North Korea blames U.S. for nuclear talks impasse

SEOUL, (Reuters) North Korea's official media on Saturday placed the blame for an impasse in talks aimed at ending Pyongyang's nuclear weapons programme squarely at the feet of the United States.

North Korea, which faces U.N. sanctions for defying warnings and conducting its first nuclear test in October, remained focused at this week's talks on demands that the United States end a separate crackdown on its international banking.

"We clarified our will to realise denuclearisation at the talks and participated in them despite sanctions," its KCNA news agency cited the North's nuclear envoy as saying on Friday.

Delegate Kim Kye-gwan said the United States for its part demanded Pyongyang end its nuclear programme and accept inspections of its nuclear facilities.

"We decisively opposed this and told the U.S. side to further study our proposal," Kim was quoted as saying.

The talks among the two Koreas, China, Japan, Russia and the United States ended on Friday with the envoys failing to even reach a date for the next round.

Throughout the five days of talks, envoys said, North Korea dwelt on little more than the freeze on its accounts at Macau's Banco Delta Asia, which Washington alleges abetted Pyongyang's money-laundering and dollar counterfeiting. North Korea said the financial curbs, which resulted from the U.S. Treasury's Sept. 15, 2005, designation of Banco Delta Asia as a "primary money-laundering concern," showed that Washington had negotiated in bad faith.

The crackdown, which froze just $24 million in funds, has had wide implications for North Korea because it has scared other international banks away from doing business with Pyongyang.

Washington maintains that the nuclear talks and the financial crackdown are separate issues and should not be confused.

But South Korean President Roh Moo-hyun appeared to sympathise with the North Koreans' position, asking this week why the U.S. Treasury would move just days before the six parties struck a deal where Pyongyang agreed to scrap its nuclear weapons programme in exchange for aid and security guarantees.

"If one wants to look at it in a bad light, one may say it was all coordinated between the two (the U.S. State and Treasury Departments)," Roh said in a speech.

South Korea's envoy said he wanted to see the six-party talks, which have been going on for more than three years with little concrete results, continue because they contribute to peace in the region, Yonhap news agency reported on Saturday. The mainstream daily JoongAng Ilbo agreed, but cautioned Pyongyang against dragging its heels.

"If North Korea holds its ground obstinately, it will only face more serious isolation and pain," it said in an editorial.

A Japanese daily offered a bleaker outlook.

"The reason why North Korea has taken such a selfish attitude is because it is confident that it has shown the world that it has nuclear weapons through its nuclear test," the liberal Asahi Shimbun said in an editorial on Saturday.

"It may be thinking that it has more 'cards', such as another nuclear test or missile firings."

China, which has hosted the talks since 2003, counselled more flexibility in the negotiations, and avoided placing blame on either Washington or Pyongyang for this week's failure.

The overseas edition of the People's Daily, the voice of the ruling Communist Party, said discussing implementation was inevitably going to be tough going.

"In any negotiations, this is the most sensitive, difficult and tortuous stage, and thus the stage that most requires patience and political wisdom."

The paper said the contending sides needed to continue talking and "make necessary compromises."