April 13, 2006

N.Korea Makes Veiled Threat to Boost Nuclear Arsenal

By Jon Herskovitz and Jack Kim

SEOUL/TOKYO (Reuters) - North Korea made a veiled threat on Thursday to boost its nuclear capability if six-party talks on ending its atomic programs remained deadlocked, but said it would return to the table if Washington met its demand.

Pyongyang's top envoy to the stalled negotiations told a news conference in Tokyo that the United States must lift what the North considers to be financial sanctions against it.

"I told them the minute we have the funds or I have the funds in my hand I will be at the talks. But if they continue to come with pressure and sanctions, we will respond with extremely strong measures," North Korean envoy Kim Kye-gwan said.

"There is nothing wrong with delaying the resumption of the six-party talks. In the meantime we can make more deterrent. If the United States doesn't like that, they should create the condition for us to go back to the talks."

Washington has clamped down on a Macao-based bank that it suspects of assisting Pyongyang in illicit financial activities, including money laundering and counterfeiting U.S. currency.

Kim is in Tokyo, where he had been attending a privately sponsored security symposium along with most of the other chief delegates to the six-way talks, including U.S. Assistant Secretary of State Christopher Hill.

Hill, currently in South Korea, said Pyongyang was boycotting the discussions, but urged patience for the stalled process.

"I am not pessimistic about the six-party process," Hill told a meeting of the American Chamber of Commerce in Seoul.

Hill, who was in Tokyo until Wednesday, had no substantive discussions with Kim in the Japanese capital, dimming prospects for renewed progress in the nuclear talks.


The six countries in the nuclear talks agreed in September that North Korea would end all nuclear programs in return for aid and a promise of security and better diplomatic ties.

But the most recent session in November among the two Koreas, China, Japan, Russia and the United States, aimed at drawing up a plan to implement that deal, yielded no progress.

Pyongyang has said it would be unthinkable to return to the talks when Washington is trying to topple its leaders through pressure.

Washington says the financial issue is separate from the nuclear talks and urged Pyongyang to return to the discussions.

Hill said the amount of the Macao funds was about $20 million, which is equal to approximately one week's worth of energy aid to the North proposed by South Korea.

North Korea's ruling communist party newspaper said on Thursday the state was building nuclear weapons because of what it saw as Washington's hostile policy.

(With additional reporting by Yoo Choonsik)