By Christine Kim and Steve Holland
SEOUL/WASHINGTON (Reuters) - The United States is due to announce its largest package of sanctions against North Korea to pressure the reclusive country into giving up its nuclear and missile programs, as South Korea readies itself for further talks with its leaders.
Tougher sanctions may jeopardize the latest detente between the two Koreas, illustrated by the North's participation in the Winter Olympics in the South, amid preparations for talks about a possible summit between North Korean leader Kim Jong Un and South Korean President Moon Jae-in.
A senior U.S. administration official, who spoke to Reuters on condition of anonymity, called the new penalties "the largest package of new sanctions against the North Korea regime", without giving details.
U.S. Vice President Mike Pence had hinted at such a plan two weeks ago during a stop in Tokyo that preceded his visit to South Korea for the Pyeongchang Olympics.
North Korea last year conducted dozens of missile launches and its sixth and largest nuclear test in defiance of U.N. Security Council resolutions as it pursues its goal of developing a nuclear-armed missile capable of reaching the United States. It defends the weapons programs as essential to deter U.S. aggression.
But it has been more than two months since its last missile test.
North Korean leader Kim Jong Un said he wants to boost the "warm climate of reconciliation and dialogue" with South Korea, which hosts 28,500 U.S. troops, after a high-level delegation, including his sister, returned from the Olympics.
In an extension of that rapprochement, the North agreed on Friday to hold working-level talks on Tuesday for the Pyeongchang Winter Paralympics on the North's side of the border village of Panmunjom.
The new U.S. sanctions will be announced while Trump's daughter, Ivanka, is visiting South Korea. She had dinner with Moon after a closed-door meeting with the president on Friday and will attend the Games' closing ceremony.
"I thank you for hosting us all here tonight as we reaffirm our bonds of friendship, of cooperation, of partnership and reaffirm our commitment to our maximum pressure campaign to ensure that the Korean peninsula is denuclearized," she told Moon before heading inside the dinner venue at the Blue House.
Moon expressed his gratitude towards President Donald Trump, saying ongoing talks with North Korea were thanks to Trump's "strong support".
Ivanka Trump's visit coincides with that of a sanctioned North Korean official, Kim Yong Chol, blamed for the deadly 2010 sinking of a South Korean navy ship that killed 46 sailors. His delegation will attend the closing ceremony and also meet Moon.
The Blue House has said there are no official opportunities for U.S. and North Korean officials to meet.
Kim Yong Chol is the vice-chairman of the North's ruling Workers' Party's Central Committee and was previously chief of the Reconnaissance General Bureau, a top North Korean military intelligence agency which South Korea blamed for the sinking of its navy corvette, the Cheonan.
North Korea has denied any involvement.
Seoul said it approved the pending visit by Kim Yong Chol in the pursuit of peace and asked for public understanding in the face of opposition protests.
"Under current difficult circumstances, we have decided to focus on whether peace on the Korean peninsula and improvement in inter-Korean relations can be derived from dialogue with (the visiting North Korean officials), not on their past or who they are," said Unification Ministry Baik Tae-hyun in a media briefing.
A South Korean lawmaker briefed by the country's spy agency said on Friday that Kim Yong Chol was the "right person" for inter-Korean and denuclearization talks.
"Kim Yong Chol is the top official regarding inter-Korean relations and he is being accepted (here) as the right person to discuss various issues like easing military tension, improving inter-Korean ties and denuclearization," said Kang Seok-ho to reporters.
Kim Yong Chol currently heads the United Front Department, the North's office responsible for handling inter-Korean affairs.
PROTESTS AGAINST NORTH KOREA DELEGATION
South Korea's decision on Thursday to allow in Kim Yong Chol, currently sanctioned by the United States and South Korea, sparked protest from family members of the dead sailors and opposition parties.
Some 70 members of the main opposition Liberty Korea Party staged a protest in front of the Blue House on Friday.
"President Moon's decision to accept the North's facade of peace is a serious issue and it will go down in history as a crime eternal," said the party in a statement.
A group of family members of those killed in the Cheonan sinking has said it will hold a press conference on Saturday.
Acknowledging public angst over Kim Yong Chol's pending visit, Baik said the South's stance that the Cheonan sinking was instigated by the North has not changed.
"However, what's important are efforts to create actual peace on the Korean peninsula so these kind of provocations don't occur again," said Baik, adding the government would make "various efforts" to assuage the public's concerns.
Many have been angered at the North's participation at the Games, which they say has been a reward for bad behavior with no quid pro quo from Pyongyang.
(Reporting by Christine Kim in SEOUL and Steve Holland in WASHINGTON; Editing by Nick Macfie)