"Unfortunately real negotiations to settle the North Korea nuclear issue have not begun yet," South Korean Unification Minister Chung Dong-Young said in a speech at Beijing University.

"In 2005 we will be at a crossroad: we can either find a breakthrough in resolving the matter or we can face a crisis situation."

Chung, also head of the National Security Council, is in Beijing as President Roh Moo-Hyun's special envoy as the two sides seek ways to restart stalled multinational talks on North Korea's nuclear ambitions.

He said the main obstacle was the lack of trust between North Korea and the United States.

"North Korea doesn't trust the outside world -- that is to say the United States -- and America doesn't trust North Korea. This is the main reason why we haven't started the negotiations," he said through a Chinese translator.

The reclusive Stalinist state vowed Monday to strengthen its deterrent if the United States holds on to its "hostile" policy on the communist country.

Chung said it was crucial that North Korea works towards normalising relations with the United States and Japan.

"What is most important is the normalisation of relations between North Korea and the United States, and the North should also establish diplomatic relations with Japan," he said.

Pyongyang must also abandon its nuclear plans, become part of the Non-Proliferation Treaty and accept inspections from the International Atomic Energy Agency, he said.

In return, the United States needed to "safeguard" North Korea's political system, lift economic sanctions against the country and establish diplomatic ties, said Chung.

"Only then will the Cold War structure on the Korean peninsula, which formed during the Korean War, be dismantled."

It was South Korea and China's job to build trust between the two countries, he said, and reiterated that military threats should play no part in resolving the crisis.

Chung said a window of opportunity still existed for North Korea, officially called the Democratic People's Republic of Korea (DPRK), to prove that 2005 could be "an historical point of transition".

"We hope and expect the parties involved in the six-party talks, including the DPRK and the US, to make a historic choice and decision."

North Korea has been under growing pressure to return to the six-party negotiations which also include South Korea, China, Japan, Russia and the United States.

The sides have held three rounds of talks since the standoff began in October 2002. North Korea boycotted a fourth round scheduled for Beijing in September, citing what it called a hostile US policy and other issues.

It has indicated it would take no steps until it was sure what shape US policy would take under the second administration of President George W. Bush, who will be officially inaugurated on January 20.

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