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Seoul halts rice deliveries to N.Korea until it stops reactor

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TOKYO, May 24 (RIA Novosti) - Seoul has suspended rice supplies to North Korea until it shuts down its nuclear reactor, South Korea's Yonhap news agency cited a government source as saying Thursday.

At bilateral negotiations Wednesday, North and South Korea failed to agree on delivery terms, not only for rice, but also raw materials for Pyongyang's light industry.

Seoul made it clear earlier that it would cooperate with North Korea, and planned to supply 400,000 metric tons of rice to North Korea late in May.

The UN Food and Agriculture Organization said previously that North Korea faces a serious food shortage this year and will need an additional 500,000 tons of rice.

Bilateral relations between the two Koreas were disrupted after Pyongyang conducted missile tests in October 2006. Dialogue was resumed when North Korea agreed to stop its nuclear reactor and give IAEA inspectors access to the country in a six-party agreement on February 13.

However, the communist nation has insisted that it will not start denuclearization until its funds frozen at Banco Delta Asia in Macao are released.

North Korea's $25 million deposited in Banco Delta Asia was unfrozen in March in an attempt to win Pyongyang's promise to close its nuclear reactor. But the fund transfer has been stalled, and in response the Communist regime has delayed shutting down its Yongbyon reactor expected in April.

The impoverished state has been cut off from global financial markets for several years and has used cash or complicated barter schemes to pay for supplies and services from other countries.

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