North Korea insists U.S. must lift money curbs

BEIJING, (Reuters)

North Korea's chief nuclear envoy said on Saturday his country would not stop its nuclear development programme until the United States first lifted financial curbs on North Korean accounts in a Macau bank.

Kim Kye-gwan, addressing reporters on arrival in Beijing for a new session of six-party talks aimed at ending North Korea's nuclear weapons programme, apppeared in no mood to mince words.

"If the Banco Delta Asia financial sanctions are not completely lifted, we are not going to stop our nuclear development programme," Kim said. "...What I mean is the initial steps. We are not going to stop the operation of the Yongbyon nuclear facility."

The six-party talks struck an accord on Feb. 13 giving North Korea 60 days, until mid-April, to shut Yongbyon, the heart of North Korea's nuclear programme, in return for aid and security pledges.

Washington agreed to defuse within 30 days North Korea's complaints about its crackdown on Banco Delta Asia (BDA), which the U.S. Treasury Department has accused of harbouring illegal North Korean earnings. This week, the department issued a formal ban on U.S. banks doing business with BDA, marking an end to an 18-month investigation and allowing Macau, a Chinese special administrative region, to unfreeze North Korean accounts found to be above board. Daniel Glaser, the department's Deputy Assistant Secretary for Terrorist Financing and Financial Crimes, arrived in Macau on Saturday to explain the results of the investigation to the region's leader, Chief Executive Edmund Ho, and to monetary authorities. He declined comment on Kim's remarks.

BDA is one of the smallest banks in tiny Macau, a gambling haven on China's southern coast which was run by Portugal for centuries until its return to Chinese rule in 1999.

North Korea says the freezing of its funds was the reason it boycotted the six-party talks for over a year until last December. The talks, grouping the two Koreas, the United States, China, Japan and Russia, resumed only after the North's October 2006 nuclear test drew a tide of international condemnation and U.N. sanctions.

Asked about admitting nuclear inspectors, Kim said: "Since we will not stop the nuclear facility unless the sanctions are lifted, there is no reason for inspectors to come in."

U.S. envoy Christopher Hill repeated on Saturday that he did not believe the bank dispute would impede the nuclear talks.

"The BDA will not pose an obstacle," he told reporters, adding that he expected to meet Kim later in the day to brief him on the U.S. Treasury move.

Chinese Foreign Ministry spokesman Qin Gang said on Thursday that he "deeply" regretted the American decision on the BDA, which he suggested could destabilise Macau's financial system and harm the nuclear talks that restart on Monday.

Hill said that he expected to hold talks with Kim about the bank issue and the nuclear negotiations before the formal six-party meetings, which begin on Monday.