Korea summit means massive aid for North-analysts

SEOUL, Aug 10 (Reuters) South Korea may be ready to offer billions of dollars to rebuild the failing North Korean economy when leaders meet for only the second ever summit between the enemy states later this month, analysts said.

Leaders from the two countries, technically at war for more than half a century, will meet in the North Korean capital Pyongyang on Aug. 28-30.

Analysts said the South Korean President Roh Moo-hyun's government has been trying to put together a massive aid package.

North Korea wants help to rebuild the port of Nampo that serves Pyongyang and build at least four industrial complexes, former Prime Minister Lee Hae-chan, told local media.

North Korean leader Kim Jong-il will also likely push for more tourism ventures to attract South Koreans, said Lee, who went to the North earlier this year and served as premier under Roh.

South Korea has made clear that a major focus of the summit will be revival of its communist neighbour's destitute economy, but has not yet said what might be on offer.

Officials from the two sides were expected to meet on Monday to agree an agenda for the Roh-Kim talks.

Paik Hak-soon of the Sejong Institute, a North Korea expert, said there was no question the two will discuss a dramatic boost in economic cooperation.

''It is what South Korea wants to do, and it's something that the North is upset that the South has not done already despite its earlier promises,'' he said.

Economic relations are largely limited to two enclaves -- one industrial and the other for tourism -- the South's Hyundai Group operates just inside North Korea and large amounts of aid from Seoul.

Paik headed an advisory committee that in 2005 approved a government blueprint on modernising the North's railway network and power grid, expanding its port facilities and building more resorts for South Korean and foreign tourists.

An expert on the North's economy at the state-run Korea Institute of National Unification, Lee Suk, said that while Roh and Kim were unlikely to sign specific deals this time, they could agree in principle on infrastructure projects.

''As far as infrastructure is concerned, they need a complete overhaul,'' Lee said.

REFURBISHING COST A study by the state-run Korea Development Bank estimated the cost of refurbishing the North's infrastructure would top 60 trillion won ( billion) over 10 years.

Some in South Korea argue it makes sense to get a head start and avoid a bigger financial burden when unification occurs and the South has to absorb its neighbour.

The Roh government has been criticised for being too accommodating to what many consider a renegade state.

But officials argue that South Korea's economy would buckle under the strain if the North collapsed and its poorly trained population fled south in search of work, and it is far safer to gradually bring the country out of its primitive economic state.

Roh is under strong pressure at home to win concessions from the North, especially greater commitment to nuclear disarmament, and resolving the highly-emotional issues of South Koreans kidnapped decades ago and still held in the North and reunions of families divided at the end of the 1950-53 war.

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