The North's state-run Central Radio said the world was watching the Pyongyang-Washington standoff "with sweating hands," and vowed that the Stalinist state would maintain its "mighty army-first policy." 
 

Washington and its allies are pressuring North Korea to abandon its suspected nuclear weapon programs. The North has insisted on direct talks first with the United States, from which it wants a nonaggression treaty. 

The bluster from the North came as South Korea's outgoing president warned that Pyongyang's production of atomic weapons could force his country and Japan to built nuclear bombs as well. 

"If North Korea has nuclear weapons, South Korea could possess such weapons ... and Japan could arm with nuclear weapons. This is what a lot of people worry about. This cannot be tolerated," Kim Dae-jung told tourism officials. 

Kim, whose term ends Feb. 25, did not clarify whether he thought North Korea already has such a weapon. Prime Minister Kim Suk-soo has said he believed Pyongyang does not have nuclear weapons. 

Secretary of Defense Donald H. Rumsfeld has said that North Korea has one or two nuclear weapons and could extract enough plutonium within months to make six to eight more. 

North Korea had never admitted or denied having nuclear weapons, but has said it has the right to develop nuclear weapons. 

Pyongyang's declaration of ultimate victory in the nuclear standoff came a day after it hosted national celebrations for reclusive leader Kim Jong Il's 61st birthday on Sunday. 

Kim rules the communist country as supreme commander of the nation's 1.1 million-member armed forces, and state-run media marked his birthday with anti-U.S. diatribe and hyperbolic praise of his pro-military policy. 

In his comments to tourism officials, Kim Dae-jung - who has championed a policy of engagement with North Korea - said he believes there is "no possibility" of U.S. military action against Pyongyang, and called for talks. 

"North Korea-U.S. talks are important because the problem can only be solved there," he said. 

The U.S. military said Monday it will conduct two joint military exercises with South Korea next month, but said the annual maneuvers are not related to the North Korean nuclear dispute. There are 37,000 American troops in South Korea. 

The joint drills are "defense-oriented" and designed to improve the joint U.S.-South Korea forces' ability to defend South Korea against "external aggression," the U.S. military command in Seoul said in a statement. 

North Korea had no immediate response to the upcoming exercises, but the communist country has routinely denounced past joint U.S.-South Korea military exercises as preparations for an invasion. 

Last week, the Vienna-based International Atomic Energy Agency referred the issue to the U.N. Security Council. The council could consider economic sanctions against North Korea. The North has said it would consider any sanctions a declaration of war. 

The crisis began in October when U.S. officials said North Korea admitted having a covert nuclear program. Washington and its allies suspended fuel shipments, and the North retaliated by expelling U.N. monitors, taking steps to restart frozen nuclear facilities and withdrawing from the Nuclear Nonproliferation Treaty.