N Koreans admit economy is in ruins: Threat to end nuclear inspection talks

IN A SHOCK announcement North Korea admitted yesterday that its economy was failing. The statement also suggested a power struggle was going on among the country's leadership.

The announcement came as Pyongyang told the United States that talks about inspection of North Korea's nuclear facilities would be over unless Washington accepted its latest offer. A Foreign Ministry spokesman told the Korean Central News Agency (KCNA) that his government had made its biggest possible concession in talks last Friday.

It is thought that Pyongyang offered to open five relatively minor sites yet bar access to a reactor and a nuclear fuel reprocessing plant which Western intelligence says could be used to separate plutonium for a nuclear bomb.

A US State Department spokeswoman in Washington dismissed the remarks, saying foreign ministry comments quoted by the KCNA were not considered official pronouncements from Pyongyang. She said Washington was 'not unduly' agitated by the remarks.

American and South Korean officials have warned Pyongyang it could face economic sanctions if it refuses to allow International Atomic Energy Agency inspections of suspected nuclear weapons sites. The North has said it is ready to defy sanctions and even face war.

An official communique released after an emergency meeting of the Communist Party's central committee in Pyongyang yesterday said the current seven-year economic plan was to be suspended, noting that industrial output, energy supplies and agricultural production were below target. With unprecedented frankness the report said the economy was in a 'grave situation', and suffering 'grim trials'.

The central committee meeting was chaired by President Kim Il Sung, the 81-year- old 'Great Leader' who has ruled North Korea for 45 years. Until recently his son, Kim Jong Il, 51, has been singled out as his dynastic successor, but yesterday's meeting also saw the surprise rehabilitation of President Kim's younger brother, Kim Yong Ju, who was appointed to the politburo after 18 years of political obscurity.

Kim Yong Ju, 71, was a deputy prime minister until he disappeared from public view in 1975, and his re-emergence now appears to put Kim Jong Il's automatic succession into question. Kim Jong Il is regarded as a pampered playboy with few leadership skills.

For over a year intelligence sources have suggested that food and fuel shortages have led to riots, and that cracks have been forming in the Communist Party's monolithic structure. But this is the first official confirmation of such strains from the government's media. Usually economic targets are said in the official media to have been 'surpassed', or completed months ahead of schedule by 'shock work troupes' working overtime for the glory of the revolution.

But it is thought that reformist technocrats have been struggling with hardliners - and possibly Kim Jong Il himself - to open up the economy and stop further decline in living standards.

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