Impasse continued as Pyongyang reiterated position that freeze of nuclear facilities, possibly leading to their eventual dismantling, only to occur after U.S. gives energy aid, lifts economic sanctions, and stops accusations of sponsoring terrorism. Fourth round of 6-party talks expected by end of September. Naval incident with South Korea 14 July setback to recent détente. North Korea responded by skipping scheduled 19 July meeting of military officers in Seoul. South granted asylum to 460 North Korean refugees; Pyongyang accused South of “abduction and terrorism”. U.S. to donate 50,000 tons of food aid in gesture independent of nuclear negotiations.

Thailand called on Myanmar to attend second “Bangkok process” - multinational talks to discuss transition toward democracy. National League for Democracy leader Aung San Suu Kyi and deputy chairman Tin Oo remain under house arrest.

Ongoing violence, with Maoist rebels increasingly attacking targets within Kathmandu: police, municipal and government officials shot dead; bomb blasts 15/18 July wounded 12, killed 1. Three mayors outside Kathmandu also killed. Elsewhere at least 45 died in separate clashes between Maoists and government troops/police. PM Sher Bahadur Deuba announced new coalition government 5 July, but does not include influential Nepali Congress Party. PM to control crucial defence and foreign ministries. Maoist chief Prachanda issued statement saying no immediate possibility of talks but reiterated preference for UN mediation.

Clashes continued in South Waziristan as military hunted al-Qaeda suspects and local supporters; at least 12 killed in separate incidents. Government continued to close South Waziristan Afghan refugee camps, alleged to be militant strongholds. As of 21 July, approximately 25,000 refugees had fled back to Afghanistan. PM nominee Shaukat Aziz survived assassination attempt 30 July; 7 killed. Attack by militants claimed 6 in western province of Baluchistan 31 July. Karachi explosion killed employee of hardline Islamic charity 24 July. Fighting between Solangi and Jagirani tribes 25 July in Khairpur left 8 dead. Bilateral talks and confidence building measures continued with India.

Peace talks with Moro Islamic Liberation Front (MILF) further delayed due to disagreement over presence of government troops in former rebel base on Mindanao and failure to drop terrorism charges against MILF leaders. President Arroyo received domestic praise, international criticism for withdrawing 51 peacekeepers from Iraq to save hostage.

Tension increased as violence erupted in capital. February 2002 ceasefire increasingly fragile following 8 July Colombo suicide bombing, which killed 4 police officers. Attack reportedly aimed at Hindu Affairs Minister Douglas Devananda, who had publicly said was in contact with breakaway rebel leader V. Muralitharan, aka Karuna. Tamil Tigers (LTTE) denied responsibility for bombing, but warned that Sri Lankan military connections with Karuna jeopardising peace process. Eight Karuna aides killed in Colombo safe house 25 July. Almost daily killings of Karuna supporters continued in eastern province. LTTE leaders renewed calls for their October 2003 proposal for Interim Self Governing Authority to be basis for restart of peace talks. In surprise move President Kumaratunga indicated she would hold talks on LTTE proposal but coalition partner, leftist People’s Liberation Front, threatened to pull out of government. Talks unlikely to resume until feud over rebel split resolved. Norwegian mediation efforts unsuccessful to date.

Sabre-rattling continued on both sides of Strait as China and Taiwan each held military exercises simulating Chinese attack; U.S. appealed for caution. China said U.S. policy on Taiwan issue threatening bilateral relations and warned against arms sales to Taipei.

Security deteriorated in restive south with almost daily killings of policemen, officials and village administrators. PM Thaksin Shinawatra warned of increased violence. Deputy PM Thamarak Isarangura, previously replaced as defence minister in March due to heavy-handed approach, appointed to supervise military operations. Defence Minister Chettha Thanajaro announced 20 July he had sent officials to Malaysia to open talks with separatist leaders.

Approximately 100 former guerrillas demonstrated outside main government building demanding more reform 20 July. Vital revenue from Timor Sea oil/gas fields at stake in continuing border dispute with Australia.

Dispute over land on which a United Arab Emirates- funded airport is to be built continued in impoverished north.