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North Korea to reap benefits from South as ties thaw

SEOUL (Reuters) - North Korea’s disclosure of its nuclear activities could mark a breakthrough in potentially lucrative exchanges with the South stalled by a new government in Seoul that pledged a hard line on Pyongyang.

A man walks in front of pictures of North Korean leader Kim Jong-il and the late Kim Il-sung outside the North Korean Embassy in Beijing June, 26, 2008. REUTERS/Reinhard Krause

North Korea handed over a long-delayed nuclear inventory on Thursday under a disarmament deal, and in a symbolic follow-up on Friday, demolished the cooling tower at a nuclear complex.

“The biggest obstacle to progress in South-North ties has been the delay in the nuclear problem,” said Chun Bong-geun, an expert on the North at the Institute of Foreign Affairs and National Security in Seoul. “Now that’s taken care of.”

South Korea has been one of the North’s biggest benefactors, supplying it with food to feed its people and economic projects that bring foreign currency to its decrepit economy.

But the flow of aid was severely cut when President Lee Myung-bak took office in February and said Seoul’s largesse would be tied to action by the North to dismantle its nuclear programme and open up to the international community.

That has not gone over well with the communist regime in Pyongyang, which after a disquieting silence began hurling insults at Lee, branding him “a traitor to the nation”.

The breakthrough in the nuclear deal may give Lee the room to offer some incentives to the North, which in turn could cause Pyongyang to tone down its rhetoric, analysts said.

But North Korea has a history of being a prickly partner, and has often reversed itself on agreements or failed to live up to their provisions. More hitches on denuclearisation may be in store despite this week’s progress.

That means the South may move cautiously on warming ties, and analysts warn against too much optimism too soon.

Lee has suspended all government aid for the South’s impoverished neighbour, including hundreds of thousands of tonnes of food each year that made up for a large part of the North’s shortfall.

“The North probably harbours the misconception that the new government in the South has a hostile policy against it,” said Lim Dong-won, a former spy chief and unification minister who is considered one of the architects of the South’s “Sunshine Policy” of engagement.

The potentially swift improvement in ties between the North and the United States that will likely follow the nuclear disclosure should trigger similar warming ties between Pyongyang and Seoul, said Kim Tae-woo, an expert on the North.

“When the United States begins food aid to the North and takes it off the list of state sponsors of terrorism, it could help resolve the tight knot in the dialogue between the South and the North,” said Kim, of the Korea Institute of Defence Analyses.

He said the North, whose chronic food shortages were exacerbated by flooding last year, has “a severely urgent, almost thirsting” short-term need for help.

Analysts said the North may be shunning the South now, but despite Lee’s hard line, knows it needs its neighbour’s help to prop up its mangled economy.

“The North needs the South,” said Lim, the former spy chief. “They have seriously pressing needs in reality, be those of a humanitarian nature or in economic cooperation.”

For North Korean leader Kim Jong-il, there may be enormous political mileage from telling his people the country was able to make Washington drop its hostile policy against it and that he won concessions from the South, Chun said.

“The financial benefits of becoming a friend of the United States are pretty limited. Most of that comes from the South.”

Additional reporting by Junghyun Kim; Editing by Jonathan Hopfner and Jerry Norton