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(LEAD) S. Korea rejects N. Korea's demand over asset freeze at mountain resort

All Headlines 13:15 April 11, 2010

(ATTN: RECASTS throughout, CHANGES headline; UPDATES with details)

SEOUL, April 11 (Yonhap) -- South Korea on Sunday rejected North Korea's demand that Seoul officials come to a mountain resort in the communist nation later this week over its plan to freeze southern assets at the beleaguered resort.

Last week, North Korea said it would freeze some South Korean facilities at its Mount Kumgang resort and find a new partner to run tours to the resort in apparent anger over Seoul's refusal to reopen the lucrative cross-border tour program to the resort.

The five facilities to be frozen belong to either South Korea's government or a state-run tourism agency, such as a family reunion center, a fire station and a duty free shop.

The North has since told Hyundai Asan, the South Korean organizer of the now suspended tours to the mountain, that it would carry out the asset freeze Tuesday, and officials representing the owners of the properties should appear at the resort for the measure.

"We won't comply with the demand," Unification Ministry spokesman Chun Hae-sung said Sunday.

North Korea has pressured the South to resume the mountain tours, which had been a key source of foreign currency for the impoverished nation since 1998. South Korea suspended the tours in 2008 after one of its nationals was shot dead by a North Korean soldier in a restricted area near the resort.

But South Korea has remained undaunted while demanding that the North first agree to a joint on-site investigation into the death and offer a state-to-state guarantee of tourist safety before the tours can resume.

The mountain tourism project had been a key symbol of inter-Korean rapprochement that flourished after the first summit of the two Koreas in 2000. Nearly 2 million South Koreans visited the scenic mountain within the decade before the suspension.

Ties between the sides have frayed badly since early 2008, as Pyongyang strongly protested South Korean President Lee Myung-bak's hard-line stance on the regime, including his policy to link aid to progress in efforts to rid the North of nuclear programs.

The sides still remain technically at war after the 1950-53 Korean War ended in a truce rather than a peace treaty.

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