BEIJING - A hard-won disarmament pact that the U.S. and four other nations struck with North Korea on Tuesday requires the communist nation to halt its nuclear programs in exchange for oil while leaving the ultimate abandonment of those weapons projects to a potentially trouble-filled future.

In a sign of potential problems to come, North Korea's state news agency said the country was receiving 1 million tons of oil for a "temporary suspension" of its nuclear facilities — and failed to mention the full disarmament for which the agreement calls.

It wasn't clear if the report represented an attempt by the government to backtrack on the deal, or was simply a statement of bluster for a deeply impoverished domestic audience that Pyongyang has rallied around the nuclear program as a cause for national pride.

And by tackling so many issues in a process likely to take years, the deal could unravel, pulled apart by differing agendas of its six signers, which also include China, South Korea, Russia and Japan.

"We have a lot of work to do," U.S. Assistant Secretary of State Christopher Hill told reporters. "It's certainly not the end of the process, it's really just the end of the beginning of the process."

Nevertheless, the agreement marks a turnabout for North Korea, which rattled the world only four months ago when it tested a nuclear device. If Pyongyang follows through with its promises, they would be the first moves the communist state has made to scale back its atomic development since it kicked out international inspectors and restarted its sole operating nuclear reactor in 2003.

"These talks represent the best opportunity to use diplomacy to address North Korea's nuclear programs," President Bush said in a statement. "They reflect the common commitment of the participants to a Korean Peninsula that is free of nuclear weapons."
Robert J. Einhorn, a former State Department official who visited North Korea with then-Secretary of State Madeleine Albright, said Americans should applaud the agreement, but he predicted it would come under heavy questioning from both the right and the left.

He said, "I think a number of people are going to ask the question, `Couldn't this deal have been concluded three or four years ago before North Korea conducted its nuclear test and acquired enough additional plutonium to build anywhere from six to 10 nuclear weapons?'"

The accord, completed at a Chinese government guesthouse by negotiators from six countries after tortuous talks, lays out an ambitious agenda. It sets a firm 60-day timetable for North Korea to seal its main nuclear reactor and begin accounting for other nuclear programs.

Within that time, more talks are planned on ending the hostilities between North Korea and the United States and Japan that have made northeast Asia a tense corner of the world. In return, North Korea will receive 50,000 tons of heavy fuel oil, a modest down payment on a promised 1 million tons in oil or aid of a similar value if it ultimately disarms. One million tons of oil would be equivalent to more than two-thirds of North Korea's entire oil consumption in 2004, according to the CIA Factbook. Hill said the aid package was worth about $250 million at current prices.

In the negotiations, envoys debated who would pay for North Korea's disarmament. China, the U.S., South Korea and Russia agreed to foot the bill though Moscow may contribute in the form of debt relief. Japan has refused to provide aid until Pyongyang fully accounts for the abductions of Japanese citizens by North Korea.

"We understand it marks the first concrete step by North Korea toward its nuclear dismantlement," Japanese Prime Minister Shinzo Abe said after the accord was struck in Beijing. "But our position that Japan cannot provide support without a resolution of the abduction issue is unchanged."

Disarmament, however, is likely to remain the thorniest problem.

"What if North Korea doesn't show them to inspectors, if they say we've stopped this and shut down that, what if they say you have to trust us?" said Liu Gongliang, a physicist at China's Institute of Applied Physics and Computational Mathematics who has followed North Korea's nuclear program for the Chinese government.

Under the deal, the North is required to seal its main nuclear reactor and related facilities at Yongbyon, north of the capital, within 60 days and allow inspections by the International Atomic Energy Agency.

Senior IAEA figures have met regularly with North Korean diplomats in past months preparing for such a mission, and a diplomat familiar with the status of preparations told The Associated Press that IAEA inspectors could be on site "within days" once given the go-ahead.

But no timetable was set for a final declaration by North Korea of all its nuclear programs and their ultimate dismantling.

North Korea has sidestepped previous agreements. It allegedly operated its uranium-based weapons program even as it froze a plutonium-based one, sparking the latest nuclear crisis in late 2002. The country is believed to have countless mountainside tunnels in which to hide projects.

The uranium program was not explicitly addressed in the agreement. But, Hill said, "I certainly have made very clear repeatedly that we need to ensure that we know precisely the status of that."

The nuclear issue has frequently been ensnarled by lingering frictions between the North and its neighbors, as well as a dispute over U.S. sanctions against the regime for alleged money laundering and counterfeiting activities. Hill said the sanctions issue would be resolved within 30 days, but didn't provide specifics.

The United States will also begin the process of removing North Korea from its designation as a terror-sponsoring state and also on ending U.S. trade sanctions, but no deadlines have been was set, according to the agreement. Washington's blacklisting of a Macau bank in September 2005 had led the North to a more-than-yearlong boycott of the six-nation talks during which it tested its first nuclear bomb.

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SEOUL, South Korea - North Korea's No. 2 leader pledged his country's commitment Thursday to giving up its nuclear program during a meeting with a visiting high-level South Korean delegation.

