Central African Republic rebels halt advance, agree to peace talks

DAMARA, Central African Republic (Reuters) - Rebels in Central African Republic said they had halted their advance on the capital on Wednesday and agreed to start peace talks, averting a clash with regionally backed troops.

The Seleka rebels had pushed to within striking distance of Bangui after a three-week onslaught and threatened to oust President Francois Bozize, accusing him of reneging on a previous peace deal and cracking down on dissidents.

Their announcement on Wednesday gave the leader only a limited reprieve as the fighters told Reuters they might insist on his removal in the negotiations.

"I have asked our forces not to move their positions starting today because we want to enter talks in (Gabon's capital) Libreville for a political solution," said Seleka spokesman Eric Massi, speaking by telephone from Paris.

"I am in discussion with our partners to come up with proposals to end the crisis, but one solution could be a political transition that excludes Bozize," he said.

Bozize on Wednesday sacked his Army Chief of Staff and took over the defense minister's role from his son, Jean Francis Bozize, according to a decree read on national radio, a day after publicly criticizing the military for failing to repel the rebels.

The advance by Seleka, an alliance of mostly northeastern rebel groups, was the latest in a series of revolts in a country at the heart of one of Africa's most turbulent regions - and the most serious since the Chad-backed insurgency that swept Bozize to power in 2003.

Diplomatic sources have said talks organized by central African regional bloc ECCAS could start on January 10. The United States, the European Union and France have called on both sides to negotiate and spare civilians.

Central African Republic is one of the least developed countries in the world despite its deposits of gold, diamonds and other minerals. French nuclear energy group Areva mines the country's Bakouma uranium deposit - France's biggest commercial interest in its former colony.

RELIEF IN BANGUI

News of the rebel halt eased tension in Bangui, where residents had been stockpiling food and water and staying indoors after dark.

"They say they are no longer going to attack Bangui, and that's great news for us," said Jaqueline Loza in the crumbling riverside city.

ECCAS members Chad, Congo Republic, Gabon and Cameroon have sent hundreds of soldiers to reinforce CAR's army after a string of rebel victories since early December.

Gabonese General Jean Felix Akaga, commander of the regional force, said his troops were defending the town of Damara, 75 km (45 miles) north of Bangui and close to the rebel front.

"Damara is a red line not to be crossed ... Damara is in our control and Bangui is secure," he told Reuters. "If the rebellion decides to approach Damara, they know they will encounter a force that will react."

Soldiers armed with Kalashnikovs, rocket propelled grenade launchers and truck-mounted machineguns had taken up positions across the town, which was otherwise nearly-abandoned.

Some of the fighters wore turbans that covered their faces and had charms strung around their necks and arms meant to protect them against enemy bullets.

Chad's President Idriss Deby, one of Bozize's closest allies, had warned the rebels the regional force would confront them if they approached the town.

Chad provided training and equipment to the rebellion that brought Bozize to power by ousting then-president Ange Felix Patasse, who Chad accused of supporting Chadian dissidents.

Chad is also keen to keep a lid on instability in the territory close to its main oil export pipeline and has stepped in to defend Bozize against insurgents in the past.

A CAR government minister told Reuters the foreign troop presence strengthened Bozize's bargaining position ahead of the Libreville peace talks.

"The rebels are now in a position of weakness," the minister said, asking not to be named. "They should therefore stop imposing conditions like the departure of the president."

Central African Republic is one of a number of countries in the region where U.S. Special Forces are helping local soldiers track down the Lord's Resistance Army, a rebel group which has killed thousands of civilians across four nations.

France has a 600-strong force in CAR to defend about 1,200 of its citizens who live there.

Paris used air strikes to defend Bozize against a rebellion in 2006. But French President Francois Hollande turned down a request for more help, saying the days of intervening in other countries' affairs were over.

(Additional reporting by Paul-Marin Ngoupana in Bangui and Jon Herskovitz in Johannesburg; Writing by Richard Valdmanis; Editing by Andrew Heavens and Janet Lawrence)

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Creative industry in China on the rise

SHANGHAI: The creative industry is becoming a new growth area of the Chinese economy.

As one of the cities boasting the fastest growth in this sector, Shanghai's municipal government is injecting another US$32 million to further support its development.

Located in one of Shanghai's creative industry parks, KRT is a young local design firm. It is known for doing detailed work that showcases its customers' unique character.

