As South Korea begins to impose sanctions on North Korea following Pyongyang's first test of a nuclear weapon, its investment in a massive tourism facility in the North is becoming increasingly controversial. Critics say the Mount Kumgang resort is a money-machine for a dangerous regime, but supporters say it is a vital connection in the search for inter-Korean peace. VOA's Seoul correspondent Kurt Achin has just returned from taking a first-hand look at the Mount Kumgang resort.

South Korean tourists climb up ladders to a peak at Diamond Mountain, North Korea, Sept. 29, 2006

Melodramatic music with themes of longing and unification played non-stop in Mount Kumgang this week during a visit by international journalists.

The leisure enclave, surrounded by beautiful scenery, is just north of the heavily fortified border separating the two Koreas - which remain technically at war. It is one of the two main projects of South Korea's policy of engagement with Pyongyang. The other is an industrial production zone in the North's border city of Kaesong.

South Korea's funding of the mountain resort has attracted intense criticism following North Korea's test of a nuclear weapon earlier this month. There is now intense debate in South Korea about whether the recently passed U.N. sanctions against Pyongyang obligate Seoul to terminate its involvement in the inter-Korean projects.

Christopher Hill  (file photo)

United States Assistant Secretary of State Christopher Hill has taken specific aim at Kumgang, saying it exists simply to funnel money to the North Korean government.

Prices in the tourist zone are certainly high for North Korea. A simple pancake costs about $10, while a cup of weak instant coffee runs about four dollars.

Kumgang's hand-picked North Korean workers, each wearing a pin showing the revered former leader, Kim Il Sung, greet visitors with polite smiles. All of them provide uncannily similar answers to questions about this month's North Korean nuclear test.

Park Myung-nam, an agricultural supervisor at Mount Kumgang, says that the North has always been economically and militarily oppressed by the United States. He adds North Koreans would be very sorry if South Korea gave in to U.S. oppression by curtailing the Kumgang project.

While touring Kumgang, it is impossible to avoid the contrast between the resort and surrounding villages. The resort area is fenced off with military checkpoints about every 100 meters.

North Korean villagers use separate roads and photographing or making contact with them is forbidden. Within minutes of a conversation starting between visitors and North Korean resort staff, political minders arrive to listen. At night, while the resort area is bright with neon lighting, the surrounding areas remain pitch black.

Despite the minders, the tour does provide occasional opportunities for frank exchanges with ordinary North Koreans. International journalists stayed up late into the night this week, telling bar and restaurant staff about life outside North Korea. South Korean hikers can also share news and opinions with North Korean mountain guides.

The Kumgang resort has been the site of a series of emotional reunions between family members separated since the Korean war. North Korea halted the reunions in a worsening of North-South relations following missile tests by Pyongyang in July.

Senior South Korean officials say they will protect the Kumgang project as a vital North-South interface. They say there is no proof that any of the close to one billion dollars in revenue the project has transferred to North Korea since 1998 has gone to fund nuclear programs.

But some South Korean consumers are already making their voice heard about the project. Kumgang was hit by an almost 50 percent cancellation rate in the week after the North's nuclear test, and is only slowly recovering.