An international effort to denuclearise the Korean peninsula has run into another obstacle after it emerged that North Korea has started reassembling its nuclear reactor.

North Korea started disabling the reactor at Yongbyon last year in return for economic aid and diplomatic concessions, including its removal from a US list of countries that sponsor terrorism.

On Wednesday, the South Korean foreign ministry said North Korea had begun reassembling the plant, in a move seen as a protest against Washington’s decision to delay its removal from the terrorism list.

Any collapse in the so-called “six-party” process aimed at disarming North Korea would be a blow to the Bush administration, which has touted the agreement with Pyongyang as a foreign policy success.

Condoleezza Rice, US secretary of state, downplayed the development, saying there would be inevitable “ups and downs” in the complicated six-party process, which includes China, Japan, South Korea and Russia.

The move comes a week after Pyongyang announced it had suspended efforts to disable its nuclear facilities and was considering putting the plutonium-based Yongbyon reactor back into action.

President George W. Bush told the US Congress in June that he planned to remove North Korea from the terrorism list as part of a February 2007 deal to dismantle the Stalinist state’s nuclear programme. But he delayed its removal because of North Korea’s failure to agree to an acceptable “verification” mechanism to prevent future proliferation.

In June, Pyongyang handed over a detailed nuclear declaration to China, and soon after that, it publicly destroyed a water cooling tower at the Yongbyon facility. The declaration paved the way for North Korea’s removal from the terrorism list on the condition that it agree to a verification mechanism to prevent nuclear proliferation.

The two sides have been deadlocked in recent weeks over that verification mechanism. One senior US official said Pyongyang was concerned that the US was “setting the bar too high on verification” and wanted a “less intrusive process” that did not include snap inspections.

The US official said the administration was not overly concerned that North Korea had started moving equipment back to the nuclear plant, saying it seemed to be aimed at extracting a compromise rather than destroying the six-party process.

The Bush administration believes North Korea would need at least six months to return Yongbyon to operation as it would need to rebuild the cooling tower.

“We have done enough disabling that this is not something that is easily reversible,” said the official. “The talks have not broken down. There is still ongoing discussion.”

The official expressed optimism that a deal could be reached. He said one possible outcome was to define verification in a manner that would assuage Pyongyang’s concerns that the US wanted spot inspections to conduct intelligence operations inside North Korea. He added that spot inspections, while sounding tough, have historically not been very useful.

“We need a very credible inspection regime, but it doesn’t necessarily have to be onerous.”

The White House declined to comment on the reports that North Korea had started rebuilding the plutonium reactor, but stressed that Pyongyang needed to agree to a “credible verification protocol” before it could be removed from the terrorism list.

“North Korea knows what it needs to do at this point. The six-party talks operate on a principle of action-for-action,” said Gordon Johndroe, White House national security council spokesman.

Additional reporting by Daniel Dombey

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