Merrill believed that the key elements of Kim's strategy were to revive the moribund North Korean economy, establish better diplomatic relations with the United States and the rest of the international community, maintain popular domestic support for his regime and arrange for a smooth transfer of power.

"So the bottom line is that I think it means that we probably have greater chance of making progress than many think," Merrill said, citing current six-nation talks aimed at disbanding North Korea's nuclear weapons program through an aid-for-disarmament deal.

North Korea has promised to start shutting down its key nuclear plant under UN supervision under an accord reached at the six-nation talks in February.

But a dispute over the transfer of North Korean money from a Macau bank has held up implementation of the accord.

Washington says it has unfrozen the 25 million dollars but foreign banks have since been unwilling to handle the cash, which the United States had said were proceeds from money laundering and counterfeiting of US dollar bills.

On Thursday, the US-based Wachovia bank said it was considering a State Department request to oversee the transfer of frozen funds back to the financially starved regime, in an indication that the dispute was about to be settled.

Giving an upbeat prospect of the North Korean denuclerization deal at a forum of the South Korean embassy Thursday, Merrill said North Korean leader Kim probably realized that nuclear weapons had become "more of an obstacle to some of the things he wants to achieve."

Kim, he said, was fighting against time to push economic reforms in his country against the backdrop of a prosperous Northeast Asian neighborhood and to lift the living standards of his people who were "worn out by years after years of struggle and sacrifice."

The 65-year-old Kim, who like his father Kim Il-Sung has ruled the nation with an iron hand, also needs to begin putting into place arrangements for a smooth transfer of power, Merrill said.

"I would think he would want ... to do that in a situation where the new person is not faced with monumental challenges, he would like to give him a boost by settling some things, I would think," he said.

Merrill said that the junior Kim might also want to achieve a key unfulfilled ambition of his father -- establish diplomatic relations with the United States.

"Kim Jong-Il has his own agenda and I think there is some confluence between his agenda and our agenda. There is a lot more to that agenda than a few nuclear weapons," Merrill said.

Under the nuclear accord, the United States will consider removing Pyongyang from its list of terrorist states and open talks on establishing diplomatic relations as it dismantles and removes its nuclear facilities.

earlier related report
China says NKorea bank row still not solved
Beijing (AFP) May 18 - A financial dispute that has stalled efforts to end North Korea's nuclear programme remains unresolved despite promising signals from Pyongyang, Chinese Foreign Minister Yang Jiechi said Friday.

North Korea has for months been trying to retrieve around 25 million dollars that was initially frozen in Macau's Banco Delta Asia (BDA) bank in 2005 under US money laundering and counterfeiting sanctions.

The North has said it will not push ahead with a nuclear disarmament deal brokered in six-nation talks in February until it receives the money.

However, despite the United States lifting the restrictions in March, North Korea has been unable to get the money due to a myriad of complications that include other banks not wanting to touch apparently tainted money.

"The most pressing issue that needs to be resolved at the moment is the DPRK-related money in the BDA," Yang said, using North Korea's official acronym.

"Relevant parties are making intensive efforts to seek a solution to the matter. We hope to see an early and proper settlement of that issue so that the process of the six-party talks will continue," he said during a press conference with British Foreign Secretary Margaret Beckett.

Yang's comments came after Pyongyang said Tuesday that work was under way to settle the banking row, raising hopes that North Korea would finally start shutting down its nuclear programme.

China is the host of the six-nation disarmament talks, which involve the two Koreas, the United States, Japan and Russia.

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