"The denuclearization of the Korean Peninsula is the dying wish" of the country's late founding president Kim Il Sung, said Kim Yong Nam. The North "will make efforts to realize it," he said.

At the meeting, South Korean Unification Minister Lee Jae-joung pressed the North to implement a Feb. 13 pledge to take initial steps to disarm.

"It is important to make efforts to ensure that South and North Korea cooperate and six countries each assume their responsibilities," Lee said in reference to the accord reached last month in Beijing between North Korea and five other countries.

This week's Cabinet-level talks between the North and South — the highest-level regular contact between the Koreas — are the first in seven months. The talks resumed after North Korea's pledge to shut down its main nuclear reactor within 60 days in exchange for aid.

Earlier Thursday, North Korean negotiators appealed for aid from the South, but Seoul appeared resistant to promising any major assistance until Pyongyang keeps its pledge to start dismantling its nuclear program.

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HANOI (AFP) - North Korea pulled out of afternoon talks with Japan aimed at normalising bilateral ties here Wednesday, without giving a reason or saying whether further meetings would be held.

Diplomats from Tokyo and Pyongyang met in the morning for their first formal two-way talks in more than a year, following a landmark six-nation deal struck last month that aims to get North Korea to give up its nuclear weapons.

The delegations had been due to meet again at 3:00 pm (0800 GMT), but a North Korean embassy official in Hanoi said the meeting had been cancelled.

"We cannot disclose the reason now," said the official who refused to give his name. "Maybe we will explain it later."

He declined to say whether the North Korean side would meet the Japanese delegation again during the talks officially scheduled to last until Thursday.

The foreign ministry in Japan said it assumed talks would resume Thursday, but it was unclear whether further talks would go ahead.

Tokyo and Pyongyang had set out to discuss resolving a row over Pyongyang's abductions of Japanese citizens in the 1970s and 80s.

Pyongyang admitted in 2002 that it had abducted 13 Japanese citizens to train its spies in Japanese language and culture. It returned five of them and their families but insists the others are dead.

Japan wants to see all abductees repatriated and has demanded a thorough investigation and extradition of the perpetrators. Japanese Prime Minister Shinzo Abe has vowed he will not budge on the emotive issue.

Tokyo has refused to fund the six-nation deal -- under which North Korea is set to receive 50,000 tonnes of fuel in return for closing a key nuclear facility and allowing in UN nuclear inspectors -- until the kidnapping issue has been resolved.

In the February 13 deal, China, Japan, South Korea, Russia and the United States also assured North Korea of diplomatic and security guarantees if the regime completely abandons its nuclear programme.

North Korea's move Wednesday left delegates scratching their heads. In Hanoi, a Foreign Ministry official said that North Korea had informed the Japanese delegation that the afternoon talks were suspended but could not confirm if the talks would go ahead.

In Tokyo, Japanese foreign ministry deputy press secretary Tomohiko Taniguchi told AFP: "The meeting is suspended this afternoon. As far as why it has come to this, we would decline to disclose the reason.

"Japan made our arguments about the abduction issue in the two and a half hours of the morning session.

"We started the meeting with a plan to discuss kidnapping today and the normalisation of the relationships coupled with settlement of the historical issues to be taken up tomorrow.

"So the schedule remains the same for tomorrow, as it is a separate track from today's topic."

North Korea's main priority at the Hanoi talks has been for Japan to atone for its 1910-1945 occupation of the Korean peninsula.

While North Korea did not spell out reasons for cancelling the meeting, Rodong Sinmun, the mouthpiece of the ruling Workers Party, lashed out at Japanese leaders' recent remarks on wartime sex slaves.

Abe, who built his career campaigning on North Korea's abductions, has denied that Japan coerced thousands of so-called "comfort women," many of them Koreans, into the imperial army's brothels.

"The Japanese reactionaries' despicable distortion of history is an intolerable insult to the Korean people, the victim," the Rodong Sinmun said, as quoted by the official Korean Central News Agency.

"The Japanese reactionaries are increasing pressure upon the DPRK (North Korea), persistently raising a hue and cry over the already settled 'abduction issue,'" it said. "This is linked with their scheme of reinvasion of Korea."

In their morning meeting Japan's top delegate Koichi Haraguchi and his North Korean counterpart Song Il-Ho shook hands but did not smile for the cameras.

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BEIJING (Reuters) - North Korea is committed to a disarmament pact reached in February but wants sanctions lifted first, the head of the U.N. nuclear watchdog said on Wednesday on his return from a trip he said had cleared the air.

But he said North Korea wanted U.S. financial restrictions against it resolved before it would shut its Yongbyon nuclear reactor and readmit inspectors as agreed in a February 13 accord reached at six-party talks in Beijing.

"The DPRK mentioned that they are waiting for the lifting of sanctions with regard to the Macau bank before they implement the part of the agreement allowing the agency to monitor and verify the shutdown of the Yongbyon facility," ElBaradei told a news conference, referring to North Korea by its official name, the Democratic People's Republic of Korea.

