U.S., N. Korea may hold financial talks in week of Jan. 22

From news reports

The United States and North Korea have agreed in principle to hold talks on a dispute over U.S. financial restrictions against the communist regime starting Jan. 22, Foreign Minister Song Min-soon said yesterday.

Song made the remark after arriving from Washington, where he held talks with U.S. Secretary of State Condoleezza Rice on Friday.

"A date has not been set, but I understand that the North and the United States provisionally agreed to hold the talks in the week starting Jan. 22," he told reporters. "I think it will be held around that time."

The financial dispute was the main stumbling block that deadlocked last month`s six-nation talks on North Korea`s nuclear programs.

The North insisted that Washington lift the financial restrictions first before disarmament discussions begin in earnest.

Financial experts from Washington and Pyongyang held separate talks on the row on the sidelines of the nuclear talks - involving China, Japan, the two Koreas, Russia and the United States - but no progress was reported.

The two sides have agreed to continue the talks, but did not set a date.

Song did not provide specifics, including where the talks will be held. News reports have said the venue will be either New York or Beijing.

Despite the failure of the last round of six-party talks, Rice said the parties had made some progress.

"One of the reasons that you are hearing some sense that we might be able to return sooner than later is that when you look at what happened in the last round of the talks, there actually was significant groundwork laid for potential outcomes that could be useful," Rice told a news conference with Song in Washington Friday.

"If there are signals that in fact the North is now ready to come back in a more constructive way ... I do think that we could be back in talks fairly soon," she added, but declined to say when that might be.

"It is North Korea`s turn to come back to us with a positive and realistic response to the proposals tabled in Beijing," Song said.

The U.S. and South Korean officials sought to play down reports that North Korea, which carried out its first nuclear test on Oct. 9, might be preparing for another.

South Korea said activity had been spotted near a suspected nuclear test site in North Korea but there was no evidence to suggest Pyongyang was about to test again.

"We do not have any indication that that kind of test is imminent," Song added.

"The North Koreans would have to know that any such test would obviously further deepen their isolation," Rice said.

The U.S. State Department on Friday warned North Korea of "severe consequences" to the diplomatic push to end its nuclear programs if Pyongyang conducts a second atomic test.

U.S. State Department spokesman Sean McCormack told reporters Friday that there are "signals that they (six-nation North Korea nuclear talks) can start again this month" but said another test would have "severe" consequences.

"If you did have another test of a nuclear device, that would have severe consequences for the viability of that political-diplomatic process - why would they take such a step at this time?" McCormack told reporters.

North Korea`s Oct. 9 nuclear test caused unease across the Pacific and its neighbors, as well as the United States, have been scrutinizing the country for any signs of a new test.

The United States monitors North Korea by satellite and spy planes that fly along the fringes of the reclusive communist state`s airspace to watch for signs of nuclear activity.

"Certain activities have been detected near a suspected North Korean nuclear test site but currently there are no specific indications related to an additional test," said a South Korean source familiar with the North`s nuclear program.

The source asked not to be named and declined to explain how the latest movements were spotted.

Another South Korean official in Seoul said vehicle and personnel movement had been spotted near the site of the North`s first test.

That official said, however, that there were no signs of cables being laid or electronic monitors being installed which might indicate a test was imminent.