North Korea's official Rodong Sinmun newspaper also said Washington's rejection of direct talks was "little short of refusing to solve the nuclear issue."
Washington wants to resolve the issue through talks involving other countries, but North Korea insists the dispute is only with the United States and demands a non-aggression treaty with Washington. China and other third parties have also backed bilateral talks.
"The nuclear issue on the Korean Peninsula is a very crucial problem related to who beats whom," the North Korean newspaper said. "It will decide whether the DPRK's sovereignty will be trampled down by the U.S. or protected."
North Korea accuses the United States of inciting the tension over its suspected nuclear weapons programs as a pretext for an invasion. It also claims that its place in the "axis of evil," and the new U.S. policy of preemptive strikes, give it ample justification for feeling threatened and restarting its nuclear programs.
In Seoul, U.S. Ambassador Thomas Hubbard said North Korea's actions posed a threat to worldwide stability because of the chances of nuclear proliferation. He said Washington aimed to solve the nuclear dispute peacefully and through diplomacy, but that all options were open.
"North Korea lies dark and nearly dormant, most of its people numb with hunger and cold," Hubbard said in an address to South Korean business leaders.
"They seem to be sustained only by an irrational fear of the United States, and an equally irrational adulation of their own leadership, both of which they have been taught for decades in complete isolation from the rest of the world," Hubbard said.
He said the United States was aware that South Korea "bears the brunt of Pyongyang's threat and would have the most to lose if war were to break out again on the Peninsula."
His comments came amid condemnation by Pyongyang of annual U.S.-South Korean military exercises now underway. North Korea says the drills are war preparations, a claim it has made in past years.
Despite the tension, Washington plans to send 40,000 tons of food to North Korea as part of its commitment of 100,000 tons of food to a nation that cannot feed its people without outside help.
Meanwhile, a South Korean presidential adviser said North Korea has shown no signs of reactivating a nuclear reprocessing facility that could enable the production of bombs within months.
There are concerns that North Korea's next step in the standoff will be to reactivate the reprocessing plant in a bid to pressure Washington into negotiations. U.S. officials say the facility could yield enough weapons-grade plutonium from spent fuel rods to make several more nuclear bombs.
"North Korea is not showing any movement to reactivate its nuclear reprocessing lab and test-fire a ballistic missile," said Ra Jong-il, senior security adviser to President Roh Moo-hyun.
Ra cited intelligence reports from Japan, which has been closely watching North Korea. Japan has deployed a destroyer with surveillance equipment near the North because of fears that it might test a ballistic missile. In 1998, North Korea fired a missile over Japan and into the Pacific.
Ra's comments were reported by Kim Man-soo, a presidential Blue House spokesman.
Also Monday, the International Atomic Energy Agency said it was unclear what was happening at North Korea's nuclear facilities.
"At this stage, the agency cannot provide any assurance about (North Korea's) nuclear activities, and we are unable to verify that its nuclear material has not been diverted to nuclear weapons or other nuclear explosive devices," IAEA director-general Mohamed ElBaradei said.
Last month, the IAEA referred the North Korean case to the Security Council, which could impose sanctions. The United States has not yet asked for new restrictions, and North Korea has threatened to treat any new sanctions as acts of war.
In Washington, Vice President Dick Cheney dismissed the notion that Pyongyang and Baghdad should be handled the same way.
Some have criticized the United States for threatening war against Iraq, which denies having weapons of mass destruction, while calling for multilateral talks with North Korea, which is believed to have two nuclear bombs and is making bold-faced efforts to resume nuclear development.
"Each set of circumstances we are faced with around the world is different," Cheney said on NBC's Meet the Press. "It does not automatically mean an approach that makes sense in Iraq is necessarily an approach that would make sense in North Korea."
U.S. officials have denied that the difference in policy stems from worries that the Pentagon cannot fight two wars at one. North Korea is one of the most militarized countries in the world, and any American strike would place South Korean people and cities at grave risk of destruction.
Cheney also said he would travel to Asia next month and stressed the importance of North Korea's neighbors in dealing with the crisis.
"They're far more directly affected than we are — Japan, South Korea and especially China," he said. A nuclear-armed North Korea with ballistic missiles to deliver the bombs could set off an arms race in the region, he said.
The Korean nuclear crisis flared in October, when U.S. officials said North Korea admitted having a secret nuclear weapons program. Washington and its allies suspended fuel shipments; Pyongyang retaliated by expelling U.N. monitors, withdrawing from the Nuclear Nonproliferation Treaty and restarting a nuclear reactor.