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Obama proposes U.S. liaison in North Korea-report

SEOUL (Reuters) - U.S. President Barack Obama has proposed setting up a liaison office in North Korea next year in a step to ease tensions between the two rival states, Yonhap news agency said on Friday.

North Korean leader Kim Jong-il holds a bottle during his visit to the Rason Taehung Trading Company at an undisclosed place in North Korea, in this undated picture released by North Korea's official news agency KCNA December 17, 2009. REUTERS/KCNA

The offer was in a letter for leader Kim Jong-il that Obama’s first envoy to the secretive state delivered when he went to Pyongyang last week for discussions aimed at reviving dormant nuclear disarmament talks, Yonhap quoted diplomatic sources in Beijing as saying.

North Korea’s official KCNA news agency confirmed later on Friday that the letter from Obama to Kim had been handed to First Vice Minister Kang Sok-ju, considered the mastermind of the North’s nuclear policy, by U.S. envoy Stephen Bosworth on December 9.

It gave no other details

Obama said the liaison office could be established if Pyongyang ended its year-long boycott of the talks and returned in the next few months to the discussions with China, Japan, Russia, South Korea and the United States, Yonhap said.

North Korea, which has seen its broken economy become weaker since it walked out of the disarmament-for-aid nuclear talks, hinted it was ready to resume discussions after its top nuclear policy maker met U.S. envoy Stephen Bosworth.

The sources quoted by Yonhap said the offer presents a face-saving opportunity for North Korea, which had declared the talks dead and said it would never go back unless Washington drops what Pyongyang sees as hostile plans to topple its leaders.

“North Korea is looking for a way to justify their return to the talks,” an unidentified source said.

The two countries, technically still at war and with no diplomatic ties, usually conduct their rare communications through the North Korean U.N. mission in New York.

North Korea was hit with fresh U.N. sanctions after a nuclear test in May, its second.

The sanctions are aimed at halting its arms sales, which experts say are worth more than $1 billion a year and are a key component of the North’s estimated $17 billion (10.5 billion pounds) annual economy.

Few expect the North Korean leader will ever abandon arms sales, which earn him the hard currency he needs for his “military-first” rule and win the backing of senior cadres as he prepares for succession in Asia’s only communist dynasty.

The seizure of North Korean arms in the past week found on a plane in Thailand put the squeeze on Pyongyang by making it more costly for it to dodge an international dragnet when it sells arms, including missiles. It also increased the risks for its customers, analysts said.

But as the cash flow slows to a trickle, Kim may feel the need to make concessions that could win him rewards for moves he makes that reduce the security threat his state poses to North Asia, which is responsible for one-sixth of the global economy. (Additional reporting by Shin Ji-eun; Editing by Jonathan Thatcher and Paul Tait)