updated 10/9/2008 5:31:15 PM ET 2008-10-09T21:31:15

North Korea moved closer Thursday to relaunching its nuclear arms program, announcing that it wants to reactivate the facility that produced its atomic bomb and banning U.N. inspectors from the site.

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The U.S. said the moves did not mean the death of international efforts to persuade the North to recommit to an agreement that offers it diplomatic and economic concessions in exchange for nuclear disarmament.

Despite the gloomy implications of North Korea's moves, they could be a negotiating ploy: The year needed to start its reprocessing plant could be used to wrest more concessions from the regime's interlocutors.

John Bolton, who has served as U.S. ambassador to the United Nations and U.S. undersecretary of state in charge of the North Korean nuclear dossier, suggested the North's tactics were working.

Bolton, a critic of what he considers U.S. leniency with North Korea who remains well-connected with senior Bush administration officials, told The Associated Press that Washington was planning to meet the communist country's key demand "within a week" by removing it from a State Department list of nations that sponsor terrorism.

That would be a significant move because the disarmament deal is bogged down over U.S. refusal to do just that until the North accepts a plan for verifying a list of nuclear assets that it submitted to its negotiating partners.

It was unclear whether the U.S. would settle for less than the full accounting it had asked for before the North walked away from the talks.

White House press secretary Dana Perino said a nuclear disarmament verification protocol remained essential to taking North Korea off the terrorism list.

She added, however: "If we can get a verification protocol that we are satisfied with, then we would be able to fulfill our side of the bargain."

The plans of the reclusive communist nation were revealed by the International Atomic Energy Agency. The North had already banned IAEA inspectors from the reprocessing plant last month after demanding they remove agency seals from the facility. But the experts continued to have access to the rest of the site until Thursday.

"Since it is preparing to restart the facilities at Yongbyon, the DPRK has informed the IAEA that our monitoring activities would no longer be appropriate," the U.N. nuclear watchdog said, using the formal acronym for North Korea.

It said the North "informed IAEA inspectors that effective immediately access to facilities at Yongbyon would no longer be permitted" and "also stated that it has stopped its (nuclear) disablement work."

'A regrettable step'
The IAEA said its small inspection team would remain on the site until told otherwise by North Korean authorities, and the State Department suggested it does not view North Korea's statement as the end of a six-nation agreement on ending the regime's atomic program.

"This is a regrettable step, but one that is reversible," State Department spokesman Sean McCormack said.

Still, the North Korean reversal compounds the White House's nuclear setbacks with time running out for President Bush, who leaves office early next year.

Washington has been successful in persuading the international community to do nuclear trade with India. In doing so, it has set up lucrative access for U.S. firms looking to provide nuclear technology worth billions of dollars, reversing more than three decades of U.S. policy that has barred the sale of nuclear fuel and technology to a country that has not signed international nonproliferation accords and tested secretly developed nuclear weapons.

But along with the North's resurgent atomic defiance, Iran remains a nuclear thorn it the Bush administration's side as it continues to flout U.N. sanctions and Western pressure to give up uranium enrichment, a potential pathway to the bomb.

Tensions also rose elsewhere on the Korean peninsula, with the North warning the South against sending naval ships into its waters and threatening warfare as it reportedly shifted an arsenal of missiles to a nearby island for more test launches.

The warning came hours after a South Korean newspaper reported that a U.S. spy satellite detected signs the North had positioned about 10 missiles near the disputed sea border after test-firing two short-range missiles on Tuesday. The Chosun Ilbo report cited an unidentified South Korean official.

Yongbyon, located about 60 miles north of Pyongyang, has three main facilities: a 5-megawatt reactor, a plutonium reprocessing plant and a fuel fabrication complex.

The reactor is the centerpiece of the complex, with the facility stretching more than a mile along the Churyong River, satellite images show.

The reprocessing center to the south of the reactor is capable of extracting weapons-grade plutonium from spent fuel rods. Thousands of them remain in storage but would likely be moved to the reprocessing plant as a next step. South of the reprocessing center, fuel rods are made from natural uranium in the fuel fabrication complex that lies tucked into a bend in the Churyong River.

A second reactor with the potential to produce much higher quantities of plutonium has not been completed.

North Korea was to dismantle the Yongbyon nuclear complex in return for diplomatic concessions and energy aid equivalent to 1 million tons of oil under the deal with the U.S., South Korea, China, Russia and Japan.

But the accord hit a snag in mid-August when the U.S. refused to remove North Korea from the terrorism list until the North accepts the plan for allowing a full check of the list of nuclear assets the North says it has.

U.S. chief nuclear negotiator Christopher Hill recently returned to Washington from a trip to North Korea meant to jump-start the talks, but the State Department has declined to provide details of his meetings.

For the U.S., the North Korean nuclear reversal is the second major setback this decade — Yongbyon was under IAEA seal in December 2002 when Pyongyang ordered U.N. inspectors out of the country and restarted its atomic activities, unraveling a deal committing the U.S. to help the North build a peaceful nuclear program.

North Korea quit the Nuclear Nonproliferation Treaty in January 2003. Then on Oct. 9, 2006, it set off an underground test explosion of a nuclear weapon. There was widespread international condemnation, but the U.S. also softened its position and the six-nation deal soon followed.

Scientists began disabling the Yongbyon reactor a year ago, and in June the North blew up its cooling tower in a dramatic show of commitment to the pact.

Eight of the 11 steps needed to disable the reactor had been completed by July, North Korean officials said.

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