Talks with Japan failed to solve  any outstanding issues. NK repeated condition for returning to 6-party nuclear talks, suspended since November 2005, would be lifting of U.S. economic sanctions. North-South military-level talks to resume 2 March after 19-month hiatus.

Kim Jong-il’s China visit 10-18 January led to speculation North interested in emulating Chinese economic reforms. South President Roh Moo-hyun appointed Lee Jong- seok, strong supporter of engagement with North, as new minister for unification.

Nuclear negotiations returned to impasse, erasing 5 months of apparent progress. Pyongyang announced intention to resume work on 2 light-water reactors previously developed under now defunct Agreed Framework and abandoned multinational KEDO project to provide reactors in exchange for freeze on weapons programs. New U.S. ambassador to South publicly labelled North “criminal regime”. UN General Assembly adopted first-ever resolution condemning NK’s widespread human rights violations.

Chinese President Hu Jintao made first trip to NK ahead of fifth round of 6-party talks due to start in November; Jong-il reportedly pledged his commitment to talks. Diplomatic tensions raised over reported NK request for completion of civilian light-water reactor before disarmament possible. Pyongyang’s No. 3 defence official and confidant of leader Kim Jong-il, Yon Hyong-muk, died 23 October; unlikely to herald policy shift.

Surprise development on last day of 6-party talks in Beijing as deadlock on text of joint statement of principles broken. Pyongyang promised to give up nuclear weapons and programs, in exchange other 5 parties expressed willingness to provide energy assistance and security guarantees. Washington and Tokyo agreed to work to normalise ties with Pyongyang, which also pledged to rejoin NPT. According to statement, North Korea has right to civilian nuclear program - main sticking point between Washington and Pyongyang - if it regains international trust. Lack of detail in agreement highlighted by next day NK demand for light- water reactor before dismantlement to start. Fifth round of talks due in November.

Pyongyang delayed scheduled 29 August resumption of nuclear talks by 2 weeks, citing U.S-South Korean military exercises. Earlier talks ended 7 August without agreement, despite reported increased civility and bilateral contact between U.S. and North Korean negotiators. North’s insistence on retaining peaceful nuclear capability - supported by South Korea, China and Russia - key sticking point with U.S. North launched 4-day goodwill tour of South in effort to win further support.

Positive development as 6-party nuclear talks reconvened in Beijing 26 July after 13-month hiatus. Pyongyang agreed to talks after offers of massive energy aid from South Korea, in return for disarmament and U.S. recognition of sovereignty. U.S. envoy at talks, Assistant Sec. State Christopher Hill, met North’s deputy FM Kim Kye Gwan, in several unprecedented bilateral preparatory “discussions”. China presented draft statement “of basic principles” 31 July, sticking points remain North’s demand for security guarantee, reluctance to give up nuclear power program. Human rights and Japanese abductions also contentious issues, but consensus sees nuclear disarmament as priority.

Month saw series of promising but largely symbolic diplomatic exchanges - as yet no date fixed for resumption of nuclear negotiations. In first meeting with senior South Korean official in more than 3 years, North’s Kim Jong-il met Unification Minister Chung Dong-young as part of commemorations of 2000 inter-Korean summit 17 June. Pyongyang secured food aid from U.S. and South Korea, and made positive comments on resumption of 6-party talks but definitive statement on timing yet to emerge. Conflicting messages from White House, Pentagon, and State Dept. reinforced perception in North East Asia that Bush administration yet to agree on strategy. Democrat senators Biden, Levin, Reid, Rockefeller urged special envoy appointment and new diplomatic effort in strong letter to President Bush 23 June. China remained against coercive measures, including referring North Korea to UN Security Council.

Tensions continued to rise between Pyongyang and Washington. U.S. decision to deploy 15 stealth bombers to South Korea provoked North charge of U.S. warmongering. Fears April closure of Yongbyon nuclear reactor precursor to fuel rod extraction confirmed by 11 May official statement. Both South and China reportedly warned Pyongyang against nuclear test. In positive move U.S. officials had “working-level contacts” with North Korean counterparts 13 May, urging Pyongyang to rejoin 6-party nuclear talks; later in month operations to retrieve remains of missing U.S. servicemen suspended due to restrictions placed on teams. Bilateral talks between North and South ended without breakthrough on nuclear issue though North agreed to resume cabinet-level talks in Seoul 21-24 June.

Prospects of return to 6-party negotiations increasingly bleak after Pyongyang announced would only return to talks if changed to “mutual arms reduction negotiations”. South Korea and China warned Washington against referring Pyongyang to UN Security Council as would exacerbate situation; North Korean spokesman quoted saying sanctions would be seen as “declaration of war”. North reportedly preparing to remove spent fuel rods from Yongbyon nuclear reactor - would provide sufficient material to make additional 6 to 8 nuclear weapons. North and South agreed to resume bilateral dialogue. North Korea reportedly tested short- range missile into Sea of Japan 1 May.