SEOUL (Reuters) – A senior Chinese envoy is visiting North Korea and was expected to meet leader Kim Jong-il in a visit aimed at prodding the reclusive neighbour back to stalled nuclear disarmament talks.

Following are some questions about whether the North is set to return to disarmament-for-aid talks and what may happen next:

WILL NORTH KOREA RETURN TO NUCLEAR TALKS?

North Korea’s moves are often linked to the precarious state of its finances and the economic pressure it is facing now indicates it will likely return to the talks in the hopes of winning aid.

SEOUL, Feb 8 (Reuters) – A senior Chinese envoy is visiting North Korea and was expected to meet leader Kim Jong-il in a visit aimed at prodding the reclusive neighbour back to stalled nuclear disarmament talks. [ID:nTOE61601S] Following are some questions about whether the North is set to return to disarmament-for-aid talks and what may happen next: WILL NORTH KOREA RETURN TO NUCLEAR TALKS? North Korea’s moves are often linked to the precarious state of its finances and the economic pressure it is facing now indicates it will likely return to the talks in the hopes of winning aid. North Korea has attached two conditions to its return and a face-saving compromise would need to be found to resume the talks among the two Koreas, China, Japan, Russia and the United States. North Korea has called for an end to U.N. sanctions imposed to punish it for detonating a nuclear device in May 2009 and for direct talks with Washington to replace the armistice that ended the 1950-53 Korean War with a peace treaty. IF TALKS RESUME, WHAT WOULD BE THE NEXT STEP? North Korea will be expected to resume where it left off when it stepped away from the disarmament-for-aid deal a year ago. This means taking apart its Yongbyon plant that makes arms-grade plutonium and allowing in international nuclear inspectors. While this would help ease tension, it does not address the progress the North is believed to have made in uranium enrichment, which could give it a second path to a bomb. Pyongyang may seek a much bigger payoff for giving up its uranium ambitions and this could bog down already sputtering negotiations for several more years. CAN THE TALKS BREAK DOWN? Most analysts feel a breakdown is inevitable because there is little reason for North Korean leader Kim Jong-il to ever give up nuclear arms. The North’s propaganda has justified years of sacrifice to build a nuclear programme to prevent an invasion from a hostile United States and the weapons are seen at home as the crowning achievement of Kim’s military-first rule. WHAT HAPPENS TO REGIONAL SECURITY IF THE TALKS BREAK DOWN? North Korea may try to raise the stakes. If the North resorts to its usual brinkmanship, there will likely be missile tests, military provocations toward the South and perhaps another nuclear test. WHAT IS THE IMPACT ON MARKETS? Short-lived military grandstanding that results in little to no damage, such as a missile launch or the exchange of artillery fire as happened late last month, usually leads to quick blips in foreign exchange and stock trading that have no lasting impact. They dampen sentiment and serve as a reminder of the risks of investing in the divided peninsula. Financial analysts say markets would only really worry if there were signs of serious armed confrontation. WHAT ARE THE ECONOMIC PRESSURES ON PYONGYANG? U.N. sanctions have cut into the North’s arms trade, which estimates said earned the state with a $17 billion a year economy about $1 billion annually. A currency reform imposed late last year that was aimed at reasserting the government’s control over the economy triggered inflation and led to rare civil unrest, putting pressure on Kim to ease some of the economic strain on his impoverished people. China, the North’s main benefactor, is willing to help with economic assistance to prop up Kim’s leadership but the U.N. sanctions mean Beijing would be reluctant to do so openly and may only do so on condition that the neighbour returns to the six-party nuclear talks hosted by China. North Korea may also try warming up to South Korea, which once supplied about $1 billion a year in aid. Seoul cut off the unconditional handouts about two years ago and said aid would only come once the North abandons its atomic ambitions. (Editing by Jon Herskovitz)

