Seoul Hesitant to End N. Korea Projects

South Korean protesters hold South Korean flags and a North Korean leader Kim Jong Il poster, denouncing North Korea's nuclear test during a candlelight vigil in front of Seoul City Hall Saturday, Oct. 21, 2006. The top U.S. diplomat on Saturday rejected media reports that North Korea promised to hold off on future nuclear tests, while a former South Korean President Kim Dae-jung warned the North could lash out with military action in response to U.N. sanctions banning its weapons trade. (AP Photo/Kin Cheung) (Kin Cheung - AP)

SEOUL, South Korea -- South Korea is still sending tourists to a mountain resort in the North and maintaining a joint economic zone, despite pressure to cancel the projects after Pyongyang's nuclear test.

The country has its reasons for refusing to shutter key projects that help keep Kim Jong Il's regime afloat, including competition with China for influence over the impoverished nation.

South Korea and China together account for two-thirds of overseas trade for the communist North, and South Korea hopes to one day reunite the two Koreas.

The U.S. has scoffed at the tourism venture at the North's majestic Diamond Mountain resort, saying the project simply hands money to the North Korean government. Washington also has questioned labor practices in a joint economic zone where North Korean workers provide cheap labor for South Korean firms.

But Seoul has been reluctant to inflame North Korea as it pursues its policy of reconciliation that has led to unprecedented cooperation between the two countries that share a peninsula.

Totally cutting off the joint projects also would mean Seoul would lose influence in the North, leaving the isolated nation wide open for China _ the North's No. 1 trade partner and a key source of aid.

Secretary of State Condoleezza Rice has said she will not presume to tell South Korea or China how to enforce U.N. sanctions imposed against North Korea after the Oct. 9 underground blast.

But she has called on all nations to cooperate and pointedly noted in a South Korean TV interview Friday that the North "set off a nuclear weapons test right here in South Korea's backyard."

"It is important to use whatever leverage a country feels that it can use to get the North Koreans to make the right choice" to rejoin arms talks and disarm, Rice told KBS in Seoul.

South Korea is keen to maintain stability and not let its unpredictable neighbor spoil its hard-won prosperity built from the ruins of the 1950-53 Korean War. Today's South Korea is a high-technology mecca and cultural trendsetter for Asia, proudly proclaiming itself as "Dynamic Korea" in its main tourism slogan.

The inter-Korean projects are part of Seoul's strategy to use trade and exchanges to ensure that success is not wiped out by a war or a chaotic collapse of North Korea. The North has needed foreign assistance to feed its 23 million people since the mid-1990s, when its state-run farm system collapsed after the loss of Soviet subsidies.

But in the wake of the North's first-ever nuclear test, Seoul has faced new calls to cancel the landmark reconciliation projects in line with the U.N. sanctions.