North Korea to reap benefits from South as ties thaw

By Jack Kim - Analysis

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.

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.