Pyongyang stunned the world last year with its first nuclear test, drawing widespread condemnation and U.N. sanctions.

The February agreement was reached at negotiations in Beijing in which China, the United States, South Korea, Japan and Russia worked to convince the North to scrap its atomic program.

ElBaradei's visit was the agency's first since December 2002 when North Korea expelled inspectors as an earlier disarmament deal fell apart. It withdrew from the nuclear Non-Proliferation Treaty days later.

FINANCIAL RESTRICTIONS

The United States said that within 30 days of the February deal it would settle a dispute over financial restrictions stemming from North Korean bank accounts frozen in Macau that Washington says Pyongyang used to launder illegal earnings.

That deadline now looms and U.S. envoy Christopher Hill told reporters in Beijing on Wednesday: "The Macau issue will be resolved as we've promised."

ElBaradei said North Korea's seeing through the initial steps of the deal, in which it must shut Yongbyon in return for energy aid and security guarantees, hinged on Washington making good on that promise.

"Once that happens, they are looking to fully cooperate with us and implement the agreement in the timeframe mentioned."

Hill, referring to Yongbyon, told reporters: "My understanding is that it hasn't been completely shut down yet."

ElBaradei said he had met three officials during his short stay in North Korea, including the head of the North's atomic energy agency, but not its chief nuclear negotiator, Kim Kye-gwan.

Nonetheless, he said he was positive about the visit.

"The trip cleared the air. It created a positive environment for our future relationship," he said.

A Non-Aligned Movement diplomat said: "They are speaking to each other, so at least there is some progress."

Referring to ElBaradei not meeting North Korea's chief nuclear negotiator, the diplomat said: "We don't see this as a problem. The North Korean chief nuclear negotiator said he had another engagement which he had agreed to earlier.

"We need to give both sides more time to have more discussions -- this is such a complex issue that cannot be resolved in one or two days."

NO SIGNS

The IAEA inspectors will be key to verifying whether North Korea makes good on its pledge to shut down Yongbyon.

South Korean Foreign Minister Song Min-soon said earlier that North Korea had shown no signs of closing the reactor.

Earlier this week, a U.S. official said North Korea was preparing to shut down the Yongbyon complex, but other U.S. officials have been more guarded.

In addition to Hill, South Korean envoy Chun Yung-woo arrived in the Chinese capital for working-group meetings as the multilateral waltz heats up ahead of a new round of six-party talks opening on Monday.

Both envoys, along with China's Wu Dawei, were to take part in talks aimed at fleshing out parts of the pact and the three were expected to meet ElBaradei.

Western diplomats said they expected no immediate progress and warned that the process of North Korea establishing relations with the IAEA or bringing back inspectors would need time.

"North Korea wants to show that they are in the driving seat. They want to drive home the point that they are on eye level when it comes to these negotiations," one diplomat in Vienna said.

(Additional reporting by Jack Kim and Jon Herskovitz in Seoul, Carol Giacomo in Washington and Karin Strohecker in Vienna)

BEIJING (Reuters) - A rift opened between the United States and China on Thursday on how to end a dispute about North Korean bank accounts, with China angry over a U.S. decision it said might harm talks to end Pyongyang's nuclear threat.
http://news.yahoo.com/s/nm/20070315/ts_nm/korea_north_dc

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BEIJING - The top American nuclear envoy said Sunday that he believed North Korea and the U.S. had "gotten past" a dispute over $25 million in frozen North Korean funds, and the communist nation was moving toward nuclear disarmament.
http://news.yahoo.com/s/ap/20070318/ap_on_re_as/koreas_nuclear

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BEIJING - Negotiations on halting North Korea's nuclear program broke down abruptly Thursday, with the country's chief envoy to the talks flying home after a dispute over money frozen in a Macau bank could not be resolved.

Kim waved to reporters at the airport but did not say anything.

China issued a statement saying the talks would take a recess but did not give a restart date.

"The parties agreed to recess and will resume the talks at the earliest opportunity to continue to discuss and formulate an action plan for the next phase," it said.

The breakdown raises doubts over meeting a deadline in the Feb. 13 denuclearization agreement that calls for U.N. inspectors to verify the closure of North Korea's main nuclear reactor at Yongbyon by April 14.

But the top U.S. nuclear envoy said he was still optimistic that disarmament deadlines can be met despite the breakdown.

"It is our strong view that we are still on schedule," Assistant Secretary of State Christopher Hill said, referring to the April deadline that calls for U.N. inspectors to verify the closure of North Korea's main nuclear reactor at Yongbyon.

Hill added he still expected other goals requiring Pyongyang to declare all of its nuclear programs and for fuel and economic assistance to be sent to North Korea to be met by the end of the year.

In Tokyo, Japanese Prime Minister Shinzo Abe criticized North Korea for not being constructive.

"It's clear there is nothing for North Korea to gain from this kind of move," Abe said. "This kind of attitude is meaningless."

Abe said North Korea only will be accepted by the international society if it takes concrete steps toward complying with its commitment to dismantle its nuclear programs.

