There are "legitimate grounds" for suspecting that Pyongyang may never submit to complete denuclearisation but "a phased negotiation process remains the only strategy with any chance of success," the International Crisis Group (ICG) said in a report.

The Brussels-based group said the US and other negotiators must offer sufficient incentives and guarantees of regime survival -- with progress constantly monitored given the North's history of breaking international agreements.

A six-nation deal reached on February 13 was a step in the right direction but offers more questions than answers, the ICG said.

That pact offers North Korea one million tons of fuel oil or equivalent aid for declaring all nuclear programmes and disabling all nuclear facilities.

But it does not specifically require it to account for existing nuclear weapons, does not mention a suspected highly enriched uranium (HEU) programme and does not set an overall timetable.

A deadline for the first phase -- the shutdown of the Yongbyon reactor in return for an initial 50,000 tons of oil -- was missed because of a dispute over the North's funds which had been frozen in a Macau bank.

The communist state insists it will start moving once it receives the 25 million dollars, which the United States says have been unfrozen.

"The US, South Korea, China and Japan now need to put forth a detailed, comprehensive offer for the second and subsequent phases, and back that offer with a credible threat of coercive measures should Pyongyang renege on the deal," the ICG said.

These should normally be sanctions. But the ICG said military force should not be excluded if the North tries to transfer nuclear material to another country or group.

It cautioned that nuclear weapons are the North's "trump card, and it may try to cheat and hide one in one of its countless tunnels."

Getting the North actually to dispose of its weapons may prove to be the hardest part of the exercise, the ICG said.

The report proposed an eight-step process:

1. Verified freeze of Yongbyon in exchange for the funds and 50,000 tons of fuel oil

2. Energy planning in exchange for declaration of nuclear programmes

3. Energy provision if the North signs the nuclear Non-Proliferation Treaty and other pacts and gives UN atomic inspectors unlimited access

4. Rehabilitation and relief in exchange for agreed dismantlement

5. Aid and lifting of UN sanctions in exchange for dismantlement

6. Security assurances in exchange for weapons and HEU declarations

7. International financial institutions open offices in Pyongyang in exchange for HEU commitments

8. Liaison offices and normalisation of US-North Korea relations in exchange for conclusive verification