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NORTH KOREA NEWSLETTER NO. 99 (March 25, 2010)

N. Korea Threatens to Seize S. Korean Assets at Mount Kumgang

SEOUL (Yonhap) -- In another sign of deteriorating inter-Korean relations, North Korea threatened last week to confiscate real estate owned by South Koreans inside the scenic mountain resort along the North's east coast, as it is apparently frustrated by Seoul's refusal to allow its citizens to travel there.

   The North also said that it would seek a "new business partner" if the South rejects its offer to restart the tour by April, the Unification Ministry that oversees Seoul's policy on Pyongyang said March 18.

   In a faxed message to the ministry and Hyundai Asan Corp., operator of the suspended tour project, the North's Asia-Pacific Peace Committee, a state agency in charge of cross-border exchanges, said it will look into all of the real estate inside the Mount Kumgang district beginning March 25.

   The committee called on the owners of the real estate and related officials to visit Mount Kumgang by the day of the planned probe, adding all assets of those who fail to meet the deadline will be confiscated while they will not be able to visit the mountain again.

   Dozens of South Korean firms hold a long-term lease on roughly 360 billion won (US$310 million) worth of land and buildings in the special tourist zone, including Hyundai Asan's two hotels, Emerson Pacific Group's golf course, and other facilities, government data showed. The South Korean government also poured more than 60 billion into the construction of a family reunion center there.

   The threat was the latest in a series of warnings Pyongyang has made to pressure Seoul to resume the tours, which had been a key source of hard currency for the impoverished North.

   The tours were suspended right after a South Korean tourist was shot to death by a North Korean guard after straying into a restricted area in July 2008. South Korean visits to the ancient city of Kaesong were stopped in December of the same year.

   North Korea, feeling the pinch of U.N. sanctions imposed for its missile and nuclear tests last year, has called for the South to immediately resume the tours.

   South Korea has urged the North to first fully guarantee the safety of South Korean tourists. Related working-level talks between the two sides last month failed to yield a deal due to differences over details on a security guarantee.

   At the meeting, Seoul demanded an official apology for the 2008 shooting death of the female South Korean tourist and a pledge that such an incident will not occur in the future. The South has said a formal investigation must be carried out to determine why the shooting occurred.

   The North says that such safety measures were promised when its leader Kim Jong-il met with the chairwoman of Hyundai Asan last year and that its own probe shed enough light on the shooting.

   In the latest threat, the North's committee warned that a new business partner will resume tours for South Korean and foreign tourists to Mount Kumgang and Kaesong starting in April unless the South's government agrees to resume the tours.

   The Unification Ministry called an emergency meeting of related officials and expressed regret over the North's unilateral move. "North Korea's measure violates agreements between South and North Korean authorities, as well as between their tourism business operators," the ministry said in a press release. "It also goes against international practice."

   It stressed the North should abide by accords with the South, and all pending issues should be resolved through dialogue. "As the tours to Mount Kumgang and Kaesong are issues directly related with our people's safety, there is no change in the government's existing position that it will resume them only after the matters are settled," it added.

   Meanwhile, the head of the South Korean operator of the tours offered to resign to take responsibility for snowballing losses from the suspended businesses. Cho Kun-shik, president of Hyundai Asan Corp., expressed his intent to step down in a statement emailed to all staff on March 18, company officials said.

   In an earlier statement issued March 4, the North Korean committee said it may revoke all accords and contracts on the tourism business unless the South stops blocking the resumption of the joint ventures. It claimed that the Seoul government is effectively blocking South Koreans from visiting its tourist attractions.

   "If the South Korean government continues to block the travel routes while making false accusations, we will be left with no choice but to take extreme measures," an unidentified spokesman for the committee said.

   The spokesman stressed that whether or not South Korean tours to the two locations will restart will depend entirely on South Korean authorities, who will have to bear full responsibility if the cross-border exchange does not take place.

   Seoul officials said they are examining in detail the latest saber-rattling by the communist country, adding, however, there is little chance of the current government moderating its stance on the tourism issue since it involves the safety of its citizens.

   Ties between the sides fell to their lowest point in decades after South Korean President Lee Myung-bak took office in early 2008 and said he would suspend large-scale aid to North Korea until Pyongyang showed progress in denuclearization under a six-nation agreement.

   Experts speculated that the North's latest threat may be aimed at pressuring the South to ease its demands, but said Pyongyang may not rush to take any action that could complicate inter-Korean relations and scare away overseas investors.

   In recent months, Pyongyang has been actively seeking investments from abroad. It revised the law on the Rason free trade zone to allow investments by South Koreans.

   The North said it will send military officials and Cabinet members to the planned meeting at Mount Kumgang.

   But the South Korean government said it will not attend the March 25 meeting because the North's message technically rules it out as a partner.

   On March 19, the North's General Scenic Spots Development Guidance Bureau, the office in charge of the tour program, also condemned the Seoul government for suspending tours, placing blame on the deceased tourist for her "carelessness" and saying the South Korean authorities "failed to properly take care and control the tourists."

   According to a report from the North's official Korea Central News Agency (KCNA) monitored in Seoul, the bureau said that Seoul's refusal to resume the tours is equivalent to the South rejecting inter-Korean relations and the spirit of reconciliation and unity, according to the KCNA report.

   After a series of consultation with the government, executives from South Korea's state-run Korean Tourism Organization (KTO) and Hyundai Asan Corp. decided to visit North Korea to attend the survey probe of their properties at Mount Kumgang.

   On March 24, the Seoul government issued travel permits for South Korean business officials to visit North Korea to comply with Pyongyang's order that they convene at the mountain resort.

   Three officials from the KTO entered the North on March 24 for their own inspection of tourism facilities ahead of the survey.

   On March 25, 16 officials from Hyundai Asan Corp., Emerson Pacific Group and six other operators of now-suspended tours were to travel across the eastern side of the heavily guarded Demilitarized Zone at 9:30 a.m., according to the Unification Ministry in Seoul.