Also Thursday, the aircraft carrier USS Ronald Reagan arrived in South Korea for joint military exercises, which North Korea called "a dangerous provocation that casts a shadow" at the nuclear talks.

This round of talks has been dogged by troubles since it started Monday, with Pyongyang refusing to take part for two days because of problems over the transfer of $25 million in North Korean funds frozen since 2005 at Banco Delta Asia in Macau under pressure from the United States.

"This round of talks started with the BDA problem and ended with the BDA problem," Japanese envoy Kenichiro Sasae said.

Banco Delta Asia was blacklisted by Washington on suspicion the funds were connected to money-laundering or counterfeiting. The North boycotted the international nuclear talks for more than a year over the issue.

U.S. officials announced this week that the money would be transferred to the North Koreans, saying it was up to the Monetary Authority of Macau, a Chinese territory, to release the funds.

China had promised to resolve the issue as quickly as possible by transferring the funds to a North Korean account at the Bank of China.

Officials said the Chinese bank held up the transfer because of worries that the money had been at the center of criminal investigations.

"The Bank of China has concerns (about accepting the money) and not all the concerns have been assuaged," Chinese negotiator Wu Dawei said.

Adding to the confusion over the matter, the Bank of China denied Thursday that it was told to accept the money.

"I can tell you that up until now, we were not asked to deal with this business," Li Lihui, the bank's vice chairman and president, told reporters in Hong Kong.

With details about the fund's transfer sketchy, various explanations have been offered by other parties.

Russian envoy Alexander Losyukov, who also left for home Thursday, was quoted by ITAR-Tass news agency as saying "the whole problem came from the American side."

He said the United States failed to assure the Chinese side that the Bank of China could receive the funds without fear of facing U.S. sanctions or a "negative attitude" from the banking community and the U.S. government.

South Korea's Yonhap news agency said the money transfer was being delayed because Macau authorities were having difficulty confirming the ownership of 50 North Korean accounts, most of which are under the names of the heads of Zokwang Trading Co., a North Korean-run firm in Macau that U.S. officials have long suspected of being involved in money-laundering.

"The difficulty of this issue is beyond our expectations and due to some technical and procedural issues we had not expected completely before," Chinese Foreign Ministry spokesman Liu Jianchao told a news conference.

Wu, the Chinese negotiator, said that in a last-ditch effort to salvage the talks he called Kim late at night to persuade him to take part.

"When I called Vice Minister Kim Kye Gwan, it was 11:15 at night. ... He got out of bed after taking his sleeping pills to take my call," Wu said.

Wu then had to convince an operator at Hill's hotel to wake him at 1:30 a.m. to discuss the impasse.

The six parties — the two Koreas, the United States, Russia, China and Japan — were in Beijing to discuss how to push forward the landmark deal in which Pyongyang agreed to start dismantling its nuclear facilities in exchange for energy and economic aid.

Under the deal, the North is to receive energy and economic aid and a start toward normalizing relations with the U.S. and Japan, in return for beginning the disarmament process. The regime ultimately would receive assistance equivalent to 1 million tons of heavy fuel oil if it fully discloses and dismantles all its nuclear programs.

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Associated Press writers Mari Yamaguchi, Audra Ang and Christopher Bodeen in Beijing, and Jae-Soon Chang in Seoul contributed to this report.

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But shortly after U.S. Assistant Secretary of State Christopher Hill arrived in Tokyo for talks with his Japanese counterpart, Japan's NHK television said North Korea had fired a short-range missile towards the Sea of Japan.

Quoting a Japanese government source, NHK said one missile had been launched earlier in the day. NHK said it was not a ballistic missile.

Chief Cabinet Secretary Yasuhisa Shiozaki declined either to confirm or deny reports of the missile launch, but told reporters: "I don't think we're currently in a situation where Japan's national security has been significantly affected."

Hill, speaking to reporters before word of the missile launch, sounded an optimistic note.

"I'm very hopeful we can get to the six-party talks of some kind in early July," he said after arriving in Tokyo.

Hill said that North Korea appeared to have received the funds it had demanded be released from a frozen bank account in Macau as a condition for closing its only nuclear reactor, the source of its weapons-grade plutonium.

"As far as we know, it has been transferred. I am sure that money is in the North Korean bank account," Hill said in Seoul earlier.

North Korea said at the weekend it would allow U.N. nuclear inspectors into the country as part of a disarmament deal after nearly $25 million in blocked funds had started to make its way back to the impoverished country.

IAEA VISIT

The International Atomic Energy Agency (IAEA) plans to send a senior delegation to North Korea next week to agree details for a return of its inspectors to monitor the reactor shutdown, agreed to under Pyongyang's February 13 deal with major regional powers.

"We want the IAEA to be able to quickly make an agreement and get on with shutting down the reactor," Hill told reporters in Seoul, where he met South Korean officials.

China, chief backer of the reclusive state, praised North Korea for its latest move.

"We believe that this step shows North Korea's sincere will to implement the February 13 joint document and express our welcome," Foreign Ministry spokesman Qin Gang said.

