North Korea said on Monday it would start implementing a nuclear disarmament deal struck in February and awaits a visit by U.N. inspectors now that a dispute over its funds frozen at a Macau bank had been resolved.

A team of International Atomic Energy Agency inspectors arrived in Beijing on Monday and is scheduled to go to Pyongyang on Tuesday to help lay the groundwork for shutting down the North's reactor and source of bomb-grade plutonium.

As the funds that had been frozen at Macau's Banco Delta Asia have been transferred as we demanded, the troublesome issue of the frozen funds is finally resolved, North Korea's KCNA news agency quoted a Foreign Ministry spokesman as saying.

He said there could now be action for action.

As part of that, there will be discussions with (IAEA) delegates on June 26 in Pyongyang on shutting down nuclear facilities and inspections and monitoring.

The North said the amount of the funds may not have been all that large but the freezing the assets was an example of what it saw as a hostile policy toward it by Washington.

Analysts said the main reason Pyongyang was upset about the U.S. action was that it effectively cut off their access to international banking.

The North said it would use the frozen funds for humanitarian purposes, which analysts said is highly doubtful in a country that has one of the worst human right records on the planet.

U.S. nuclear envoy Christopher Hill, who made a rare and surprise overnight visit to Pyongyang last week, said he expects the North to start shutting its Soviet-era Yongbyon reactor in the next two to three weeks.

Impoverished North Korea had refused to honor the disarmament-for-aid deal struck by the two Koreas, the United States, Japan, Russia and China until it got the money back.

The Yongbyon complex is at the heart of the North's nuclear arms program and includes a plutonium reprocessing plant.


While the first step of the deal calls for a closure of the North's nuclear facilities in exchange for fuel oil, the goal of the six-way discussions is for the North to completely scrap its nuclear arms program in exchange for massive aid, security guarantees and better diplomatic standing.

Now we are going to negotiate how to verify and make sure the reactor will be shut down and sealed, so this is the next step on this long trip, Olli Heinonen, the IAEA's deputy director in charge of global nuclear safeguards, told reporters at Beijing's international airport.

Heinonen's four-member team is expected to stay for five days in North Korea.

The North ejected IAEA inspectors in December 2002 after the United States charged it with having a secret program to enrich uranium. It tested its first nuclear device in October 2006, drawing widespread condemnation and U.N. sanctions.

Despite signs of a reduction in tension, Pyongyang's official Rodong Sinmun newspaper accused Washington earlier on Monday -- the anniversary of the June 25, 1950 surprise assault by the North on the South to start the Korean War -- of preparing for an attack.

The U.S. anachronistic hostile policy and moves for military confrontation... (are) escalating the tensions on the Korean peninsula and increasing the danger of war, the newspaper said, according to KCNA.

Meanwhile, South Korea's spy agency in a report to parliament shot down reports about Kim Jong-il's ailing health, saying he may be showing signs of aging with a heart condition and diabetes, but that is not serious enough to affect his activities.

(With additional reporting by Lucy Hornby, Mark Chisholm and Benjamin Kang Lim in Beijing, Jon Herskovitz in Seoul and Gleb Bryanski in Moscow)