N Korean talks break down over frozen funds US envoy optimistic deal still achievable

CHINA: Deadlocked six-party talks on implementing a deal to end North Korea's nuclear programme collapsed yesterday when Pyongyang…

CHINA:Deadlocked six-party talks on implementing a deal to end North Korea's nuclear programme collapsed yesterday when Pyongyang's envoy refused to take part for the third day in a row and then flew home from Beijing, writes Clifford Coonanin Beijing.

After yet another recess in these tortuous talks, attention turned to what would happen next, and whether the disarmament deadlines contained in the deal could still be met despite the breakdown in negotiations.

It was somehow grimly inevitable that Kim Kye-gwan would board an aircraft back to the secretive Stalinist enclave, as he and his delegation have done so many times before when talks stalled.

Mr Kim refused to rejoin talks on implementing a deal struck on February 13th - in which North Korea agreed to halt operations at its main Yongbyon nuclear plant - until Pyongyang has in its hands the $25 million (€18.8million) in funds frozen in a Macao bank which the US has promised to release.

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The money at Banco Delta Asia SARL was frozen after the US designated the Macao bank a "primary money-laundering concern" in September 2005, and has been the source of a row that held up progress in the six-party talks.

The latest session was initially scheduled to end on Wednesday but was extended for "one or two days" after the bank fund issue stalled discussions.

China said the collapse of talks was a "recess" but gave no restart date.

The hosts are obviously keen to put a positive spin on yet another breakdown in communication between North Korea and the US, while the other four nations taking part - South Korea, Japan, Russia and China - look on glumly.

China is North Korea's only remaining ally of note in the world and Beijing is also eager to prove its diplomatic strengths in the way it conducts the talks.

Russia's negotiator, deputy foreign minister Alexander Losyukov, also left yesterday afternoon and the only agreement to come out of the talks was one to meet again.

Christopher Hill, Washington's chief envoy to the talks and nothing if not an optimist after so many years trying to steer them to a successful conclusion, remained upbeat.

"It is our strong view that we are still on schedule," he said, referring to the 60-day deadline, which expires on April 14th, by which time UN inspectors must be allowed in to verify the closure of Yongbyon.

Optimist or not, the strain is clearly having an effect on Mr Hill. As he stepped out of the negotiations for bilateral talks with China's envoy, Wu Dawei, he said: "The day I'm able to explain to you North Korean thinking is probably the day I've been in this process too long."

For his part, Mr Wu said that while time was needed for the money to be transferred, he believed the issue "will not be an obstacle to the six-way process".

Within the first 60 days, the almost bankrupt North Korea is due to receive 50,000 tonnes of heavy fuel for energy use from the other parties.

Stage two of the deal involves North Korea ending its nuclear programme and disabling its existing facilities.

If it does this, Pyongyang gets economic, energy and humanitarian assistance up to the equivalent of one million tonnes of heavy fuel oil, including an initial shipment of 50,000 tonnes.

Mr Hill seemed to indicate a slightly longer time frame for the implementation of the deal when he said he thought the second phase could be completed before the end of 2007.

"I think we can get through that in this calendar year," he said.

The White House insisted that North Korea must live up to its commitments on taking steps toward nuclear disarmament after the collapse of the talks.

"We expect them to live up to their commitments," said White House spokesman Tony Snow, who insisted that the crux of the problem was merely a technical issue over the transfer of funds.

The North Koreans are also angry about the arrival of American aircraft carrier USS Ronald Reagan into Pusan in South Korea for joint military exercises, saying the US was planning a surprise attack.