Icelanders vote in a referendum on Saturday on a $5 billion deal to repay Anglo-Dutch loans, with an expected resounding “No” set to further delay foreign aid and hopes for economic recovery. Despite the consequences of rejecting the standing deal, Icelanders are angry about what they see as harsh repayment terms from Britain and the Netherlands and they are now certain they can get a much better deal. The referendum looks like a one-way bet with no political parties backing the deal agreed in late 2009, not even Prime Minister Johanna Sigurdardottir who brokered the agreement.

Sigurdardottir has vowed to stay on after the near certain referendum defeat and said that a quick solution to the Icesave saga was “a matter of life or death for the Icelandic economy.”

“The bill is literally an ‘orphaned’ law since there is nobody fighting for it,” she told reporters on Friday, adding that “it is quite clear it will be rejected.”

Britain and the Netherlands have offered easier terms, so there is no reason for voters to back the old deal.

“It’s of utmost importance that we don’t over-interpret whatever message comes out of this. We want to be perfectly clear that a ‘No’ vote does not mean we are refusing to pay,” Finance Minister Steingrimur Sigfusson told reporters.

“We will honor our obligations. To maintain anything else is highly dangerous for the economy of this country.”

Foreign Minister Ossur Skarphethinsson told Reuters that he expected a new Icesave deal “in the next weeks, perhaps sooner. The economy minister said a several month delay would shave 2-3 points off GDP in 2010.

Venting Anger
The ballot gives Icelanders, who have lost 30 percent of their disposable income since 2007, an opportunity to vent anger at the bankers and politicians in Reykjavik who they blame for the island’s meltdown.
In the referendum, Iceland’s 230,000 voters will be asked whether to approve a deal on paying money back to Britain and the Netherlands, after they compensated savers in their countries who had lost money in Icesave accounts.

Sigurdardottir said Britain and the Netherlands were holding Iceland “hostage” by linking the Icesave issue to Reykjavik receiving the next tranche of aid from the International Monetary Fund. With the cash in its coffers, Iceland would be able to open its borders to capital flows that feed investments.

The Icesave debt amounts to more than $15,000 for every one of Iceland’s 320,000 people, though most of the money is likely to be raised eventually by the sale of assets of Landsbanki, which operated Icesave accounts before folding late in 2008.

The Icesave row with the two European Union countries has also rekindled anti-EU sentiment at a time when Brussels has invited Reykjavik to begin accession negotiations.

Support for membership has been falling in past months and is now opposed by more than half of Icelanders, nearly twice the level seen just after the 2008 collapse.

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Montenegro has become a major smuggling route for South American cocaine into Europe in recent years.

Working with Latin American authorities, Serbian intelligence officials recently broke a suspected drug trafficking trying to get $350m worth of cocaine to Western Europe through Montenegro.

Al Jazeera’s Barnaby Phillips reports on how governments across the region are struggling in their battle against organised crime.

Ioannis Michaletos, an analyst at the World Security Network recently gave a short interview to the Montenegrian newspaper “DAN” regarding the emergence of the Balkans as a cocaine smuggling hub used as a transit point for entry into European Union and increasingly Russia.

In your opinion, where is the cocaine that arrives in Montenegro destined to?

The bulk of the cocaine arriving in ports of Montenegro is destined for European markets and the local Balkan ones. The Kosovo territory plays an important role because shipments are gathered there and then are distributed in the north from Bosnia or Serbia to Croatia and Hungary and then to Western-Central Europe.

Other shipments travel to the South through FYROM-Albania and Greece and then to Western Europe mainly through vessels.

Europe is certainly a prime destination for Latin American cocaine traders, for two reasons. One is the rise of Euro against the Dollar. The latter is the currency used in all Americas, so the smugglers earn a harder currency (The Euro) which they exchange for Dollars thus increasing their financial strength.

The second reason is the unification of Europe and the non-existent border controls in an area of almost 500 hundred million people that created over the past decade tremendous opportunities for all kinds of illegal activities. The police authorities in many European countries proved ineffective to deal with this kind of situation.

Is the corruption and involvement of organised crime in local pollitics in Montenegro related to the cocaine smuggling in the region?

Corruption in political and social level plays a vital role in the cocaine contraband and of course in any other kind of illegal activity. Although there are not presently so many evidents of high-level corruption regarding cocaine trade, it could be safely assumed that it exists, since in a small country it would be almost impossible to have a rising trend in this illegal sector without the knowledge of the authorities.

