Two Koreas cut back on rail link over armed border

SEOUL (Reuters) - North and South Korea will cut rail cargo traffic across their densely armed border, an official said on Thursday, barely a month after the resumption of what was held up as a milestone in ending their Cold War divide.

The first regular freight train service in more than 50 years started in December but the reclusive North said there was too little cargo to justify a large number of freight cars.

"The number of freight cars which run on the train will be flexible, depending on the amount of cargo," said an official with the South's Unification Ministry.

The re-opened 20 km (12.5 mile) route runs between the South and the Kaesong industrial enclave it operates just inside North Korea and where its companies have access to cheap land and labor.

South Korean rail officials said most companies in the industrial park still prefer road transport to and from Kaesong, which is seen as a model of future economic cooperation between the wealthy South and its impoverished neighbor.

The rail service was one of a number of projects agreed in October in a rare summit between the two states, and the only major one to have so far been implemented.

President-elect Lee Myung-bak, who takes office on February 25, said he will review cooperation projects struck under his predecessor Roh Moo-hyun and make it harder for the communist North to receive handouts by linking them to progress it makes in nuclear disarmament.

Regular train runs ended during the 1950-53 Korean War, which was settled by a ceasefire, not a peace treaty.

(Reporting by Jon Herskovitz and Jessica Kim; editing by Jonathan Thatcher)