Speaking at an international forum, he said the North might try to circumvent the sanctions imposed following its nuclear test by selling nuclear technology to countries like Iran.
Kim won the Nobel Peace Prize in 2000 following his landmark summit with North Korean leader Kim Jong-Il the same year.
"The economic sanctions will not be so efficient because North Korea has already been under economic sanctions to a considerable degree," he said. The North is accustomed to poverty amid economic sanctions.
"Resentment against outside interference will unify the people in overcoming economic destitution. And some countries, including China, may help it and (North Korea) may sell nuclear technology to countries like Iran."
"In addition, when economic sanctions set in, North Korea will be resentful all the more and consequently, various kinds of dangerous clashes are expected," Kim said.
Kim urged direct talks between Pyongyang and Washington.
"Dialogue is not only to make friends. We should talk to the evil if it's necessary for national interest or world peace."
He noted that US President Richard Nixon's visit to China in 1972 led to openness and reform there while President Ronald Reagan held talks with leaders of the Soviet Union, even though he called it an "evil empire."
Kim said the Bush administration had rejected direct talks with North Korea, which led to a "great failure" in its policy. "North Korea says it will actively co-operate in the denuclearization of the Korean peninsula if a give-and-take deal is struck. Then, why can't we give it one more chance?"
North Korea boycotted multilateral talks on ending its nuclear programmes in November last year after the United States imposed sanctions on an Asian bank alleged to be acting as a clearing house for illicit trade for Pyongyang.
The crisis reached a new height when the communist state carried out its first nuclear test on October 9, prompting international condemnation and sanctions by the United Nations Security Council.
North Korea on Tuesday said it regarded the sanctions as a "declaration of war" and warned it would strike back at nations trying to punish it.

Copyright AFP (Agence France-Presse), 2006