S. Korea to postpone rice aid until N. Korea acts on denuclearization


South Korea has decided to put off food shipment to North Korea until the communist country fulfills its promise to shut down its main nuclear reactor, government sources said Thursday.

South Korea had planned to start sending 400,000 tons of rice to the impoverished North late this month in the form of a loan to be paid back over 30 years after a 10-year grace period.

In inter-Korean economic talks in April, however, South Korea made its food aid conditional on the North’s fulfillment of its obligation to start denuclearization steps in return for energy aid within 60 days of a Feb. 13 six-party deal.

The North failed to meet the April 14 deadline, citing a banking dispute with the United States over $25 million of its funds frozen at a Macau bank, Banco Delta Asia. In a separate deal, the North Korean money was unblocked but the communist country has yet to withdraw it.

Hoping that the banking dispute would have been resolved by the end of May, South Korea’s government last Tuesday approved budget spending for the rice aid worth $170 million and raw materials worth $80 million for the North to make soap, footwear and clothing.

“As we made clear in inter-Korean economic talks last month, however, we will wait and see if North Korea will carry out the Feb. 13 agreement,” a government official said, asking that he remain anonymous.

The South Korean government has yet to sign a commercial contract to purchase rice aid for North Korea, so it would be next to impossible to keep the inter-Korean agreement to start shipment in late May.

South Korean officials have expressed frustration over the prolonged financial dispute which was touched off by Washington’s accusations that North Korea laundered illicit money through the Macao bank.

North Korea has been free to withdraw the money but it reportedly insists that it gets it back through a U.S. bank. The U.S. government said last week that arrangements were being made to address the North Korean demand.


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