Seoul: North Korea and the United States came close to agreement last week that the communist state freeze its nuclear activity and allow international monitoring in exchange for aid, a news report said today (Jan 22,2007).

The potential movement toward a breakthrough came during talks in Berlin last week between the North s nuclear envoy, Vice Foreign Minister Kim Kye Gwan, and his US counterpart, Assistant Secretary of State Christopher Hill, South Korea s Chosun Ilbo newspaper reported, citing unidentified officials in Seoul and Beijing.

"Kim offered to halt the operation of the five-megawatt reactor at the North s main nuclear complex and other nuclear activity while allowing monitoring by the International Atomic Energy Agency as first steps toward dismantling its nuclear programmes, "the paper said.

"In return, Kim demanded that the United States provide the impoverished North with economic and energy aid and show 'sincerity' in efforts to resolve a dispute over Washington s imposition of financial restrictions against Pyongyang," the report said.

"Hill responded positively to Kim s request for aid," the paper said.

It did not say how the US diplomat reacted to the North s request over the financial dispute, but said the US is expected to negotiate how to relax the restrictions in financial talks with the North expected this week.

South Korean Foreign Minister Song Min-soon declined to confirm the report, but said the Berlin talks broadly touched upon the financial issue.

Song also told YTN television that the US and the North have the willingness to resolve the row in a way that fulfills each other s needs.