N Korea marks Kim's birthday with nuclear row

North Korea yesterday threatened to withdraw from a key nuclear agreement, setting alarms ringing on the eve of national celebrations to mark the birthday of its reclusive leader, Kim Jong Il.

The Stalinist nation is balking at the insistence of the United States that it accept light-water reactors from South Korea, its bitter rival. Under last year's deal with Washington, which appeared to have averted the main international threat of nuclear proliferation, North Korea agreed to scrap reactors which produce large quantities of weapons-grade plutonium in exchange for more modern technology costing some $4bn (£2.5bn). It never accepted South Korea as the supplier, however, an objection that was glossed over at the time but which is now threatening to wreck the whole agreement.

The North Korean foreign ministry said yesterday it had "nothing to lose", adding: "It might be better for us that the agreement is scrapped now in the initial stage than spending time with debate on the infeasible provision of LWRs [light-water reactors]."

The US, Japan and South Korea are forming an international consortium to supply North Korea with light-water reactors, which can less easily be turned to military uses. Britain is among several Western countries that have been asked to join the consortium, but Seoul insists that since it is meeting 70 per cent of the cost, it must be awarded the contract. The South Koreans argue that this would make the two power generation systems compatible after eventual reunification, but Pyongyang is extremely reluctant to allow hundreds of technicians from the south to cross regularly over the demilitarised zone dividing the peninsula.

The stand-off threatens to revive one of the Clinton administration's worst foreign policy problems. Republican right-wingers who criticised the nuclear deal for rewarding North Korean intransigence now control both houses of Congress, and will block any increase in American funding. Nor would South Korean public opinion allow President Kim Young Sam's government to pay for reactors built by any other country.

"The hope must be that Pyongyang will accept South Korean reactors, otherwise I can't see how the nuclear agreement can go ahead," a Western diplomat said yesterday.

But North Korea's determined tugging at one of the principal loose ends in the agreement, just as the country appeared to be emerging from more than half a year of mourning for the fallen Kim Il Sung, indicates that its defiant attitude to the world has not changed under his son.

Although the senior Kim died in the midst of the nuclear negotiations last July, US diplomats say the progress made since then shows that someone - presumably Kim Jong Il - is making decisions in North Korea. But the son has made no more than a handful of appearances The preparations to celebrate his 53rd birthday are being analysed for signs as to when he might emerge fully as his father's successor.

Today is being celebrated as a national holiday in North Korea. Banners and flowers have appeared in cities for the first time since Kim Il Sung's funeral and the regime's propaganda organs have been even more diligent in discovering signs and portents.

The national news agency reported that a "seven-colour luminescent ring" had recently shed "dazzling light" around the sun, while another "bright and deep, silver colour" ring had appeared .around the moon above Kim Jong-Il Peak.

"The Dear Leader", it concluded, "is evidently the Greatest among the Great men, who has descended from Heaven."

Despite this claim of near- divinity for Mr Kim, however, most analysts believe he will not come out from his seclusion yet. If he does not emerge in April, when North Korea has invited thousands of visitors and journalists to one of the biggest sport and cultural festivals in its history, he may wait until the second half of the year, after the anniversary of his father's death.