Watch CBSN Live

N. Korea Envoy Goes Home, Talks "End"

Chief Chinese envoy Wu Dawei said Thursday that talks on North Korea's nuclear program had broken down.

Wu was speaking after four days of talks hampered by a dispute over the transfer of North Korean funds frozen in a Macau bank, which kept North Korea away from the talks.

"This session has ended," Wu said. A statement issued by China said "the parties agreed to recess and will resume the talks at the earliest opportunity to continue to discuss and formulate an action plan for the next stage."

North Korean chief nuclear envoy Kim Kye Gwan went to Beijing's airport Thursday for a flight home after the breakdown in the talks.

Kim had refused to take part in the six-party talks held this week on ways to push forward a February agreement on North Korea giving up its nuclear program in return for energy aid because of problems over the transfer of funds.

Kim waved to reporters when he arrived at the airport but did not say anything.

The talks were to have ended Wednesday, but were extended after Pyongyang refused to take part because of problems over the transfer of $25 million in funds that were frozen in Banco Delta Asia under pressure from the United States.

U.S. officials announced this week that the money would be transferred to the North Koreans, saying it was up to the Monetary Authority of Macau, a Chinese territory, to release the funds.

China had promised to resolve the issue as quickly as possible, with the funds to be transferred to a North Korean account at a Beijing bank.

Meanwhile, North Korea strongly condemned upcoming joint U.S.-South Korean military exercises, saying Thursday that they would harm progress at the already-stalled talks.

"This is a dangerous provocation that casts a shadow over the implementation of the hard-won Feb. 13 agreement and its progress," the North Korean Foreign Ministry said in a statement.

Various reasons have been given for the delay of the funds transfer. A Japanese government official, who spoke on condition of anonymity because of the sensitivity of the talks, said the receiving bank, the Bank of China, was reluctant to accept money that has been the focus of investigations.

South Korea's Yonhap news agency said the money transfer was being delayed because Macau authorities were having difficulty confirming the ownership of 50 North Korean accounts, most of which are under the names of the heads of Zokwang Trading Co., a North Korean-run firm in Macau that U.S. officials have long suspected of being involved in money laundering.

A woman from publicity department at the Bank of China, who would not give her name, said she had no information about the BDA issue at the moment.

Chief U.S. envoy Christopher Hill had said earlier Thursday that the Chinese side had "made some progress" on getting the money cleared but did not give details or say when the money would arrive.

North Korea boycotted the six-nation talks for more than a year after Washington blacklisted the tiny, privately run Banco Delta Asia on suspicion the funds were connected to money-laundering or counterfeiting.

The two Koreas, the U.S., Japan, Russia and host China are trying to fine-tune a timetable for North Korea's disarmament under the February agreement.

North Korea would ultimately receive assistance equivalent to 1 million tons of heavy fuel oil if it fully discloses and dismantles all its nuclear programs.

Meanwhile, South Korea said Thursday it would resume emergency flood aid to North Korea that had been suspended after last year's nuclear test, the latest sign that Pyongyang's recent agreement on nuclear disarmament has warmed ties between the Koreas.

South Korea's Vice Unification Minister Shin Eon-sang said the aid that had been pledged to help North Korea cope with floods last summer would be resumed. Seoul has previously said it would send food and medical supplies along with construction materials and equipment.

South Korea is also resuming regular fertilizer shipments to the North later this month that had been part of its annual aid to its impoverished neighbor.

Shin said the government decided to resume the aid considering progress in the international nuclear talks, requests from the North and the fact that it was purely humanitarian assistance as part of emergency relief.

View CBS News In