Qin told a Beijing news conference: "We also hope that all the concerned parties will continue taking positive steps, will conscientiously abide by their commitments and take actions in a comprehensive and balanced way."

North Korea plans to seal the reactor at Yongbyon, about 100 km (60 miles) north of Pyongyang, in the second half of July, Russia's Interfax news agency quoted an unidentified North Korean diplomatic source as saying on Monday.

Pyongyang, which tested its first nuclear device last October, is widely believed to already produced enough material for several weapons.

TWO-MONTH DELAY

Despite more than two months of delay in starting to dismantle the North's atom bomb program, it would still be possible to complete the nuclear disarmament of the communist state by the end of the year, Hill has said.

The North missed a mid-April deadline to shut its Soviet-era reactor agreed to under the February 13 deal. Its money had been blocked by Washington for suspected ties to Pyongyang's alleged dollar counterfeiting and other illicit activity.

If Pyongyang keeps its part of the deal and shuts down its nuclear facilities, the United States is likely to provide the economically struggling state with $2 million worth of emergency humanitarian aid, Japan's Mainichi newspaper reported.

In Tokyo, Hill was set to meet Kenichiro Sasae, Japan's envoy to the six-party talks, which bring together the two Koreas, China, the United States, Russia and Japan.

Analysts said Hill was likely to urge Japan to ease its tough stance with North Korea in a feud over citizens kidnapped decades ago so that it could take part in providing energy aid to the North. Such a change in stance would be tough for Prime Minister Shinzo Abe ahead of a national election expected in July.

In public, Hill stressed that the abduction issue -- an emotive one for many Japanese -- was also vital to Washington, but added that progress on denuclearization could help build a base for progress on the kidnappings.

Separately, Philippine Foreign Secretary Alberto Romulo left Beijing for Pyongyang to meet North Korea's number two leader, Kim Yong-nam, and newly appointed Foreign Minister Pak Ui-chun.

Romulo told Reuters ahead of his visit that he would invite Pak to the ASEAN Regional Forum (ARF) in Manila on August 2.

ARF is the Asia-Pacific's main security grouping. In addition to the 10 members of the Association of Southeast Asian Nations, it brings together other countries, including all of the participants in the six-party talks.

(Additional reporting by Chris Buckley and Benjamin Kang Lim in Beijing, Jon Herskovitz in Seoul, and Linda Sieg, Chisa Fujioka and George Nishiyama in Tokyo)

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U.N. inspectors arrived in North Korea on Saturday to monitor the communist country's long-anticipated promise to scale back its nuclear weapons program, while the top U.S. nuclear envoy said he expected Pyongyang's reactor to be shut down in a matter of days.

An initial shipment of oil aid arrived hours earlier Saturday, in return for Pyongyang's pledge to close down its main nuclear reactor. The move would be the North's first step in nearly five years toward the de-nuclearization of the peninsula.

The 10-member team from the International Atomic Energy Agency was heading directly to Yongbyon, about 60 miles northeast of the capital, to begin monitoring the shutdown.

"We are going directly to the nuclear site at Yongbyon," IAEA team chief Adel Tolba told broadcaster APTN outside the Pyongyang airport. Footage showed dozens of cardboard boxes being loaded onto the back of two trucks.

Tolba said the team would stay in North Korea as long as needed to complete its work.

After years of tortuous negotiations and delays — during which the North argued its nuclear program was needed for self-defense — the reclusive communist regime said earlier this month that once it received the oil shipment, it would consider halting its reactor.

North Korea did not give any timetable for starting the shutdown but top U.S. nuclear envoy Christopher Hill said it would happen over the next few days.

"I think it's a matter of today, tomorrow, maybe Monday," Hill told reporters in the Japanese resort town of Hakone south of Tokyo.

Hill also said he expected the North to submit a list of its nuclear facilities within months, as was agreed to in February's round of talks.

"We expect the comprehensive list in a matter of several weeks, possibly several months," Hill said.

The South Korean tanker No. 9 Han Chang, carrying 6,200 tons of heavy fuel oil, arrived Saturday at the North's northeastern port of Sonbong, and the oil was being unloaded, a Unification Ministry official said. The South Korean official spoke on condition of anonymity because he was not authorized to talk to the media.

Saturday's delivery was part of 50,000 tons of heavy fuel oil the North has been promised in exchange for shutting down the Yongbyon reactor. Pyongyang eventually will receive 1 million tons of oil for dismantling its nuclear program.

After the IAEA team installs monitoring equipment, personnel will remain at Yongbyon to ensure the reactor remains shut down, said a diplomat familiar with North Korea's file at the IAEA.

"The IAEA plans to have a permanent presence there, with some experts remaining at the site continuously," said the diplomat, who requested anonymity because of the sensitivity of the issue.

North Korea agreed earlier this year to shut down its reactor and take other steps toward disarmament in exchange for the oil and other financial and political concessions in a deal with the United States, China, Japan, South Korea and Russia.