Money laundering – How does it relate with the above?

Money laundering takes numerous forms. The most usual ones, especially in the Balkan countries, is to launder capital through: Construction, real-estate, tourism, foreign currency exchange bureaus, gas stations, transport companies, cazinos, night-clubs, NGO’s and insurance companies. This is more or less the main sectors where the attention of international authorities is being concetrated and it also involves all Balkan countries and Montenegro as well.

Which countries from South America export cocaine to the Balkans?

Bolivia, Venezuela, Colombia and Peru, Ecuador are the traditiional production or distribution centers of cocaine in Latin America. Organized crime networks in these countries have all found links to crime syndicates in the Balkans and cooperate with them strongly over the past decade.

Lastly, which European criminal networks organisations that coordinate the cocaine trade?

There have been numerous reports about N’draggeta, Kosovar Mafia and others. Usually the connection between all these groups is to have intermediate groups of people that facilitate transportation. Ship owners, transport companies, corrupted public officials and indepedent traders, act as liaisons between a group like Ndragheta for instance and the Cali cartel.

It is difficult to pin point the exact human network involved, because this is police work ,but we can speculate that Italian and Balkan groups have the majority of this illegal trade under their influence presently and seem to be able to evade prosecution in the upper level, despite many succesfull operations by the security authorities of many states the past few years.
The use of intermediates seems as very effective by these networks that are able not to “get their hands dirty” and evade prosecution.

It might help if Montenegrin authorities were co-operative, but apparently they are not.

Goran Soković and Dejan Šekularac, accused of smuggling two tons of cocaine from South America to Europe, were released from custody in Montenegro.

According to TV Montenegro, Soković and Šekularac were released after the state prosecution decided that there was not enough evidence to prosecute them, because Serbia refused to send evidence against them until Operation Balkan Warrior was complete, Podgorica’s television station Vijesti reported.

Montenegrin investigative judge Miroslav Bašović released the two from custody after he was informed that there was not enough evidence available to keep them incarcerated and press charges against them.

It was also stated that the Serbian organized crime prosecution refused to help in the case, on the request of the Montenegrin sector for fighting organized crime, corruption, terrorism and war crimes.

According to the Serbian prosecution’s decision, the information will not be forwarded until the case before the Serbian courts against Soković, Šekularac and 19 others has finished.

The Serbian prosecution stated that an exchange of information at this time could possibly endanger the case being led in Serbia.

The mastermind behind the massive drug smuggling operation is believed to be Darko Šarić, who is currently a fugitive from justice.

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Political leaders, NGOs and scientific elites from the nine Baltic countries are meeting in Helsinki to take part in a Baltic Sea Action Summit on cleaning up one of the world’s most polluted and poisonous seas.

The sea was used to dump thousands of World War Two planes, chemical weapons, agricultural runoff, untreated waste and even dead bodies.

The World Water Forum says all the Baltic states “are sinners” for dumping over the years tons of sewage and agricultural waste into the sea. As a result, large areas of the body of water are suffering from eutrophication or lack of oxygen.

The Baltic is considered one of the most polluted waterways in the world. The Baltic Sea Action Summit brought together the nine nations who share the coastline, and was chaired by the Finnish President Tarja Halonen.

She said: “Today some of the richest and most environmentally-conscious countries on earth live on the shore of one of the world’s most polluted seas. What a tragedy. It is clear that something has to be done and quickly.”

The Lithuanian President, Dalia Grybauskaite, agreed: “Today we are also facing a historic international challenge, which I would like to point to as as the issue of chemical and conventional weapons dumped into the Baltic Sea.”

Almost enclosed, very shallow, and fed by numerous rivers, the Baltic is a vulnerable sea.

Ninety million people live around its shores, many of them depending on the sea in some way or other for their livelihoods, but waste from industry, agriculture and daily life ends up in the sea.

One of the biggest resulting dangers is too much algae. Excess growth of it robs the water of oxygen suffocating other species.

Juuka Jormola, a scientist from the Finnish Environment Institute, said: “It is caused by nutrients, too many nutrients in the water, like nitrogen and phosphorus. And some of these algae are poisonous and dangerous for children who want to swim, and these algae also appear in other lakes and also in the Baltic Sea.”

In St Petersburg, a huge new water treatment station was inaugurated in 2005 – thanks in part to a 10 million euro contribution from Finland.

