FACTBOX: North Korean thaw may benefit cash-starved Pyongyang

SEOUL (Reuters) - North Korea has reached out to South Korea in recent weeks, with its leader Kim Jong-il sending envoys to the South for the first time since President Lee Myung-bak took office in February 2008.

North Korea had all but severed ties with South Korea in anger at Lee's policy of ending unconditional aid and instead linking handouts to progress Pyongyang makes in ending its nuclear arms program.

Here are some steps that may come as a result of the thaw:

TOURISM

North Korea said it wants to reach a deal to resume tourist visits to a mountain resort in the North run by an affiliate of South Korea's Hyundai Group. The North receives fees from each tourist who crosses the border and a cut of money they spend at the Mount Kumgang resort. If tours are restored, the North could receive tens of millions of dollars a year.

North Korea has also said it would allow tourism to resume in the North's border city of Kaesong, 70 km (45 miles) northwest of Seoul, and could start tours to Mount Paektu, a peak in the northern part of North Korea that is considered sacred to Koreans. These ventures would also generate hard currency.

FACTORY PARK

North Korea has been demanding increased rent and more money for its workers at a joint factory park run by a Hyundai affiliate in Kaesong, where about 100 South Korean firms rely on cheap North Korean labor and land to make goods. There has been no word if the North's leader Kim discussed the demands when he met Hyundai Group Chairwoman Hyun Jeong-eun this month. But if a deal was reached, it could mean tens of millions of dollars a year for the North.

SOUTH KOREAN CAPTIVES

Kim reportedly said in the meeting with the Hyundai chairwoman he would look into the matter of four South Korean fishermen being held after their boat drifted into North Korean waters several weeks ago. This indicates a deal on their return could come soon. The Lee government has also demanded the release of more than 1,000 South Koreans kidnapped by the North or not released after the end of the 1950-53 Korean War. Pyongyang denies it is holding anyone against their will and is not likely to budge.

SOUTH KOREAN AID

The thaw in ties could put pressure on Lee to resume food and rice aid, put on hold after he took office due to political friction. The South used to send 400,000 to 500,000 metric tons of rice a year and about 300,000 metric tons of fertilizer to North Korea. The North battles chronic food shortages and its economy has suffered from flooding this year that has damaged crops.

FAMILY REUNIONS

North Korea agreed to allow the resumption of reunions of families separated after the Korean War. The North suspended these highly emotional meetings in anger at Lee's tough policies.

NUCLEAR TALKS

If North Korea can start getting aid again from the South, which was once equal to about 5 percent of its estimated $17 billion annual GDP, its leaders would feel less need to make concessions in stalled six-country, disarmament-for-aid talks.

The North may be swayed into resuming those talks to please China, the host of the discussions and its main benefactor, but few analysts expect it will ever give up its nuclear weapons.

(Editing by Jonathan Hopfner and Dean Yates)