N. Korea Crisis Eases as Inspectors Report No Nuclear Fuel Diversion : Asia: Hard-line regime heads off confrontation by accounting for all used rods. The West had feared the plutonium was being hidden for weapons.

The United States has no evidence that North Korea has diverted nuclear fuel into an atomic bomb-making program, and U.S. officials expressed guarded optimism Friday that a new crisis over Pyongyang’s nuclear program has been averted.

While Pyongyang violated its pledges by removing spent fuel from a small reactor before the arrival of inspectors from the International Atomic Energy Agency, all the fuel rods apparently are accounted for and have not been hidden for future use in making nuclear weapons, senior U.S. officials said.

The Clinton Administration warned that North Korea must safeguard the spent fuel rods for future inspection to ensure that it has not deceived inspectors about its stockpile of nuclear materials.

But officials stopped short of threatening economic sanctions and even indicated that the Administration would resume high-level talks with the Communist country. Washington has offered to expand diplomatic and economic ties with Pyongyang, but only if it agrees to abandon its alleged nuclear weapons program.

U.S. officials also demanded that Pyongyang suspend the removal of spent fuel from the Yongbyon reactor so that evidence of the reactor’s operating history can be preserved.

By accounting for its spent fuel rods, North Korea appears, for the moment at least, to have headed off a major international confrontation over its nuclear program.

Defense Secretary William J. Perry said that even though North Korea began removing the fuel rods over the objections of the U.N. atomic energy agency, that “does not mean that the spent fuel is being diverted for weapons purposes.”

“The IAEA, in fact, has told us that it is confident that there has been no diversion of the fuel that has just been discharged,” Perry told reporters at the Pentagon.

North Korea denies that it is developing atomic weapons, but the CIA has expressed its opinion that North Korea already has “one or two” nuclear weapons.

Western officials suspect that the reactor has been the source of plutonium for North Korea’s nuclear weapons program.

In a series of dire speeches in recent weeks, Perry has also warned that North Korea is building an even larger reactor that would produce enough plutonium for “10 to 12 nuclear bombs a year.”

Top Administration officials met late Friday to review reports from the inspectors now in North Korea and to decide whether any further response is warranted.

A source familiar with the discussions said that no immediate U.S. or U.N. action against North Korea is likely.

“While we view this as a serious situation, there is no sense of panic or hysteria,” the official said.

Officials of the atomic energy agency reported to the U.N. Security Council on Thursday night that North Korea’s removal of spent fuel rods from the five-megawatt reactor at Yongbyon was a “serious violation” of its nuclear safeguards pledges. But they said Friday that Pyongyang has been otherwise cooperative with the inspection process.

International observers have been able to monitor the removal of a number of additional fuel rods and to ensure that they are being stored securely in a cooling pond near the reactor.

“North Korea has taken no steps, we understand, to obstruct these IAEA activities required to confirm the non-diversion of the fuel,” said Robert Gallucci, assistant secretary of state for political-military affairs and chairman of the Administration’s senior policy-making group on Korea.

Gallucci said it is important that North Korea halt the defueling of the Yongbyon reactor because the rods decay quickly and at some point would no longer be useful in determining the way the reactor has been used.

The international agency wants to send a team to North Korea to negotiate a schedule for overseeing removal of the fuel.

France joined the United States on Friday in warning North Korea to halt removal of the spent fuel from Yongbyon until an inspection regime can be worked out.

“If North Korea persists in this action, the question of whether to adopt sanctions will have to be examined by the U.N. Security Council,” a French Foreign Ministry official told reporters in Paris.

In Seoul, South Korean officials also demanded that Pyongyang halt the defueling but expressed hope that the impasse could be resolved through diplomatic channels.

“The government notes the IAEA’s announcement that it is still possible for North Korea to implement required safeguard measures as long as it refrains from continuing the refueling,” South Korean Foreign Ministry spokesman Chang Ki Ho said in a statement.

Deputy Prime Minister Lee Hong Koo said the dispute with the North could be resolved short of Security Council action.

North Korea insists that it can resolve the nuclear dispute only in a “package deal” with Washington, which has promised diplomatic and economic cooperation once Pyongyang has satisfactorily answered questions about its nuclear program.

The suspected North Korean nuclear weapons effort remains “the central issue and the issue that must be resolved first before additional progress could be made,” Gallucci said Friday.