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Tuesday, 10 April, 2001, 07:01 GMT 08:01 UK
North Korea cruises cut back
Cruise ship
High tourist numbers never materialised
By Caroline Gluck in Seoul

South Korea's ailing Hyundai Group has announced it is to temporarily scale down its cruise ship tours to North Korea this month in a bid to save money.

The company said that the number of services would be almost halved for 15 days because of a drop in the number of tourists.

The move is seen as a setback to the ground-breaking tours to North Korea which began three years ago, but which have been running at huge losses.

Launched in 1998, the cruise tours went to North Korea's scenic Diamond Mountains near the demilitarised zone separating the two countries.

It is the only place in the North that South Korean tourists are allowed to visit.

Symbolic importance

The trips have continued to play an important symbolic role in improving ties between the two nations, who still remain technically at war.

Map of Korean peninsula
But the venture has lost Hyundai more than $200m.

The announcement by the company to reduce the number of tourist cruises this month reflects the serious financial woes that it is facing.

Under its deal with North Korea, Hyundai agreed to pay $12m each month in return for exclusive rights to operate the project.

But the expected high tourist numbers never materialised, despite recent reductions in the price of the tours.

Shadow over reconciliation

Hyundai is trying to negotiate halving the fees it pays North Korea and has been unable to meet the full fees for the last two months.

The troubles with the tourism project come at a time when inter-Korean exchanges are also facing problems, despite pledges between the leaders of the two nations last year to work towards a new era of reconciliation.

North Korea has recently cancelled an inter-ministerial meeting, Red Cross talks and backed out of a deal to send a joint Korean table tennis team to world championships in Japan.

Analysts believe it reflects Pyongyang's unhappiness at an apparent hardening of attitudes towards the North by the new United States administration.

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See also:

08 Mar 01 | Asia-Pacific
Seoul's fears over Bush
08 Mar 01 | Asia-Pacific
Bush rules out North Korea talks
08 Aug 00 | Asia-Pacific
Hyundai takes cattle to N Korea
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Kim Dae-jung: Korean peacemaker
15 Aug 00 | Asia-Pacific
Summer months melt Korean ice
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Pyongyang reaches out
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Breaking the ice in North Korea
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