North looking to Re-Open Mount Kumgang Tourism with New Partner

The beach at Mount Kumgang resort

In the wake of the sinking of Navy Warship Cheonan, North-South relations intensify as North Korea pursues aggressive measures to pressure South Korea in to lifting its ban on tourism in Mount Kumgang. Last week, Pyongyang announced its plan to partially take over property at the Mount Kumgang resort and expel all existing South Korean personnel.

The North has been steadily increasing its leverage over the South Korean government since late March. Pyongyang initially threatened to freeze assets of private companies investing in Mount Kumgang tours (namely Hyundai Asan, the corporate enterprise running the tours) and begin “seizing South Korean-owned property.” North has also stated it will find another business partner and terminate all agreements and contracts if the ban continues.

After these statements were released, South Korean businessmen and North Korean officials convened at the Mount Kumgang resort to negotiate. According to bbc.co.uk, the businessmen were told that if Seoul did not reopen tourism “extraordinary measures” would be taken.

The demanding and threatening attitude of the North hints at the possibility of a deteriorating economic situation. While active, the Mount Kumgang resort earned North Korean tens of millions of dollars every year. The North has been struggling financially for years, and the currency reform last year only exacerbated the situation.

Escalating tensions have also hit Hyundai Group subsidiaries and other local companies manufacturing in the Kaesong Industrial Complex – company stocks declined 1 to 8 percent by the end of the day.

Mount Kumgang tourism was founded 12 years ago and is symbolic of the thawing of North-South relations through cultural exchange. However, tours were suspended in July 2008 after Park Wang-ja (53), a South Korean tourist, was shot and killed by North Korean guards on a beach near the Mount Kumgang resort – the North claimed Park was trespassing into military territory.