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UN Agency Temporarily Freezes Funds for North Korea

The main U.N. Development agency has halted all new projects for North Korea pending an audit to determine whether the agency illegally funneled millions of dollars to the Kim Jong Il government. VOA's Peter Heinlein reports from U.N. headquarters in New York.

The executive board of the U.N. Development Program Thursday postponed funding its North Korea projects for 2007 through 2009. The board also ordered a halt to hard currency payments to the Pyongyang government, and told U.N.D.P. administrators to stop hiring government-recruited staff members.

The board's action came after the United States, Japan and other contributor countries alleged that funds intended to help impoverished North Koreans could have been diverted to North Korea's leaders. Some diplomats suggested the money may have been used to finance Pyongyang's nuclear weapons program.

U.N.D.P Associate Administrator Ad Melkert said the board had agreed to defer consideration of a three-year, $17.9 million budget for the D.P.R.K, as it is known, until outside auditors examine expenditures for the past ten years. That could take three months.

U.N. Secretary-General Ban Ki-Moon had called for the audit when the allegations became public last week.

Acting U.S. Ambassador to the U.N. Alejandro Wolff expressed satisfaction with the U.N.D.P. decision. "We're pleased with the approach that the U.N.D.P. administrator has laid out. Two fold. One, a full thorough independent outside audit of the program, and perspectively, immediate remedial measures for some of the shortfalls we've identified along with UNDP for the program to continue. In the mean time, until we get the results of that audit, and the program is reviewed, we defer approval of the new program for the D.P.R.K."

Japan, the second largest contributor to the U.N. budget, demanded even tougher action. The Director-General of Global Issues in the Japanese Foreign Ministry, Koji Tsuruoka, noted that the D.P.R.K. last year rejected two U.N. Security Council resolutions, one condemning a missile test, the other imposing sanctions for its nuclear weapons test. Tsuruoka called for a complete halt of all funds to Pyongyang. "What I have stated is simply common sense. By two total rejections of Security Council resolutions, the U.N. has been hit twice by a member states. It is unthinkable for the U.N. to reward the authorities of such a state by rewarding it with funds," he said.

North Korea's delegate Jang Chun Sik described the decision to suspend funds as "unfair and unacceptable". He accused the United States and Japan of conducting what he called "a sinister campaign to politicize international assistance". "The U.S. allegation is based on its hostile policy toward the DPRK to isolate and stifle it. The D.P.R.K delegation therefore, rejects categorically the distorted and fabricated allegations made by the United States through its media," he said.

Russia and Cuba, two other members of the 36-nation U.N.D.P. board, also criticized the suspension of aid.

U.N. diplomats say Thursday's action marked the first time the development program has suspended funding to a member state.

The U.N.D.P. website says the agency operates in 166 countries worldwide, with an annual budget of $4.7 billion.