It is a start towards achieving the Helsinki Commission’s aim of restoring the Baltic’s “good ecological status” by 2012.

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While the Russian economy contracted 7.9 percent overall in 2009 in its worst performance for 15 years, Russia began to escape its recession in the second of the year. More from the Korea Times:

Has Russia’s economic crisis ended? That depends on who you ask. Ask Prime Minister Vladimir Putin, or any official of his United Russia party, and you will be told, “Of course it is over.”

They will even produce proof in the form of an unemployment rate that does not rise, unprecedented increases in pensions, and strong growth in construction and metal-working.

Of course, all these comparisons are made with how things stood last month rather than with the country’s pre-crisis economic performance.

Then there is another “miracle” that the government is starting to trumpet, one discovered in August 2009: an increase in Russia’s population. Unfortunately, in no month before or since have births outpaced deaths.

Ask a member of the opposition whether the crisis has ended, and you will be told that it is only just beginning. Gazprom’s production is falling at a dizzying pace; the country’s single-industry “mono-towns” are dying.

There is truth in both views about the state of Russia’s economy, but because the government controls all the major television channels, it is succeeding in enforcing its view of the situation.

Indeed, the opposition has access only to a few newspapers and radio stations, leaving the Internet the sole remaining space of freedom in Russia.

But there you can read very pessimistic estimates of the country’s economic future. So the Kremlin blinds its citizens with rosy scenarios, while the Internet over-dramatizes reality.

The truth, it is clear, is somewhere in the middle. What is beyond dispute is that Russia’s economic health depends on external factors.

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Vladimir Lensky of Russia’s Channel One and former Soviet Foreign Ministry official Sergey Shestakov join Daljit Dhaliwal to discuss Obama’s progress in resetting American-Russian relations, Russia’s cooperation in war effort in Afghanistan, relations with Iran and Russia’s own economic downturn.

Today, the White House released a short statement noting that an agreement on a nuclear arms reduction treaty is at hand.

The story in the New York Times:

President Barack Obama and his Russian counterpart Dmitry Medvedev agreed in a telephone call on Wednesday that both countries were close to a new nuclear arms reduction treaty, the White House said.

“The presidents agreed that negotiations are nearly complete, and pledged to continue the constructive contacts that have advanced U.S.-Russian relations over the last year,” the White House said in a statement.

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Here is the Monday, January 11th, 2010 edition of what’s making news and interesting reads from around the world. Also please note that off to the left there are two widgets with updates on news from Asia and the world in a separate page: Around Asia & Around the World New Feeds.

Venezuela’s Two-Tiered Devaluation
On Friday after markets had closed, President Hugo Chávez “adjusted” the value of Venezuela’s currency, the bolívar. The bolívar had been fixed at 2.15 to the dollar since 2005 as part of Chávez’s strict controls of Venezuela’s economy in line with his “21st century socialism” policies. But Chávez, in a live address on state TV, said the bolivar would now have two levels — a preferential rate of 2.6 per dollar for essential imports like food, health and machinery and a 4.3 “petro-dollar” rate for other things. The bond market is likely to react positively to the news but the move is likely to spur inflation in Venezuela, already the highest in Latin America. To combat rising prices, Chávez has threatened to expropriate any business that raises its prices.

Venezuela last devalued its currency in 2005, to 2,150 bolivars per dollar from 1,920 bolivars. In 2008, it re-denominated the currency, lopping off three digits. Venezuela’s economy is estimated to have shrunk 2.9 percent in 2009.

The other aspect worth noting is that multi-tiered exchange rate tend to spur corruption and Venezuela has under Chávez descended to the ranks of one of the world’s most corrupt countries. When Transparency International, an NGO that tracks governance issues, first reported its Corruption Perception Index in 2001, Venezuela ranked 69th in a list of 91 countries — or at the bottom 25th percentile of the world’s most corrupt countries. In 2009, Venezuela ranked 162 in the list of 180 countries, or in the 10th percentile of the world’s most corrupt.

A New Institutional Crisis in Argentina
After Argentine President Cristina Fernández de Kirchner removed the President of the Central Bank, Martín Redrado, by decree, the Congress moved to reinstate him plunging the country into another political showdown. The unprecedented confrontation, which could end up before the Supreme Court, has brought to a head a fight over a bid by the president to use central bank reserves to pay down the national debt. Federal Judge María José Sarmiento will examine the government’s appeal of her decision to temporarily suspend a government decree that removed central bank president Martin Redrado from office after he refused to let the reserves be used for debt payments.