From a three-member team redesigning apartment bathrooms, it now has 20 employees and focuses on high-end residential design and construction projects in the millions of dollars.

Kevin Hsu, design director of KRT Architecture & Interior Design Co., said: "In the past few years, we moved up from doing designs for small projects to big ones for really high-end customers. We don't need to do as many projects as we used to. Instead, we only need five to 10 projects a year to achieve the same amount of growth and profit as before."

Located five minutes away is Adopted -- formed only four months ago. It makes phone accessories which are sold by Apple.

Its small size did not stand in the way of a collaboration with the tech giant.

David Watkins, founder of Adopted, said: "Pretty much the entire team has a lot of experience working for building products for the Apple's retail eco-system. And as a small company, we are able to react and be a lot more nimble than a lot of larger companies."

According to CCID Consulting, China's largest consulting firm, the value of the creative industry in China exceeded US$172 billion in 2011, and the average annual growth rate was more than 26 per cent over the past five years.

This growth can be attributed to the higher value placed on the industry amid the realisation that China needs to move beyond just manufacturing.

In recent years, China's central and local governments have launched various plans to support the industry -- including encouraging schools to set up creative industry departments, and giving subsidies and tax relief to companies in this sector.

For example, Shanghai has just injected another US$32 million into the industry, which will be used to grow the industry, including training more local talents and attracting overseas talents to come to Shanghai.

The total value of the sector in China is expected to reach US$331 billion by 2014 - almost double its current value.

-CNA/ac

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Polaroid opens Fotobar shops to print photos off mobile devices

Polaroid's Delray Beach, Florida Fotobar is slated to open in February.

(Credit:
Polaroid)

It this era of immediacy, it can be hard to remember the days when people would shoot a roll of film on a camera and then wait to get it developed before they even saw the photos. In a sense, before digital photography, the only instant pictures that existed were Polaroids.

Now, Polaroid is looking to change up the game again. It's opening several retail shops called Fotobars where people can bring in digital photos they have stored on their mobile devices -- including those in apps like Facebook, Picasa and Instagram -- and get them printed.

"There are currently around 1.5 billion pictures taken every single day, and that number continues to grow in tandem with the popularity and quality of camera phones," founder and CEO of Fotobar Warren Struhl said in a statement. "Unfortunately, even the very best of those pictures rarely ever escape the camera phone with which they were taken to be put on display around our homes and offices."

The Fotobars come equipped with work and edit stations where people can wirelessly transmit their selected photos to a desktop computer. From there, the uploaded pictures can be edited for red-eye correction, contrast, brightness, and filters can be added as well. The photos can be framed, matted, and even printed on different types of material, such as canvas, metal, and wood. The finished product is then shipped to the user within 72 hours.

Polaroid announced its Fotobar project at the Consumer Electronics Show happening this week. The first store is slated to open in February in Delray Beach, Fla. Nine other stores are expected to open in 2013 and will be in cities such as New York, Las Vegas, and Boston.

"Polaroid has always been about much more than just taking pictures," Polaroid President and CEO Scott Hardy said in a statement. "Polaroid Fotobar retail stores represent a perfect modern expression of the values for which we have stood for 75 years."

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Pa. gov. to sue NCAA over Penn State sanctions

HARRISBURG, Pa. Gov. Tom Corbett said Tuesday he plans to sue the NCAA in federal court over stiff sanctions imposed against Penn State University in the wake of the Jerry Sandusky child sexual abuse scandal.

The Republican governor scheduled a Wednesday news conference on the Penn State campus in State College to announce the filing in U.S. District Court in Harrisburg.

The sanctions, which were agreed to by the university in July, included a $60 million fine that would be used nationally to finance child abuse prevention grants. The sanctions also included a four-year bowl game ban for the university's marquee football program, reduced football scholarships and the forfeiture of 112 wins.

The governor's office announced the news conference late Tuesday afternoon. His spokesman did not respond to repeated calls and emails seeking to confirm a Sports Illustrated story that cited anonymous sources saying a lawsuit was imminent.

Corbett's brief statement did not indicate whether his office coordinated its legal strategy with state Attorney General-elect Kathleen Kane, who is scheduled to be sworn in Jan. 15.

Kane, a Democrat, ran on a vow to investigate why it took state prosecutors nearly three years to charge Sandusky, an assistant under former football coach Joe Paterno. Corbett was the attorney general when that office took over the case in early 2009 and until he became governor in January 2011.

