updated 3/19/2007 3:28:03 PM ET 2007-03-19T19:28:03

International nuclear negotiators inched closer Monday toward setting a timetable for North Korea’s disarmament after the biggest obstacle hindering discussions was removed — $25 million in frozen North Korean funds.

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Envoys from the two Koreas, the United States, Japan, Russia and host China met to review progress made by five working groups established under a hard-won Feb. 13 agreement.

The deal gives the North 60 days to shut down both its main reactor and a plutonium processing plant, and allow U.N. monitors to verify the closures. In return, the regime is to receive energy and economic assistance and a start toward normalizing relations with the U.S. and Japan.

“I think we’re in good shape for the 60 days,” U.S. Assistant Secretary of State Christopher Hill, the top American envoy, told reporters at the end of the day. “It’s the next phase we really have to work on.”

Monday’s talks were possible because the biggest sticking point — North Korean funds frozen in the Macau lender Banco Delta Asia — was resolved. North Korea boycotted the international nuclear talks for more than a year after the U.S. alleged that it was using Banco Delta Asia to launder money and process counterfeit currency.

U.S. Deputy Assistant Treasury Secretary Daniel Glaser said Monday that the money would be transferred into a North Korean account at the Bank of China in Beijing to be “used solely for the betterment of the North Korean people.”

But a U.S. State Department spokesman Monday acknowledged the difficulties in monitoring how North Korea will use the money.

“Because of the nature of Korean society, it is difficult to monitor activities in North Korea. There is a limited ability to do that,” State Department spokesman Sean McCormack said.

The Monetary Authority of Macau, a Chinese territory, said in a statement that it will release the funds “in accordance with the instructions of the account holders” but did not give any other details.

“With the BDA issue resolved, the biggest obstacle on the path ... has been removed,” South Korean envoy Chun Yung-woo said. “Our next major tasks will be to discuss how and how fast we should proceed.”

Under the Feb. 13 pact, North Korea is required to list all its nuclear programs after the 60 days. A key obstacle could be its alleged uranium enrichment program, which the North has never publicly acknowledged having. South Korea is also to deliver 50,000 tons of heavy fuel oil to the North in exchange for the reactor shutdown.

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