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The US undersecretary for arms control and international security said Kim had to scrap his nuclear weapons drive and was "dead wrong" if he thought developing them would serve to strengthen his regime.
"The days of DPRK (North Korean) blackmail are over," Bolton said in a speech to the East Asia Institute, a Seoul-based private thinktank.
"Kim Jong-Il is dead wrong to think that developing nuclear weapons will improve his security. Indeed the opposite is true."
He said Kim lived like royalty while keeping "hundreds of thousands of his people locked in prison camps with millions more mired in abject poverty, scrounging the ground for food. For many in North Korea, life is a hellish nightmare."
Washington has been pressing for expanded dialogue with Pyongyang following initial three-way talks in Beijing in April involving China, North Korea and the United States.
North Korea is considering a new US proposal for resuming three-party talks followed quickly by six party talks with Seoul, Tokyo and Moscow joining the forum.
Bolton's remarks are sure to inflame the Stalinist state which on Wednedsay unleashed its own verbal attack on Washington over the US-led war on Iraq.
The Stalinist state has demanded one-on-one talks with Washington, but says it may show flexibility if Washington offers it security guarantees in the form of a non-aggression pact.
Asked at a press conference what effect his criticial remarks were likely to have on Pyongyang while delicate diplomatic negotations were underway, Bolton said it was necessary to speak out.
"I think it is important to tell the truth and I think that being able to state clearly the concerns we have about the regime in North Korea is important internationally in explaining why we are concerned both about its own support for terrorism and its pursuit of weapons of mass destruction," he said.
Bolton, who arrived here from Beijing, heads to Tokyo later Thursday on the third leg of his Asian tour which comes amid signs that a China-led drive to bring North Korea to the negotiating table has stalled.
China, seen as one of the few states with any influence on North Korea, has mounted months of diplomacy designed to find a format acceptable to both Pyongyang and Washington for talks on the crisis which erupted last October.
Bolton said Pyonmgyang had yet to respond to the latest US proposal, saying "the ball is North Korea's court."
He said as well as multilateral talks, Washington was pursuing two "complementary tracks" through the UN Security Council and the US-led Proliferation Security Initiative aimed at blocking the North's exports of missiles, nuclear materials and other banned items.
He said it was important for Pyongyang to know that if North Koreans refuse multilateral talks, "there is another route... that we can follow."
He denied there was a rift with South Korea, which insists that diplomacy should be exhausted before further steps, including UN involvement, are considered.
"We are quite happy to defer the discussion of a presidential statement or resolution (at the UN)... but the possibility of Security Council action is always there."
US President George W. Bush, who spoke by telephone Wednesday with Chinese President Hu Jintao, said in Washington that "serious progress" had been made thanks to Chinese inmvolvement in the diplomatic drive for multilateral talks.
Bolton, however, said it was uncertain what impact China's intervention was having on North Korea.
"We have to wait and see what happens," Bolton added.
The nuclear crisis flared in October when Washington said Pyongyang had admitted to having a secret nuclear program in violation of a 1994 bilateral accord that froze North Korea's nuclear activities.
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