* Panama turns to U.N. Security Council to handle case
* Two more containers with suspected arms found on ship
* U.S.-Cuba migration talks go ahead despite arms incident (Adds reaction from North Korea, details about ship, U.N. team)
By Lomi Kriel
PANAMA CITY, July 17 (Reuters) - Panama said on Wednesday it had called in the United Nations Security Council to investigate a North Korean ship caught smuggling arms from Cuba, piling more pressure on Pyongyang over a possible breach of U.N. sanctions.
Panama stopped the ship last week and seized the cargo after a stand-off with the North Korean crew in which the captain tried to slit his own throat. Authorities discovered missile equipment, MiG fighter jets and other arms aboard that Cuba said were "obsolete" Soviet-era weapons being sent to North Korea for repair.
"It's going to be transferred to the U.N. Security Council, they will decide what to do," Panamanian Security Minister Jose Raul Mulino said in Panama City.
Five U.N. investigators, including one from the Security Council, are expected to arrive at the end of July once the ship, the Chong Chon Gang, has been unloaded, said Demetrio Olaciregui, a spokesman for Panama's Foreign Ministry.
The North Korean government urged Panama to release the ship and its 35-strong crew, who were detained for questioning.
"This cargo is nothing but aging weapons which are to send back to Cuba after overhauling them according to a legitimate contract," a North Korean Foreign Ministry spokesman was quoted as saying by the official KCNA news agency.
Panama said it had issued North Korea with two diplomatic visas via its embassy in Cuba in a bid to have officials shed more light on the matter. "We have given our consent so they can come and give explanations or inspect their ship," Foreign Minister Fernando Nunez said in a statement.
The incident has not derailed U.S.-Cuban talks on migration, which went ahead as scheduled on Wednesday, but U.S. officials said Washington would raise the issue of the ship with Cuba very soon. One senior U.S. lawmaker called the matter a "grave violation of international treaties."
The United Nations has imposed various sanctions on Pyongyang, including strict regulations on arms shipments, for flouting measures aimed at curbing its nuclear weapons program.
Around 350 police and border patrol officials were combing through the ship, which has a dead weight of some 14,000 tonnes.
Before their arrest, the ship's crew burned the electrical system to disable it, which had slowed the process of unloading the vessel, the Panamanian Foreign Ministry spokesman said.
As a result, it could take 10 days to unload the ship, he added. The vessel has four storage areas, each with six containers, and so far only one storage area had been opened and a single container unloaded, government officials said.
"This ship was loaded so you can't unload it," security minister Mulino said on his Twitter account.
Two more containers with suspected arms had been found in addition to the two already discovered, he noted.
Earlier on Wednesday, Britain's U.N. Ambassador, Mark Lyall Grant, said the ship appeared to have violated a U.N. arms embargo on North Korea. Britain is a permanent member of the U.N. Security Council.
An eight-member panel of experts appointed by U.N. Secretary-General Ban Ki-moon monitors the Security Council sanctions imposed on North Korea.
The experts are mandated to "gather, examine and analyze information from States, relevant United Nations bodies and other interested parties" on allegations of sanctions violations and report back to the 15-member Security Council.
Marie Harf, a spokeswoman for the U.S. State Department, said Panama had asked the United States for technical assistance on the matter, which would be provided. She said Washington would be talking to Cuba "very soon" about the ship.
A State Department official said the scheduled migration talks with Havana went ahead on Wednesday as even though the United States believes Cuba broke U.N. sanctions, the issues were deemed to be "apples and oranges."
According to Cuba, the weapons on the ship included two anti-aircraft missile batteries, nine disassembled rockets, two MiG-21 fighter jets, and 15 MiG-21 engines, all Soviet-era military weaponry built in the middle of the last century.
Servicing of weapons would also be in breach of the arms embargo imposed on North Korea sanctions.
A U.N. resolution adopted in 2009 says the embargo applies to "all arms and related materiel, as well as to financial transactions, technical training, advice, services or assistance related to the provision, manufacture, maintenance or use of such arms, except for small arms and light weapons."
U.S. Democratic lawmaker Robert Menendez, the Chairman of the Senate Foreign Relations Committee, issued a statement condemning Cuba, saying it needed very careful monitoring.
"The shipment ... is a grave violation of international treaties," he said. "Weapons transfers from one communist regime to another hidden under sacks of sugar are not accidental ... and reinforces the necessity that Cuba remain on the State Department's list of countries that sponsor state terrorism."
Hal Klepak, a history professor at the Royal Military College of Canada, said Cuba was "using weapons and equipment of staggeringly old vintage" and that the Pentagon had long since written off the island as a military threat.
Since Cuba's military doctrine was designed to deter any attack, it needs to maintain the arms it has, he added.
"Cuba cannot afford to buy anything newer and does not have repair facilities of its own for such needs. Thus if it is not to scrap, for example, the aircraft entirely, it must repair and potentially update them in some areas," Klepak said.
Panama's Foreign Minister Nunez said his country had no problem with Cuba but had been under a U.N. obligation to stop the North Korean vessel and inspect its contents.
Panama's Security Minister Mulino said the 35 crew members were likely to be charged with crimes against Panama's internal security. Panama had attempted to question the crew, but they have not been cooperating, he added.
"They are very reluctant to speak," Mulino said. (Additional reporting by Gabriel Stargardter, Louis Charbonneau, David Adams, Paul Eckert, Marc Frank and Michelle Nichols; Writing by Dave Graham; Editing by Todd Benson, Claudia Parsons and David Brunnstrom)