Sarmiento has two days to decide whether to accept the appeal lodged by the government on Saturday. If she rejects it, the government can go to the Supreme Court for an urgent decision to resolve an institutional conflict that could threaten Argentina’s fragile economy.

North Korea Seek Peace Treaty with the US
The New York Times reports that North Korea has proposed talks with the United States to reach a formal peace treaty that would replace the truce that ended the Korean War 57 years ago, indicating it would not give up its nuclear weapons until Washington signed such an agreement.

Social Democrat Ivo Josipovic Scores Decisive Win in Croatia
In Croatia’s presidential elections on Sunday, a left of centre Social Democrat, Ivo Josipovic, took just over 60 percent of the vote. Croatia has mixed parliamentary/presidential system with the Prime Minister governing day-to-day affairs but with the President serving as Commander-in-Chief of the armed forces and conducting foreign policy. More from the EU Observer:

Social Democrat law professor and classical music composer Ivo Josipovic won Croatia’s presidential elections on Sunday (10 January), pledging to back the centre-right government’s efforts against corruption on the path to EU accession.

Mr Josipovic won the vote by a sweeping 60.2 percent against his populist rival, Milan Bandic, according to official results out on Monday. The former chairman of the Croatian composers’ society compared the event to a “victorious symphony.”

Despite being from rival political camps, Mr Josipovic promised to back the centre-right Prime Minister Jadranka Kosor’s drive to implement reforms and fight corruption, as required by Brussels to complete EU accession talks.

South Korea Emerges as Nuclear Power Giant
South Korea’s unprecedented acquisition of a US$20.4 billion contract to develop nuclear power plants for the United Arab Emirates is fueling hopes of at least short-term economic development with regard to nuclear energy-related industries. The acquisition of the contract also marks the beginning of a new relationship with the United States over nuclear power. The largest single construction contact Seoul has ever won, it makes South Korea the world’s sixth exporter of nuclear plants. The Asia Sentinel profiles South Korea’s emergence in the nuclear power industry.

EU Railroad Market Deregulation Sets Stage For a Clash of Titans
As of the first of the year, long-distance passenger rail services are completely deregulated within the EU. Der Spiegel looks at the brewing battle between Germany’s Deutsche Bahn and France’s SNCF for the long distance rail market. It’s a clash of titans. Deutsche Bahn, a joint stock company fully owned by the German government, has long claimed to be Europe’s foremost rail transport company but France’s state-owned SNCF is looking to challenge its German rival. Deutsche Bahn generates about €33.5 billion ($48.5 billion) in sales annually, while SNCF brings in around €25 billion. Deutsche Bahn carries approximately two billion passengers each year.

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Croatians will be heading to the polls to choose a president that will lead them into the European Union.

Ivo Josipovic, a law professor and classical music composer, led in the first round of elections with 32 per cent of the vote, which was double the number of votes received by Milan Bandic, the mayor of Zagreb.

The presidential elections come at an important time in Croatia’s history since they are close to completing a long-cherished ambition of joining the European Union.

Al Jazeera’s Barnaby Phillips reports from Zagreb.

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Here is the Friday, January 8th, 2010 edition of what’s making news and interesting reads from around the world. Also please note that off to the left there are two widgets with updates on news from Asia and the world in a separate page: Around Asia & Around the World New Feeds.

Lashkar-e-Taiba Attack in Jammu & Kashmir
Indian authorities have killed one Lashkar-e-Taiba terrorist in a protracted 22-hour gun battle in Jammu & Kashmir. As many as ten others, including one Indian policeman, have been injured in the second incident in as many days in the restive Indian state. The story in the Times of India. Lashkar-e-Taiba was responsible for the attack on Mumbai in November 2008 and the organization has deep ties to Pakistan’s ISI.

Argentina Central Bank President Removed By Cristina Fernández de Kirchner
A week-long stand-off between Argentine President Cristina Fernández de Kirchner and Martin Redrado, the President of Central Bank of Argentina, grew worse on Thursday. Issuing a decree, President Fernández de Kirchner removed Mr. Redrado from his post citing “misconduct and dereliction of duty by a public servant.” Earlier this week, President Fernández de Kirchner announced she had accepted Redrado’s resignation after the bank chief declined to support a plan to use $6.5 billion in reserves to pay the country’s debt. Redrado retorted that he had not resigned, and that only the Congress, not the president, could remove him. Opposition politicians advised Redrado not to abide by the decree and to seek an injunction to protect his rights. The move is likely to provoke a showdown between the President and the Argentine Congress. More from Bloomberg.