The agreement eased a standoff that began in October 2002, when the U.S. said North Korean officials had admitted during meetings in Pyongyang to having a secret uranium enrichment program. Washington said that violated a 1994 agreement for the North's disarmament, and a month later halted oil shipments under that deal.

The North reacted by expelling IAEA monitors on New Year's Eve, withdrawing from the Nuclear Nonproliferation Treaty and restarting the reactor.

Since then, North Korea has occasionally shut down the reactor to remove fuel rods and extract plutonium — and is believed to have harvested enough to construct at least a dozen atomic bombs.

The North set off an underground test explosion in October, leading to intensified international efforts to negotiate an end to Pyongyang's arms program.

When it does act to shut down the reactor again, the North will term it simply a suspension of operations — a move that could be easily reversed, as it was in 2002.

But Hill said Friday that Washington hoped to quickly move beyond the mere freeze of the reactor and dismantle the program by year's end.

"Where we would like to be at the end of the year is with the Yongbyon facility disabled," he said after meeting with his Japanese counterpart in Tokyo to prepare for another round of the six-nation nuclear talks next week in Beijing.

"As I've said before, we lost a lot of time in the early part of this year and now we have to do a lot in the second part if we are to achieve our objectives," Hill said.

The U.S. was forced to back down on a separate banking dispute in which Washington blacklisted a Macau bank for dealing with the North, saying it was helping the regime launder money. The bank remains banned from doing business with U.S. institutions, but the North Korean funds were freed earlier this year with U.S. approval.

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Associated Press Writers Anita Chang in Beijing and Bo-Mi Lim in Seoul, South Korea contributed to this report.

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The leaders of North and South Korea, capitalizing on progress in shutting down the North's nuclear program, plan to meet later this month for the second-ever summit between the longtime foes, officials said Wednesday.

North Korean leader Kim Jong Il will host South Korean President Roh Moo-hyun from Aug. 28-30 in Pyongyang, North Korea's capital, South Korean presidential security adviser Baek Jong-chun told reporters.

At the first North-South summit, Kim met then-South Korean President Kim Dae-jung in June 2000, also in Pyongyang.

"The second inter-Korean summit will contribute to substantially opening the era of peace and prosperity between the two Koreas," South Korea's presidential office said in a statement.

The two Koreas remain technically at war since the 1950-53 Korean War ended in a cease-fire, not a peace treaty, but the 2000 meeting led them to embark on economic cooperation projects and stage reunions of thousands of relatives split by their shared border — the world's most heavily fortified.

Kim Dae-jung won a Nobel Peace Prize for his efforts to engage North Korea, but the achievement was tainted by later revelations that South Korea made secret payments to foster the meeting.

Kim Jong Il believed the timing was right for a second meeting due to the state of relations between the two Koreas and the improved regional situation, South Korean National Intelligence Service head Kim Man-bok quoted his North Korean counterpart as saying earlier this month. The South's spy chief twice visited the North to arrange the summit.

In Washington, State Department spokeswoman Joanne Moore hailed the announcement.

"We have long welcomed and supported North-South dialogue and hope this meeting will help promote peace and security on the Korean Peninsula and fulfilling the goals of the six-party talks," she said in a statement.

The summit comes amid optimism on the peninsula as North Korea has made strides in abandoning its nuclear weapons program, including shutting down its sole operating nuclear reactor last month in exchange for oil aid. The United States and other regional powers are negotiating with the North on a timeline for the communist nation to declare all its nuclear programs and disable the facilities.

The South's Baek said the summit would help achieve progress in resolving the nuclear standoff and in relations between the Koreas, including the establishment of a peace regime on the peninsula.

Under agreements at the international nuclear talks, the main countries involved in the Korean War — also including the United States and China — are to begin discussions on a possible resolution of the 54-year-old cease-fire.

However, North Korea has consistently refused to engage South Korea on the nuclear standoff during regular meetings between the two sides. Pyongyang views the nuclear issue as a dispute solely with Washington — making it unlikely that a summit would achieve any further arms breakthroughs.

Kim Jong Il promised in 2000 to make a return visit to South Korea for a second summit. But Kim Man-bok said Roh had accepted North Korea's proposal for Pyongyang as the venue.

Roh, a former human rights lawyer who took office in 2003, has repeatedly said that he would meet with Kim at any time and any place and there has been persistent talk this year that a summit was possible. The conservative opposition Grand National Party blasted such potential plans, however, calling them an election ploy ahead of South Korea's December presidential vote.

Roh, 61, is set to leave office in February and has seen his popularity plummet amid perceptions he has bungled handling of the economy and security policies.

On Wednesday, the Grand National Party renewed its opposition to a summit as a political move aimed at bolstering the embattled liberals.

"At this point, there is nothing to expect from the summit," party spokeswoman Na Kyung-won said in a statement.

South Korean citizens questioned why Kim Jong Il had not fulfilled his promise to travel to the South and were divided on whether the meeting would help reconciliation with the North.

"It's humiliating that the summit is going to be held in Pyongyang, the capital of North Korea, again," said Son Jin, 88, a political activist. "It's high time that North Korea had to visit to Seoul."

