North Korea wants nuclear arms 'to cut size of army'

North Korea explicitly acknowledged its intention to build nuclear weapons yesterday but gave a new reason for doing so - to save money on its conventional forces.

Analysts in Washington were studying the utterance from Kim Jong-Il's regime, the latest move in North Korea's stand-off with the United States.

Pyongyang said that it wanted "to build up a nuclear deterrent force" to cut the number of conventional troops and to divert funds into the economy. With 1.1 million troops, North Korea has the fifth largest army in the world.

The stand-off began last year when the US discovered North Korea was violating an agreement not to develop nuclear arms, by operating a uranium enrichment programme.

Since then, North Korea has adopted an increasingly belligerent posture, spurred on by its fears about the American policy of pre-emptive strikes since the 11 September attacks and its presence within George Bush's "axis of evil".

In the past six months, North Korea has restarted an atomic reactor, thrown out UN nuclear inspectors, begun moving spent fuel rods to a reprocessing facility that can produce plutonium, and become the first country to withdraw from the international nuclear non-proliferation treaty.

Relayed by the government's KCNA news agency, Pyongyang's statement yesterday was the clearest public admission so far that it is seeking to build nuclear weapons.

This is not North Korea's first use of this tactic in an effort to pressure the US to comply with its overall goal - bilateral talks leading to an agreement guaranteeing the nation's survival. North Korean officials told American diplomats that Pyongyang had nuclear weapons during three-way talks in China in April. They also implied that these weapons had already been deployed.

The US wants multilateral talks and has insisted it will not be blackmailed by Kim Jong-Il's threats. However, Washington's position has been complicated by the striking contrast between its handling of North Korea - which has acquired nuclear capabilities - and Iraq, which apparently has not.

This time it wants a diplomatic resolution, mindful that the North Koreans have thousands of artillery pieces within range of Seoul, the capital of South Korea, and of the 37,000 US troops in the country.

The KCNA statement said that North Korea would have "no option but to build up a nuclear deterrent force" if the US "keeps threatening [North Korea] with nuclear arms instead of abandoning its hostile policy towards Pyongyang". But it added: "We're not trying to possess a nuclear deterrent in order to blackmail others, but we are trying to reduce conventional weapons and divert our human and monetary resources to economic development and improve the living standards of the people."

This latest manoeuvre by North Korea is unlikely to impress the US. Bill Rammell, a British Foreign Office minister, said that Pyongyang should give up its nuclear weapons programme or "we'd be looking at an alternative route of containment and sanctions".