North Korea will face UN sanctions if it goes ahead with a long-range missile test, which would be seen as a threat to the region, South Korea's foreign minister said on Wednesday.
"Whether the North launches a missile or a satellite, it is still a violation of a UN Security Council resolution," Foreign Minister Yu Myung-hwan told a group of diplomats and journalists. "It will inevitably be followed by sanctions."
US Secretary of State Hillary Clinton said in Tokyo on Tuesday such a launch would be "very unhelpful" and Washington was watching the North's moves very closely.
The North appears to be readying a launch of the Taepodong-2, its longest-range missile, which experts said is designed to strike US territory but has never flown successfully.
The North contends the rocket is the key to its peaceful space programme and said this week it had the right to launch it.
In addition, South Korea's Dong-a Ilbo newspaper, quoting a government source, on Wednesday said North Korea had been running a uranium enrichment plant near its main nuclear complex in Yongbyon, about 100 km (60 miles) north of the capital, Pyongyang, albeit on a small scale,
South Korean officials declined to comment on the report.
The possible existence of an uranium enrichment programme, which could offer an effective way of developing nuclear arms, has been a persistent sticking point in diplomacy.
A US accusation that Pyongyang was clandestinely operating such a plan led to the breakdown of a 1994 disarmament deal and the start of new, six-way nuclear talks in 2003.
The Security Council in 2006 imposed sanctions on the North after it last launched the Taepodong-2, which fizzled just seconds into flight and destructed. Unfazed by the UN action, the North conducted its first nuclear test three months later and was hit by more sanctions.
The UN sanctions that ban arms and financial transactions with the North still remain in place. A missile test by Pyongyang could invoke further penalties, the foreign minister indicated.
Washington last year dropped some of its trade sanctions against the North for progress it made in nuclear disarmament but scores of other international measures remain in place that ban trading with North Korean entities.
The North has been assembling the Taepodong-2 and could launch it by as early as next week, South Korea's biggest newspaper, Chosun Ilbo, quoted intelligence sources as saying.
Financial analysts have said that if the North goes ahead with the launch, it will add a bit of further downward momentum to already battered markets in the region.
North Korea has sharply raised tensions in recent weeks by threatening to destroy its wealthy southern neighbour in anger at the hardline policies of its President Lee Myung-bak.
Another move that should raise tension is an annual joint US and South Korean military exercise, announced by US Force Korea on Wednesday, which will be held from March 9-20.
North Korea has previously called the drills a prelude to invasion and nuclear war.
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