SEOUL, Feb 5 (Reuters) – A senior Chinese Communist Party official will visit North Korea as early as Saturday, in what appears to be a move to press Pyongyang to return to nuclear disarmament talks, a South Korean news agency said on Friday. The North said separately it was releasing a U.S. activist it had held since December, clearing an obstacle between North Korea and its most important dialogue partner, the United States, that could have harmed negotiations. [ID:nTOE61401G] The moves come as pressure mounts on North Korea to end its year-long boycott of international nuclear talks and win rewards that can prop up its broken economy. Communist Party international affairs chief Wang Jiarui is due to make the visit, Yonhap said citing diplomatic sources in Beijing and Seoul. The visit should take place Saturday or next week, it said. Wang met North Korean leader Kim Jong-il last year and received a denuclearization pledge. [ID:nTOE614005] Chinese Foreign Minister Yang Jiechi also signaled there was a chance for progress: "Tension has recently eased and there is now a new opportunity to restart six-party talks," he said in Munich where he was attending a security conference. "The Korean nuclear issue is a complex and sensitive one … We must find a peaceful solution to this issue through dialogue and consultation," he said. The six parties to the talks are the United States, Russia, China, Japan and the two Koreas. China, the destitute North’s biggest benefactor, is seen as having most influence on the reclusive state. Kim Jong-il told the Chinese premier in October he could return to the nuclear talks if conditions were right. U.N. sanctions imposed after the North’s nuclear test last year have dealt an economic blow, and a botched currency reform measure undertaken late last year deepened financial woes. "This will be a very difficult year, a year of crisis for North," said Cho Min, of the Korea Institute of National Unification. "The visit may turn out to be the only way to get the urgent transfusion." CHRISTIAN MISSION North Korea said it was releasing U.S. activist Robert Park, 28, who walked over the frozen Tumen river from China and into North Korea on Christmas Day on a mission to raise awareness about Pyongyang’s human rights abuses. The North’s official KCNA news agency said Park had confessed to illegally entering the state and had changed his mind about North Korea after receiving kind treatment. U.S. State Department spokesman P.J. Crowley said the United States would welcome his release and expected Park to travel to Beijing on Friday on his way home. Crowley added that Washington had made no special offers to Pyongyang to secure Park’s freedom. "There was no deal involved here," he told reporters. North Korea said in late January that it was holding a second American for illegal entry. The man has not been identified, and Crowley said the United States — which has no diplomatic relations with Pyongyang — had no information about the case. (Additional reporting by Rhee So-eui and Andrew Quinn in Washington; Editing by Nick Macfie and Alan Elsner)

SEOUL, Feb 5 (Reuters) – North Korea has sacked an economic policy chief and eased restrictions on market activities, reports said this week, after sporadic clashes over currency moves that sparked inflation. [ID:nTOE61207K] Following are some questions about whether the North’s move late last year to revalue its currency, aimed at stamping out black market merchants but now widely seen as a serious policy blunder, may be driving the destitute state to a major crisis. WHAT SET OFF THE UNREST, AND HOW BAD IS IT? North Koreans have increasingly turned to the markets to provide essentials after a collapse of the central distribution system in the late 1990s led to a famine that killed about 1 million people. Last year, North Korea announced a revaluation of its currency where old notes of its won currency would be changed for new ones at a rate of 100 to one. The currency revaluation was aimed at wiping out the cash holdings of a burgeoning merchant class, who risked exposure for illegal activities outside the centrally planned economy if they exchanged their old cash or deposited their wealth in banks. The collapse of the market system brought about by the currency revaluation produced rare civil uprisings. But the violence appears to have been sporadic and should fade as long as the North allows market activity to return. [ID:nTOE61307T] WHAT DOES THE BLUNDER MEAN FOR THE GOVERNMENT? The unrest proved a setback for hardline party officials who pushed for tighter restrictions on markets in favour of increasing the state’s control over the economy. "It is a victory for the shopping bag against the armband," said Cho Min, an analyst at the Korea Institute for National Unification, a state-run think tank in South Korea. The failure may have convinced leaders that a market economy that operates out of their reach will stay. Leader Kim Jong-il’s government is still in desperate need of hard cash after being hit with U.N. sanctions to punish it for its nuclear test last year. The sanctions are aimed at cutting off the money it receives through its biggest export item — military goods. Kim needs money to win the support of senior cadres for succession in Asia’s only communist dynasty and for his ambitious plans to build a "great and prosperous" state by 2012. The ruling party is said to be in disarray and there is growing discontent in its ranks as Kim increasingly depends on the military for backing for his leadership, which adds to the risk of instability in the power structure that has lasted for more than a decade under him, analysts say. WILL THE PROBLEMS LEAD TO GOVERNMENT COLLAPSE? Not likely. As long as Kim Jong-il is in control of his well-entrenched domestic security network, there are not many things that could realistically lead to a mass protest movement in the authoritarian state that would remove him from power. WHERE WILL THE NORTH TURN TO HELP? The North’s leader will likely seek the help of its biggest benefactor China to recover from the mess. A news report said the Chinese Communist Party external affairs chief is scheduled to visit Pyongyang next week. Wang Jiarui usually has an audience with the North’s leader when he visits and passes on the Chinese president’s message. [ID:nTOE61401H] Kim might ask for economic help and in return offer further concessions on his nuclear arms programme, for example, pledging to return to the six-way nuclear talks hosted by Beijing. WHAT IS THE IMPACT ON EXTERNAL RELATIONS? North Korea may speed up a return to six-party talks aimed at ending its nuclear programme in return for economic aid and better diplomatic recognition if it can reach a face-saving measure with regional powers. The United States and South Korea appear reluctant to provide aid until there is firm and verifiable commitment from the North to end its nuclear ambitions. The North will probably try to warm up to South Korea, which once provided aid about equal 5 percent of its estimated $17 billion a year economy. Some analysts said Kim Jong-il will never give up nuclear weapons, which are seen in North Korea as the crowning achievement in his "military-first" rule. (Editing by Jon Herskovitz and Jeremy Laurence)

SEOUL (Reuters) – A senior Chinese Communist Party official will visit Pyongyang next week in what appears to be a move to press North Korea to return to stalled nuclear disarmament talks, a South Korean news agency said on Friday.

