US says North Korea has money, now shut reactor

SEOUL, June 19 (Reuters) North Korea appears to have received funds it demanded be returned before closing a nuclear reactor and now needs to move quickly to shut down its source of bomb-grade plutonium, a top US nuclear envoy said.

North Korea said at the weekend it would allow UN nuclear inspectors into the country as part of a disarmament deal after nearly 25 million dollars in funds frozen at a Macau bank started to make its way to the impoverished country last week.

''As far as we know, it has been transferred. I am sure that money is in the North Korean bank account,'' US Assistant Secretary of State Christopher Hill said in Seoul before leaving for Tokyo yesterday.

The International Atomic Energy Agency (IAEA) has said it will send a senior delegation next week to agree on details for a return of its inspectors to monitor Pyongyang's reactor shutdown, agreed to under a Feb. 13 deal with major regional powers.

''We want the IAEA to be able to quickly make an agreement and get on with shutting down the reactor,'' Hill told reporters in Seoul, where he was meeting South Korean officials.

China, chief backer of the reclusive state, praised North Korea for its latest move.

''We believe that this step shows North Korea's sincere will to implement the Feb. 13 joint document and express our welcome,'' said Chinese Foreign Ministry spokesman Qin Gang.

Qin told a Beijing news conference: ''We also hope that all the concerned parties will continue taking positive steps, will conscientiously abide by their commitments and take actions in a comprehensive and balanced way.'' North Korea plans to seal its Yongbyon reactor, located about 100 km (60 miles) north of Pyongyang, in the second half of July, Russia's Interfax news agency quoted an unidentified North Korean diplomatic source as saying yesterday.

Pyongyang, which tested its first nuclear device last October, is widely believed to already have enough material for several weapons.

Despite more than two months of delay in beginning the dismantling of the North's atom bomb programme, it would still be possible to complete the nuclear disarmament of the communist state by the end of the year, Hill has said.

The North missed a mid-April deadline to shut its Soviet-era reactor as part of the six-way deal struck in February. The money had been frozen for nearly two years for suspected ties to Pyongyang's alleged dollar counterfeiting and other illicit activity.

Separately, Philippine Foreign Secretary Alberto Romulo was due to fly to Pyongyang from Beijing today to meet North Korea's number two leader, Kim Yong-nam, and newly appointed Foreign Minister Pak Ui-chun.

Romulo told Reuters ahead of his visit that he would invite Pak to attend the ASEAN Regional Forum (ARF) in Manila on August 2.

ARF is the Asia-Pacific's main security grouping, and in addition to the 10 members of the Association of Southeast Asian Nations, brings together other countries, including all of the participants in the six-party nuclear talks -- the two Koreas, the United States, China, Russia and Japan.

REUTERS RKM KP1445