N. Korea warns of 'actions' if bank squeeze not relaxed

BEIJING,(Reuters) North Korean nuclear envoy Kim Kye-gwan warned on Saturday that if the United States failed to lift financial sanctions against it, his country would have to take "corresponding actions" in response.

Washington had promised to look into easing financial sanctions within 30 days of a Feb. 13 agreement that offers North Korea millions of dollars in energy aid and improved security in return for steps on dismantling its nuclear facilities.

"The U.S. has promised to lift the Banco Delta Asia financial sanctions, so we are closely watching developments," Kim told reporters at Beijing airport on his return journey to North Korea from talks in the United States.

"If the U.S. fails to lift all of the sanctions, we cannot help but to partially take corresponding actions," he said. Kim did not elaborate on what "corresponding actions" his country might make, nor if that meant it would not fulfil its commitment to shut down its main nuclear reactor within 60 days of the Feb. 13 deal.

About $24 million in North Korean accounts was frozen at Banco Delta Asia after the U.S. designated the Macau bank a "primary money laundering concern" in 2005, a decision that complicated efforts to persuade the North to abandon nuclear arms.

But Washington agreed to resolve the matter as part of the February deal hammered out at talks in Beijing between the two Koreas, the United States, China, Japan and Russia.

Kim's remarks followed two-way talks in New York with his counterpart, Christopher Hill, earlier this week. The discussions there focused on obstacles to normalising ties between the countries that have been foes since the 1950-53 Korean War.

Transiting back to North Korea through Beijing, Kim met Chinese Vice Foreign Minister Wu Dawei, who said he had hopes of progress in implementing the Feb. 13 agreement but cautioned that deep distrust was challenging efforts.

"Nonetheless, we are still full of confidence in pursuing hope in hardship," Wu said in an on-line interview with China's official Xinhua news agency on Friday.

Next week, the chief of the International Atomic Energy Agency, Mohamed ElBaradei, will visit North Korea to discuss how it will close down its reactor and readmit inspectors from the U.N. watchdog.