http://today.reuters.com/news/articlenews.aspx?type=worldNews
<http://today.reuters.com/news/articlenews.aspx?type=worldNews&storyID=2006-
08-08T150447Z_01_SEO6257_RTRUKOC_0_US-KOREA-NORTH-REPORT.xml>
&storyID=2006-08-08T150447Z_01_SEO6257_RTRUKOC_0_US-KOREA-NORTH-REPORT.xml
 
US, North Korea may be on collision course: group


By Jon Herskovitz
SEOUL (Reuters) - North Korea needs to be given a face-saving way of coming
back to talks on its nuclear weapons program or it might opt to increase
tension through missile or nuclear tests, a report released on Wednesday
said.
The influential International Crisis Group (ICG) said in a report on the
stalled six-way nuclear talks and the North's multiple missile launches in
July that one way to reduce tensions might be for the United States to ease
some of the financial restrictions it placed on the communist state.
"Unless negotiations resume soon with both sides showing more flexibility,
Washington and Pyongyang could find themselves on a collision course with
Seoul caught in the middle," it said.
Talks among the two Koreas, China, Japan, Russia and the United States have
been stalled since last November, following a U.S. crackdown on firms it
suspects of aiding the North in illicit activities such as counterfeiting.
North Korea has denied any wrongdoing and said it would be unthinkable for
it to return to the discussions while Washington was trying to topple its
leaders through financial pressure.
"If Pyongyang is not given a face-saving way of backing down, it could
escalate the confrontation by testing another missile or even conducting a
nuclear test, which would certainly lead to even harsher condemnation and
more severe sanctions," the ICG report said.
Defying international warnings, North Korea test-fired seven missiles on
July 5. The U.N. Security Council later passed a resolution chastising
Pyongyang for the launch.
The ICG recommended that the United States free up North Korean assets
frozen in a Macau bank that can be linked to legitimate business activities.
In September, the U.S. Treasury Department branded Banco Delta Asia -- a
bank in Macau that did business with North Korean firms -- a "willing pawn"
in Pyongyang's illicit activities. The bank denied the allegation, but said
in February it had stopped dealing with North Korea.
U.S. officials have said the bank froze about $24 million in assets. Some of
the accounts belonged to North Korea's top leaders, who have since found it
difficult to bank in other places because of the U.S. crackdown.
Washington has vowed to maintain the restrictions.
The report also recommended that the U.S. government appoint a special envoy
solely dedicated to the six-party talks who can visit Pyongyang for informal
bilateral discussions. It called on Washington to avoid veiled threats and
name calling.
The chief U.S. envoy for the talks is an assistant secretary of state.
Washington has said it can talk directly with Pyongyang within the six-party
process.
The report recommended that South Korea link its expansion of economic
cooperation with the North to the resumption of the six-party talks and for
Seoul to refrain from making any more critical comments about how the United
States and Japan responded to the missile launch.
"A united front is needed more than ever. North Korea must no longer be
allowed to exploit differences between the parties," it said.
The independent International Crisis Group -- set up in 1995 to try to
prevent, contain and resolve conflicts -- is funded by foundations,
governments and individual donations. It has high-level access to government
policy makers.


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