North Korea may be dropped from terrorism list, U.S. hints

By Arshad Mohammed and Sue Pleming

NEW YORK (Reuters) - U.S. Secretary of State Condoleezza Rice hinted on Monday that North Korea could be dropped from a U.S. terrorism blacklist before fully accounting for the Japanese citizens it abducted in the 1970s and 1980s.

Such a move could antagonize Japan, a key U.S. ally for whom the fate of the abductees -- who were kidnapped by North Korean agents and kept in the impoverished, Stalinist state for decades -- is a politically sensitive issue.

North Korea's presence on the U.S. state sponsors of terrorism list -- which imposes a range of U.S. sanctions -- has become a bargaining chip in multilateral negotiations on ending Pyongyang's nuclear programs.

The top U.S. negotiator with North Korea suggested recently that Pyongyang could come off the list before it abandons all nuclear programs as called for under a 2005 agreement among the two Koreas, China, Japan, Russia and the United States.

Asked if Washington might also drop Pyongyang from the list before it provides a complete accounting for Japanese citizens kidnapped by North Korea, Rice said the United States should not tie its hands in doling out such carrots to Pyongyang.

"I don't think that we want to get into a situation in which we have locked all of the steps that we might take with the North Koreans and lock them into a certain sequence with other steps that we think need to be taken," Rice told Reuters in an interview.

"We have to be able to use whatever incentives we have that are appropriate to the stage at which we are with the North Koreans," she added.

The fate of Japanese citizens abducted by North Korea is a highly emotive issue in Japan, and Tokyo may resent any step by Washington to drop Pyongyang from the U.S. blacklist.

Pyongyang admitted in 2002 that its agents had kidnapped 13 Japanese, five of whom have since been repatriated after living for years in the impoverished, Stalinist state.

North Korea says the other eight are dead, but Tokyo wants better information about their fate, as well as information on another four people it says were also kidnapped.

'REALLY HORRIBLE'

Rice said that the United States would continue to press North Korea to settle the matter.

"We have been very clear with the Japanese ... that we are not going to forget the abduction issue," she said. "We're going to keep pressing it. It's a really horrible humanitarian situation. It was a terrible thing to do and it needs to be resolved."

Under a February 13 "six-party" agreement, North Korea must disable its nuclear facilities and give a complete declaration of all its nuclear programs. In return, it is to receive 950,000 tonnes of heavy fuel oil or its equivalent,

As part of that agreement, the United States said it would "begin the process" of taking North Korea off the terrorism list.