U.S. concerned over North Korean arms ship, Panama awaits U.N By Lomi Kriel and David Adams PANAMA CITY/MIAMI (Reuters) - A U.N. team is due to arrive in Panama next month to inspect a North Korean ship which was seized carrying arms from Cuba, a potential breach of U.N. sanctions that the United States said was "incredibly concerning." The five-member team of U.N. experts will arrive on August 5 to examine the ship, Panamanian government officials said. The military cargo is suspected of being in violation of a U.N. arms embargo that covers all exports by Pyongyang and most imports. North Korea is under a host of U.N., U.S. and other sanctions due to repeated nuclear and ballistic missile tests since 2006 in defiance of international demands that it stop. North Korea has asked for the ship and crew to be returned but Panama has not responded, saying the country has no official representation in the Central American nation. "There are no North Koreans in Panama, and we don't have any plans to respond to them," said Panamanian Security Minister Jose Raul Mulino. According to Panamanian law they committed a crime. We won't speak with North Korea, period. The U.S. government has strongly backed Panama's seizure of the ship, the Chong Chon Gang. "There is a process in place and we are supportive of that process, because the bottom line is that any alleged violation of Security Council sanctions is incredibly concerning to us," U.S. State Department spokeswoman Marie Harf told reporters. Panama has been at pains to underline it acted alone in seizing the ship, though security experts say the United States, which operated the Panama Canal until a final withdrawal on December 31, 1999, is likely to have provided assistance. When asked whether information provided by the United States was used, a U.S. intelligence official said: "Yes." A Panamanian frigate on routine patrol stopped the ship off its Atlantic coast last week and seized its cargo after a tense standoff with the North Korean crew. The 35 crew members were arrested and charged with attempting to smuggle undeclared arms through the canal. "No Americans were involved in the operation," said a Panamanian official familiar with the incident. Officers on the frigate were first alerted by the fact that the Chong Chon Gang was not issuing a transponder signal as required by maritime law, and suspected it was smuggling drugs, the official said, speaking on condition of anonymity. "It was a drug bust that came up with weapons," the official said. After an extensive search that took several days authorities discovered the weaponry aboard and Cuba later said it was "obsolete" Soviet-era missile equipment, MiG fighter jets and other arms being sent to North Korea for repair. Panama has 100 police cadets unloading the sugar in sweltering conditions in the port of Manzanillo and have so far only cleared one of the four holds, a Panamanian official said. The U.N. team had initially planned to arrive on Tuesday but delayed their trip to give Panama more time to empty the cargo. Earlier on Thursday, Britain's ambassador to the United Nations said the U.N. Security Council sanctions committee would examine the case. The U.N. team of investigators heading to Panama will be drawn from an eight-member panel of experts appointed by U.N. Secretary General Ban Ki-moon to monitor the sanctions imposed on North Korea, according to diplomats within the Security Council. Joe Reeder, former chairman of the Panama Canal Commission's Board of Directors and an ex-under secretary of the U.S. Army, said Panama's security apparatus has a history of cooperating closely with U.S. authorities, who may have shared intelligence on the ship. Mulino, Panama's security minister, was highly regarded by U.S. officials at the Pentagon and the Department of Homeland Security, Reeder said. Officials were alerted by a number of suspicious factors, including where the ship was coming from and the fact that its transponder had been switched off, Reeder said. "They ... were clearly trying not to be detected," he said. Panamanian officials said they had found the ship's electrical equipment burned and that access to its storage areas had been blocked when they boarded the ship. Officials also noted that the ship's draft "was measurably lower coming back from Cuba than it was going out," Reeder said. He said the raid was sensitive due to the neutrality of the canal, and the decision would not have been taken lightly. "If (Panama had) busted that thing and there was nothing on it, everybody would have egg on their face," said Reeder, who is now with the law firm Greenberg Traurig in Washington, D.C.. The U.S. Southern Command in Miami, the Pentagon's headquarters for operations in Latin America, declined to comment about the specifics of the Chong Chon Gang case, though incidents involving illegal maritime activity, from drug smuggling to human trafficking, fall within its responsibility. "It's very routine for us to be working very closely with countries in the region and sharing information with partners," a spokesman for Southcom said. Reporting by Lomi Kriel and David Adams; Additional reporting by Alexandra Alper, Louis Charbonneau, Michelle Nichols, Luc Cohen, Lesley Wroughton and Tabassum Zakaria; Writing by Dave Graham; Editing by Sandra Maler and Eric Beech