By Michael Perry

SYDNEY, Aug 23 (Reuters) - Former Australian Prime Minister Paul Keating, who was instrumental in creating the first APEC leaders summit, called on Thursday for Asia-Pacific leaders to focus on China-Japan-Korea security at next month's summit.

Keating said planned APEC topics like global warming and trade should be secondary to security in north Asia, which he described as "the most dangerous part of the world".

"We are witnessing an arms race on either side of the Sea of Japan," Keating said in a speech in Sydney.

"South Korea, alert to the bristling equipment procurement of its neighbours and the ever present threat from the North, is now seriously upgrading its defence material to give it at least a fighting chance in any skirmish.

"These issues, I believe, should be at the top of the APEC leaders agenda."

Australian Prime Minister John Howard, an arch rival of Keating, plans to make global warming a major issue at the APEC meeting in September in Sydney. Howard is expected to call an election, in which the environment will be a major issue, shortly after APEC and needs to boost his green credentials.

Keating, prime minister from 1991 to 1996, was instrumental in organising the first APEC leaders meeting in 1993 in Seattle.

He said APEC, under the guise of economic cooperation, allowed the leaders of the United States, China and Japan to meet face-to-face amidst post Cold War tensions.

"This structure is of inestimable strategic value," he said.

"The most important thing about the APEC leaders meeting is that it actually exists. That there is actually a forum where leaders can get to know one another, develop better levels of understanding and with that, some modicum of trust."

Keating said if the APEC Sydney meeting concentrated on global warming and world trade it would "under sell its capacity" to deal with strategic issues like the North Asia arms race and the proliferation of nuclear weapons.

"In my opinion the most seriously dangerous part of the world is North Asia, within that triangle of unresolved tensions between China and Japan and the Korean peninsula," he said.

Keating said that despite 60 years since the end of World War Two, antipathy between China and Japan had only intensified.

Despite the "self defence" nature of Japan's armed forces, its latest weapons acquisitions blurred the line between defence and offence, he said, adding that China's military build up while called defensive also fuelled the North Asia arms race.

Keating said APEC leaders should encourage a conversation between China and Japan in which both Beijing and Tokyo saw a shared future for each country in the region.

Without a dialogue, influence over strategic issues in North Asia will be lost, just as the U.S. influence over Russia was waning due to the lack of an inclusive dialogue, said Keating.

"The U.S. is now losing all influence over Russia. We do not want the same thing happening in our neck of the woods with China and Japan," said Keating.

The APEC forum draws together leaders of economies that account for more than one third of the world's population, about 60 percent of global gross domestic product and 47 percent of world trade volume.

Members are Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, South Korea, Taiwan (under the name Chinese Taipei), Thailand, United States and Vietnam.

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