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Who's who in the Penn State child sex abuse scandal

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Pa. Atty Gen: Penn State officials showed "callous lack of concern"

State and congressional lawmakers from Pennsylvania have objected to using the Penn State fine to finance activities in other states. Penn State has already made the first $12 million payment, and an NCAA task force is deciding how it should be spent.

The NCAA, which did not respond to calls seeking comment Tuesday, has said at least a quarter of the money would be spent in Pennsylvania.

Republican U.S. Rep. Charlie Dent called that an "unacceptable and unsatisfactory" response by the NCAA to a request from the state's U.S. House delegation that the whole $60 million be distributed to causes within the state.

Last week, state Sen. Jake Corman, a Republican whose district includes Penn State's main campus, said he plans to seek court action barring any of the first $12 million from being released to groups outside the state.

The fine was just part of college sports' governing body's sanctions on Penn State for its handling of the abuse scandal involving Sandusky, who was convicted in June on charges he sexually abused 10 boys, some on campus. The landmark sanctions, though, didn't include a suspension of the university's football program, the so-called death penalty.

Sandusky, 68, was convicted on 45 counts. He's serving a 30- to 60-year state prison term.

Eight young men testified against him, describing a range of abuse they said went from grooming and manipulation to fondling, oral sex and anal rape when they were boys.

Sandusky did not testify at his trial but has maintained his innocence, acknowledging he showered with boys but insisting he never molested them.

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House Approves 'Fiscal Cliff' Deal

The House of Representatives has approved a bipartisan Senate deal to avert the "fiscal cliff" and preserve Bush-era tax cuts for all Americans making less than $400,000 per year.

The compromise is now on its way to President Obama for his signature.

House Republicans agreed to the up-or-down vote Tuesday evening, despite earlier talk of trying to amend the Senate bill with more spending cuts before taking a vote. The bill delays for two months tough decisions about automatic spending cuts that were set to kick in Wednesday.

A majority of the Republicans in the GOP-majority House voted against the fiscal cliff deal. About twice as many Democrats voted in favor of the deal compared to Republicans. One hundred fifty-one Republicans joined 16 Democrats to vote against the deal, while 172 Democrats carried the vote along with 85 Republicans.

The Senate passed the same bill by an 89-8 vote in the wee hours of New Year's Day. If House Republicans had tweaked the legislation, there would have been no clear path for its return to the Senate before a new Congress is sworn in Thursday.

The vote split Republican leaders in the House. House Speaker John Boehner, R-Ohio, voted yes, and so did the GOP's 2012 vice presidential candidate, Rep. Paul Ryan, R-Wis.

But House Majority Leader Eric Cantor, R-Va., the No. 2 Republican in the House, voted no. It was his opposition that had made passage of the bill seem unlikely earlier in the day.

The deal does little to address the nation's long-term debt woes and does not entirely solve the problem of the "fiscal cliff."

Indeed, the last-minute compromise -- far short from a so-called grand bargain on deficit reduction -- sets up a new showdown on the same spending cuts in two months amplified by a brewing fight on how to raise the debt ceiling beyond $16.4 trillion. That new fiscal battle has the potential to eclipse the "fiscal cliff" in short order.

"Now the focus turns to spending," said Boehner in a statement after the vote. "The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the 'balanced' approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt."

President Obama also seemed to be looking forward to the next debate.

Bill Clark/Roll Call/Getty Images

'Fiscal Cliff' Negotiations: Congress Reaches Agreement Watch Video

"This is one step in the broader effort to strengthen our economy for everybody," said Obama, who was joined by his top negotiator, Vice President Joe Biden, for late-night televised remarks after the House vote.

Obama lamented that earlier attempts at a much larger fiscal deal that would have cut spending and dealt with entitlement reforms failed. He said he hoped future debates would be done with "a little less drama, a little less brinksmanship, and not scare folks quite as much."

But Obama drew a line in the sand on the debt ceiling, which is set to be reached by March.

"While I will negotiate over many things, I will not have another debate with this Congress over whether they should pay the bills for what they've racked up," Obama said. "We can't not pay bills that we've already incurred."

Republicans hope that allowing the fiscal cliff compromise, which raised taxes without an equal amount of spending cuts, will settle the issue of tax rates for the coming debates on spending.