The North said separately it was releasing a U.S. activist it had held since December, clearing an obstacle between Pyongyang and its most important dialogue partner, Washington, that could have harmed negotiations.

The moves comes as pressure is mounting on North Korea to end its year-long boycott of international nuclear talks and win rewards that can prop up its broken economy.

Communist Party international affairs chief Wang Jiarui is slated to make the visit, a diplomatic source in Beijing told Yonhap news. He met North Korean leader Kim Jong-il last year and received a denuclearization pledge.

SEOUL, Feb 5 (Reuters) – A senior Chinese Communist Party official will visit Pyongyang next week in what appears to be a move to press North Korea to return to stalled nuclear disarmament talks, a South Korean news agency said on Friday. The North said separately it was releasing a U.S. activist it had held since December, clearing an obstacle between Pyongyang and its most important dialogue partner, Washington, that could have harmed negotiations. [ID:nTOE61401G] The moves comes as pressure is mounting on North Korea to end its year-long boycott of international nuclear talks and win rewards that can prop up its broken economy. Communist Party international affairs chief Wang Jiarui is slated to make the visit, a diplomatic source in Beijing told Yonhap news. He met North Korean leader Kim Jong-il last year and received a denuclearisation pledge. [ID:nTOE614005] China, the destitute North’s biggest benefactor, is seen as having the most influence on the reclusive state. Kim Jong-il told the Chinese premier in October that he could return to the nuclear talks if conditions were right. [ID:nSP478096] U.N. sanctions imposed after the North’s nuclear test last year have dealt a blow to its wobbly economy, and a botched currency reform measure undertaken late last year deepened economic woes. [ID:nTOE61207K] "This will be a very difficult year, a year of crisis for North," said Cho Min, of the Korea Institute of National Unification. "The visit may turn out to be the only way to get the urgent transfusion." CHRISTIAN MISSION Robert Park, 28, walked over the frozen Tumen river from China and into North Korea on Christmas Day on a mission to raise awareness about Pyongyang’s human rights abuses, other activists who helped him said. [ID:nTOE5BS01I] Park told Reuters in Seoul ahead of the crossing it was his duty as a Christian to enter North Korea and he was willing to die. He said he was carrying a letter calling on leader Kim Jong-il to release those in brutal political camps and also to step down. The North’s official KCNA news agency said Park had confessed to illegally entering the state, and that he had changed his mind about North Korea after receiving kind treatment. "What I have seen and heard in the DPRK convinced me that I misunderstood it. So I seriously repented of the wrong I committed, taken in by the West’s false propaganda," KCNA quoted Park as saying. Defectors from the North say the state often uses torture to extract confessions. North Korea said in late January that it was holding a second American for illegal entry. The man has not been identified. [ID:nN29196568] (Editing by David Fox)

SEOUL, Feb 4 (Reuters) – North Korea has eased some curbs it placed on black market trading, the South’s spy agency said on Thursday, rolling back part of what was widely seen as a policy blunder that caused unrest in the authoritarian state. The North’s impoverished citizens have increasingly turned to the black market for essentials not provided by the broken state distribution system after a famine in the late 1990s killed about five percent of the population. Authorities had cracked down on the black market to stamp out smuggling and trading of food, resulting in angry consumers fighting security agents patrolling market places. "To quell public discontent, controls and the crack down on market places have been eased," a National Intelligence Service official said by telephone. "Discontent is high." North Korea late last year also implemented currency controls aimed at stamping out merchants who operate outside the centrally planned economy, which experts said sparked inflation and made it more difficult for the public to buy food. News reports said this week that North Koreans were starving to death and unrest was growing as last year’s revaluation caused prices to soar and also led to a senior ruling party official being sacked to take the blame. [ID:nTOE61207K] The news comes as the destitute North is under growing pressure to end its boycott of international nuclear disarmament talks, where it can win aid for reducing the security threat it poses in economically vital North Asia. Leader Kim Jong-il has replaced another party official who had acted as his personal finance manager because the man has been blacklisted by many governments, making it difficult for him to manage state firms that channel money to his boss. The new official, a Workers’ Party deputy director named Jon Il-chun, had been reported as accompanying Kim on inspection tours from this week, South Korea’s Yonhap news agency said quoting sources familiar with the North. The revaluation, dropping two zeros from its notes, was aimed at wiping out cash holdings of a burgeoning merchant class who risked exposure for illegal activities outside the centrally planned economy if they exchanged their old cash or deposited their cash. The move was a further blow to the North’s wobbly economy, already hit by U.N. sanctions imposed after its nuclear test last year to halt its lucrative arms sales. An online news site that specialises on North Korea, Daily NK, said in a report that the easing of controls had led to a slight fall in staple food prices in the market place. (Editing by Nick Macfie)

