March 2, 2021

North Korea to Auction Resort Owned by South

SEOUL, South Korea — North Korea on Monday gave South Korean tourism officials 72 hours to leave a mountain resort, declaring that it will start auctioning off South Korean-owned hotels, restaurants and other remnants of what used to be a symbol of inter-Korean cooperation.

When the resort complex opened in 1998 on the coastline foothills of Geumgangsan, or Mount Diamond, a scenic spot on the southeastern corner of the reclusive North, it helped usher in a period of détente between the two Koreas that would last a decade. The collaboration was halted in July 2008 after the shooting death of a South Korean tourist that aggravated what was by then rapidly chilling relations between the two sides.

North Korea gave the ultimatum on Monday after talks failed to resolve a dispute over whether tourism in the resort should resume, and under what conditions.

“We consider that the South has completely given up all rights on properties owned by South Korean companies and now start legal disposal of them, ” the North’s official Korean Central News Agency quoted the North Korean tourism authorities as saying. “All assets owned by South Korean companies in the Geumgangsan resort are banned from being taken out as of Aug. 21.”

The South Korean assets held in the resort amount to 480 billion won, or $443 million, according to government data. North Korea said last year that it had confiscated them, including a spa, a duty free shop and other businesses built and owned by the South Korean government.

Fourteen South Koreans were staying in the area maintaining the facilities owned by Hyundai and other South Korean private investors. The Unification Ministry, a South Korean government agency in charge of inter-Korean relations, said that it would take “all possible diplomatic and legal measures to protect the property rights of our government and enterprises.”

Hyundai-Asan, which developed and ran the resort, warned that anyone who buys facilities at the North Korean resort will be implicated in international lawsuits.

After attracting 2 million South Korean tourists by sea or through a road built across the nations’ heavily armed border, the project came to an abrupt halt in 2008 after a female South Korean tourist strayed outside the tourism zone one morning and was shot and killed by North Korean soldiers.

The killing quickly became a test of will between the two governments. President Lee Myung-bak had just come to office in Seoul, determined to get tough on North Korea, which he accused of returning generous South Korean aid with nuclear weapons development and military provocations. North Korea called him a “national traitor” and accused him of abusing the shooting to derail his predecessors’ reconciliation with the North and please his conservative power base.

Seoul said it would not reopen the tourism project at least until North Korea apologized and agreed to a joint investigation of the shooting. 

Pyongyang retorted that it would find a new foreign partner for the project. It has recently threatened to dispose of the South Korean assets unless South Korean investors of the resort  join its international tour program or lease or sell their assets.

Mr. Lee’s two predecessors, Kim Dae-jung and Roh Moo-hyun, cited the resort complex as a symbol of their efforts to ease military tensions and build political trust through economic exchanges. 

But to South Korean conservatives, the project was an eyesore; after pocketing hundreds of millions of dollars for selling the tourism right to Hyundai, the North Korean regime collected additional millions of dollars  a year in tourist cash, a hard currency that they accused the leader Kim Jong-il of using to finance his nuclear weapons program rather than to feed his hungry people.

A Korean-American businessman has recently claimed that he might become a new partner for the North Korean government at the resort.

While Geumgangsan is only a short ride from the border with South Korea, it would be logistically difficult and politically risky for the Pyongyang regime to bus large numbers of foreign tourists from Pyongyang across the length of the poverty-stricken country where the people are kept isolated from the outside world, analysts say. Roads in North Korea also remain decrepit.

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