U.S. to North Korea: Time Running Out on Nuclear Disarmament Deal

North Korea is running out of time to start dismantling its nuclear weapons program before a weekend deadline, a top White House adviser told North Korean officials Tuesday during a rare visit to Pyongyang.

Meanwhile, U.S. officials asserted they had resolved a separate financial dispute that has stymied progress in the arms talks, but it was unclear how the North would respond.

The U.S. Treasury Department said authorities in the Chinese-administered region of Macau are prepared to unblock frozen funds that North Korea says are the reason it has refused to move forward on a Feb. 13 disarmament agreement.

Top U.S. nuclear negotiator Christopher Hill expressed hope that the move would allow North Korea to meet Saturday's deadline.

"It's obviously a big step that I think should clear the way for the (North) to step up the process of dealing with its obligations within the 60-day period," Hill said, referring to the deadline set in the agreement. "We've reacted positively to it and I hope (North Korea) will also react positively to it."

South Korea's top nuclear envoy, Chun Young-woo, speaking alongside Hill after the two met, said the hold on the North Korean accounts in the Macau bank would be lifted Wednesday morning.

Under the agreement, Pyongyang pledged to shut down its main atomic reactor in exchange for energy aid and political concessions, but only after the U.S. promised to resolve the financial issue within 30 days — which Washington failed to do because the fund transfer has been mired in technical complications.

North Korea has refused to talk about further disarmament steps until its US$25 million in frozen funds is returned.

"The United States understands that the Macau authorities are prepared to unblock all North Korean-related accounts currently frozen in Banco Delta Asia," the U.S. Treasury Department statement said, referring to the bank where the funds are being held. The department said the U.S. would support such action.

"The United States supports any decision by Macau to release the funds to authorized account holders," Hill said, noting the freeze was placed on the money by authorities there. "And with that, we are stepping out of this process. So now, I think it will be up to the (North) to work this out between them and the banker."

A call to a spokesman of Banco Delta Asia was not immediately returned Tuesday. The lender had been blacklisted by Washington for allegedly helping the North launder money and its North Korean accounts were frozen. The bank has denied any wrongdoing.

The Macau government said it was aware of the Treasury statement and that it would work with all parties involved. "Simultaneously, it expects all parties concerned to come up with appropriate and responsible arrangements respectively," it said on its Web site.

In Pyongyang, Victor Cha, U.S. President George W. Bush's top adviser on North Korea, told North Korea's top nuclear negotiator, Kim Kye Gwan, that Pyongyang had to act quickly.

"They don't have a lot of time," said a U.S. official with knowledge of Cha and Kim's meeting, who spoke on condition of anonymity because of the sensitivity of the talks. "They just can't be in receive mode, they have to be in action mode."

Cha is part of a U.S. delegation, including presidential candidate Bill Richardson and Anthony Principi, Bush's former veteran affairs secretary, leaving Pyongyang Wednesday after a four-day trip to recover remains of American servicemen killed in the 1950-53 Korean War.

Kim said in earlier meetings that his government would allow U.N. nuclear inspectors into the country — to check whether it is meeting its commitments — as soon as the US$25 million (euro18.7 million) in North Korean funds are released.

Kim had also said it would be difficult to shut down the nuclear reactor by the Saturday deadline.

In Washington, State Department spokesman Sean McCormack told reporters Monday the money issue "was more complicated than anyone could have imagined," and suggested Washington might not object to an extension in the deadline.

The Feb. 13 deal was crafted during international disarmament talks involving the two Koreas, the United States, China, Japan and Russia.

North Korea boycotted the nuclear talks for more than a year because of anger over the frozen funds. During that year, North Korea also exploded its first nuclear device.

Japan imposed trade sanctions on North Korea because of that test, and on Tuesday it extended them for six months. The sanctions include closing ports to North Korean ships and banning the import of North Korean goods.

Japanese Prime Minister Shinzo Abe urged North Korea to carry out its promises of disarmament when asked to comment on the latest development on the financial issue.

"North Korea has promised to take concrete actions toward nuclear disarmament at the six-way talks. The situation concerning North Korea will not change unless the country fulfills its promises." Abe told reporters.