WASHINGTON (AFP) - US Secretary of State Condoleezza Rice called North Korea a "dangerous regime" and defended financial sanctions imposed on Pyongyang for alleged counterfeiting and money laundering activities.

"In terms of danger, of course you know they are a dangerous regime, but we should also not misinterpret the security sitution on the Korean peninsula ... there is a significant deterrent towards North Korean activity there," she told reporters.

"Their illegal activities have drawn sanctions from us because the president (George W. Bush) is not going to let North Korea counterfeit American money without action," she said.

Rice"s remarks further cloud the prospect of any resumption of six-party talks aimed at ending North Korea"s nuclear weapons drive.

The talks are in a limbo following the imposition of US sanctions on Pyongyang for alleged counterfeiting and money laundering.

In September the US Treasury Department told US financial institutions to cut all ties with a Macau bank, Banco Delta Asia, which it accused of being a willing front for North Korean counterfeiting.

A month later the US blacklisted eight North Korean companies allegedly involved in the spread of weapons of mass destruction.

North Korea said Washington must lift the sanctions for the nuclear talks to resume among the United States, the two Koreas, Russia, China and Japan.

Pyongyang also said the sanctions breached the spirit of a September pact secured at the Beijing-hosted talks, in which North Korea agreed in principle to disband its nuclear weapons program in return for economic and diplomatic benefits.

But Rice said that the US sanctions were justified, noting the absence of protests from the international community.

"There hasn"t been much uproar from anybody else about the fact that we are engaged in trying to constrain these illicit activities," she said.

The standoff between Pyongyang and Washington ignited in 2002 when the United States accused North Korea of running a secret uranium-enrichment program.

North Korea responded by throwing out UN International Atomic Energy Agency weapons inspectors and abandoning the Nuclear Non-Proliferation Treaty.

Rice said that if the North Korean regime would be prepared for greater openness and engagement and to denuclearize, there would be a "totally different situation."

On the prospect that the Bush administration"s policy could drive the reclusive state further into isolation, making it more dangerous, Rice said "it"s a North Korean choice to be isolated, not American policy to isolate them."

She cited the September 2005 decision at the six-party talks in which the international community pledged to help North Korea if it abandoned its nuclear weapons drive.

"So if they choose isolation, I don"t think it is a result of American policy; it"s a result of choices that the North Koreans made."