North Korea pulls out of border liaison talks with US

SEOUL - North Korea pulled out of border liaison talks with United States officials yesterday, and a UN envoy said Pyongyang was continuing to work on a reprocessing plant at the heart of a nuclear standoff with the US.

At the same time, state media reported that North Korea's parliament had received a budget increasing military spending to put the impoverished communist state's entire population under arms.

The developments came after US and South Korean officials suggested North Korea might try to stage an incident - possibly a missile launch or a naval incursion - to draw attention to itself now the spotlight was on the war against Iraq.

But South Korean officials played down an incident this week when two North Korean naval vessels briefly strayed into southern waters, saying they saw no link to the war or to North Korea's bid to draw the US into direct talks about Pyongyang's suspected nuclear weapons ambitions.

The North's decision to pull out of military liaison talks at the demilitarised zone border between North and South Korea because of annual military exercises in the South removed one of the few conduits for contact between the sides.

The announcement from the North's KCNA news agency came as South Korean Foreign Minister Yoon Young-kwan was flying to Washington for talks.

Yesterday, North Korea's Finance Minister Mun Il-bong presented to parliament a budget allocating 15.4 per cent of this year's spending on defence, up from 14.9 per cent in 2002. It gave no monetary figure.

Mun's budget report vowed to "implement to the letter the [Workers' Party] policy of putting all the people under arms and turning the whole country into a fortress", KCNA said. One in 20 of the 22 million North Koreans are in the armed forces.

Later today Japan will launch two satellites into orbit to keep a closer eye on the North, which fired a ballistic missile over Japan in 1998.

US and South Korean officials have speculated the North might choose the next few days to test-fire one of its ballistic missiles to try to catch Washington's attention again.

The North postponed planned North-South economic talks last weekend, saying it was angry the South had raised its alert status since the war started. The South denies changing the alert level, but North Korea said it did not believe Seoul.

Although North Korea and the United States have no diplomatic ties and are at loggerheads over the North's suspected nuclear weapons ambitions, officers from the two sides have continued to meet regularly at Panmunjom, a neutral area inside the Demilitarised Zone that bisects the peninsula. The US officers represent the United Nations at Panmunjom.

North Korea told a UN special envoy last week it would continue preparations to restart its nuclear reprocessing plant until the United States agrees to talks, the envoy, Maurice Strong, said in Seoul.

Strong said the North was concerned it might be the next US target after Iraq.

He said Pyongyang was reassured by Washington's verbal statements it does not intend to invade North Korea but wanted stronger proof.

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