(LEAD) N.K. may demand S. Korea lift sanctions in return for Olympics participation: report

(ATTN: ADDS analysis by Seoul's unification ministry in last 6 paras)

SEOUL, Jan. 1 (Yon hap) -- North Korea may demand that South Korea lift sanctions on Pyongyang, resume inter-Korean economic projects and provide aid in exchange for the North's participation in the Winter Olympics, Seoul's think tank said Monday.

North Korean leader Kim Jong-un said in his New Year speech that his country could send a delegation to the Winter Games to be hosted by South Korea next month and is open to talks with Seoul over the matter.

North Korea may assess that its participation is an act to "help" the South, according to a report by the state-run Institute for National Security Strategy (INSS) under Seoul's spy agency.

"In exchange for that, it cannot be ruled out that it would demand Seoul lift economic sanctions against it and resume economic cooperative projects and humanitarian aid," the report said.

Seoul has imposed unilateral sanctions over the North's nuclear and missile tests and also banned inter-Korean exchanges to punish the North for the sinking of a South Korean warship in 2010. The South also closed an inter-Korean industrial complex in the North's border city of Kaesong in 2016.

"The North is likely to give weight to participation (in the Winter Olympics), but it is expected to make a final decision in tandem with the South's attitude," the INSS added.

The report said that, at future talks with the South, the North could demand the suspension of military drills between the South and the U.S. as well as Washington's stopping the regular deployment of its strategic assets on the Korean Peninsula.

"Pyongyang could call for such conditions when it opens talks with Seoul over the Olympics, a move aimed at taking an upper hand in inter-Korean ties," the think tank added.

President Moon Jae-in earlier proposed to the U.S. that the allies delay their joint military drills, which may coincide with the Winter Olympics or the Paralympics.

Seoul will host the Winter Olympics in PyeongChang, 180 kilometers east of Seoul, from Feb. 9-25. The Paralympics will be held from March 9-18.

The institute said that Pyongyang will likely refrain from provocations at least until the opening of the Winter Games.

"But it also cannot be ruled out that the North could resume provocative acts if Seoul and Washington resume their joint military drills after the games," it said.

It also added that the wayward regime could focus on putting nuclear weapons and missile into operational deployment, rather that carrying out additional testing.

"But there is a possibility that it could seek to launch a satellite into orbit in the name of its right to develop a peaceful space program," the report said.

South Korea's unification ministry said that the North is apparently seeking to find a way out of its current situation through an improvement in ties with Seoul on the basis of its confidence about its nuclear force.

"The North expressed strong willingness for better inter-Korean ties through contacts at various levels and cross-border visits," the ministry said in its analysis of Kim's speech.

Meanwhile, the North's ruler did not express his intent to improve ties with the U.S., although he stressed the country's status as a "responsible nuclear power," the ministry said.

"It did not signal additional provocations, but the government thinks the North will continue to advance its nuclear capabilities," it added.

As to the economy, Kim proposed sectoral assignments to improve the livelihoods of ordinary North Koreans on the occasion of the 70th anniversary of the regime's establishment, but he has yet to unveil targets for new projects.

"To achieve its proposed tasks, the country is expected to strengthen internal control and surveillance (on its people and officials)," the ministry added.

sooyeon@yna.co.kr
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