US bans luxury exports to NKorea, sets money talks

Washington, Jan 27: The United States has banned exports of luxury items to North Korea even as it announced a date for critical talks on resolving a dispute over other US financial curbs on the communist state.

The related moves occurred amid a flurry of diplomatic activity that U S and other officials say could lead to an agreement under which the North halts operations at its Pyongyang nuclear complex in return for energy assistance and the release of some 7.5 million dollar in accounts frozen in a Macau bank.

President George W. Bush -- his popularity plummeting and embattled by crises with Iraq, Iran and North Korea -- is desperate for a foreign policy win, many U S officials and experts say, and seems willing to make compromises he previously resisted.

A rule issued by the U S Commerce Department yesterdays details the luxury goods Washington plans to block under U N trade sanctions mandated after Pyongyang conducted a nuclear test on October 9.

Banned items include cognac, jet skis, iPods, jewelry and fancy cars, all part of an effort to pressure Pyongyang's communist leaders by denying their reputed high-end tastes.

Commerce Secretary Carlos Gutierrez issued a press release on the luxury goods list in November, but publication of a formal rule was delayed until yesterday so U S negotiator Chris Hill could pursue six-country talks aimed at persuading Pyongyang to end its nuclear programs, U S officials said.

Hill's recent discussions with North Korea in Berlin appear to have made progress, prompting predictions that six-country negotiations could soon resume, possibly February 5 to 8.

Some U S officials described a vigorous administration debate, with Hill resisting formal publication of the export rule, fearing it would give Pyongyang another excuse to jettison the six-country talks.

'Primary Money Laundering Concert'

Meanwhile, U S officials announced they would resume talks with North Korea on January 30 in Beijing on Macau's Banco Delta Asia.

The U S Treasury Department in September 2005 had labeled the bank a ''primary money-laundering concern'' for its aiding Pyongyang's counterfeiting of U S dollars, drug trafficking and other illicit activities.

Macau authorities froze 24 million dollar in North Korean accounts after Treasury's designation. Pyongyang has cited this as a major reason for stonewalling the six-country talks.

The U S designation of the bank largely cut North Korea out of the international financial system, U S officials say.

But U S officials have said Treasury was scrutinizing the accounts to see if some of the money could be considered legitimate and released to Pyongyang, a major U S compromise.

Leading the U S delegation to the Beijing financial talks will be Daniel Glaser, deputy assistant Treasury secretary for terrorist financing and financial crimes.

He will continue discussing ''the international community's concerns about (the North's) illicit financial conduct, globally-recognized standards for operating as a responsible member of the financial community, and the financial measures taken by the United States to combat illicit financial flows,'' Treasury spokeswoman Molly Millerwise said in a statement.

Responding to North Korea's nuclear test, the U.N. Security Council voted to ban military supplies and weapons shipments -- sanctions already imposed by the United States.

It also prohibited sales of luxury goods but left each country to define such items.

The measures are targeted to hurt North Korean leader Kim Jong-il and the elite families he favors with luxury goods in effort to maintain their loyalty, in a country where most people are impoverished and outside help is needed to stave off starvation.

U S officials argue that if the elites directly feel the sting of international outrage, it could loosen Kim's control of the government.

Reuters