North Korea is refusing to back down from its demand that US financial restrictions be lifted before it dismantles its nuclear program, delegates said last night.

North Korea agreed to end its 13-month boycott of the six-party talks that also include China, Japan, Russia, South Korea and the US to discuss a US campaign to isolate the nation from the international banking system.

Washington alleges North Korea is involved in a range of illegal activities, including counterfeiting US$100 bills, money laundering and selling weapons of mass destruction.

US and North Korean experts discussed the financial restrictions for five hours yesterday, their second day of one-on-one meetings on the talks sidelines this week, but made no breakthroughs and planned no more meetings.

Daniel Glaser, US deputy assistant secretary for terrorist financing and financial crimes, said the talks at the North Korean embassy were "businesslike and useful."

Glaser said he would possibly meet North Korean representatives next month in New York.

"For this process moving forward to be productive and useful, it's going to have to start focusing very, very closely on the underlying concerns of illicit finance," he told reporters. "We hope to get to do that."

Meanwhile the six-party talks are to continue at least through tomorrow.

Japan wants focus on border issue

"The financial issues are a major interest for North Korea," Japanese envoy Kenichiro Sasae said after the third day of discussions in Beijing.

Sasae pleaded with North Korea to put aside that issue.

"I think it is not realistic to treat the financial issue as a major block while putting the broader discussion on hold," Sasae said.

However, North Korea said it would be willing to halt operation of its main nuclear reactor and allow international inspectors "under the right conditions," a South Korean official said on condition of anonymity.

"We are focusing our discussion on what those conditions would be," he said.

South Korean chief envoy, Chun Yung-woo, said it remained to be seen whether delegates would make progress on implementing a September 19 joint statement issued during the fourth round of talks last year. Under the statement North Korea pledged to jettison its nuclear program in exchange for aid and security guarantees.

"We cannot predict that we will be able to produce a document of breakthrough agreements," he said.

"We cannot be just optimistic about the situation since this round of talks opened after many difficulties," Chun said, referring to the long break, North Korea's nuclear test and UN sanctions.

Before talks had begun the chief US envoy urged all sides to start hashing out substantive details on disarmament or risk squandering the opportunity.

"At this point I don't want to say I am pessimistic or optimistic," Christopher Hill, US assistant secretary of state told reporters.

Washington would be willing to give a written security guarantee, a pledge that it would not seek to topple the North Korean government by force as soon as the nation allows the return of international nuclear inspectors, South Korea's Yonhap News Agency reported, citing "diplomatic sources."

(China Daily December 21, 2006)