Oct. 18 (Bloomberg) -- Billionaire investor George Soros today blamed U.S. President George W. Bush for escalating tensions with North Korea, which last week tested a nuclear bomb for the first time.

Bush shouldn't have labeled North Korea part of an ``axis of evil,'' Soros told a group of investors and academics in Seoul. The president ``aggravated the problem'' by rejecting South Korea's so-called Sunshine Policy of engaging with the North, Soros said.

North Korea drew international condemnation after last week's test and the United Nations Security Council banned the sale or transfer of arms and nuclear-related materials to the communist country. China, South Korea and the U.S. have been cooperating in their handling of the crisis, and their desire for stability on the Korean peninsular bodes well, Soros said.

``Chinese want stability, or no change. South Korea the same,'' Soros said. ``The United States, having lots of problems elsewhere, wants to keep this under wraps.''

Danny Diaz, a spokesman for the Republican National Committee, dismissed Soros as the Democratic Party's financier and someone who ``has no credibility with the American people.''

`Axis of Evil'

North Korea, Iraq and Iran were labeled an ``axis of evil'' by Bush in January 2002. The U.S. subsequently invaded Iraq, where more than 2,700 U.S. military personnel have been killed, and the Bush administration has been pressing for international action to reign in Iran's nuclear program. On North Korea, Bush has rejected direct talks with Kim Jong Il's regime in favor of negotiations involving five regional partners.

White House Press Secretary Tony Snow said today that the U.S., China, South Korea, Japan and Russia ``are more unified than ever in their approach toward North Korea.''

Secretary of State Condoleezza Rice is on a trip to the capitals of all four of the U.S. partners in the talks to coordinate enforcement of UN sanctions. U.S. and South Korean officials have said Kim's government may test another device.

Hungarian-born Soros is a longtime critic of the Bush administration and spent $27.5 million trying to defeat the president in the 2004 election. He last month said Bush's war on terror is ``misleading, counterproductive and destructive,'' because it creates innocent victims and spurs the rage and resentment that fuels more terrorism.

South Korea's financial markets won't be much affected by the crisis, Soros said. ``It's nothing new. The nuclear test is an act of desperation.''

To contact the reporter on this story: William Sim in Seoul at wsim2@bloomberg.net.

Last Updated: October 18, 2006 17:25 EDT