Tycoon's trip to N. Korea may help relations

Tycoon's trip to N. Korea may help relations

By Bill Tarrant

SEOUL (Reuters): The octogenarian founder of South Korea's
largest conglomerate returned from a historic trip to the enemy
North at the weekend with a fistful of business deals that could
help mend ties on the Cold War's last frontier.

The Hyundai group's 82-year-old Chung Ju-yung met North
Korea's reclusive leader Kim Jong-il late last Friday and
hammered out a $906 million deal that will eventually send up to
2,000 tourists a day by luxury cruise ships to the fabled Diamond
Mountains on North Korea's east coast.

That alone would go a long way toward thawing ties on the
divided Korean peninsula. The two Koreas have been in a technical
state of war since the end of the 1950-53 Korean conflict because
it ended in a now fraying truce rather than a peace accord.

People from the capitalist south are banned from traveling to
the communist north except under special permission and the two
countries do not have communication links of any kind.

Chung said Kim Jong-il also promised to let Hyundai build
pipelines to supply oil from North to South Korea, which must
import all its crude. He gave no further details.

Other deals in the planning stages include a major industrial
complex on North Korea's west coast, where South Korea can
relocate facilities to use North Korea's cheaper labor, a 100,000
kilowatt thermal power plant in Pyongyang and a ship repair yard.

Kim Jong-il, who rarely greets any foreigners, let alone those
from South Korea, met Chung in his Pyongyang hotel room.

"We spoke for a long time and Kim promised to cooperate on
everything for mutual benefits," Chung told reporters last
Saturday in the neutral village of Panmunjom on one of the
world's most heavily fortified border.

"We also agreed that the two Koreas can work together on
everything if that helps both," Chung said. "I think South-North
exchanges will improve and everything will progress well."

The Hyundai chairman said the maiden voyage of Hyundai's
cruise ships to the Diamond Mountains would be on Nov. 18.

Hyundai will build ski slopes, golf courses, a hot spring spa,
a beach resort and entertainment complexes in the area.

Chung's trip, which began last Tuesday when he brought 501
head of cattle and a fleet of cars as tokens of his appreciation,
is the most tangible result of South Korean President Kim Dae-
jung's "sunshine policy" toward the North.

The policy seeks to boost non-governmental ties with North
Korea to gradually open up the Stalinist state, while postponing
political reunification to the distant future.

Kim Jong-il's personal approval of the unprecedented deals may
signal a thaw in ties.

Famine-struck North Korea, its economy in tatters after
several years of natural disasters compounded by mismanagement of
the command economy, depends on aid to feed its 22 million people
and is in desperate need of hard currency.

The business breakthrough contrasts with diplomatic deadlock
in talks with North Korea on a peace agreement and ways to curb
its missile and nuclear programs.

In Geneva last weekend, North Korea assented to a fourth round
of peace talks in January between the two Koreas, the United
States and China but, again, refused to agree an agenda.

Pyongyang insists the withdrawal of the 37,000 U.S. troops in
South Korea and a separate peace with the United States take
precedence on the agenda. Washington adamantly rejects that.

North Korea next month hosts a U.S. delegation in Pyongyang,
during the maiden Hyundai voyage to the Diamond Mountains. They
will discuss the North's missile and nuclear programs.

The talks will try to ensures North Korea's compliance with a
1994 agreement in which Pyongyang agreed to dismantle its nuclear
program in exchange for annual deliveries of heavy fuel oil and
two safe, light water nuclear reactors.

North Korea has recently threatened to tear up the accord over
what it views as U.S. foot-dragging on delivering the fuel oil
and has refused international inspections of its nuclear
facilities.

On Aug. 31, North Korea stunned the world by launching a
rocket it said was putting a small satellite into orbit, which
flew over Japan and into the Pacific.

Recent U.S. spy photos have spotted what Washington has
described as a "suspicious underground facility" in North Korea
that could be housing a missile or nuclear program.