"The United States is in a very delicate situation. It is up to them how to handle it," a East European diplomat said.

Caption: South Korean army soldiers in full protective gear flush the street 17 August, 1999 as they train for chemical attacks in downtown Seoul. The annual joint South Korea-U.S. exercises have sparked a furious reaction from Pyongyang amid heightened tensions over its suspected plans to launch a new missile which could hit the U.S. mainland. Photo by Choo Youn-kong Copyright AFP

"They have to strike a balance between the two sides and it is a very difficult task," he said.

North Korea Saturday denounced the South for developing new missiles, calling it "an unpardonable provocation against us and a grave threat to peace and security on the Korean peninsula."

"If the South Korean warhawks persist in developing long-range ballistic missiles ... we will take a strong countermeasure," the North's Committee for the Peaceful Reunification of the Fatherland said in a statement.

The South, which has engaged in talks with the United States to extend its missile range, denied a New York Times report it was developing a long-range ballistic missile.

The North's statement came as progress was made in the US-South Korea talks to extend Seoul's missile range, according to both US and South Korean officials.

"The discussions on the ROK (South Korea) missile issue were productive and concrete, bringing the US and ROK positions closer together," the US embassy said in a press release.

"Some differences remain, however, which the US hopes will be resolved as soon as possible," it said.

A South Korean official told journalists the two sides narrowed differences on most key points during the talks, which extended into Saturday for a three-day session.

"But because the differences are so wide over the remaining points, it will be difficult to conclude the talks at one stroke," the official was quoted as saying by the Munhwa Daily.

News reports here said the two sides have yet to agree on the extent of US technology assistance and on how to ensure "transparency" in increasing the range of South Korean missiles beyond the current 180 kilometers (108 miles).

Yonhap News Agency said the two sides came closer on ways of ensuring transparency in developing missiles with a range of 300 kilometers but they differed over the research and development of missiles with longer ranges.

The United States insisted the South restrict the research and development of missiles with ranges of longer than 300 kilometers to designing and computer simulation tests.

But South Korea demanded it be allowed to test-fire such missiles so it could produce and deploy them easily when necessary, arguing the North was developing ballistic missiles, Yonhap said.

On the other side of the globe, US and North Korean officials ended a week of talks in Berlin on improving relations but apparently without any tangible progress, according to South Korean officials.

Northern Vice Foreign Minister Kim Gye Gwan told journalists topics discussed over the past week had focused on improving bilateral relations and laying the groundwork for a future high-level meeting.

At a previous round of talks in Berlin in September, North Korea agreed to halt its missile development programme in return for the partial easing of US economic sanctions against Pyongyang.

Copyright 1999 AFP. All rights reserved. The material on this page is provided by AFP and may not be published, broadcast, rewritten or redistributed.

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