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Thursday, 12 September, 2002, 16:36 GMT 17:36 UK
Mount Kumgang tourism talks falter
A cruise ship head to Mount Kumgang
Visitor numbers to Mount Kumgang have fallen
Efforts to revive a struggling tourism project between North and South Korea have broken down in the mountain resort of Kumgang just north of their shared border, local media reported.

The three days of talks were aimed at designating Mount Kumgang - also known as Diamond Mountain - a special tourist area open to the free flow of foreign capital and linked by a land route to the South.


I hope the two sides will soon meet again to continue discussions based on the contents of talks this time

Cho Myung-Kyoon
South Korea chief delegate
But the despite running into extra time late on Thursday the talks ended without the two sides reaching an agreement.

Kumgang Mountain first opened to South Korean tourists in 1998, allowing them to visit the Stalinist North by cruise ship, despite the fact that the two states technically remain at war.

Financial crisis

The scheme was hailed as a success which had helped to cool relations between the two states.

But the number of tourists visiting the resort dropped away after South Korea's privately owned Hyundai Group, which ran the cruise trips, ran into financial problems.

According to the Yonhap news agency the talks failed because Pyongyang insisted that Seoul should guarantee it would pay for the loss-making tourism business operated by Hyundai Group.

A North Korean guard on the DMZ
It is hoped tourism might thaw relations between the two states

The South reportedly rejected this demand and the talks broke down.

"Failing to narrow differences, both sides ended the talks without an agreement produced," the South's chief delegate Cho Myung-Kyoon said.

But Mr Cho suggested that the talks might resume.

"I hope the two sides will soon meet again to continue discussions based on the contents of talks this time," he said.

Easing tension

South Korea's proposal that Mount Kumgang should be classed a special tourist area would pave the way for investors to build facilities such as golf courses, ski resorts and other entertainment facilities which could help boost tourism in the communist country.

Mount Kumgang
Kumgang could become home to golf course and ski resorts

The limited cruise tours to Mount Kumgang have already been a key source of income for the impoverished North.

But in the past the North has rejected the South's plans for Kumgang, citing environmental and security reasons.

However, in recent weeks there have been signs of rapprochement between the two countries as the impoverished North reaches out internationally for much needed aid.

On Thursday North Korea signed a deal with the American-led United Nations Command, for the construction of an east coast rail link between the two Koreas.

A similar deal for a rail link on the western side of the peninsula was agreed last year, but it has yet to be implemented.


Nuclear tensions

Inside North Korea

Divided peninsula

TALKING POINT
See also:

04 Oct 01 | Asia-Pacific
20 Jun 01 | Asia-Pacific
10 Apr 01 | Asia-Pacific
08 Aug 00 | Asia-Pacific
12 Feb 00 | From Our Own Correspondent
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