Kim Bong-chon, a 62-year-old businessman, said he hoped the event was not just for political gain. "Nothing is better than having regular meetings between the leaders to reconcile the relationship," he said.

At the first summit, Kim Jong Il warmly greeted his South Korean counterpart on the tarmac immediately upon landing, showing a human side of the reclusive North Korean leader known for his trademark jumpsuit and sunglasses. The 65-year-old leader assumed power in 1994 after the death of his father, North Korea's founding ruler Kim Il Sung, who technically remains the country's president.

Since then, the countries have launched a joint industrial zone in North Korean border city of Kaesong, bringing together South Korean know-how and cheap North Korean labor. More than 17,000 relatives split by the border have met in brief tearful reunions, and roads and rail lines have been reconnected across the frontier.

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Associated Press writer Kwang-tae Kim contributed to this report.

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China is in discussions with the United States and North Korea on how to bridge differences and restart talks on ending the North's nuclear ambitions, a senior Chinese Foreign Ministry official said on Thursday.

Talks on disarming North Korea have been on hold since Pyongyang missed an end-2007 deadline to give a complete inventory of its nuclear arms program as agreed under a multilateral deal.

"China has raised all kinds of means with both the American and the North Korean sides," Vice Foreign Minister Wu Dawei told reporters on the sidelines of China's annual parliament session.

"We are still discussing these means."

China hosts the disarmament talks that also include the two Koreas, the United States, Japan and Russia, and, as an old Communist ally of North Korea, it is seen as wielding particular influence over its impoverished and isolated neighbor.

U.S. Secretary of State Condoleezza Rice hinted at progress towards implementing the deal, under which the North committed to abandon all nuclear weapons and programs in exchange for aid and diplomatic benefits, following a visit to Beijing last month.

Rice urged China to press North Korea to disclose its nuclear programs so that the stalled accord can move forward and left the chief U.S. negotiator on the issue, Christopher Hill, in Beijing an extra day to follow up on her talks.

Hill made an unexpected return visit to Beijing last weekend, where Japanese news reports said China was trying to broker a meeting between him and the North's envoy, but North Korean negotiator Kim Kye-gwan failed to turn up.

Wu said North Korea and the other parties disagreed over what constituted "complete and accurate," in reference to any declaration of its nuclear programs.

U.S. officials say Pyongyang is reluctant to discuss any transfers of nuclear technology to other nations or its suspected pursuit of uranium enrichment.

Wu said it was not time yet to give up on the deal.

"I believe that with the efforts of all sides, the six-party talks can continue to move forward," he said.

"You can be at ease."

(Reporting by Lindsay Beck; Editing by Nick Macfie)

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North Korean leader Kim Jong-il fell seriously ill in April, sometimes losing consciousness at work and unable to rule on important policy matters, the Mainichi daily reported on Sunday, citing a "reliable" Chinese source.

The Japanese newspaper said Kim's poor health was apparently behind the lack of flexibility in North Korea's recent attitude towards the six-party dialogue over its nuclear program.

Kim, 66, had been making all decisions on the country's nuclear policy, the source told Mainichi, and after his health worsened there was no one who could make major diplomatic moves.

This raised speculation that hard-line military figures had increased their clout in the leadership ranks.

North Korea's official media had reported no public appearance by the reclusive "Dear Leader" since mid-August, but Kim's failure to attend last Tuesday's triumphal military parade marking the state's 60th anniversary made worldwide headlines.

Speculation swirled that he had suffered a stroke, was gravely ill or even that he had been dead for years and replaced by look-alikes for state occasions.

The following day, North Korea's nominal number two leader, Kim Yong-nam, told Japan's Kyodo news agency: "(There is) no problem."

Senior North Korean diplomat Song Il-ho told Kyodo: "We see such reports as not only worthless, but rather as a conspiracy plot."

The communist state's official media have continued their blanket praise this week for Kim and his late father, state founder Kim Il-sung, with not the slightest acknowledgment that there might be a power vacuum at the summit of the state.

The Korean Central News Agency (KCNA) carried an item on Sunday saying that Kim had sent birthday greetings to Russian President Dmitry Medvedev.

Sunday's Mainichi report said Kim had first complained of problems with multiple organs, including his heart and kidneys, in the summer of 2007 and his condition had gradually worsened.

Citing the same Chinese source, the daily said Kim, who often used to work late into the night and early in the morning, had become unable to do so as his health progressively failed and his judgment deteriorated.

(Reporting by Taiga Uranaka, editing by Roger Crabb)

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North Korea said Friday it was preparing to restart its nuclear reactor, accusing the United States of failing to fulfill its obligations under an international disarmament-for-aid agreement.

It was the first time the North has confirmed it has begun reversing what it has done so far to roll back its nuclear program, though it has warned it would do so in anger over Washington's failure to remove it from the U.S. terrorism blacklist.

"We are making thorough preparations for restoration" of the Yongbyon nuclear complex, the deputy director-general of North Korea's Ministry of Foreign Affairs, Hyun Hak Bong, told reporters. He did not say when Yongbyon might begin operating again.

