April 13, 2006

North Korea threatens to boost nuclear arsenal

By Jack Kim

TOKYO (Reuters) - North Korea said on Thursday it might
boost its nuclear deterrent if six-country talks on ending its
atomic programs remained deadlocked, but said it would return
if Washington met a demand to unfreeze it assets.

Pyongyang's top envoy to the stalled negotiations told a
news conference in Tokyo 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," 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."

In an official media report on Thursday, North Korea
reiterated it has been building a nuclear deterrent to counter
what it views as Washington's hostile policy toward it.

Washington has clamped down on a Macau-based bank it
suspects of assisting Pyongyang in illicit financial
activities, including money laundering.

Kim has been in Tokyo, where he attended a security
symposium along with most of the other chief delegates to the
six-party talks, including U.S. envoy Christopher Hill.

At the airport before departing, Kim said it was up to the
United States to seek bilateral discussions.

"I always have patience," he said.


An analyst in Seoul said Kim's comments might indicate
Pyongyang was fishing for a compromise, where the United States
could say not all of the North's accounts frozen at the Macau
bank were used for illicit activity and then free up some

"Seoul's preference is for the U.S. to find some gesture
that will help North Korea save face. China's position is not
all that different," said Kim Sung-han, head of North American
studies at the Institute of Foreign Affairs and National

Analysts have said a meeting between the U.S. and Chinese
presidents next week in the United States could also increase
the pressure on North Korea to return to talks.

Beijing is urging flexibility on the financial crackdown.
Tokyo says Pyongyang must appreciate that unless the atomic
issue and a separate standoff with Japan over abductees is
resolved the North's already weak economic position would
deteriorate further.

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

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

Hill said the amount of the frozen Macau funds was about
$20 million, equal to approximately one week's worth of energy
aid proposed by South Korea for the North in return for
scrapping its nuclear programs.

"The DPRK needs to understand that as long as it is going
to be producing nuclear weapons, we are going to be having a
real close look at its finances," Hill said, referring to the
North's official name, the Democratic People's Republic of

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. Hill said he was
ready to meet Kim face-to-face within the six-party format.

The last round of the talks among the two Koreas, China,
Japan, Russia and the United States was held in November.

(With additional reporting by Jon Herskovitz in Seoul, the
Tokyo bureau and Lindsay Beck in Beijing)