However, getting the deal done wasn't easy. Before deciding on the up-or-down vote in the House on the fiscal cliff deal, GOP leaders had emerged from a morning conference meeting disenchanted by the legislative package devised by Senate Minority Leader Mitch McConnell, R-Mo., and Vice President Biden early this morning, with several insisting they could not vote on it as it stood.

"I do not support the bill," Cantor said as he left the meeting. "We're looking for the best path forward. No decisions have been made yet."

Boehner refused to comment on the meeting, but his spokesman said, "The lack of spending cuts in the Senate bill was a universal concern amongst members in today's meeting."

As lawmakers wrestled with the legislation, the non-partisan Congressional Budget Office estimated that the bill's added spending combined with the cost of extending tax cuts for those making under $400,000 would actually add $3.9 trillion to the deficit over the next 10 years. The Joint Committee on Taxation reached a similar conclusion.

The impasse once again raised the specter of sweeping tax hikes on all Americans and deep spending cuts' taking effect later this week.

"This is all about time, and it's about time that we brought this to the floor," House Minority Leader Nancy Pelosi said after emerging from a meeting with Democrats.

"It was a bill that was passed in the U.S. Senate 89-8. Tell me when you've had that on a measure as controversial as this?" she said of the overwhelming vote.

Pelosi could not say, however, whether the measure had the backing of most House Democrats.

"Our members are making their decisions now," she said.

Biden joined Democrats for a midday meeting on Capitol Hill seeking to shore up support for the plan.

While Congress technically missed the midnight Dec. 31 deadline to avert the so-called cliff, both sides expressed eagerness to enact a post-facto fix before Americans went back to work and the stock market opened Wednesday.

"This may take a little while but, honestly, I would argue we should vote on it today," said Rep. Tom Cole, R-Okla., who sits on the Budget Committee, early Tuesday. "We know the essential details and I think putting this thing to bed before the markets is important.

"We ought to take this deal right now and we'll live to fight another day, and it is coming very soon on the spending front."

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At least 61 crushed to death in Ivory Coast stampede

ABIDJAN (Reuters) - At least 61 people were crushed to death in a stampede after a New Year's Eve fireworks display at a stadium in Ivory Coast's main city Abidjan early on Tuesday, officials said.

Witnesses said police had tried to control crowds around the Felix Houphouet-Boigny Stadium following the celebrations, triggering a panic in which scores were trampled.

"The estimate we can give right now is 49 people hospitalized ... and 61 people dead," said the chief of staff of Abidjan's fire department Issa Sacko.

Crying women searched for missing family members outside the stadium on Tuesday morning. The area was covered in patches of dried blood and abandoned shoes.

"My two children came here yesterday. I told them not to come but they didn't listen. They came when I was sleeping. What will I do?" said Assetou Toure, a cleaner.

Sanata Zoure, a market vendor injured in the incident, said New Year's revelers going home after watching the fireworks had been stopped by police near the stadium.

"We were walking with our children and we came upon barricades, and people started falling into each other. We were trampled with our children," she said.

Another witness said police arrived to control the crowd after a mob began chasing a pickpocket.

President Alassane Ouattara called the deaths a national tragedy and said an investigation was under way to find out what happened.

"I hope that we can determine what caused this drama so that we can ensure it never happens again," he said after visiting the injured in hospital.

The country, once a stable economic hub for West Africa, is struggling to recover from a 2011 civil war in which more than 3,000 people were killed.

Ivory Coast's security forces once were among the best trained in the region, but a decade of political turmoil and the 2011 war has left them in disarray.

At least 18 people were killed in another stampede during a football match in an Abidjan stadium in 2009.

(Reporting by Loucoumane Coulibaly and Alain Amontchi; Writing by Richard Valdmanis; Editing by Michael Roddy)

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Cricket: Brett Lee misconduct charges dropped

SYDNEY: Misconduct charges against veteran Australian fast bowler Brett Lee for criticising administrators have been withdrawn and a compromise agreed, cricket officials said Wednesday.

Cricket New South Wales (NSW) reported Lee to Cricket Australia for alleged code of conduct breaches after he claimed that dumped NSW coach Anthony Stuart had been made the scapegoat for failings of the state's cricket hierarchy.

The former Test quick, who still plays in the domestic Big Bash League, said in an interview that NSW had "seriously dropped the ball" and Cricket NSW chief David Gilbert "should have been made to go" instead of Stuart.

Lee attended a disciplinary hearing of governing body Cricket Australia in Sydney over the comments on Wednesday, where charges of unbecoming behaviour and detrimental public comment were dropped and a compromise brokered.

