U.S. Reportedly Offered to Take North Korea Off Terror List During Nuke Negotiations

The United States offered to remove North Korea from Washington's list of states sponsoring terrorism if the communist regime dismantles its atomic weapons program, South Korea's main nuclear envoy said Tuesday.

The proposal was just one of the incentives the U.S. spelled out last week at six-nation nuclear disarmament talks with the North, along with offers of security guarantees, a peace treaty and normalization of relations, Chun Yung-woo said.

"The point of the proposal is that everything is possible if North Korea denuclearizes and nothing is possible if it refuses," Chun told news cable channel YTN.

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North Korea was not prepared to review the U.S. offer at the talks, but promised to study it and bring a response to the next round of negotiations, he said.

Removal from Washington's list of terrorism-sponsoring states has long been a key North Korean demand. The listing effectively blocks a country from getting low-interest loans from international lending agencies.

North Korea was first put on the list for its alleged involvement in the 1987 mid-air bombing of a South Korean airliner that killed all 115 people aboard.

The six-nation talks in Beijing — the first since North Korea's Oct. 9 nuclear test explosion — produced no breakthrough as the North's delegation refused to discuss disarmament, demanding Washington first lift financial sanctions imposed for the North's alleged involvement in dollar counterfeiting and money laundering.

A date for a resumption of the talks — involving China, Japan, the two Koreas, Russia and the U.S. — has not been set.

North Korea says the financial sanctions are evidence of Washington's "hostile policy" and indicate its intention to overthrow the regime, and the North therefore needs nuclear weapons for protection.

Washington says the restrictions against a Macau-based bank holding North Korean accounts is a law enforcement matter unconnected to the nuclear issue.

The U.S. and North Korea held separate bilateral talks on the financial issue on the sidelines of the nuclear negotiations, but failed to narrow differences.

Chun said the U.S. and the North exchanged views on when and where to hold the next financial talks, but he declined to elaborate.

South Korea's new foreign minister, Song Min-soon, went to Tokyo on Tuesday to discuss the North Korean talks, officials said.

Making his first overseas trip since becoming South Korea's top diplomat in early December, Song was to meet with Japan's chief Cabinet secretary, Yasuhisa Shiozaki, on Tuesday and Prime Minister Shinzo Abe and Foreign Minister Taro Aso on Wednesday, the Foreign Ministry said.

Song also planned to seek ways to mend South Korea's strained relations with Japan.

Ties have been frayed by territorial disputes and by former Japanese Prime Minister Junichiro Koizumi's repeated visits to a war shrine that honors Japan's war dead, including convicted war criminals. The visits angered many on the Korean peninsula, which Japan ruled as a colony in 1910-45.

Monitor the nuclear showdown on the Korean Peninsula in FOXNews.com's North Korea Center.