By Matt Spetalnick and Jeremy Pelofsky
WASHINGTON (Reuters) - North Korea handed over along-delayed account of its nuclear activities on Thursday,prompting a still-wary U.S. President George W. Bush to easesome sanctions on a country he once branded part of an "axis ofevil."
Bush cautiously welcomed the action but warned North Korea,which tested a nuclear device two years ago, that it faced"consequences" if it did not fully disclose its operations andcontinue to dismantle its nuclear programs.
"If North Korea makes the wrong choices, the United Statesand our partners in the six-party talks will respondaccordingly," he said in Washington shortly after thedeclaration was handed over to China.
Responding to an unusual opening by the secretive communiststate, Bush took a step toward removing North Korea from a U.S.list of state sponsors of terrorism and issued a proclamationlifting some sanctions under the Trading with the Enemy Act.
Seeking to deflect criticism from hardline critics whoaccuse him of going soft on North Korea, Bush made clear hewould put the onus on Pyongyang to keep its promises.
With the unpopular Iraq war and Iranian nuclear standoffunresolved in the twilight of Bush's presidency, hisadministration is hoping progress on North Korea can helpsalvage his foreign policy legacy.
But U.S. officials acknowledged that the North Koreandeclaration, which came six months after a December deadline,falls short of answering all concerns about Pyongyang's atomicambitions, especially on past nuclear proliferation activities.
Stephen Hadley, Bush's national security adviser, said thestatement reveals the amount of plutonium North Korea hasproduced but does not detail its nuclear arsenal.
But he said U.S. experts could "do the math" and that issuewould be discussed in a further phase of the six-party talksinvolving Pyongyang's neighbours that yielded this deal.
Bush also welcomed an announcement by North Korea that itwould blow up the cooling tower at Yongbyon, its main nuclearcomplex. In an unprecedented move, North Korea has invitedWestern media to record the event.
North Korea had already begun dismantling its nuclearfacilities after talks among China, Japan, Russia, North andSouth Korea and the United States.
"This isn't the end of the process, this is the beginningof the process," Bush said, insisting that Pyongyang's latestmoves would not in themselves end its international isolation.
He said among other steps North Korea needed to take was aresolution of its differences over abducted Japanese citizens.
'AXIS OF EVIL'
Bush bracketed North Korea, Iraq and Iran in an "axis ofevil" after the September 11 attacks in 2001.
Hadley said Pyongyang had now met the condition -- a U.S.finding it had not supported terrorism in the past six months-- needed to get off the U.S. blacklist, which takes 45 days.
But, when a reporter asked whether Bush now consideredPyongyang an ex-member of the "axis," Hadley said: "We have alot of problems with North Korea." He cited human rights andthreats to neighbours from ballistic missiles and conventionalforces as well as from its nuclear efforts.
Removal from the terrorism list could relax some traderestrictions and eventually let the impoverished country workwith the World Bank. But the immediate economic benefit isexpected to be minimal, experts said.
Bush and his aides stressed the symbolic nature of the U.S.concessions. The outgoing president, who leaves office inJanuary, has come under pressure from many conservatives not tobe seen as compromising on North Korea five months before apresidential election in which national security issues willplay a big part.
"This is a big shame. This is an agreement that almostentirely benefits North Korea. They've gained enormousinternational political legitimacy ... while giving upessentially nothing in return," said John Bolton, a former U.S.envoy to the United Nations under Bush and now a harsh critic.
Hadley said easing sanctions was "relatively minor" and ifPyongyang failed to fulfil its obligations the United Statescould seek to reimpose them or push for new ones.
U.S. financial sanctions aimed at thwarting North Koreanmoney laundering, illicit financing activities and weaponsproliferation will stay in effect, a Treasury spokesman said.
Experts said the declaration was positive but left deepuncertainties over who will make further concessions and howmuch other countries can trust Pyongyang.
Despite that, U.N. Secretary-General Ban Ki-moon said NorthKorea's declaration followed by "reciprocal actions" by theUnited States "are important steps forward."
China, the closest Pyongyang has to an ally, hosted talksthat last year secured a deal offering North Korea energy, aidand diplomatic incentives in return for disabling its mainnuclear facility and unveiling past nuclear activities.
"In order to verify the plutonium number that the NorthKoreans have given, we have been given documents, but we alsoare expecting access to the reactor core, to the waste pool,"U.S. Secretary of State Condoleezza Rice said in Japan.
The latest phase of the nuclear disarmament deal had beendue for completion by the end of 2007 but was delayed bydisputes over money, aid and the contents of the declaration. Anew round of six-party talks is expected soon.
(Additional reporting by David Morgan and Paul Eckert inWashington, Louis Charbonneau at the United Nations, ChrisBuckley in Beijing, Susan Cornwell in Kyoto, and Jack Kim inSeoul; Writing by Matt Spetalnick and Jeremy Laurence; Editingby David Storey and Patricia Zengerle)
