NKorea launches tours from China, snubbing SKorea

[August 31, 2011]  MOUNT KUMGANG, North Korea (AP) -- A rusty cargo ship festooned with welcome banners arrived Wednesday at North Korea's Diamond Mountain resort to mark the launch of new tours from China that snub Seoul and aim to replace suspended South Korean trips.

For a decade, the two Koreas jointly operated a golf resort ringed by Mount Kumgang's seaside vistas and jagged peaks just north of their border, but Seoul halted the reconciliation project in 2008 after a North Korean guard shot and killed a South Korean tourist.

With relations at a low point, the two sides have been unable to agree on terms for restarting the project. Instead, the cash-strapped North has turned to China, seizing South Korea's assets at the site known familiarly abroad as Diamond Mountain and evicting its workers over Seoul's objections.

Now, North Korea is opening the site to other investors and welcoming tourists of all nationalities who will meet in the Chinese city of Yanji, drive three hours' by road to the North Korean port city of Rason, and then go by cruise down the east coast by ship to Kumgang.

"We have opened the door, and it's open to the whole world," said Park Chol Su, vice chairman of the Taepung International Investment Group, a North Korean government agency set up to attract foreign investment.

He said large-scale infrastructure projects were a priority and that discussions were under way with a few potential investors, though he wouldn't give specifics.

Seoul officials say they'll try to get foreign governments to boycott the plans, and it remains unclear how many non-Korean tourists will make their way to a resort that primarily drew nostalgic South Koreans.

The cruise would ferry tourists from Rason, a special, separately administered economic zone in North Korea's far northeast a few hours' drive from the Chinese city of Yanji, to Mount Kumgang near the Demilitarized Zone dividing the Koreas.

The maiden voyage -- a trial run -- arrived Wednesday, carrying dozens of Chinese travel agents, international media and North Korean officials.

About 500 North Koreans lined up with military precision at the Rason port for a red carpet send-off Tuesday, waving small flags and plastic flowers while revolutionary marches such as "Marshal Rides a White Horse" blared over the loudspeakers. Streamers swirled and balloons spiraled skyward.

The Mangyongbong, a refurbished Japanese-built cargo ship with rusty portholes and musty cabins, was used for the 21-hour overnight cruise tracing the length of North Korea's east coast. Some passengers slept on wooden bunk beds while others were assigned mattresses on the floor. Simple meals were served cafeteria-style on metal trays.

A plaque on board commemorated a 1972 tour of the boat by North Korea's founder, late President Kim Il Sung, and bright red posters emblazoned with his sayings decorated the walls.

Park promised a "more luxurious" ship capable of carrying up to 900 passengers, perhaps next year. He said the goal is to bring as many as 4,000 visitors a day from Rason to Mount Kumgang during the peak summer season, up from some 500 per week now.

North Korea remains far off the beaten track for tourists -- especially those from the U.S. and South Korea, whose nations fought against North Korea and China during the 1950-53 Korean War. But Hwang said Rason is open to all tourists.

"People from any country -- Jamaica, Japan, Singapore, people from various countries -- can come to Rason and don't require a visa," said Rason's vice mayor, Hwang Chol Nam. "That's the reality."

But other restrictions remain. Hwang said visitors must book with approved travel agents and remain in their guides' company throughout. Mobile phones must be left behind in China.

For years, foreigners could visit scenic Diamond Mountain through tours run by South Korea's Hyundai Asan Corp., which opened a spa and golf resort there in 1998. All but a sliver of the 2 million visitors were South Koreans who saw it as a symbol of inter-Korean cooperation following decades of animosity. After the 2008 shooting death, Seoul demanded that Pyongyang formally apologize and allow a joint investigation before resuming the tours that brought North Korea an estimated tens of millions in hard revenue.

The earnings have been sorely missed in a country that suffers chronic food shortages and where the annual gross domestic product is an estimated $1,800 per person. Pyongyang suffered an even further drop in outside income after a widely condemned rocket launch and nuclear test in 2009, which drew strengthened sanctions and a suspension in aid linked to disarmament.

After telling the South Koreans in June to draw up plans to salvage its assets at the resort, Pyongyang announced a few weeks ago that it was seizing the South Korean assets and would court new investors to develop the project. Last week, Pyongyang also kicked out all South Korean workers from the resort.

It remains to be seen how many Chinese tourists will be interested in the new tours. With incomes rising, Chinese are traveling abroad in rising numbers, thronging tour groups to Europe, Thailand, Japan and South Korea, with a small but growing number also making the short trip to nearby North Korea.

A senior South Korean official said North Korea would have trouble drawing investors and tourists after the way the North dealt with South Korean businesses.

South Korea's Unification Ministry plans to send a letter to foreign embassies asking them not to cooperate with any new Diamond Mountain tours offered by North Korea, said the official, who spoke on condition that his name was not used.

North Korea's latest moves are likely to upset Hyundai -- but that might the strategy of Pyongyang officials riding out conservative South Korean President Lee Myung-bak's leadership, which ends next year, said Yoon Deok-ryong, an economist at the Korea Institute for International Economic Policy in Seoul.

"If they bring potential investors into the Mount Kumgang area, Hyundai would be upset and try to mobilize possible supporters in Parliament so the next government in South Korea will improve inter-Korean relations," he said. "That is I think the design of the North Korean government."

Wang Zhijun, a Chinese hotel manager from Jilin province who joined the trip free of charge, said it won't be hard to sell the cruise to tourists in his region, which has a large ethnic Korean population and lacks coastline of its own.

But, he said, the price would have to stay low, suggesting around 2000 yuan (US$310) per passenger for an all-inclusive, five-day trip.

"It ought to be very popular. There are a lot of tourists already coming across to Rason," Wang said. "People from China's northeast would really like this kind of trip because it's a cruise. You can enjoy the sea."

[Associated Press; By ALEXA OLESEN]

Associated Press writers Sam Kim and Hyung-jin Kim in Seoul, South Korea, contributed to this report.

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