South Korea is considering using one of its state-run banks as an intermediary to transfer North Korean funds out of a Macao bank to help implement a nuclear deal with Pyongyang, a local newspaper reported yesterday.

Pyongyang has demanded the transfer of US$25 million in assets at Macao-based Banco Delta Asia (BDA) as a condition for starting the shutdown of its nuclear facilities under a February 13, six-country disarmament deal.

The South Korean Foreign Ministry and presidential Blue House declined to comment directly on the report but said Seoul has been involved in discussions on a wide range of possibilities to resolve technical complications.

North Korea missed an April 14 deadline for the start of the nuclear shutdown.

Under the South Korea plan, the Export-Import Bank of Korea will act as an intermediary between BDA and a North Korean bank account in a third country, a high-ranking national security source was quoted as saying by the Chosun Ilbo newspaper.

"The United States has agreed to the government's plan, and I understand it has conveyed the position that it won't raise issues if the Export-Import Bank of Korea mediates the transfer of BDA funds," the source was quoted as saying.

Export-Import Bank officials said they were unable to comment on the report. One official said no one from the bank attended a reported high-level meeting last week to discuss the possibility of using it as an intermediary.

A Japanese daily reported on Sunday that North Korea wanted to open an account at a New York bank for the transfer but the idea had been rejected by Washington.

North Korea reaffirmed yesterday that it is ready to quickly shut down its nuclear reactor after receiving the US$25 million funds. "The shutdown is something that can be done immediately and it won't take long," Ri Kyong-son, vice-spokesman at the North Korean Foreign Ministry, said in an interview in Pyongyang.

(China Daily May 8, 2007)