Pyonyang seizes Seoul's assets in jointly run resort after shooting

Pyongyang has upped the ante in its tense relations with South Korea by seizing the assets of a jointly run resort that was once a symbol of warming ties.

Fourteen officials and workers from the South have been given 72 hours to leave Mount Kumgang, which has been closed since a South Korean tourist was shot dead by a North Korean solider in July 2008.

Seoul has demanded a joint investigation into the incident before it will permit its citizens to use the resort again. Pyongyang's official Korean Central News Agency said the three-year stalemate meant the South had "given up all its rights" to the resort and its assets would be legally disposed of. The North had been threatening the action for months unless Seoul allowed tourists to return.

Pyongyang watchers are struggling to determine if the statement is a bluff designed to prod Seoul back to the negotiating table or a genuine threat aimed at clearing the way for Mount Kumgang to reopen under new ownership – possibly Chinese. Most agree that the North is desperate for hard cash after several years of UN sanctions for its missile and nuclear tests. The South severed most commercial and political ties after the sinking of one of its warships and the deadly shelling of Yeonpyeong Island last year.

Seoul yesterday told the Associated Press the seizure of Kumgang was "regrettable" and promised to take "all possible measures, including legal and diplomatic actions".

The Kumgang resort was an important source of revenue for the impoverished northern economy, drawing 400,000 visitors a year before the shooting. It is expected to host crowds of foreign tourists next year, the 100th anniversary of the birth of Kim Il-Sung – the nation's founder. Hyundai, the South Korean conglomerate, has invested millions of dollars in the site, building a hotel, golf course and other facilities.

Pyongyang's threat comes amid renewed reports of food and energy shortages and reported attempts by its leadership to secure new resources. Leader Kim Jong-Il is currently on a rare trip to Russia, where he is expected to meet President Dmitry Medvedev in Siberia today.

Russia has announced that it is sending 50,000 tonnes of grain to help Pyongyang deal with recent flood damage and other help is reportedly in the pipeline, including natural gas and oil.

North Korea has recently showed signs of attempting to break the deadlock with the West over its nuclear programme, meeting US and South Korean officials last month in an apparent bid to restart talks.