The nuclear crisis is the "greatest security challenge facing the world," New Mexico Governor Bill Richardson told a regional session of the World Economic Forum here.

He said the peace process that has involved two rounds of six-party talks so far in the Chinese capital was deadlocked and in danger of failure.

The next round, expected in Bejing within weeks, was "critical," he said at a plenary session of the forum.

"I believe that if these talks do not show progress ... that a window of peace will be lost," said the former Clinton administration official and frequent envoy to North Korea.

South Korea has proposed providing electricty to the power-starved Stalinist country in return for a freeze of its plutonium-producing nuclear facilities.

Washington has refused to reward North Korea unless it dismantles all its nuclear programmes, including an alleged uranium-based scheme.

Richardson said the talks should focus on the plutonium issue at first in a step-by-step process that should also include one-on-one talks between Washington and Pyongyang. The United States has ruled out bilateral meetings so far.

Former South Korean president Kim Dae-Jung -- who four years ago launched a new era of reconciliation with North Korea at a summit in Pyongyang -- said Washington should be prepared to take parallel steps to meet North Korean demands for a security guarantee and an end to economic sanctions.

"Because there is distrust between the two countries, both countries must act simultaneously or in parallel," sid Kim.

UN envoy Maurice Strong, who has just visited North Korea, said it was ready to give up its nuclar weapons under pressure from China.

"They now understand that they will not get their nuclear capability accepted by the international community in the way that India and Pakistan did," he said.

"They have accepted that they need to dismantle their nuclear capability."

But North Koreans will not do so unless the price is right, including a security guarantee and economic help, the UN envoy said.

The Seoul forum is working out an agenda for Asia's future economic growth which can be discussed at the annual WEF meeting in Davos, Switzerland.

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