Bush Offers Better Ties to N. Korea : Diplomacy: President hopes to entice Pyongyang to speed pledged nuclear site inspections. He also announces conditional cancellation of joint war games with the south.

President Bush held out the prospect today that the United States will expand its ties to North Korea as an incentive to the Pyongyang regime to open its nuclear facilities to inspection.

As a first step, Bush announced the conditional cancellation of joint U.S.-South Korean military exercises known as “Team Spirit” that for decades have served as a symbol of the nations’ shared resolve against the north.

The moves, to be implemented if Pyongyang fulfills its pledge to allow international inspectors access to its plants, were offered as part of a U.S. effort to seize an opportunity opened by North Korea’s agreement last week to a ban on nuclear weapons throughout the Korean Peninsula.

Administration officials said North Korea had responded to the U.S. offer of a modest upgrade in relations by asking for more time. But Bush replied “that’s fine” when asked about the rebuff, and National Security Adviser Brent Scowcroft said he did not know if Pyongyang’s stance was “non-retractable.”

In the meantime, Bush maintained a tough line toward the north, reasserting a U.S. commitment to maintain a 40,000-strong contingent of American troops here at least until Pyongyang opens its doors.

The North Korean agreement on nuclear weapons, in a pact with Seoul, followed the withdrawal of all U.S. nuclear weapons from South Korea. But the United States believes Pyongyang may be capable of producing such weapons of its own within two years.

And despite the accord, the issue of how North Korean facilities are to be inspected has not yet been resolved, and the Administration has remained skeptical that Pyongyang will fulfill its pledge to permit access to its nuclear plants.

“Paper promises will not keep the peace,” Bush said in an address before the Korean National Assembly as he urged Pyongyang to act promptly in what would be “a new milestone on the path to peace.”

He denounced North Korea’s pursuit of nuclear arms as “the single greatest source of danger to peace” in the region.

By dangling the prospect of improved relations before the increasingly ostracized Pyongyang, the Administration hopes to speed its compliance to allay lingering fears that North Korea could emerge as a renegade nuclear power.

Administration officials said Bush had intended to make the offer of closer ties with North Korea a centerpiece of his address but backed away from the plan because of Pyongyang’s lukewarm response.

He instead discussed the issue in a meeting with President Roh Tae Woo and then, at a joint news conference, nodded approvingly as Roh said he would welcome such an upgrade.

White House officials said the U.S. offer to Pyongyang was made in recent days as the United States suggested that the site of low-level talks between the two nations that have taken place in recent years should be shifted from Beijing to New York.

In describing North Korean President Kim Il Sung’s apparent irresolution on the matter, a senior Administration official suggested that Pyongyang is “nervous about getting too close to us.”

In what appeared to be the consequence of the parallel U.S. effort to maintain pressure on the north, a government spokesman in Pyongyang complained that the United States in recent days had dispatched U-2 spy planes over its territory in a provocative action.

In an interview here today with ABC-TV, Scowcroft declined to discuss such operations but said the United States would continue its “intelligence surveillance of North Korea” at least until Pyongyang agrees to a nuclear inspection system.

The effort to accelerate the denuclearization of North Korea was described as Bush’s top priority in a three-day visit that began when the President arrived here Sunday night after visits to Australia and Singapore.

Bush met this morning with Roh after having dining with him Sunday evening at the Blue House, the home of the Korean leader, and discussed ties with Pyongyang in a noontime news conference.

During his visit here, Bush urged Roh to overcome the protectionist pressures he said are manifest in South Korea’s buy-domestic “frugality campaign” and agree to the further opening of a market for agriculture and services that has often shut out U.S. exports.

But at the joint news conference, Roh said only that he hoped the United States would be understanding if Seoul did not agree to open its markets.

While the Administration still regards South Korea as overly protective, the U.S. trade deficit to Seoul has become a trivial amount compared to its $40 billion gap with Tokyo.

For that reason, the President will save his sharpest words on trade for a visit to Tokyo that begins Tuesday, during which, Scowcroft said today, Bush will press Japan further to allow in more U.S. autos and auto spare parts.

On the North Korean security issue, in an ironic twist, Administration officials indicated that part of the motivation for the White House haste in seeking the nuclear inspections lies in the mounting difficulties encountered by Pyongyang.

Telling the National Assembly that “the winds of change are with us now,” Bush predicted to the applause of the National Assembly that “the day will come when . . . Korea will be whole again.”

Some U.S. intelligence estimates predict the collapse of the north’s Communist regime by year’s end, and officials here said the United States hope to guard against the prospect that a newly unified Korea might have second thoughts about casting nuclear weapons aside.

“It’s like the Ukrainians,” one official said in reference to the former Soviet republic, which has not yet relinquished the nuclear weapons on its soil. “They say, ‘Hey, this is kind of nice.’ ”

The growing accommodation by North Korea to the south means that for the first time since the Second World War, the message delivered by an American president here will be mostly positive toward Pyongyang.

Over its 46-year history, North Korea has shown little fealty to its agreements, and has yet to permit inspections by the International Atomic Energy Agency despite having signed in 1985 the Nuclear Non-proliferation Treaty.

But a senior U.S. official traveling with Bush indicated that mounting economic difficulties in a North Korea whose government has mounted a campaign to persuade its citizens to eat just two meals a day may now make Pyongyang somewhat more compliant.

“We would consider doing more if they are responsive in the security area,” the official said in briefing reporters aboard Air Force One as Bush flew here on Sunday.