N. Korea nuke issue can only be solved by regime collapse: Bolton

Visiting former U.S. Ambassador to the United Nations John Bolton said Wednesday that the North Korean nuclear weapon program issue can only be solved by the collapse of its current leader Kim Jong Il's regime.

Bolton also said in a press conference in Tokyo that additional economic pressure on North Korea is necessary, noting that the six-party talks on North Korea's nuclear program "failed irrecoverably" following Pyongyang's missile launches and nuclear test last year.

"If my conclusion that the six-party talks have failed is correct, that means we now need to shift to a new policy" Bolton said.

"I think realistically, over time, the only answer to the North Korean nuclear weapons program is the collapse of the regime in North Korea, and hopefully peaceful reunification in the Korean Peninsula," he said.

Bolton also said South Korea and China, which have been reluctant to take a hard stance against Pyongyang compared with Japan and the United States, should also join in adding pressure.

Continuing the failed talks will cause "even more embarrassment for China," Bolton said, urging Beijing to acknowledge the failure of the six-party talks.

Bolton is currently visiting Japan at the invitation of the Japanese Foreign Ministry.

U.S. said considering release of some N.Korea funds

By Carol Giacomo, Diplomatic Correspondent

Tue Jan 16, 6:58 PM ET

The U.S. Treasury Department is scrutinizing $24 million in North Korean accounts frozen in a Macao bank to see if some of the money could be considered legitimate and released to Pyongyang, U.S. officials say.

Several officials told Reuters they believe the Bush administration is now inclined to find a solution to the year-long dispute over the accounts in Banco Delta Asia, which Washington has called a "willing pawn" in Pyongyang's counterfeiting and money-laundering activities.

But they stressed this would not affect U.N. sanctions and U.S. laws and regulations that provide other authority for cracking down on Pyongyang's finances and weapons trade.

North Korea has cited the frozen Banco Delta Asia (BDA) accounts as a major reason for stonewalling six-country talks on ending its nuclear program.

Chief U.S. negotiator Chris Hill met his North Korean counterpart in Berlin on Tuesday to discuss resuming the talks and the BDA issue was expected to be on the agenda.

"There are a number of North Korean accounts in Banco Delta Asia that the (Treasury) accountants are looking at. They are comparing these accounts," said one U.S. official who spoke on condition of anonymity.

It is possible that accounts reflecting "legitimate" business activity could be segregated from "illegitimate" accounts and "a lot of resources are being applied to make that kind of assessment," he said.

SEGREGATING ACCOUNTS

Previously, U.S. officials argued it was impossible to differentiate among Pyongyang's accounts because the country's entire financial system is based on illicit activities such as counterfeiting and money-laundering.

Experts say $7.5 million of the $24 million was from Daedong Credit Bank, a British bank representing foreign companies doing business in North Korea.

The Treasury Department on Tuesday refused to comment on the status of the BDA investigation and whether it was looking for a compromise solution.

But a second U.S. official said: "They are taking another look at this (BDA) issue. There is active discussion within the administration on whether to make concessions and if so, how far, how fast and under what conditions."

Hill is "hoping to close" Treasury's investigation on Banco Delta Asia, he added.

Macao, not the United States, has control over BDA and the North Korean accounts. U.S. officials said if Treasury closed its BDA probe, this could be interpreted by Macao as a signal to release at least some of the $24 million.

Some officials are deeply troubled by what they see as a more accommodating U.S. approach toward Pyongyang and say Hill has been given greater flexibility to negotiate. They say North Korea can't be trusted to honor any deal.

But other officials say North Korean counterfeiting and money-laundering, while important to stop, should not be allowed to thwart a possible deal that could halt the North's vastly more dangerous nuclear weapons-related activities.

Pyongyang has dramatically advanced its nuclear program during President George W. Bush's tenure. It tested its first weapon last October.

During the last round of six-party talks in Beijing in December, North Korea refused to even discuss a September 2005 statement under which it agreed to abandon its nuclear programs in return for economic aid and security guarantees.

All Pyongyang's negotiator "wanted to talk about was one issue -- BDA -- and the return of the $24 million," one U.S. official said. A U.S.-North Korea financial working group expected to meet soon would discuss the "substance" of the BDA accounts, a U.S. official said.

Six-party talks in November 2005 broke off after Washington squeezed Pyongyang's access to the world financial system to punish it for its illegal activities. Banco Delta Asia accounts were frozen after Washington declared the bank a "primary money laundering concern" under section 311 of the USA Patriot Act.

US, North Korea envoys meet in Berlin on renewing nuclear talks

by P. Parameswaran

Tue Jan 16, 4:46 PM ET

Top US envoy Christopher Hill held a rare meeting with his North Korean counterpart Kim Kye-gwan in Berlin to discuss resuming multilateral nuclear talks, the State Department said.

There was no breakthrough in the first direct talks in Europe between the two rival powers in as many years but officials said the lengthy meeting at the US embassy in the German capital set the pace for resumption of the six-party talks.

"I don't think that there is any particular conclusion from them to share with you, but the goal here ... is to ensure that we are appropriately setting up and laying the groundwork for the next round of talks," Tom Casey, deputy State Department spokesman, told reporters.

He said "it was a good exchange of views, that certainly was conducted in a positive atmosphere."

Yet no date was fixed for the next round of the six-party talks aimed at ending Pyongyang's nuclear weapons program.

This is believed to be the first time Washington held direct talks with North Korea in Berlin under President George W. Bush's administration, which had confined the meetings to Beijing and New York so far.

During the Clinton administration, the two powers held landmark talks in Berlin in 1999 that ultimately led to the lifting of half-century of restrictions on trade, travel and banking against North Korea after it agreed to a moratorium on missile tests in 1999.

The crisis blew up again in 2002.

The Berlin meeting on Tuesday came ahead of Hill's visits beginning Friday to South Korea, China and Japan to continue consultations with key partners in the six-party talks on how to make progress in the next round of negotiations.

China, Japan, the two Koreas, Russia and the United States met for five days in December after a year-long break, but no progress was made toward dismantling North Korea's nuclear weapons program.

The six-party negotiations were suspended in late 2005 after North Korea walked out in protest at US financial sanctions imposed on a Macau bank accused of illicit dealings on behalf of Pyongyang.

Before the breakdown, North Korea signed a statement agreeing to give up its nuclear weapons program in exchange for economic aid and security guarantees from the other five states.

But it then went ahead and conducted its first nuclear weapons test in October, sparking international condemnation and UN sanctions.

Under intense pressure from its main ally, China, and with a promise from the United States that it would discuss the financial sanctions issue, North Korea agreed to return to the talks last month.

Casey said the meeting between Hill and Kim on Tuesday "focused more on some of the follow-up to some of the proposals and ideas expressed in the last round of talks."

At the Beijing talks, North Korea reportedly told the United States to lift the financial restrictions while Washington demanded the communist state report all of its nuclear facilities and programs, and accept inspectors from the International Atomic Energy Agency.

The United States was also said to have demanded that the North close its plutonium-producing nuclear reactor in Yongbyon and seal off underground nuclear facilities from where it conducted the atomic test.

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