North Korea has made a rare proposal for talks with the South over a joint industrial park just north of the border where the communist state has been holding a South Korean worker captive for weeks.
However, it also issued a fresh warning against South Korea's move to join a US-led initiative against the flow of weapons, saying any sanctions against the communist state would be considered an act of war.
The moves come after North Korea expelled international nuclear inspectors and threatened to restart its plant that makes arms-grade plutonium in response to being chastised by the UN for a rocket launch earlier this month widely seen as a disguised long-range missile test.
South Korea's unification ministry said North Korea wants to hold talks over the Kaesong industrial complex next Tuesday.
Ties between the rival Koreas have chilled over the past year due to Pyongyang's anger over the policies of President Lee Myung-bak, who took office a year ago and ended the South's free flow of unconditional aid to its impoverished neighbour.
Talks on Kaesong would be the first on economic matters between the two Koreas, technically still at war, sinceMr Lee took office in February 2008.
The Kaesong industrial park, once hailed as a model of economic co-operation, has been a focal point of conflict over the past few months with the North expelling South Korean workers there and clamping down on operations.
North Korea has held a South Korean worker for about three weeks at the complex built by a Hyundai Group affiliate.
Local media said the worker angered the North by making derogatory comments about its communist political system.
South Korea put off an announcement on joining the US-led Proliferation Security Initiative expected this weekend, following the North's proposal for talks, local media said.
President Lee held an emergency meeting with ministers today and decided on the delay, but maintained that it would join the PSI.
Joining PSI involves sharing intelligence and intercepting of shipments suspected of carrying parts or equipment for weapons of mass destruction.
It could cut into the North's arms trade, one of its few sources of foreign currency.
North Korea's official news agency KCNA quoted a spokesman of its army as saying joining the initiative was 'a declaration of undisguised confrontation and a declaration of a war'.
It said the North's army would increase defence capability including nuclear deterrent, without being limited by agreements from previous international disarmament talks. It added the army has never had any hope on the six-party nuclear talks.
‘The Lee group of traitors should never forget that Seoul is just 50km away from the Military Demarcation Line,’ it said.
