Premiers from divided Korea talk peace and money

SEOUL, Nov 14 (Reuters) Prime ministers from the two Koreas met today for the first time in 15 years to discuss a peace deal for the divided peninsula and a massive aid package to lift up the impoverished North.

Their meeting comes about six weeks after the leaders of the two countries, technically still at war, held only their second summit and as North Korea has begun disabling nuclear arms facilities in an international disarmament-for-aid deal.

In their three-day meeting, the prime ministers will try to iron out the details of an aid package -- which some estimate could be worth billions of dollars -- to develop a North Korean port, shipyards and antiquated roads and railways.

The discussions between South Korean Prime Minister Han Duck-soo and the North's Kim Yong-il, the latter seen by analysts as an advocate of economic reform, are being held at a Seoul hotel known for its casino and circus shows.

The meeting will also focus on developing a joint fishing zone off the west coast in disputed waters and pushing for a peace deal for the peninsula. It is the highest level contact between the two Koreas to take place in the South since 1992.

The summit between North Korean leader Kim Jong-il and President Roh Moo-hyun was held in Pyongyang.

Though neither prime minister wields much political power, their meeting signifies the desire of their two leaders to press ahead with pledges made at their summit last month.

''We are here having our first meeting to undertake the dignified wishes of the North-South leaders,'' North Korean premier Kim said just before starting the first formal session.

South Korea, fearful a collapse of its communist neighbour would would ruin its own economy, has been working to develop the North to soften the blow of unification.

The North Korean premier and a delegation of around 40 others flew on one his country's ageing passenger planes for the short journey to Seoul.

The two sides were all smiles when they first greeted one another at the airport and at a meeting later in the well-heated hotel where the North Koreans sat, still wearing heavy overcoats.

Outside, about 50 protesters burned North Korean flags and carried signs reading: ''Down with Kim Jong-il''.

Defence ministers from the two Koreas will meet later this month in the North Korean capital to discuss ways to decrease tension along one of the world's most heavily armed borders.

Yesterday, Roh called for a meeting with the leaders of the United States, North Korea and China to help conclude a peace treaty to replace the armistice that ended the 1950-1053 Korean War, adding the summit would help nuclear disarmament.

US President George W Bush and China's ambassador to South Korea have said a peace treaty cannot be reached until North Korea abandons its nuclear weapons programme.

In exchange for massive aid and an end to its status as an international pariah, North Korea agreed in a deal with China, Japan, Russia, South Korea and the United States to disable by year-end a nuclear complex that makes plutonium for weapons.

REUTERS ARB KN1450