Turkmenistan Gas and an Emerging Economic Axis in Central Asia
The Asia Times reports how Russia, China and Iran are quietly tapping the vast natural gas in Turkmenistan for their benefit and in the process cementing a new economic axis in Central Asia.

We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world’s largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy.

The Turkmen-Iranian pipeline mocks the US’s Iran policy. The US is threatening Iran with new sanctions and claims Tehran is “increasingly isolated”. But Mahmud Ahmadinejad’s presidential jet winds its way through a Central Asian tour and lands in Ashgabat for a red-carpet welcome by his Turkmen counterpart, Gurbanguly Berdymukhammedov, and a new economic axis emerges. Washington’s coercive diplomacy hasn’t worked. Turkmenistan, with a gross domestic product of US$18.3 billion, defied the sole superpower (GDP of $14.2 trillion) – and, worse still, made it look routine.

Seven Militants Killed in Karachi
Seven suspected militants were killed on Friday when explosives being stored in a hideout in the Pakistani city of Karachi were apparently detonated accidentally according to police in Pakistan. The full story from Al Jazeera.

Scores Dead in Tribal Clashes in South Sudan
At least 139 people have been killed in tribal clashes following a cattle raid in southern Sudan, local government officials said. Armed attackers from the Nuer tribe raided Dinka cattle herders in the remote Tonj area in Warrap state on Saturday, seizing 5,000 animals. Violence between the Nuer and Dinka tribes has been increasing in recent weeks ahead of the independence referendum scheduled for next year. More from Al Jazeera.

Religious Violence Flares in Malaysia
Two Malaysian churches have been attacked, leaving one badly damaged, in an escalating dispute over the use of the word Allah by non-Muslims. From the Jakarta Post:

The attacks sharply escalated tensions in the Muslim-majority country ahead of planned protests later Friday against a Kuala Lumpur High Court verdict which struck down a 3-year-old ban on non-Muslims using “Allah” in their literature.

The Dec. 31 court decision incensed many Muslims, who see it as a threat to their religion. Hateful comments and threats against Christians have been posted widely on the Internet, but this is the first time the controversy has turned destructive.

The ruling was on a petition by the Herald, the main publication of Malaysia’s Roman Catholic Church, which uses the word Allah in its Malay-language edition.

Only the first floor office in the three-story Metro Tabernacle Church was destroyed in the pre-dawn blaze, said Kevin Ang, a spokesman for the Protestant church. The worship areas on the upper two floors were undamaged and there were no injuries.

He quoted a witness as saying she saw three or four men on a motorcycle break the main glass front of the church and throw a gasoline bomb inside. The church occupies a corner plot in a row of shops in Desa Melawati, a suburb of Kuala Lumpur.

Separately, a Molotov cocktail was thrown into the compound of a Roman Catholic church before dawn Friday but caused no damage or injuries, said the Rev. Lawrence Andrew, the editor of the Herald.

Andrew said most churches have employed extra security guards amid the protest threats. “Most churches are taking precautions. They are aware it may just blow up,” he said.

The government has appealed the court verdict and the High Court has suspended its decision’s implementation until the appeal is heard.

Muslims argue that “Allah” is exclusive to Islam, and its use by Christians would confuse Muslims and tempt them to convert to Christianity.

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President Olafur Grimsson announced that he would veto legislation under which Iceland was to repay some $5 billion USD to the British and Dutch governments for funds they used compensate depositors of Icesave, a collapsed Icelandic bank, in their countries. The veto is only the second veto in the history of Iceland.

Under Icelandic law, the measure now get puts the voters in a referendum.

The story in the New York Times:

The president of Iceland blocked a hard fought $5 billion compensation deal with the British and Dutch governments on Tuesday, upending the precarious finances and politics of the island nation and further jeopardizing already frayed ties with Europe and international lenders.

In a televised speech, President Olafur R. Grimsson said he would veto legislation under which Iceland was to repay the British and Dutch governments for funds they used compensate depositors of a recently collapsed Icelandic bank in their countries.

