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The European Parliament has decided to temporarily withhold its 2003 funding to a consortium charged with building nuclear reactors in North Korea following Pyongyang’s admission that it is developing nuclear arms, EU sources said Friday.

But the decision on the 20 million euros ($19.9 million) 2003 budget for the Korean Peninsula Energy Development Organization (KEDO) could be reversed, the sources said.

The development places KEDO’s finances at risk because the European Union’s contribution is significant. The 15-member EU provided 115 million yen to the New York-based international consortium building two light-water reactors in the North between 1997 and 2002, mainly to buy fuel oil. Brussels also pledged to provide a further 20 million euros annually until the end of 2005.

Meanwhile, the United States plans to take up the issue of economic sanctions against North Korea over its nuclear weapons program at talks with Japan and South Korea in November, a diplomatic source said Thursday.

Possible economic sanctions against North Korea include a freeze on a supply of fuel oil under an agreement reached in 1994 between Washington and Pyongyang, the source said.

U.S. Secretary of State Colin Powell is scheduled to hold talks with Japanese Foreign Minister Yoriko Kawaguchi and South Korean Foreign Affairs and Trade Minister Choi Sung Hong in Seoul on Nov. 11 on the sidelines of an international conference on democracy.

Discussions at the three-way meeting are expected to focus on whether to review the 1994 accord, the source said.

Japan will decide what to do about its support for an energy assistance program in North Korea after consulting with the United States and South Korea, Prime Minister Junichiro Koizumi said Friday.

“Japan, the U.S. and South Korea will have to closely cooperate, lest the issue should affect the Japan-North Korea negotiations,” Koizumi told reporters at his office, referring to Japan-North Korean talks aimed at normalizing ties that were resumed earlier this week.

The European Parliament’s decision reflects serious concerns over Pyongyang’s violation of international commitments such as under the Nuclear Nonproliferation Treaty and the KEDO Accession Agreement. The pacts stipulate that participants shall respect the nuclear nonproliferation regime.

European parliamentarians decided to reconsider the funding “to say that we are not happy with you (North Korea) if you do not do something” to address the concerns, one of the sources said, adding the decision was “an early signal.”

The European Parliament will hold another round of deliberations on the 2003 budget in November and could reverse its decision if there are positive developments.

The EU sources said the funding could be released if Pyongyang proves it is willing to respect the international nonproliferation regime and has discontinued its nuclear arms program.

The move, based on an EU assembly Budget Commission proposal approved by parliamentarians Oct. 24, came after the U.S. revealed that North Korea admitted it was secretly working on a uranium reprocessing program that can be used to create nuclear arms.

KEDO was set up based on the 1994 Pyongyang-Washington Agreed Framework. Under the accord, the reactors and fuel oil supply would be provided to the North in return for Pyongyang’s pledge to freeze and eventually dismantle its nuclear development programs.

South Korea was to cover some 70 percent of the cost of the $4.6 billion project while Japan was to contribute $1 billion for the construction of the reactors. The U.S. is supplying 500,000 tons of fuel oil to North Korea annually to meet its energy needs until one of the reactors begins operations.

But whether the pact is still in effect is in doubt. Pyongyang reportedly said it regards the Agreed Framework as nullified. Washington responded to the North’s revelations by saying that it regarded the accord with Pyongyang as dead and demanded that North Korea ends its nuclear weapons program before talks to resolve the issue could be held. Tokyo is also vague on whether it will keep funding KEDO.

Meanwhile, some European left-leaning politicians still believe that Brussels, which established diplomatic ties with Pyongyang in May 2001, should take pains not to isolate the communist state.

“The EU should take the lead from Seoul and Tokyo” in revitalizing the pact, Glyn Ford, a member of the European Parliament from Britain who has visited North Korea five times, said.

A North Korean Supreme Assembly delegation will visit Brussels as early as November as part of regular dialogue with the European Parliament, one of the sources said.

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