S. Korean envoy: N. Korea preparing to shut down main nuclear facility

BEIJING -- North Korea told delegates at nuclear talks on Saturday that it is preparing to shut down its main reactor, South Korea's chief nuclear envoy said, a key step promised in a landmark disarmament pact.

The apparent progress in implementing last month's agreement came only hours after North Korea's lead nuclear envoy said his government would not close its main nuclear facility until all $25 million of its money frozen in a Macau bank is released.

But U.S. Assistant Secretary of States Christopher Hill, the top American envoy, said late Saturday that the North was still "fulfilling their obligations."

The fate of the frozen funds, the result of a blacklisting by U.S. authorities, has become a central issue in the talks. The United States promised to resolve the bank issue as an inducement to North Korea to return to the negotiations, but its solution -- an order this past week to U.S. banks to sever ties with Banco Delta Asia -- has been criticized by China and left North Korea sending mixed signals.

At one follow-up meeting Saturday, another North Korean diplomat, Kim Song Gi, said North Korea has "begun preparations to shut down its Yongbyon nuclear facility," South Korean envoy Chun Yung-woo told reporters afterward.

Kim promised that North Korea will submit a list of its nuclear programs and disable its nuclear facility "as soon as the right conditions are created," Chun said, without explaining what the conditions were.

Chun did not independently confirm whether shutdown preparations were under way.

Under the Feb. 13 agreement, which involves the United States, China, Japan and Russia as well as the two Koreas, North Korea has 60 days to shutter the Yongbyon reactor and a plutonium processing plant which have produced material for a nuclear weapons program.

U.N. monitors are supposed to be allowed in North Korea to verify the shutdown, and once confirmed North Korea is to receive energy and economic assistance.

The United States, in a side agreement, promised to resolve the Banco Delta Asia funds, which U.S. authorities alleged may have resulted from counterfeiting or money laundering.

"We are on schedule for this first phase," Hill told reporters after daylong meetings with delegates in the other five countries.

Earlier, North Korea's chief nuclear negotiator, Kim Kye Gwan, said his country would not stop nuclear activity "until our funds

frozen in the BDA are fully released."

Also Saturday, a senior U.S. Treasury Department official traveled to Macau to discuss the results of the investigation with officials there. It will be up to the government of Macau -- a semiautonomous Chinese territory -- whether to release any of the funds, which have been frozen since 2005.

The Treasury Department is expected to help Macau's regulators identify accounts connected to North Korea that are not tainted by links to alleged nuclear proliferation or counterfeiting, smuggling and other crimes.

"I think it is important to emphasize this was a Macanese action to freeze the funds, and it would be a Macanese process to determine" whether to release them, U.S. Deputy Assistant Treasury Secretary Daniel Glaser told reporters.

As part of the disarmament meetings in Beijing, Hill said he would push North Korea to disclose all its nuclear programs, including an alleged uranium enrichment program.

U.S. allegations that North Korea has a secret uranium enrichment program brought on a nuclear crisis in 2002 that led the country to expel U.N. inspectors and eventually led to North Korea exploding its first nuclear device in October.

North Korea has never publicly acknowledged a uranium program, although Kim indicated the North was willing to discuss the issue.

"We are willing to cooperate with the United States to address the allegations," Kim said. "We will clarify this when (the U.S.) presents the evidence."