By Dana Priest and Sandra Sugawara
Washington Post Staff Writers
Tuesday, September 1, 1998; Page A15

A medium-range ballistic missile test-fired by North Korea early yesterday morning sailed over Japan, damaging the fragile international nuclear pact with Korea and raising fears of a new round of missile proliferation in Asia.

U.S. officials said they and U.S. allies in the region were not surprised by the launch of the Taepo Dong 1 missile. U.S. intelligence obtained imagery of scaffolding for the launch being built at the Taepo Dong plant on North Korea's northeast coast last week, said one defense official.

But the timing of the test, coinciding with talks in New York between the United States and North Korea, may jeopardize the so-called framework agreement in which North Korea has pledged to freeze its nuclear program in exchange for fuel oil, help in building two nuclear reactors and eventually the end of an economic embargo.

Immediately after the launch, Japan's Chief Cabinet Secretary Hiromu Nonaka called the tests "deplorable" and Akitaka Saiki, a spokesman for the prime minister's office, said Japan had "suspended signing the [framework] agreement for the moment" because of the missile test.

Key members of Congress who have in the past threatened to deny U.S. funding for fuel oil promised under the plan were incensed by the launch. "I think we ought to stop talking to them, stop appeasing them," said Rep. Bob Livingston (R-La.), chairman of the House Appropriations Committee. "I see this as a pretty good excuse just to get out of this" agreement.

At the State Department, however, spokesman Lee McClenny said the test should not threaten U.S. commitment to the framework agreement. "We think the framework agreement is in the best interest of everyone involved," he said.

McClenny said U.S. officials would express their displeasure at the New York meeting yesterday afternoon, where U.S. officials would again stress the need for bilateral talks on missile proliferation, talks the North Koreans have shunned for the past year.

U.S. officials said they are concerned that advances in the Taepo Dong portend a new round of missile proliferation, given North Korea's record as the biggest supplier of missiles to Iran, Syria and Pakistan. Intelligence officials said the launch shows North Korea has the ability to build a two-stage missile, a development that bring the regime close to the possibility of building a long-range, intercontinental missile.

"This is a matter of deep concern to the United States because of its potentially destabilizing impact in North East Asia and beyond," said McClenny.

North Korea launched the missile, which has a range of up to 1,250 miles, shortly after noon yesterday in Japan, midnight Sunday in Washington. The first stage of the missile landed in the Sea of Japan between Russia and Japan, 185 miles southeast of Vladivostok, Japanese officials reported. The second stage flew over the main Japanese island of Honshu, landing several hundred miles off its northern coast, according to U.S. intelligence officials.

Japan dispatched two patrol boats and an airplane toward the site where the missile landed, but it was unclear whether the location was in Russian waters and off-limits to the Japanese.

Most analysts within and outside the administration believe the missile launch was North Korea's way of pressuring Washington to honor its commitments under the framework agreement, including lifting economic sanctions and delivering 500,000 metric tons of heavy fuel oil. The oil is meant to help the impoverished country meet its energy needs until the first of two planned nuclear power reactors comes on line, in 2003 at the earliest.

"The message is: Unless you come through with what we expect out of that deal, we can threaten tremendous damage," said David Kay, chief U.N. nuclear weapons inspector from 1991 to 1992.

The agreement is already in trouble because of the recent discovery that 15,000 North Koreans are digging a vast underground cavern that U.S. intelligence analysts have concluded is designed to house a nuclear reactor or reprocessing plant.

Analysts in Asia said the test also is likely meant to stir up nationalistic pride in preparation for the expected elevation of Kim Jong Il as North Korea's president, a post vacant since the death of his father Kim Il Sung in 1994. The transition may take place around Sept. 9, the 50th anniversary of the country's founding.

"The timing is exactly set for the inauguration to raise the national pride and morale. But more importantly, they are using this action as a bargaining card," said Noriyuki Suzuki, director of Radiopress, an agency under the Japanese Foreign Ministry that monitors North Korean radio. "North Korea is demanding compensation for not exporting missiles. North Korea wants to raise the stakes by demonstrating the capability of its missiles."

North Korea has acknowledged developing and exporting ballistic missiles, saying if the United States wants it to stop the missile trade, it should lift its economic embargo on North Korea and compensate the country for lost missile sales.

The four key members of the international consortium building the two reactors -- the United States, Japan, South Korea and the European Union -- had been scheduled to adopt a resolution today on funding the $4.6 billion North Korean project.

Sugawara reported from Tokyo, Priest from Washington. Special correspondent Akiko Kashiwagi contributed to this report.