BEIJING North Korea agreed on Tuesday to take steps toward nuclear disarmament in exchange for $300 million in aid under a deal President George W. Bush hailed as the best chance to get it to scrap its atomic weapons program.
The landmark agreement, reached four months after Pyongyang stunned the world with its first nuclear test, requires the secretive communist state to shut down the reactor at the heart of its nuclear ambitions and allow international inspections.
But the accord also calls for concessions by the United States toward economically impoverished North Korea, which Bush once lumped together with Iran and Iraq as an "axis of evil."
The United States and Japan agreed to discuss normalizing ties with North Korea, something it had long sought. Washington also said it would resolve within 30 days a dispute over frozen North Korean bank accounts in Macau, and consider removing Pyongyang from a list of state sponsors of terrorism.
The plan hammered out in Beijing by the two Koreas, the United States, Japan, Russia and China after nearly a week of talks will only mark the starting point for locating and dismantling North Korea's nuclear projects, leaving many questions to future negotiations.
"These talks represent the best opportunity to use diplomacy to address North Korea's nuclear programs," Bush said in a statement released by the White House. "They reflect the common commitment of the participants to a Korean Peninsula that is free of nuclear weapons."
He acknowledged, however, that Tuesday's deal represented only a "first step," and White House spokesman Tony Snow warned Pyongyang it still faces sanctions if it reneges.
U.S. Secretary of State Condoleezza Rice said Iran, another country at loggerheads with the West over its nuclear program, should see North Korea as an example.
"Why should it not be seen as a message to Iran that the international community is able to bring together its resources?" she asked at a news conference.
The deal came after a U.S. administration known for a go-it-alone style in world affairs decided to take a more multilateral approach toward North Korea, largely by drawing in China to apply pressure as Pyongyang's major trading partner.
Some Bush advisers had argued in favor of squeezing North Korea to the point of economic collapse, but China, along with South Korea, feared that could bring waves of refugees.
The Bush administration, which had demanded a verifiable suspension of North Korea's nuclear activities before agreeing to aid, softened its stance and agreed to a process including discussions of removing U.S. trade sanctions.
Bush has been determined to achieve progress on North Korea as he struggles with an unpopular war in Iraq, Iran's nuclear challenge and a domestic agenda threatened by a newly Democratic-led Congress.
Chief U.S. negotiator Christopher Hill and North Korean envoy Kim Kye-gwan warmly shook hands and patted one another's arms during a closing reception in Beijing.
Pyongyang's official KCNA news agency said the other parties decided to offer economic and energy aid equivalent to one million tonnes of heavy oil in connection with North Korea's "temporary" suspension of the operation of its nuclear facilities.
Hill dismissed that report. "Any action to restart the reactors would be a violation of the agreement," he said.
Japan, which has voiced doubt that any agreement could be made to stick, said it will not join in giving aid to North Korea because of past abductions of its nationals by Pyongyang's agents.
The deal says North Korea must take steps to shut down its main nuclear reactor within 60 days. In return, it will receive 50,000 tonnes of fuel oil or economic aid of equal value.
The North will receive another 950,000 tonnes of fuel oil or equivalent when it takes further steps to disable its nuclear capabilities. The fuel would be worth around $300 million at current prices.
The deal faces a tricky path to fruition amid profound distrust between North Korea and its would-be donors.
North Korea stepped down the path to nuclear disarmament before, in a 1994 agreement with the Clinton administration that collapsed in 2002 after Washington accused Pyongyang of seeking to produce weapons-grade uranium.
The United States maintains some 30,000 troops on the Korean peninsula, which has remained in a technical state of war since the 1950-53 Korean War truce.
China welcomed the agreement. But at the United Nations in New York, China's deputy UN ambassador, Liu Zhenmin, was asked if Beijing would push for the lifting of UN sanctions against North Korea. "No it won't push for that, it will push for progress in the six party talks," he told reporters.
(Additional reporting by Teruaki Ueno, Ben Blanchard, Nick Macfie, Lindsay Beck and Ian Ransom in Beijing and Matt Spetalnick, Steve Holland, Tabassum Zakaria and Sue Pleming in Washington and Evelyn Leopold at the United Nations)