NKorea agrees to resume joint projects with SKorea

North Korea said Monday it will resume largely frozen cross border exchanges with South Korea and the communist country's leader Kim Jong Il promised that incidents such as the shooting death last year of a South Korean tourist that helped stoke inter-Korean tensions will not recur.

The North's surprise announcement followed a meeting Sunday between Kim and the chairwoman of Hyundai Group, the biggest South Korean investor in the North, who traveled to Pyongyang last week to secure the freedom of a company employee and discuss restarting joint business projects. North Korea released the Hyundai worker on Thursday.

But in a sign that significant tensions remain, North Korea's military said in a statement Monday that the country's army was on "special alert" because of joint military drills between South Korea and the United States this week.

North Korea, via the state Korean Central News Agency, said it would restart Hyundai-run tours to the scenic Diamond Mountain resort on North Korea's east coast and ancient sights in the northern city of Kaesong, less than an hour's drive from Seoul, as well as allow reunions of families separated by the heavily fortified border with South Korea.

The tours were suspended in the rising tensions that followed the inauguration of South Korea's conservative President Lee Myung-bak early last year. Lee angered Pyongyang by taking a tougher line than his predecessors on keeping North Korea accountable to its commitments on nuclear disarmament.

The suspension has been a major financial burden to Hyundai, which poured hundreds of millions of dollars into the projects aimed at promoting ties with the North. Hyundai Asan said the suspension of tours caused more than $130 million in financial losses for the company.

Kim "told me to tell him of any difficulty this time and I told him everything and he resolved them all," Hyun told reporters after crossing the border to return home Monday.

Hyun said she held four hours of talks with Kim at Myohyang Mountain, northeast of Pyongyang.

South Korean officials said Hyun was not a South Korean government envoy and the agreements made on the trip require further government-level talks between the two Koreas.

Still, the Unification Ministry, which handles relations with the North, said it considered the development "positive" and said the government will actively seek to achieve an agreement with North Korean authorities to allow the tourism trips to resume.

"Kim Jong Il clearly showed his intention to improve South-North Korean ties and he is strongly demanding that the South Korean government change its North Korea policy," said Paik Hak-soon, an analyst at the private Sejong Institute think tank near Seoul.

The North Korean report did not give exact dates for resumption of the tours, but said it was decided the Diamond Mountain trips would start "as soon as possible."

North Korea suspended tours to Kaesong late last year. South Korea earlier halted tours to the mountain resort after a North Korean soldier fatally shot a South Korean tourist, who allegedly entered a restricted military area next to the resort in July last year. South Korea called for a joint investigation but the North refused.

"Such a thing will never happen again," Hyun quoted Kim as saying, referring to the shooting.

Koh Yu-hwan, a North Korea expert at Seoul's Dongguk University, said the North appeared to be using the resumption of the tour programs as a way to resolve its economic woes aggravated by international sanctions imposed following the country's missile and nuclear tests earlier this year.

Koh also said improved relations with Seoul are also necessary to promote ties with Washington, the North's coveted goal.

KCNA said the North also agreed to resume reunions of families separated by one of the world's most heavily armed borders at the Diamond Mountain resort on this year's annual "Chuseok" autumn harvest holiday that falls on Oct. 3. Chuseok is one of the two biggest Korean traditional holidays celebrated in both Koreas and is equivalent to Thanksgiving in the United States.

The family reunions first took place in August 2000 and have reunited about 20,000 separated Koreans with their long-lost kin across the border before last being held in October 2007.

The North also said it agreed to ease restrictions on border traffic and "energize" the operation of a joint factory park in the border city of Kaesong - the last remaining key joint project between the Koreas. The future of the industrial complex was thrown into doubt after the North significantly restricted border crossings and demanded a massive increase in rent and salaries for North Korean workers at the complex.

About 110 South Korean-run factories employ about 40,000 North Korean workers at Kaesong. Both the industrial complex and the tour projects are key sources of income for North Korea.

On Thursday, the North freed a Hyundai worker whom it had detained for months for allegedly denouncing the communist country's political system. His return home came about a week after the North's release of two jailed U.S. journalists, following a surprise trip to Pyongyang by former President Bill Clinton.