Angry over the action, Pyongyang has refused to return to multilateral talks aimed at ending its nuclear weapons drive.

"Coercive measures such as large-scale sanctions and interdiction of DPRK ships as part of the 'Proliferation Security Initiative' have the potential to trigger a major conflict, even a conflagration," ex-unification minister Park Jae Kyu said in a Washington lecture Tuesday.

The US-educated Park, now president of South Korea's Kyungnam University, did not elaborate on a possible US-North Korea conflict but noted that Pyongyang had accused Washington of "poisoning the atmosphere" of six-party nuclear talks by imposing the financial sanctions.

The United States has clamped down on companies it suspects of aiding North Korea in counterfeiting, money laundering and the drug trade and urged Pyongyang to resume the talks without preconditions.

It is not known whether Washington would step up its sanctions, but last year it reportedly reviewed a plan to seek UN endorsement for intercepting ships or aircraft suspected of carrying so-called weapons of mass destruction to or from North Korea.

The plan, under the US-sponsored Proliferation Security Initiativealso involving Japan, Australia and a number of European nations, was considered an option if North Korea refused to abandon its nuclear weapons.

The Stalinist state in September agreed in principle to disband its nuclear weapons program in return for diplomatic and security guarantees and energy aid.

But it reacted angrily after the US Treasury Department in the same month told US financial institutions to stop dealing with a Macau bank, Banco Delta Asia, which it accused of being a front for North Korean counterfeiting.

A month later the US blacklisted eight North Korean companies allegedly involved in the spread of weapons of mass destruction.

The nuclear standoff ignited in 2002 when the United States accused North Korea of running a secret uranium-enrichment program.

North Korea responded by throwing out UN inspectors and abandoning the Nuclear Non-Proliferation Treaty.

Park said North Korea "does have more to gain" from a peaceful resolution of the current nuclear standoff, adding that "its dire economic situation means that it is in no condition to risk a war."

The prospect of future economic cooperation between North Korea and South Korea, Japan and China "will hinge on the absence of major disturbances," said the ex-minister, who was instrumental in arranging the first inter-Korean summit in 2000 since the emergence of two separate states on the Korean peninsula in 1948.

But Park said South Korea believed that "exerting overt pressure on the North Korean government would not really help alleviate the North Korean people's suffering nor would a UN resolution be compatible with the goal of prodding the North to resolve the nuclear issue."

China's ambassador to Washington Zhou Wenzhong said North Korea was eager to have improved relations with the United States but highlighted Pyongyang's security concerns.

"They feel they are not being treated as a friend or a partner ... rather they feel their security is being threatened," he said during a visit to Chicago.

China, North Korea's top ally and aid provider, is host to the six-party nuclear talks, which also include the United States, the two Koreas, Japan and Russia.

"Its in the best interest of everyone to try to resolve the issue peacefully and obviously a nuclear free peninsula is in the best interest of all," Zhou said.

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