United States, North Korea Begin Bilateral Nuclear Talks

Financial experts from the United States and North Korea met Tuesday to address Washington's campaign to isolate the North from the international banking system, the key stumbling block blamed for Pyongyang's 13-month boycott of nuclear talks.

The meeting came on the sidelines of six-nation arms talks that entered a second day Tuesday with discussions focused on the implementation of a disarmament pledge signed by the North last year.

The North Korean and U.S. delegations also held their first one-on-one meeting at the nuclear talks Tuesday afternoon, the Chinese press center said.

The atmosphere there "was not so harsh," a Japanese official said on condition of anonymity due to the ongoing diplomacy.

North Korea also met individually with the other countries at the talks — China, Russia and South Korea — but not the Japanese, a South Korean official said on condition he not be named.

Complete coverage is available in FOXNews.com's North Korea Center.

"The gap in differing opinions is being narrowed little by little," the official said, declining to go into details because the talks are still in progress. "There are still many differences, but we expect to narrow the gap even more tomorrow."

North Korea had stayed away from the nuclear talks since November 2005, claiming Washington remained hostile to the communist nation because it blacklisted a Macau bank where the North deposited some US$24 million.

The U.S. alleged the bank was complicit in the North's counterfeiting of US$100 bills and money laundering to sell weapons of mass destruction. American officials have urged other countries to bar North Korean accounts, saying all the country's transactions are suspect.

However, the North agreed to return to the nuclear talks weeks after its Oct. 9 nuclear test because the U.S. said it could discuss the financial issue in separate meetings.

Daniel Glaser, the U.S. Treasury Department's deputy assistant secretary for terrorist financing and financial crimes, met with the North Korean delegation led by O Kwang Chol, president of the North's Foreign Trade Bank of Korea.

The talks were being held at the U.S. Embassy, an embassy official said on customary condition of anonymity. The North Korean delegation departed after more than three hours of meetings.

Chinese Foreign Ministry spokesman Qin Gang said at a regular news briefing that Beijing hopes the two sides can "solve the issue properly."

"We wish to see them make positive achievements that we believe will facilitate the process of the (nuclear) talks," he said.

It is unlikely that the U.S. would simply remove the restrictions as the North demands, since it views them as a legal matter against criminal activity that it wants halted.

Earlier Tuesday, all six chief nuclear envoys met in a closed session at a Chinese state guesthouse for less than two hours. They also gathered for dinner.

"The first step for us is to map out the measures that help realize the joint statement and to decide what moves we will take," said Chinese Vice Foreign Minister Wu Dawei, according to the Chinese press center.

The "joint statement" refers to a September 2005 agreement at the talks — the only one ever reached — in which the North said it would abandon its nuclear programs in exchange for aid and security guarantees.

U.S. envoy Christopher Hill told reporters Tuesday morning that "not too much progress" had been made toward implementing last year's agreement. On Monday, Hill had said Washington was running out of patience and that it could move toward more sanctions.

China's Qin quipped Tuesday that envoys "can run in a marathon to build up their patience."

The North staked out a tough position as the six-nation talks opened Monday, demanding a long list of previously stated preconditions for its disarmament such as the lifting of all U.N. sanctions and U.S. financial restrictions.

It repeated its assertion that it be considered a nuclear weapons power and that the talks be transformed into negotiations over mutual arms reductions in which it would be accorded equal footing with the United States. The North said it would increase its nuclear arsenal if its demands are not met.

The North also renewed its demand for a nuclear reactor for electricity.

The latest North Korean nuclear crisis erupted in 2002 after U.S. officials said the North had admitted having a secret nuclear program in violation of a 1994 disarmament deal, leading to the North's withdrawal from the Nuclear Nonproliferation Treaty.