Analysis: N. Korea might want even more

The Bush administration caved to North Korea's escalating demands that threatened a nuclear disarmament accord. But there are still the communist nation is angling for a better deal.

Washington largely kept quiet as the North missed a deadline to begin shutting down a reactor and seemed to delay responding to U.S. overtures on a banking investigation.

President Bush said Friday the diplomacy has "hit a bump in the road" over the banking matter. He defended the deal the U.S. helped broker in February to trade economic and energy aid for a gradual standing down of the North's nuclear capability.

Bush said the world's patience with North Korea and leader Kim Jong Il is not infinite.

"I think it's wise to show the North Korean leader ... that there's a better way forward," Bush said. "I wouldn't call that soft."

The administration's about-face on North Korea shows the growing emphasis on pragmatism and flexibility in foreign policy. This change in approach also is evident in the new willingness to engage unpalatable governments in Iran and Syria, and to change some tactics in the Iraq war.

It divided several elements of the administration, pitting hawks such as White House adviser Elliot Abrams against diplomats at the State Department, and leaving law enforcement chiefs at the Treasury Department feeling misused.

Several administration officials, who spoke on condition of anonymity to describe internal deliberations, acknowledged the rifts. They said what was once an ideological difference of opinion became a bigger problem because of the mishandling of a complex financial investigation involving North Korea.

Bush maintained that the investigation into a Macau-based bank suspected of doing North Korea's dirty work was separate from international efforts to get the North to trade away its nuclear capability.

The two issues always were linked for the North Koreans, who boycotted arms talks for more than a year after the Treasury Department blacklisted the bank in 2005.

The administration acknowledged as much last year and got the North to return to talks by agreeing to resolve the bank matter. Thereafter, each new red line that Washington tried to draw about what would happen to the bank and $25 million in frozen funds faded in the face of the North's intransigence.

The North Koreans said they were promised one thing; the U.S. and banking authorities in China and Macau said it was another.

Bush decided to free the entire $25 million this month in hopes of keeping the fragile nuclear deal on track.

North Korea, however, may want a clean bill of health for the bank along with U.S. help improving its financial image. The North blew a mid-April deadline to begin shutting down its nuclear reactor despite the concession and has dragged its feet in retrieving the money from the bank after U.S. officials said it was available.

Washington's newly accommodating approach to the secretive government it once accused of being part of an "axis of evil" is a gamble. It relies on signals and assurances from an opaque communist nation that has reneged on or subverted previous agreements, critics said.

"Their style is to negotiate assiduously, sign the agreement and then negotiate again," said former U.N. Ambassador John Bolton, a Bush appointee. "That's what they are doing here."

North Korea has not expressly asked for additional incentives. But analysts and some U.S. officials said the North sees the banking issue as proven leverage in the nuclear negotiations and does not consider the matter closed.

U.S. officials said North Korea wants a way back into an international banking system that had shunned the North because of money-laundering allegations levied by the Treasury Department. Removing the black mark from the small bank that held the $25 million would be a start. Even better would be U.S. help in getting that money into the global banking stream, without strings or stigma.

Bush acted on advice from Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson that the concession could salvage a pact that eventually would rid North Korea of nuclear weapons.

Conservative critics in and out of the administration say North Korea is playing for time or playing the United States for a fool.

"I don't think there's any prospect the North Koreans are ever going to comply with this agreement anyway, so I don't think there's any surprise," said Bolton.

Japan, Washington's closest ally on North Korea, is increasingly nervous.

The North Koreans "need to respond properly on these issues," Japanese Prime Minister Shinzo Abe said Friday during a meeting with Bush. "Otherwise we will have to take a tougher response on our side."

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On the Net:

State Department background on North Korea: http://www.state.gov/p/eap/ci/kn/

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EDITOR'S NOTE _ Anne Gearan covers diplomacy and foreign affairs for The Associated Press.