North and South Korea began two days of economic talks Thursday in Pyongyang. The issue of North Korea's covert nuclear weapons program threatens to hamper progress.
A five-member South Korean delegation is in Pyongyang to discuss joint economic projects, but North Korea's nuclear weapon's program overshadows the gathering and could derail several projects.
According to South Korean media reports, the leader of the South's delegation said as the meeting opened Thursday that the nuclear issue should be resolved soon to support economic cooperation.
His North Korean counterpart, however, said the two sides should focus on implementing economic cooperation plans.
The North recently disclosed to U.S. officials that it was secretly developing nuclear weapons, in violation of several international agreements. South Korea, the United States, Japan and other nations are pushing Pyongyang to give up the program. The North has said that it first wants to negotiate a non-aggression pact with Washington.
Analyst Graeme Bateman from Nomura Securities in Seoul warns that progress may be limited at the economic talks.
"The nuclear issue obviously is a pretty big issue which could put an enormous spanner [wrench] in the works," he said. "But it is in the interest of the U.S., North Korea, South Korea and Japan to try to build on the rapprochement we have seen in the last four or five years of President Kim Dae-jung's administration."
At the economic talks, the top items include the building of railway and road links across the border dividing the Korean Peninsula. The construction of an industrial park in the North is also high on the agenda. Many South Korean companies hope to operate at the park and employ the North's inexpensive but educated workers. Work on the site is expected to start next month.
North and South Korea have been working on these and other economic initiatives for more than two years, since the leaders of the two countries held a summit. They aim to develop the North's impoverished economy and provide opportunities for South Korean companies.
But on-and-off tensions between the two sides have meant that some projects have stalled for months. Last May, the North abruptly cancelled an economic meeting after it accused South Korea's foreign minister of making reckless remarks against Pyongyang.
North Korea's economy is in dire condition, due to poor central planning and a series of natural disasters. South Korea is a major aid donor to the impoverished, Stalinist state. The two countries, however, remain technically at war, because the Korean conflict ended in 1953 without a peace treaty.