(ATTN: ADDS reactions from South Korean officials in paras 20-22)
By Sam Kim
SEOUL, Jan. 1 (Yonhap) -- North Korea called Saturday for defusing tension with South Korea, warning of a "nuclear holocaust" should another war break out on the peninsula, as the impoverished communist state made its last annual pitch for economic revival ahead of a landmark year.
A joint New Year's editorial by the North Korean press did not make clear allusions to the country's ongoing hereditary succession nor did it repeat the 2010 call for ending the state of enmity with the United States even though it did renew a pledge for denuclearization.
The editorial, considered a blueprint for Pyongyang's policy goals, came amid the highest level of animosity between the Koreas in decades after the North bombarded a South Korean island on Nov. 23, killing four people in one of the worst attacks since the 1950-53 Korean War.
South Korean President Lee Myung-bak has vowed retaliation while Seoul and Washington have teamed up to conduct joint military drills in a show of force to the North and a warning against provocation.
"Confrontation between north and south should be defused as early as possible," the North said in the editorial jointly released by Rodong Sinmun, Joson Inmingun and Chongnyon Jonwi.
"If a war breaks out on this land, it will bring nothing but a nuclear holocaust," it said, arguing that war was averted last year because of "our persevering efforts" and calling for the creation of "an atmosphere of dialogue and cooperation" this year.
North Korea typically makes calls for dialogue with the South in an effort to extract politically motivated aid, which Seoul has suspended since President Lee took office in early 2008.
The North also demanded that the South end its series of military exercises, accusing Seoul of aligning with "U.S. war hawks" and driving the situation to the brink of war.
The New Year's message came after Lee expressed his hope earlier this week for the resumption of multilateral denuclearization-for-aid talks on the North. New Mexico Governor Bill Richardson of the U.S. visited North Korea last month and won a pledge from the North to allow the return of international nuclear monitors on its soil.
The series of developments signaled a growing mood for the resumption of the stalled talks that include the two Koreas, the U.S., Russia, Japan and China. The so-called six-party negotiations have not been held since late 2008.
"The DPRK is consistent in its stand and will to achieve peace in Northeast Asia and denuclearization of the whole of the Korean peninsula," the North's joint editorial said, using the country's official title, the Democratic People's Republic of Korea.
North Korea alarmed the world in November when it revealed through U.S. scholars that it was operating thousands of centrifuges to enrich uranium, a second track to building nuclear bombs.
The country, which has conducted two nuclear tests since 2006, claims the uranium enrichment, coupled with the construction of a light-water reactor, is for peaceful energy use. The U.S. sees the argument as a thin cover for advanced nuclear arms development.
Stressing that light industries are the "major front," the North said standards of living for its people should be improved ahead of 2012, the year the leadership has designated as a moment in its history to rise as "a great, prosperous and powerful country."
"Next year we will be greeting the centenary of the birth of President Kim Il-sung," the country's founder who passed his power to his son Kim Jong-il upon his death in 1994, the editorial said.
"We should launch an all-out, vigorous offensive for a breakthrough to realize the wish of the President to build a prosperous country," it said, calling for a "full-scale offensive" to revive the moribund economy.
The North suffered extreme inflation and social unrest in some regions after a botched currency reform in late 2009 sent the prices of staples soaring high. The failure to reassert control on the market economy reportedly led authorities to make a public apology.
"Improving the economic management becomes more urgent at the moment, when the national economy is put on the trajectory of revitalization," the editorial said, calling for a boost in the production of "primary consumer goods and other necessities widely used in life."
"The sector of light industry should turn out commodities that would be favored by people," it said.
South Korean officials reacted cautiously with North Korea's call for better relations.
"The joint editorial talked on ending confrontations, while stressing military readiness," a senior official at the South's defense ministry said on the condition of anonymity, adding he has "doubts over the North's seriousness."
Another government official in Seoul, who also declined to be named, said it would be difficult for the South to accept what he called the North's "peace offensive" because of Pyongyang's attacks on Yeonpyeong Island and the Cheonan warship.
Analysts have said the North will step up its efforts to address the economic plight of its people as it moves to justify its second hereditary power succession.
"Despite the attack on Yeonpyeong Island, North Korea is seen demonstrating an open-minded stance on inter-Korean dialogue and cooperation to tackle the current status of isolation," said Chung Seong-chang, a senior analyst at the Sejong Institute in Seoul.
"However, I think military tensions would remain for the time being as the North also emphasized combat preparedness of its military," Chung said.
The North unveiled the third son of its aging leader Kim Jong-il as a four-star general last year, anointing him as throne successor even though Kim Jong-un was no older than 28.
The editorial said the ruling party conference in September -- in which Kim Jong-un rose to high political posts -- marked a "a spirit of single-hearted unity to invariably defend the centre of unity and leadership despite the passage of time." But it did not make comments that could be seen as directly related to succession.
Kim Jong-un has been touted by North Korean media as someone most capable of further developing the songun, or military-first, policy chartered by his father, who reportedly suffered a stroke in 2008.
The editorial said the 1.2 million-strong military should "conduct intense combat training in an atmosphere of actual battle as required by the tense situation," warning the North will not pardon an act of invasion "even an inch."
"We should further strengthen the militant might of the People's Army," it said, suggesting Pyongyang will continue to invest large resources in arms development despite economic difficulties.
The North claims it has developed nuclear arms to deter an invasion by the U.S., which signed a truce with the North at the end of the Korean War. The peninsula remains technically at war because no peace treaty has been signed.
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