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North Korea announced Tuesday it would freeze its nuclear weapons projects in return for the United States providing energy aid and removing Pyongyang from a list of countries that sponsor terrorism. U.S. President Bush rejected the offer.

A North Korean border guard stands outside the compound of the Military Armistice Committee as a South Korean UN guard is posted inside the compound at Panmunjom, on the border with North Korea north of Seoul in this July 2 photo. [AP]

The North's terms amounted to a response to a plan offered a day earlier by the United States, Japan and South Korea for ending the standoff over the communist state's nuclear weapons program.

Bush's statement, and similar remarks by White House and State Department spokesmen, appeared part of jockeying for position in advance of another round of talks with North Korea. The impoverished North has often tried to use the nuclear confrontation as a means to win economic aid and diplomatic recognition.

While Washington and its allies have sought the dismantling of North Korea's nuclear programs, Tuesday's proposal from Pyongyang offered only to "freeze" them as a first step. The North added, however, that the long-term goal is to "de-nuclearize the Korean peninsula."

"The goal of the United States is not for a freeze of the nuclear program," Bush said. "The goal is to dismantle a nuclear weapons program in a verifiable and irreversible way."

"That," he said, "is the clear message we are sending to the North Koreans."

The president spoke at a brief news conference with Premier Wen Jiabao of China, who visited Bush at the White House. The Chinese are working to revive stalled talks between North Korea and the United States, South Korea, Japan, Russia and China after a five-month pause.

According to a senior U.S. official, China has a sense of progress toward setting up new talks but does not believe the point has been reached yet.

Bush and Wen did not take up North Korea's latest overture, said the official, speaking on condition of anonymity.

"We spent a lot of time talking about North Korea here," U.S. President George W. Bush said after his meeting with Premier Wen Jiaobao. "We share a mutual goal, and that is for the Korean peninsula to be nuclear weapons-free."

Bush said the United States would keep working with China and the other countries in the six-party talks "to resolve this issue peacefully."

Details of the U.S.-backed proposal are unclear, but South Korean officials say it calls for "coordinated steps." Media reports say it seeks agreement on three principles: a peaceful solution to the nuclear crisis; a complete, verifiable and irrevocable dismantling of North Korea's nuclear program, and security assurances for North Korea.

A spokesman for the DPRK's Foreign Ministry on Tuesday called the proposal "greatly disappointing," because its aim is to "completely eliminate our nuclear deterrent force by giving just a piece of paper called 'written security assurances,'" which is "no more than a commitment."

DPRK stand for Democratic Peoples Republic of Korea, North Korea's official name.

Instead, DPRK proposed freezing its nuclear activities in exchange for "measures such as the U.S. de-listing the DPRK as a 'terrorism sponsor,' lift of the political, economic and military sanctions and blockade, and energy aid, including the supply of heavy fuel oil and electricity by the U.S. and neighboring countries," the spokesman was quoted as saying by DPRK's official news agency, KCNA.

"This would lay a foundation for furthering the six-way talks," the spokesman said. "What is clear is that in no case would the DPRK freeze its nuclear activities unless it is rewarded."

During a first round of six-way talks, held in August in Beijing, DPRK recommended a package deal in which each side takes four steps.

Under its initial proposal, DPRK would declare its willingness to give up nuclear development, allow nuclear inspections, give up missiles exports and finally dismantle its nuclear weapons facilities. In return, it demanded economic and humanitarian aid, security assurances, diplomatic ties and new power plants.

Pyongyang had wanted Washington to issue the security assurances simultaneously with a renunciation of its nuclear weapons program. The United States wanted the North to move first.

On Tuesday, DPRK seemed to back away from its previous demand that Washington and its allies accept its "package" deal at one time. It demanded that at least the first-phase action be agreed upon.

Participants in the six-way talks have been trying for weeks to jump-start a second round of negotiations. The first round ended without much progress, and participants had hoped for a new meeting in mid-December.

DPRK's energy woes deepened when the United and its allies cut off 147 million gallons of annual free oil shipments late last year after U.S. officials accused DPRK of running a clandestine nuclear weapons program in violation of international agreements.

This month, Washington and its allies also suspended construction of two new nuclear power plants in DPRK in retaliation for the its nuclear ambitions.

DPRK's inclusion on the U.S. terror list effectively blocks it from getting any development funds from the World Bank and other international lending organizations.

It has been on the list since 1988 because of its alleged involvement in the bombing of a South Korean airliner in the skies near Myanmar in 1987. All 115 people aboard the Korean Air flight died.

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