Hill Tells North Korea to Close Its Nuclear Reactor

May 30 (Bloomberg) -- U.S. Assistant Secretary of State Christopher Hill told North Korea to begin closing its Yongbyon nuclear reactor, as he prepared for talks in China on resolving a banking dispute that's delayed the six-nation accord.

Kim Jong Il's government must invite a United Nations team to inspect the plant and ``shut down the nuclear facility'' immediately, instead of waiting for its funds held at a Macau bank to be transferred, Hill told reporters in the Indonesian capital, Jakarta, late yesterday before leaving for Beijing.

Hill will meet this morning with China's Vice Foreign Minister Wu Dawei to discuss a final resolution of the banking issue, the assistant secretary said to reporters after arriving in Beijing today. ``The positive side is the North Koreans are prepared to shut'' the reactor, he said.

North Korea agreed on Feb. 13 to close its Yongbyon plutonium reactor within two months as a first step to dismantling its nuclear program. The nation says it won't do so until it can access the international banking network and transfer $25 million held at Macau's Banco Delta Asia SARL to overseas accounts.

Hill's arrival in Beijing comes after North Korea test fired missiles on May 25 in a military exercise that could further strain relations in North Asia already damaged by North Korea testing its first nuclear device in October and firing ballistic missiles last July.

`Proving Difficult'

Resolving the banking issue has ``proved to be very difficult,'' Hill told reporters yesterday. ``We are working very hard on this. The whole process would be helped immeasurably if the North Koreans simply left to us to work on this and got on with their task,'' which is to close the Yongbyon reactor.

The funds were frozen at Macau's BDA after the U.S. Treasury in September 2005 designated the bank as a ``primary money laundering concern'' because of its links to North Korean ``corrupt financial activities.''

The U.S. agreed to free the funds to get the nuclear agreement implemented. It is proving difficult for North Korea to transfer the money because the Treasury cut the Macau bank from the U.S. financial system and other banks are reluctant to handle the money in case they face similar sanctions.

U.S., Chinese and North Korean officials have worked for more than two months to resolve the issue and Hill said last week he was hopeful the money could be transferred this month.

Exchanging Views

``Mr. Hill will be here to exchange views with officials on issues related to the six-nation talks,'' China's Foreign Ministry spokeswoman Jiang Yu said yesterday.

He will stay for one day, said Susan Stevenson, a spokeswoman for the U.S. Embassy in Beijing.

Under the accord signed with the U.S., China, Russia, South Korea and Japan, North Korea will receive 50,000 metric tons of heavy fuel oil once it closes the reactor and economic assistance equivalent to another 950,000 tons if it fully disables its nuclear program.

To contact the reporters on this story: Wahyudi Soeriaatmadja in Jakarta at wahyudi@bloomberg.net ; Allen T. Cheng in Beijing at