US rejects North Korea demand to end crackdown
(Reuters)
Updated: 2006-01-04 09:39

The United States on Tuesday rejected North Korea's demand to end a crackdown on the latter's finances before nuclear weapons talks can restart and said this matter is "not subject to negotiation."

In a tough statement, the White House also insisted that it would continue to take action to thwart what it said was North Korea's money laundering and counterfeiting activities.

"We've made very clear what the concerns are when it comes to those activities, whether it's counterfeiting U.S. money, engaging in drugs or proliferation of weapons technology," spokesman Scott McClellan told reporters.

"It is not a subject (for) negotiation. We are going to continue to take action to stop them from engaging in illicit activities," he said.

In September, the U.S. banned American institutions from doing business with Macao-based Banco Delta Asia over allegations it helped launder North Korean funds from trafficking drugs and counterfeit goods.

A month later, it blacklisted eight North Korean companies for allegedly supporting Pyongyang's nuclear-weapons programs.

U.S. law-enforcement agents have also arrested nearly 100 individuals over the past six months for allegedly trafficking counterfeit U.S. $100 bills, cigarettes and drugs into the United States and Europe, the Wall Street Journal reported last month.

North Korea on Tuesday demanded an end to the U.S. crackdown on its financing activities before it would return to six-country talks on dismantling its nuclear weapons.

South Korea has urged the United States, China and North Korea to resolve the standoff over the financial crackdown.

The North agreed during the last round of talks in November to a statement of principles that included Pyongyang's promise to dismantle its nuclear program. But it has since resisted setting a date for new talks, which negotiators hoped would occur later this month.

McClellan called Pyongyang's demand "yet another in a long list of pretext for delay."

Another senior official said North Korea may be feeling the effects of the U.S. action.

He told Reuters that when U.S. firms stopped doing business with Banco Delta Asia, the bank experienced problems with its balance sheet and banking authorities on Macao "stepped in and froze the accounts pending the outcome of their own investigation on the matter."

The official, who spoke on background because of the sensitivity of the issue, said the U.S. investigation into North Korea's activities has been going on for some time and the crackdown began before Pyongyang accepted the September agreement in principle.

"So if the North Koreans are choosing to make an issue of this, it's a choice they made somewhat later in the game and long after the issue had surfaced," he said.

Although the North continues to operate its nuclear reactor at Yongbyon and presumably produce weapons-grade plutonium, the official said the United States needs to hang tough.

The official said the North was a partner with the United States, South Korea, Japan, China and Russia in adopting the agreement in principle and remained optimistic that the deal's "logic" -- offering economic benefits and international acceptance if Pyongyang gives up nuclear weapons -- would eventually prevail.