Seoul said yesterday it had suspended funding for government-level exchanges with North Korea amid rising tensions over the sinking of a Seoul warship and other issues.
The Unification Ministry, in charge of cross-border relations, said it had asked 10 ministries or other organizations to suspend spending on the exchanges.
Relations have worsened since an explosion sank a 1,200-tonne corvette near the disputed inter-Korean border on March 26, killing at least 46 sailors.
Suspicions are growing that a North Korean torpedo was to blame.
A multinational investigation will report by Thursday.
Further souring relations, the North last month confiscated or barred access to South Korean assets at a joint mountain resort on its east coast. It is angry at Seoul’s refusal to resume cross-border tours there.
Moreover, on Sunday, the North’s military threatened to stop South Koreans crossing the land border and to take other “substantial” measures if leaflets criticizing its regime keep arriving from the South.
It also warned of “catastrophic consequences” if the South decides to resume official loudspeaker propaganda broadcasts along the border in the wake of the sinking.
Any decision to shut the border would deal a heavy blow to a jointly run industrial estate at Kaesong just north of the frontier.
The Unification Ministry said it was wrong to link border crossings to the launch of propaganda leaflets.
It says it has no legal power to stop private groups sending over the flyers via giant balloons.
Last week, the ministry urged South Korean companies to refrain from signing new deals or supplying resources to North Korea.
Seoul is weighing its options in case Pyongyang is found to have launched a torpedo. It is likely to ask the UN Security Council to punish the attack.
Media reports say the South is also considering cutting trade with the North in addition to resuming the official loudspeaker broadcasts.
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