Instead of being disciplined, Lee was invited to address a new committee established to address his concerns about the future of cricket in NSW.

"Both parties are very pleased to have found a way forward and at having arrived at a very positive mutual outcome," Cricket NSW said in a statement.

"Brett Lee looks forward very much to working constructively with Cricket New South Wales into the future."

Lee had been unapologetic about the comments despite the disciplinary threat, saying he stood by them as being "in the best interests of NSW cricket" and was looking forward to stating his case to officials.

After the three-hour hearing Lee said he was "really, really pleased with the outcome".

"I'm looking forward in the next seven to 12 days to meet(ing) with the subcommittee of the board to move forward and get this state back where it used to be," Lee told reporters.

"The last 10 years it's been going through some tough times. I'm actually looking forward to improving that and getting NSW back to where it was."

-AFP/ac

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Anonymous: 'Expect us 2013'

The hacking collective Anonymous has clarified that it has no plans to fade away in the New Year. It issued a statement over the weekend that warned the world to "Expect us 2013."

Along with the statement, the group created a video that boasts of its campaigns and exploits carried out in 2012. The video details the group's temporary shutdown of the U.S. Department of Justice, the FBI, Universal Music, and the Motion Picture Association of America's Web sites in protest of the U.S. government's indictment of the operators of popular file-hosting site MegaUpload.

The video also shows newsreels of Anonymous' campaign against Syrian government Web sites because of that government's alleged shutdown of the Internet, along with Anonymous' "cyberwar" against the Israeli government in protest of government attacks on Gaza. The group also recounts its hack into the Web site of the Westboro Baptist Church in response to plans by the controversial church to picket the funerals of those massacred at the elementary school in Newtown, Conn.

"The operations which are listed in the video are only examples, there are far more operations," Anonymous wrote in the statement. "Some of them still running, like Operation Syria. We are still here."

Despite the hacking group's threats, some believe that the collective may not actually make a big impact in the online world in the coming year. Security firm McAfee Labs released its "2013 Threat Predictions" last week and claimed the decline of Anonymous.

The firm argued that a lack of structure and organization, false claims, and hacking for the simple joy of it has affected the group's reputation. McAfee also said, however, that higher-level professional hacking groups may take up the slack, and promote a rise in military, religious, political, and "extreme" campaign attacks.

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Fiscal Cliff Deal Vote Likely in Senate

The so-called "fiscal cliff" came tonight -- but now there is a specific deal on the table to try to soften it after the fact, according to congressional sources.

Senate Majority Leader Harry Reid, D-Nev., said the deal -- brokered by Vice President Joe Biden and Senate Minority Leader Mitch McConnell -- would get a vote in the Senate tonight. The House would not vote before Tuesday, having adjourned for the evening before word of the agreement spread.

"I feel really very, very good about this vote," Biden told reporters leaving the meeting with Senate Democrats, "but having been in the Senate for as long as I have there's two things you shouldn't do: You shouldn't predict how the Senate is going to vote before they vote....[and] you surely shouldn't predict about how the House is going to vote."

The proposal would extend Bush-era tax cuts permanently for people making less than $400,000 per year and households making less than $450,000, the sources said.

The steep "sequester" budget cuts scheduled to go into effect with the New Year would be postponed two months, said sources. They said half the money would come from cuts elsewhere, and the other half from new revenue.

The deal also would affect taxes on investment income and estates, and extend unemployment benefits for a year, the congressional sources added.

"The end is in sight," said a Democratic aide with Senate Majority Leader Harry Reid's office. "If everyone cooperates, it's possible things can move pretty quickly."

After the Biden meeting, Sen. Charles Schumer, D-N.Y., said there was "strong" support for the plan among Senate Democrats.

"There is a feeling that it's not that this proposal is regarded as great or as loved in any way, but it's a lot better than going off the cliff," he said.

Sen. Dianne Feinstein, D-Calif., called the compromise the "best" that could be done.

Even with progress in the Senate tonight, the "cliff" deadline will pass without action by the House, where Republican leaders said they would "consider" the deal starting tomorrow.

Chip Somodevilla/Getty Images

'Fiscal Cliff': Lawmakers Scramble for Last-Minute Deal Watch Video

"Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation," said House Speaker John Boehner, Majority Leader Eric Cantor, Majority Whip Kevin McCarthy, and Republican Conference Chair Cathy McMorris Rodgers in a statement.

