North Korea seeks talks with South for lucrative tours

North Koreans (bottom) are seen in a village in Kaepoong county on the north side of the demilitarized zone (DMZ) separating the two Koreas, in this picture taken from south of the DMZ in Paju, about 50 km (31 miles) north of Seoul January 12, 2010.

SEOUL (Reuters) - Destitute North Korea proposed on Thursday to hold talks with the South on resuming tours to enclaves inside its territory that were a vital source of hard cash before political troubles put the business on hold.

The reclusive North has lost out on tens of millions of dollars a year it used to earn through tourism with the South over wrangling in the aftermath of Pyongyang's military threats to the region and nuclear arms program.

The proposal, disclosed in a dispatch by the North's official KCNA news agency, came on the day the rival Koreas agreed to hold separate talks on a joint industrial project.

North Korea's wobbly economy has been dealt blows by fresh U.N. sanctions imposed after its nuclear test in May 2009 and currency control measures it imposed at the end of last year that made it more difficult for its impoverished people to buy goods.

"It is very regrettable that tours of Mt. Kumgang and the area of Kaesong have been suspended for one and a half years," KCNA said, adding the North proposed talks for January 26 and 27 at the Mount Kumgang resort.

More than 1 million South Koreans have visited Mount Kumgang, on the east coast just north of the heavily armed border. South Koreans could also once visit the North's border city of Kaesong, about 70 km (45 miles) northwest of Seoul.

Tours to the Kumgang resort, run by an affiliate of the South's Hyundai Group, were suspended after a North Korean soldier shot dead a South Korean housewife there in July 2008 after she wandered into a restricted area.

Seoul has demanded an apology for the shooting and better safety for visitors before it would allow the tours to resume.

South Korea's Unification Ministry had no immediate response.

North Korean leader Kim Jong-il has appealed to the Hyundai Group to resume its tours, but Seoul has not given its approval to restart the visits.

North Korea also appears ready to welcome visitors from the United States year-round, increasing the trickle of tourists from its sworn enemy who provide the reclusive state with hard cash, a tour operator in China said on Wednesday.

The North has allowed in a few hundred U.S. citizens a year since 2002 for the Arirang Mass Games, which is part dance show and part communist propaganda spectacle that incorporates tens of thousands of performers, according to an agency in China that organizes visits to the isolated country.

(Reporting by Jack Kim; editing by Jon Herskovitz)