N. Korea to move towards nuclear disarmanent

North Korea agreed to take steps toward nuclear disarmament under a groundbreaking deal struck yesterday that will bring the impoverished communist state some $300 million in aid.

Under the agreement, Pyongyang will freeze the reactor at the heart of its nuclear programme and allow international inspections of the site. The deal was reached by six countries in Beijing four months after the secretive state stunned the world by testing a nuclear device.

Japan and the US also said they would take early steps toward normalising relations with North Korea.

Washington agreed to resolve the issue of frozen North Korean bank accounts in Macau's Banco Delta Asia within 30 days, chief US negotiator Christopher Hill told reporters. The US will also initiate, under a separate bilateral forum, a process to remove North Korea from its list of state sponsors of terrorism.

The proposed plan, hammered out by the two Koreas, the US, Japan, Russia and China after nearly a week of intensive talks, will only be the first step in locating and dismantling North Korea's nuclear arms activities, leaving many questions to future negotiations.

"These talks represent the best opportunity to use diplomacy to address North Korea's nuclear programs," US President George W. Bush said in a statement.

White House spokesman Tony Snow called it a "very important first step toward the denuclearisation of North Korea" but said Pyongyang still faces sanctions if it reneges.

US Secretary of State Condoleezza Rice said Iran, another country at loggerheads with the West over its nuclear program, should see North Korea as an example.

"Why should it not be seen as a message to Iran that the international community is able to bring together its resources?" she asked at a news conference.

Mr Hill and North Korean envoy Kim Kye-gwan warmly shook hands and patted one another's arms during a closing reception.

Pyongyang's official KCNA news agency said the other parties decided to offer economic and energy aid equivalent to one million tonnes of heavy oil in connection with North Korea's "temporary" suspension of the operation of its nuclear facilities.

Mr Hill dismissed that report as posturing. "Any action to restart the reactors would be a violation of the agreement," he told reporters.

US trade sanctions will also begin to be lifted from a country Mr Bush once lumped with Iran and Iraq on an "axis of evil."

One area of uncertainty is whether North Korea has a highly enriched uranium programme as alleged by Washington. North Korea has not acknowledged the existence of such a programme. Highly enriched uranium can be the fissile material for nuclear weapons and its production can be much harder to detect than plutonium refinement.

"We have to get a mutually satisfactory outcome on this. We need to know precisely what is involved," Mr Hill said.

As details of the draft leaked out, Japan was already voicing doubt that any agreement could be made to stick.