His decision means the bill will be submitted to a referendum in a country where recent polls show that 70 percent of the population opposed to the bill. Its rejection would force Iceland’s increasingly precarious left-wing coalition to have to reopen negotiations with the British and Dutch governments — both of which have taken a hard negotiating stance.

The presidential rebuke is being described as one of the more momentous decisions in recent Icelandic history. But it also highlights a widening fault line between struggling European governments, pressed by impatient bond investors, ratings agencies and the International Monetary Fund to impose budget cuts and shrink deficits, and their recession-battered citizenry. Some 60,000 people in Iceland — one fifth of the population — had signed a petition against the bill, which was presented to the president last week.

Late last month, the constitutional court in Latvia vetoed a move by the government there to cut pensions in order to keep in tune with an I.M.F.-sponsored austerity package — a development which not only threatens the I.M.F. agreement but the country’s ties with foreign creditors.

Governments in Ireland, Greece and even Britain are also threading the increasingly difficult needle of satisfying bond investors as well as voters.

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Here is the Friday, January 1st, 2010 edition of what’s making news and interesting reads from around the world. Also please note that off to the left there are two widgets with updates on news from Asia and the world in a separate page: Around Asia & Around the World New Feeds.

Iceland Votes to Repay Billions
Iceland’s parliament narrowly approved by 33 to 30 vote a repayment scheme to pay back 3.4 billion pounds ($5 billion USD) to Britain and the Netherlands after the Icesave bank collapsed in late 2008 in the wake of the global financial crisis. The money will reimburse the British and Dutch governments which stepped in to compensate depositors with Icesave after its parent bank Landsbanki failed last year. The bank’s collapse affected more than 320,000 savers. There has been strong opposition to the measure in Iceland, amid fears the country would not be able to afford repayments. But the leftist government of Prime Minister Jóhanna Sigurðardóttir hopes the move will help boost the country’s bid to join the European Union and repair its battered economy.

Charges Against Five Blackwater Employees Dismissed
A federal judge has dismissed all charges against five Blackwater Worldwide security guards charged in a deadly Baghdad shooting. More from the New York Times.

US Drone Strike in North Waziristan
The second US drone strike in as many days has killed three militants in North Waziristan, part of the Tribal areas of Pakistan. The unmanned US predator drone fired two missiles against a suspected militant hideout in Ghundikala village, 15 kilometres east of Miramshah, the main town of North Waziristan and close to the Afghan border. The story in Pakistan’s Dawn newspaper.

Israeli Settlement Construction Continues Unabated
The Israeli newspaper Haaretz reports that despite a temporary ban on construction in Israeli settlements in the West Bank, hundreds of housing units remain under construction in isolated settlements.

Germany Inc. – A Radical Restructuring Needed
The German news magazine Der Spiegel finds that German economy performed “astonishingly well” against the backdrop of the global financial crisis in 2009. Still the staff writers of Der Spiegel believe that Germany “will need to lay the foundations for a radical restructuring” in 2010 if the country is to ” fend off powerful new competitors from China and India.” They ask if Germany needs a new business model. It’s a question we might ask here in the United States.

DPRK Calls for an End to “The Hostile Relationship”
The New York Times reports that North Korea called for an end to “the hostile relationship” with the United States, issuing a New Year’s message that highlighted the reclusive country’s attempt to readjust the focus of six-party nuclear disarmament talks.

In an editorial carried by its major state media outlets, North Korea said that its consistent stand was “to establish a lasting peace system on the Korean peninsula and make it nuclear-free through dialogue and negotiations.” The editorial added that “the fundamental task for ensuring peace and stability” was “to put an end to the hostile relationship” with the United States.

The sequence of easing tension with Washington, establishing a peace regime and then denuclearizing the Korean peninsula has been shaping up as the North’s policy approach before it re-engages in talks about giving up its nuclear weapons, according to officials and analysts in Seoul.

However, the Korea Times reports that a South Korean think tank published a paper arguing that North Korea may detonate a third nuclear device and provoke border clashes to escalate tension on the Korean Peninsula next year. The Korea Institute for Defense Analyses (KIDA) reported that through a third nuclear test, Pyongyang could show the world that it has no plans to scrap its atomic weapons program. On Thursday, President Lee Myung-bak noted that although there was little progress in inter-Korean relations in 2009, he believe that his government has laid the groundwork for developing relations in a positive direction.

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