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US, N. Korea Meet to Discuss Disarmament, Financial Sanctions

U.S. and North Korean envoys were meeting Tuesday to discuss U.S. financial sanctions against the reclusive communist state, on the sidelines of negotiations aimed at persuading Pyongyang to abandon its nuclear weapons program. From Beijing, where the talks are being held, Roger Wilkison reports it is uncertain whether any progress has been made on either issue so far.

A key point of dispute between the United States and North Korea is financial restrictions the U.S. imposed in late 2005 on a Macau bank, Banco Delta Asia. Washington says the bank helped Pyongyang with counterfeiting and money-laundering activities.

Pyongyang insists these restrictions must be lifted before it will consider adhering to a pledge it made in September 2005, to scrap its nuclear arms program in exchange for aid and security guarantees.

The restrictions led North Korea to walk out of the six-party talks on its nuclear program, which have been going on intermittently for the past three years.

The isolated Stalinist state has now returned to the negotiations, after a hiatus of 13 months, during which it detonated its first nuclear device.

At Monday's inaugural session, North Korea demanded that the U.S. financial curbs be lifted, along with United Nations sanctions imposed after its nuclear test, before the North moves on implementing the 2005 joint statement it signed with China, Japan, Russia, South Korea and the U.S.

U.S. negotiator Christopher Hill told reporters before going into Tuesday's talks that he did not see any progress on the first day.

"I think I would be hard-pressed to tell you any progress was made," Hill said. "I mean, the meeting got underway, which is good, because we haven't had it for 13 months, so I guess in that sense there was progress, but certainly, in terms of implementing the joint statement, I didn't feel I could see too much progress from yesterday."

Later Tuesday, Hill began meeting one-on-one with Kim Kye Gwan, the chief North Korean negotiator. At the same time, U.S. Treasury officials sat down with North Korean counterparts to discuss the financial sanctions.

The frozen Banco Delta Asia account reportedly holds some $24 million. That is not a lot in itself, but the U.S. action has had a ripple effect throughout the international banking system, and other countries, including Vietnam and China, have also restricted North Korean banking activity.

However, there are reports that U.S. officials have concluded that some of the 24 million is from legitimate business activity, which could allow Washington some flexibility in easing the restrictions on the Macau bank.

China, which has hosted the one-again, off-again negotiations, and is given credit for persuading the North Koreans to return once again, is still hoping for progress in implementing the 2005 agreement. Chinese Foreign Ministry spokesman Qin Gang says time and patience are needed to resolve what he called widely divergent views.

"The six-party talks are a process. It is a gradual process," he said. "This kind of process is a platform for various parties to build up their contacts and understanding and to narrow down their differences. So long as negotiations continue, we will be able to press ahead towards the denuclearization of the [Korean] peninsula."

South Korean envoy Chun Yung-woo says North Korea's long list of demands on Monday was only an attempt to bolster its bargaining position, and there is still room for negotiation.