SEOUL (Reuters) - Secretive North Korea said on Monday it would all but seal its border with the South a week before heading into talks with its neighbor and other regional powers that are pressing it to give up nuclear weapons.

North Koreans walk on a street in Pyongyang, November 13, 2008. REUTERS/Lee Jae-Won

The tension on the divided Korean peninsula has been escalating since conservative South Korean President Lee Myung-bak took office in February promising to invest heavily in the impoverished North on condition it moves to end development of an atomic arsenal.

The border closure was the first step “to be taken in connection with the ever more undisguised anti-DPRK (North Korea) confrontational racket of the south Korean puppet authorities,” North Korea’s KCNA news agency said.

But the latest move appeared more saber-rattling than substance as the North will continue to let in some South Koreans to manage an industrial zone just across the border, its one significant economic relationship with the South.

“(The North) never said it would halt production or expel staff related to the production process. So even in the worst case of operating with only half of the staff, we think there won’t be any problem in production,” said Lee Eun-suk, an official at Shinwon Corp, which has clothing factories at Kaesong.

The increasingly angry rhetoric follows an end to South Korean largesse to the North since Lee came to power.

Lee made clear during the weekend he would not back down in the face of threats by the North, which accuses him of trying to reignite war between the Koreas and warned last month it was ready to reduce its wealthy neighbor to rubble.

South Korea demanded the North call off the move, saying it would be a serious blow to their fledgling economic ties and a serious setback for their already difficult relationship.

INTERNATIONAL TALKS

Years of on-off negotiations between the two Koreas, China, Japan, Russia and the United States are stumbling over demands the North allow verification of steps it has taken to disarm.

In Washington, State Department spokesman Sean McCormack said on Monday sampling at North Korea’s nuclear facilities was part of an agreement between the United States and North Korea that Washington expected to be finalized at the December 8. international meeting.

“It is part of the agreement, and we hope and would expect, that the verification protocol would be formalized ... at the next heads of delegation meeting,” McCormack told reporters.

“Regardless of which form it may be in, it is an agreement, that doesn’t change it,” he added.

McCormack also spoke disapprovingly of North Korea’s move to cut off contacts with the South. “We’ve always encouraged direct discussions and direct interaction between the North and South. The North can only benefit from greater contact with the rest of the world, including South Korea,” he said.

In a 2005 deal, North Korea agreed to stop trying to develop nuclear weapons, in exchange for massive aid and a chance to end its international isolation.

But the negotiations have hit repeated stalemates and analysts say the nearer the international community gets to demanding complete nuclear disarmament the more difficult the negotiations will become.

Slideshow ( 7 images )

LEVERAGE

The North tested a nuclear device two years ago but it has never been clear how successful it was or whether Pyongyang has the capacity to launch a nuclear attack.

Some analysts says North Korean leader Kim Jong-il will never give up the only real leverage his destitute country has to win concessions from the outside world without threatening his tight grip on power.

But there has been speculation in recent months Kim may have suffered serious illness, although officials in the region say he appears to still be in control. North Korea denies the 66-year-old leader is ailing.

North Korea warned nearly two weeks ago it would end traffic across the heavily armed border with its wealthy neighbor from December 1, but this is the first time it has given details of what it would do.

It will also suspend all tours to its border city of Kaesong, near the Kaesong industrial park run by South Korea, and halt rail traffic across the border.

While about 200 tourists a day visit Kaesong city, the rail link reopened after 50 years last year has been largely a symbolic gesture and carries almost no cargo.

(For a related story see KOREA-NORTH/NUCLEAR (Q+A)