The project of sending South Korean tourists to a scenic resort in North Korea, suspended since July 2008, is now at the risk of being put to an end as Pyongyang is confiscating South Korean assets in Mount Geumgang on North Korea’s east coast.

North Korea, which said on Monday it was legally disposing of all South Korean assets in the resort, has made no mention of how to settle the dispute over the property. Instead, it has banned the withdrawal of any of the assets. In other words, it was taking illegal action, ignoring internationally accepted procedures for settling disputes.

The conflict over the tourism project dates back to July 2008, when a South Korean tourist was shot to death when she strayed into an off-limits area at the Mount Geumgang resort. South Korea suspended the tour program, conducted by Hyundai Asan of the South, demanding a joint investigation into the case, an assurance against any such incident in the future and a renewed security guarantee. But the North ignored the South Korean demands.

Hyundai Asan, the South Korean government and the Korea Tourism Organization have invested a total of 484.1 billion won in the resort since the tour project was launched in November 1998 as a showcase of fledgling inter-Korean economic cooperation. Almost all tourists were from South Korea.

Last month, North Korea said it was giving Hyundai Asan three weeks to make a choice between joining an international tour program it was launching and disposing of the assets through a lease, transfer or sale. The subsequent talks produced no settlement.

Hyundai Asan says that the China International Economic and Trade Arbitration Commission, located in Beijing, is designated as the final arbitrator in its 1998 contract with North Korea. But it is more interested in restarting the tour project than in immediately taking the process of settling the dispute through the Chinese agency.

A cash-strapped North Korea does not hide its desire to earn hard currency by launching its own tour project. But the chances are slim that foreign tourists will flood into the resort because their security is not guaranteed. A better alternative is to accept the South Korean government’s demands, paving the way for Hyundai Asan to resume its tour program. Moreover, the confiscation of the South Korean assets will not endear North Korea to foreign investors.