South Korea to cut subsidies for resort in North

Seoul, Oct 19: South Korea will stop subsidising tours to a mountain resort in North Korea that a US official has labelled a cash cow for Pyongyang's leaders, a government official said today.

The Mount Kumgang resort, run by an affiliate of the South's Hyundai Group, has come under increased scrutiny after the U.N.

Security Council imposed sanctions on North Korea to punish it for exploding a nuclear device last week.

''The government is going to suspend paying subsidies for Mount Kumgang tours,'' said a Unification Ministry official, who asked not to be identified.

The official did not say how much South Korea pays in tour subsidies, but local media said it ran into several of million dollars a year.

Package tours to the resort can cost from several hundred to several thousand dollars and the government frequently subsidises tickets for the elderly, war veterans or poor people.

South Korea has two major projects in North Korea where South Koreans can regularly cross the heavily fortified border.

One is the resort and the other is an industrial park in the border city of Kaesong where 15 South Koreans companies use cheap North Korean labour and land to produce goods such as shoes, clothes and cosmetics cases.

Tourists have paid 7 million in admissions and management fees to North Korea to travel to the mountain resort, which has been visited by over a million people since it was set up in 1998, the Unification Ministry said in a report.

Christopher Hill, the chief U.S. envoy for North Korean affairs, said in Seoul on Tuesday that he saw the merits of Kaesong because it was as a long-term investment in human capital while Kumgang seems to be ''designed to give money to the North Korean authorities.'' South Korea has said it has no intention of pulling the plug on the mountain resort and the industrial park projects, but the government has come under increased criticism after the nuclear test for its engagement policy with the North.

REUTERS