Hyun spoke to reporters in the border village of Panmunjom before sitting down for talks Friday with South Korean officials on sending energy aid to the North as part of the six-nation disarmament deal.

Under the landmark 2007 pact — involving the two Koreas, the U.S., China, Russia and Japan — North Korea pledged to disable its nuclear program in a step toward its eventual dismantlement in exchange for diplomatic concessions and energy aid equivalent to 1 million tons of oil.

North Korea began disabling the Yongbyon complex last year, and the process was 90 percent complete, with eight of 11 key steps carried out "perfectly and flawlessly," Hyun said.

Major progress was made in the agreement in late June when North Korea submitted a long-delayed declaration of its nuclear activities and destroyed the cooling tower at Yongbyon in a show of its commitment to denuclearization.

But the accord ran aground in mid-August when Washington refused to take North Korea off its list of states that sponsor terrorism until the North accepts a plan to verify its nuclear declaration.

North Korea responded by halting the disabling process and is now "proceeding with work to restore (Yongbyon) to its original status," Hyun told reporters.

South Korean and U.S. officials have said it would take at least a year for North Korea to restart the reactor if it is completely disabled.

Hyun warned Washington not to press the verification issue, saying verification was never part of the deal.

"The U.S. is insisting that we accept unilateral demands that had not been agreed upon," he said. Hyun said forcing North Korea to comply with such an inspection would exacerbate tensions.

The White House had no immediate reaction early Friday.

The six-nation talks last convened in July, and a new round has not been scheduled because of the current standoff between the U.S. and North Korea.

However, the talks Friday between the two Koreas — which were proposed by the North — indicate it does not want to completely scuttle the six-party negotiations, analysts said.

"The North is sending a message that it wants to maintain the six-party talks," said Koh Yu-hwan, a North Korea expert at Seoul's Dongguk University. "The North also wants to get the remaining energy aid with winter drawing closer."

Seoul's delegate, Hwang Joon-kook, assured North Korea that it would receive the remaining energy aid it was promised.

South Korea's foreign minister said North Korea's intentions remained unclear.

"It's still uncertain whether the North's measures are aimed at reversing the whole situation to the pre-disablement level" or are a negotiating tactic, Yu Myung-hwan told reporters.

The tensions come amid reports that North Korean leader Kim Jong Il has suffered a stroke. Kim, 66, has not been seen in public for more than a month and has missed two major public events: a military parade marking North Korea's 60th birthday and the Korean Thanksgiving holiday.

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Associated Press writer Jae-soon Chang in Seoul contributed to this report.

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The United States is ready to drop North Korea from a terrorism blacklist, the Associated Press has learned, in the latest attempt by the administration to salvage a nuclear deal with Pyongyang before President Bush's term ends.

The act of striking North Korea from the list of countries said to be perpetrating terrorists acts could come as early as Saturday, now that Bush has approved it, say diplomats briefed on the initiatives pressing the North to abandon its atomic weapons program.

The removal would be only provisional, officials said, and North Korea would be put back on the State Department's "state sponsors of terrorism" list if it doesn't comply with inspections of its nuclear facilities. The diplomats spoke on condition of anonymity because the administration has not yet announced the step.

The expected delisting comes as North Korea moves to restart a disabled nuclear reactor and takes other provocative actions, including expelling U.N. inspectors and test firing missiles. These steps in recent weeks have heightened tensions between Washington and Pyongyang and threatened a shaky disarmament agreement.

It also follows days of intense internal debate in Washington and consultations with U.S. negotiating partners China, South Korea, Russia and Japan. Tokyo had balked at the move because the North has not yet resolved issues related to its abduction of Japanese citizens.

Neither the White House nor the State Department would comment on the decision, which has been in the works since chief U.S. negotiator Christopher Hill returned from a trip to North Korea late last week.

But earlier Friday, U.S. officials said they were trying to build a consensus among negotiating partners on the step as well as the inspection regime that Washington insists must accompany the delisting.

"We're continuing to work with our six-party partners," White House press secretary Dana Perino said, referring to China, Japan, Russia and South Korea, which along with the United States and North Korea make up the group of countries working on the deal.

Secretary of State Condoleezza Rice spoke on Friday with the foreign ministers of China, South Korea and Japan and was trying to reach her Russian counterpart, State Department spokesman Sean McCormack told reporters.

"The point where we're at now is making sure everybody agrees," he said.

At issue was whether tentative arrangements worked out last week between Hill and the North Koreans were acceptable to the others. Under those terms, the U.S. would provisionally remove North Korea from the terror list once the North agrees to the inspections.

McCormack dismissed suggestions the United States was trying to force an agreement on its partners and declined to say which, if any, countries were preventing a consensus.

However, Japan had been resistant, arguing that North Korea should not be taken off the list until the cases of Japanese citizens abducted by Pyongyang in the 1970s and '80s are resolved.

North Korea was among a group of nations — Bush called them the "axis of evil" — that the United States singled out for condemnation early in the president's first term. His current term ends next Jan. 20, when a successor will be inaugurated.

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