September 24, 2010 / 2:32 PM / 10 years ago

Rival Koreas meet on reunions amid warming mood

SEOUL (Reuters) - North and South Korean officials met on Friday amid signs of conciliation to try to set up reunions for those families split by the 1950-53 Korean War, but failed to reach agreement on where the reunions should be held.

The seemingly minor point is at the centre of what can be a lucrative source of income for the destitute North.

North Korea indicated that reunions should lead to the resumption of tours by South Korean visitors to a resort in its territory, the Unification Ministry in Seoul said, after the meeting by officials in the North Korean city of Kaesong.

Relations between the Koreas have soured since conservative South Korean President Lee Myung-bak took office in 2008 and stopped aid to its northern neighbour, demanding an end to its nuclear ambitions and greater openness to the outside world.

Tensions spiked this year after the South, with U.S. backing, accused the North of torpedoing one of its navy ships, killing 46 sailors. Pyongyang denies the charge and threatened to retaliate by force if Seoul imposed sanctions.

Russia warned on Wednesday that conflict could break out any day, saying tension between the two countries was at its worst in a decade.

The North has made conciliatory gestures in recent weeks, engaging in dialogue with the South over flood aid and family reunions, and also indicating it was willing to restart talks with regional powers aimed at scrapping its nuclear arms projects in return for economic aid.

Seoul last week announced its first substantial aid package to its neighbour in more than two years, after flooding in North Korea killed dozens, destroyed thousands of homes and devastated farmland.

But the South plans to go ahead later this month with another series of joint military drills with the U.S. near its disputed sea border with the North, off the Korean Peninsula’s west coast, which could anger Pyongyang.

The drills, which are focussed on deterring North Korean submarine attacks and could potentially provoke unease in Beijing, will take place between September 27- October 1, the allies’ joint forces command said on Friday.

Friday’s meeting in Kaesong, just north of the heavily armed border, comes before a rare meeting of the North’s ruling Workers’ Party next week, which is expected to pick a new leadership and possibly anoint an heir to the dynastic state.

Additional reporting by Lim Daehee and Choi Yoon-sang in Paju, South Korea, Editing by Alex Richardson and Rebecca Conway

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