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South Korea is also considering halting another tour program to the North's ancient capital of Kaesong in a bid to press Pyongyang to allow Seoul officials to visit the site of the killing to look into the mysterious background of the woman's death.
A suspension of the two tour programs would deliver a major blow to the North because the joint cross-border project is one of few sources for the impoverished country to earn much-needed cash, officials and analysts say.
The North opened its sealed-off Mount Kumgang, or Diamond Mountain, to South Korean tourists in 1998 as a symbol of inter-Korean cooperation, after a Seoul business tycoon traveled to the mountain leading hundreds of head of cattle into the famine-hit North.
Last December, the North also opened its border city of Kaesong, which served as the capital of the ancient Korean kingdom of Koryo (918-1392), for sightseeing tours. The two package tour programs are operated by the South's Hyundai Group, once the largest business conglomerate in the South.
But the future of the inter-Korean tour project has been thrown into deep uncertainty in the wake of last week's fatal shooting of a South Korean visitor by the North Korean military, which shocked hundreds of tourists staying in the North.
The 53-year-old Seoul housewife apparently strayed into a poorly marked off-limits military area when she traveled to the Kumgang resort on the east coast. She was shot twice in the back and buttocks by the North's military, according to South Korean officials.
The North told Hyundai that the victim was gunned down as she tried to run, ignoring the troops' order to "freeze."
South Korean officials called for a joint on-site probe to resolve a slew of questions surrounding the tourist's death. But the North has rejected the repeated calls, rather demanding that Seoul make "a clear apology" and claiming the "responsibility for the incident rests entirely with the South side."
Outraged by the North's uncooperative attitude and with mounting safety concerns, the Seoul government – which suspended tours to the North's mountain immediately after the incident – is also considering halting tours to Kaesong, which could worsen the North’s financial squeeze.
The North earned US$20.4 million last year from the Kumgang tours. South Korean tourists paid $30 to $100 as an "entrance fee," according to Hyundai. About 350,000 South Koreans traveled to the mountain resort last year.
Hyundai paid the North US$10.7 million in the first half of this year, when some 200,000 people toured the scenic mountain.
If Seoul's ban on the tours remains in force later this year, the North would lose over $15 million in the second half, during which more than 260,000 South Koreans would be expected to visit the mountain for the peak season of summer and autumn, according to Hyundai.
The company has paid a total of US$486 million since 1999, as 1.9 million tourists joined Kumgang tours. The North earned additional cash from tickets to an acrobatic show and telecommunications charges at the resort.
Hyundai has already paid the North $452 million in royalties to operate the tours. It also invested $210 million to build facilities at the mountain resort, such as hotels, restaurants and tour roads, part of which was paid to North Korean workers.
The South’s state-run Korea National Tourism Organization also spent $93 million in improving facilities there. A South Korean company used $72 million to build a golf course at the mountain resort, and other Seoul companies have invested a combined $25 million there.
The North also earned some $6.4 million from Kaesong tours in the first half this year. A tourist pays the North $100 for the one-day tour to the ancient city under a deal between North Korea and Hyundai. More than 100,000 South Koreans have visited the city every month.
The North also earns cash from its workers at the joint industrial complex in Kaesong, where 72 South Korean firms employ some 30,000 North Koreans to manufacture light industrial goods.
A North Korean worker is given US$60 as a monthly wage. North Korea watchers say much of this goes into the pockets of the ruling elite. The number of North Korean workers in the complex is expected to reach 400,000 by the end of this year, officials here say.
The cash inflow from the South is significant to the North given its exports of just US$920 million last year. The isolated country's foreign trade marked US$2.9 in 2007 with imports worth US$2 billion, according to Seoul’s central Bank of Korea.
