North Korea may be preparing new nuclear test

SEOUL/BEIJING  - Movement around an atomic test site in North Korea indicates the reclusive state may stage another nuclear test, a South Korean minister said on Monday, an act that would further drive up tensions on the Korean peninsula.

  

The comments, made in response to a newspaper report, followed unusually harsh rebukes of North Korea at the weekend by China, Pyongyang's sole diplomatic and financial ally.

Speculation had been building that North Korea might carry out a missile test in the near future.

North Korea's February 12 nuclear test, the country's third, prompted tougher U.N. sanctions that have angered Pyongyang. It has since warned of war with the South and the United States.

"I can only say there are such signs," South Korea's Unification Minister, Ryoo Kihi-jae, told a parliamentary committee. He declined to give details on grounds that the matter was "intelligence related".

The JoongAng Ilbo daily, quoting a senior South Korean government official, had earlier reported that movement of manpower and vehicles at the Punggye-ri test site was similar to that observed before the February blast.

North Korean authorities told embassies in Pyongyang they could not guarantee their safety from Wednesday - after saying conflict was inevitable amid joint U.S.-South Korean military exercises due to last until the end of the month. No diplomats appear to have left the North Korean capital.

A South Korean government official, quoted by Yonhap news agency, said a North Korean general had told diplomats at the weekend that the situation remained "grave". But he made no mention of Pyongyang's appeal to consider leaving by Wednesday.

U.S. Secretary of State John Kerry visits Seoul later this week and the North holds celebrations and possibly military demonstrations next Monday to mark the birth date of its founder, Kim Il-Sung - grandfather of the current leader, 30-year-old Kim Jong-un.

South Korea's Defense Ministry was unruffled by the notion of a new test, saying it had been long prepared for one.

"That has not changed at this point. Vehicles and people can come and go because there are several facilities around the nuclear test site," spokesman Kim Min-seok told a briefing.

Pyongyang has moved what appeared to be a mid-range Musudan missile to its east coast, according to media reports last week.

TURMOIL HITS MARKETS

The turmoil has hit South Korean financial markets, long used to upsets over the North. Shares in Seoul dipped to near a four-month low as the rhetoric prompted selling by foreigners after substantial losses on Friday.

Moody's credit rating agency said in a report on Monday that the rise in North Korean rhetoric and the re-starting of a nuclear plant to make fissile material had made the current situation "more dangerous" and negative for South Korean assets.

A prominent symbol of inter-Korean cooperation, the Kaesong industrial park inside the North Korean border, is also in doubt after Pyongyang prevented southerners from entering last week. Several hundred South Koreans inside have since returned home.

North Korea's KCNA news agency said a senior member of the ruling Workers' Party had visited Kaesong and singled out South Korean actions for putting the facility under threat.

"It has become impossible to operate the zone as usual due to the South Korean warmonger's reckless acts," KCNA quoted Kim Yang Gon, secretary of the party's Central Committee, as saying.

A spokesman for the South's Unification Ministry said 13 companies out of around 120 firms had stopped operations there because of a lack of raw materials.

One academic, Yang Moo-Jin of the University of North Korean studies in Seoul, said North Korea was likely to choose the action most likely to get the most mileage.

"North Korea does things with the maximum impact in mind. It has not set a no-fly zone yet, which it does every time they do a ballistic missile test," he said.

Pyongyang has shown no sign of preparing its 1.2 million-strong army for war, indicating the threats are partly intended for domestic purposes to bolster Kim, the third in his family dynasty to rule North Korea.

North Korea told China it was prepared to stage one or even two more nuclear tests this year to try to force the United States into diplomatic talks, a source with direct knowledge of the message told Reuters after the February 12 test.

U.S. LAUNCH POSTPONED

The North has also reacted furiously to annual South Korean-U.S. military exercises off the Korean peninsula, which have involved the dispatch of stealth bombers from their U.S. bases.

But a long scheduled U.S. missile launch was postponed at the weekend to try to ease tensions. The U.S. commander of American forces in South Korea also cancelled a trip to Washington due to the situation on the peninsula.

The weekend message from China was one of exasperation after years of trying to coax North Korea out of isolation and to embrace economic reform.

No country "should be allowed to throw a region and even the whole world into chaos for selfish gain", President Xi Jinping told a forum on China's southern island of Hainan. He did not name North Korea but he appeared clearly to be referring to Pyongyang.

Foreign Minister Wang Yi said China opposed "provocative words and actions from any party in the region" and would not "allow trouble-making on China's doorstep".

U.S. lawmakers said China was not doing enough.

Republican Senator John McCain, a member of the Senate Armed Services Committee, criticized China's "failure to rein in what could be a catastrophic situation". China's actions, he told CBS television, "has been very disappointing. More than once, wars have started by accident and this is a very serious situation."

Analysts said that whatever influence China once had as North Korea's principal backer had waned.

"China has some say over its economic relations with the North but doesn't have the power to say 'don't do it' when it comes to nuclear weapons and political and military issues," said Kim Yeon-chul, professor of unification studies at South Korea's Inje University.

"North Korea is not listening to China."

Beijing negotiated the new U.N. sanctions with Washington and has said it wanted them implemented. The measures tighten financial curbs on North Korea, order checks of suspicious cargo and strengthen a ban on luxury goods entering the country.

(Additional reporting by Jack Kim in Seoul, David Morgan, Aruna Viswanatha and Mark Felsenthal in Washington. Writing by Ron Popeski. Editing by Dean Yates)