A Chinese official in Macau confirms North Korean funds have been transferred out of a bank there, en route to Pyongyang.  The transfer removes a major obstacle in getting Pyongyang to fulfill its promise to begin dismantling its nuclear programs.  As VOA's Kurt Achin reports from Seoul, the banking breakthrough coincides with a South Korean announcement of emergency food assistance for the North.

A man talks on a mobile phone in front of the headquarters of Banco Delta Asia in Macau, March 2007 file photo

Macau Secretary of Finance and Economy, Francis Tam, says that most of the North Korean money at the heart of a protracted banking dispute had been transferred out of a bank in the former Portuguese colony.

Tam says Macau's Banco Delta Asia remitted more than $20 million according to the instructions of a North Korean client. 

Tam did not reveal the precise path of the funds.  South Korean and Japanese media report the funds would be processed through the U.S. Federal Reserve and the central bank of Russia to a North Korean account in a Russian bank.

About $25 million in North Korean funds were frozen at Macau's Banco Delta Asia, after the United States Treasury said in 2005 the bank was involved in illegal activities, such as money laundering.  Although the United States removed its objection to returning the money to the North, no bank had been willing to handle the transfer for fear of jeopardizing relations with the U.S. banking system.

North Korea has blamed the transfer delay for its refusal to meet a deadline for shutting down its main nuclear-production facility.  The mid-April deadline was the first phase in a multi-national agreement made with North Korea in February in Beijing aimed at ending the North's nuclear weapons capabilities.

South Korean Unification Minister Lee Jae-joung speaks to media in Seoul, 14 June 2007

In Seoul, Unification Minister Lee Jae-joung announced South Korea would send more than 30,000 tons of emergency corn, wheat, and beans to North Korea via the U.N. World Food Program.

Lee says the action is appropriate given North Korea's situation, and the South's role as a responsible member of international society.

World Food Program officials say the economically isolated North faces some of its most severe food shortages since the mid-1990s, when it suffered widespread famine.

South Korea said it has delayed delivery a much larger shipment of rice until Pyongyang lives up to its February agreement promises.

Christopher Hill (file photo)

More details about the state of that agreement may emerge Friday, when the chief U.S. nuclear negotiator, Assistant Secretary of State Christopher Hill, arrives in Mongolia.  Hill is also due to make stops in Beijing, Seoul, and Tokyo.

It remains to be seen whether resolving the bank issue will be enough to persuade North Korea to take action on its nuclear program.  Experts say that will depend on whether Pyongyang feels it has the full access to the international banking system, which it feels it deserves.