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N Korea and US narrow differences: Pyongyang draws back a little on nuclear inspections as Russians join China in opposition to sanctions against Kim regime

North Korea and the US were last night on the verge of a breakthrough which could end the crisis over North Korea's nuclear programme. Bill Clinton said that talks between the US and North Korea might resume if it was confirmed that the North Koreans were prepared to freeze nuclear development while discussions went on.

Earlier yesterday North Korea reversed a decision to expel two international inspectors and has pledged to maintain surveillance equipment at its nuclear sites. After a meeting with President Kim Il Sung in Pyongyang, the former US president, Jimmy Carter, urged a resumption of direct talks between the US and North Korea. The North Koreans also told Mr Carter that they wanted help from the US to finance a light-water reactor and the money to halt the construction of their new 200 megawatt reactor if they agreed to do that.

The light-water reactor is less well adapted to produce weapons-grade plutonium than the one under construction.

President Kim appears to be holding out for a package deal with the US in which the crisis over North Korea's nuclear programme would be resolved at the same time as relations between the US and North Korea normalised. The North Koreans also want financial aid and an end to economic isolation.

In Washington, President Clinton met his advisers to discuss developments. 'It is a very serious situation,' said the White House spokeswoman, Dee Dee Myers. 'It is the most crucial foreign policy issue the President faces right now.'

The administration is eager to find a way out of the crisis that does not look like a climbdown. The difficulty of building a coalition to put pressure on North Korea was underlined yesterday by the opposition of Russia and China to sanctions, though it is unclear if this will lead to them vetoing the initially mild measures proposed by the US at the United Nations.

The Russian Foreign Minister, Andrei Kozyrev, said Moscow had not been consulted about the US proposals, and would not support any sanctions motion drawn up without its agreement. The Russians have been pressing for an international conference on the North Korean issue. While Mr Kozyrev stopped short of threatening to veto the motion, the Interfax news agency quoted him as saying: 'We agreed unambiguously to work together on a draft resolution, which on the one hand would allow for sanctions and on the other hand the organisation of an international conference.' Washington's initiative, he said, would 'seriously hamper the work of the UN Security Council'. China, meanwhile, emphasised that its friendship treaty with Pyongyang remained in force.

Speaking after his meeting with North Korea's chain- smoking leader yesterday, Mr Carter said the 82-year-old President Kim appeared to be in good health. Other visitors say he seems fully in control. At an earlier meeting with Selig Harrison of the Carnegie Endowment for International Peace, President Kim said: 'We don't have any nuclear weapons or any intention of making them. It gives me a headache when people demand to see something we don't have. It's like dogs barking at the moon.'

The North Korean leader went on to deny that there would be any point in 'our making one or two nuclear weapons when you have 10,000-plus delivery systems that we don't have. We would be a laughing-stock.'

He said North Korea did not have the money to switch to light-water reactors, which cost dollars 2bn to dollars 3bn ( pounds 1.4bn to pounds 2bn) but if assisted to obtain one, 'we are ready to suspend the development of our radiochemical laboratory (reprocessing plant) and the 200 megawatt reactor'.

Last July North Korea offered to switch reactors as part of a package deal but had not previously promised to freeze its nuclear programme for the six years it would take to obtain and build a light-water reactor. After talks in Pyongyang, Mr Harrison said he discounted North Korean threats of war if sanctions are imposed but a naval blockade would lead to some form of military retaliation. North Korea is expected to test the Rodong 1 missile in the near future as a demonstration of military strength.

(Photograph and map omitted)