SEOUL (Reuters) – North Koreans are starving to death and unrest is growing due to a currency revaluation last year that crippled markets and led to the sacking of a senior cadre, reports said on Wednesday.

The news comes as the destitute North is under growing pressure to end its boycott of international nuclear disarmament talks, where it can win aid for reducing the security threat it poses in economically vital North Asia.

Assistant U.S. Secretary of State Kurt Campbell said after meeting officials in Seoul that North Korea must return to the six-country talks and live up to pledges it made to take apart its nuclear weapons programme.

“Sanctions will not come off before that,” he told reporters.

SEOUL, Feb 3 (Reuters) – North Koreans are starving to death and unrest is growing due to a currency revaluation last year that crippled markets and led to the sacking of a senior cadre, reports said on Wednesday. The news comes as the destitute North is under growing pressure to end its boycott of international nuclear disarmament talks, where it can win aid for reducing the security threat it poses in economically vital North Asia. Assistant U.S. Secretary of State Kurt Campbell said after meeting officials in Seoul that North Korea must return to the six-country talks and live up to pledges it made to take apart its nuclear weapons programme. "Sanctions will not come off before that," he told reporters. North Korea last year announced a revaluation of its currency where old notes of its won currency would be changed for new ones at a rate of 100 to one. [ID:nSEO111754]. The move was a further blow to the North’s wobbly economy, already hit by U.N. sanctions imposed after its nuclear test last year to halt its lucrative arms sales. North Korean Workers’ Party finance director Pak Nam-gi, who led the currency revaluation aimed at breaking up markets in the socialist state, has been removed from his post, the Chosun Ilbo newspaper said quoting diplomatic sources in Beijing. "Markets have come to a grinding halt following the currency revaluation and prices have soared," the source said. After the currency moves, fewer goods were available for an already impoverished public and prices rose sharply. The North’s woes may be pressuring leader Kim Jong-il to return to the nuclear talks in the hopes of winning aid and to mend ties with the South, which once provided assistance equal to about 5 percent of the North’s yearly economy, analysts said. WIPING OUT CASH The currency revaluation was aimed at wiping out the cash holdings of a burgeoning merchant class, who risked exposure for illegal activities outside the centrally planned economy if they exchanged their old cash or deposited their wealth in banks. The merchants traded in hard currency in China for food and items not properly provided by the central government. Imports ground to a halt after the currency revaluation and a separate crack down on foreign cash holdings. The North’s impoverished citizens have increasingly turned to markets for essentials not provided by the broken distribution system after a famine in the late 1990s that killed about 5 percent population. Another leading South Korean daily, Dong-A Ilbo, reported ethnic Koreans on the Chinese side of the border as saying there have been reports of starvation in Sinuiju, a North Korean border city that has typically fared well because of trade with China. There has also been rare civil unrest in the authoritarian state with North Koreans fighting security agents trying to stop people from smuggling or trading food, Daily NK, an online site run by activists, reported sources in North Korea as saying. The South’s Unification Ministry said separately the North has agreed to a meeting next week on resuming tours for South Koreans to a resort and an ancient city north of the border. The tours, which earned the North’s leaders tens of millions of dollars a year in hard currency, were suspended due to political wrangling and the shooting death of a South Korean tourist by a North Korean soldier. (Editing by Jon Herskovitz and Sanjeev Miglani)

SEOUL (Reuters) – North and South Korea have been secretly trying to set up a summit by mid-year, news reports said on Tuesday, but the South insisted the destitute North would not be offered any payment as an enticement.

South Korean President Lee Myung-bak has said he wants a firm commitment from Pyongyang to rejoin six-party disarmament talks and scrap its nuclear arms programme before agreeing to what would be only the third summit between the states still technically at war.

A senior U.S. State Department official arrives in Seoul on Tuesday for discussions aimed at prodding the North back to nuclear talks after the mercurial state last week raised tensions by firing artillery toward a disputed sea border with the South.

“The leaders of the South and North must meet only on the premise that there won’t be any payoff for agreeing to hold the summit,” Lee’s spokesman quoted him as saying at a cabinet meeting. “We’ll never back down from this principle.”