The failure of a deal to pass Congress by Jan. 1 technically triggers an income tax hike on all Americans and automatic spending cuts, though lawmakers could still prevent a tax hike by making retroactive any legislation that passes in the weeks ahead, experts said.

The deal at hand will not entirely solve the problem of the "fiscal cliff," however. In fact, it could set up a new showdown over the same spending cuts in just two months that would be amplified by a brewing fight over how to raise the debt ceiling beyond $16.4 trillion. That new fiscal battle has the potential to eclipse the "fiscal cliff" in short order.

Earlier, during a midday news conference, Obama said he was optimistic about compromise in the short-term.

"It appears that an agreement to prevent this New Year's tax hike is within sight, but it's not done," he said. "There are still issues left to resolve, but we're hopeful that Congress can get it done."

In addition to extending current tax rates for households making $450,000 or less, the latest plan would raise the estate tax from 35 to 40 percent for estates larger than $5 million; and prevent the alternative minimum tax from hammering millions of middle-class workers, according to sources familiar with the talks.

Capital gains taxes would rise to 20 percent from 15, according to a senior White House official.

The deal would also extend for one year unemployment insurance benefits set to expire Tuesday, and avert a steep cut to Medicare payments for doctors, congressional sources said.

"I can report that we've reached an agreement on the all the tax issues," said Senate Minority Leader Mitch McConnell in an afternoon speech on the Senate floor.

At the time, McConnell said that federal spending cuts remained a sticking point. That hurdle later appeared to be cleared by postponing the debate two more months, though it is unclear whether House Republicans will go along.

"In order to get the sequester moved, you're going to have to have real, concrete spending cuts," said Rep. Mike Rogers, R-Mich. Without that, he said, "I don't know how it passes the House."

Some Republicans also said Obama unduly complicated progress toward an agreement by seeming to take a victory lap on taxes at his campaign-style event at the White House.

"Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans," Obama said, raising the ire of several Republicans. "Obviously, the agreement that's currently discussed would raise those rates, and raise them permanently."

Those words drew a sharp retort from Republican Sen. John McCain.

Rather than staging a "cheerleading rally," McCain said, the president should have been negotiating the finishing touches of the deal.

"He comes out and calls people together and has a group standing behind him, laughs and jokes and ridicules Republicans. Why?" said McCain.

Several Democrats also voiced disappointment with the president and the emerging deal.

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North Korean leader, in rare address, seeks end to confrontation with South

SEOUL (Reuters) - North Korean leader Kim Jong-un called for an end to confrontation between the two Koreas, technically still at war in the absence of a peace treaty to end their 1950-53 conflict, in a surprise New Year speech broadcast on state media.

The address by Kim, who took over power in the reclusive state after his father, Kim Jong-il, died in 2011, appeared to take the place of the policy-setting New Year editorial published in leading state newspapers.

Impoverished North Korea raised tensions in the region by launching a long-range rocket in December that it said was aimed at putting a scientific satellite in orbit, drawing international condemnation.

North Korea, which considers North and South as one country, the Democratic People's Republic of Korea, is banned from testing missile or nuclear technology under U.N. sanctions imposed after its 2006 and 2009 nuclear weapons tests.

"An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontation between the north and the south," Kim said in the address that appeared to be pre-recorded and was made at an undisclosed location.

"The past records of inter-Korean relations show that confrontation between fellow countrymen leads to nothing but war."

The New Year address was the first in 19 years by a North Korean leader after the death of Kim Il-sung, Kim Jong-un's grandfather. Kim Jong-il rarely spoke in public and disclosed his national policy agenda in editorials in state newspapers.

The two Koreas have seen tensions rise to the highest level in decades after the North bombed a Southern island in 2010 killing two civilians and two soldiers.

The sinking of a South Korean navy ship earlier that year was blamed on the North but Pyongyang has denied it and accused Seoul of waging a smear campaign against its leadership.

Last month, South Korea elected as president Park Geun-hye, a conservative daughter of assassinated military ruler Park Chung-hee whom Kim Il-sung had tried to kill at the height of their Cold War confrontation.

Park has vowed to pursue engagement with the North and called for dialogue to build confidence but has demanded that Pyongyang abandon its nuclear weapons ambitions, something it is unlikely to do.

Conspicuously absent from Kim's speech was any mention of the nuclear arms program.

(Reporting by Jack Kim; Editing by Nick Macfie)

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