But the projects may be shut down as South Korea is expected to meet stronger pressure to join U.S.-led sanctions against the North which conducted a nuclear weapon test despite worldwide appeals and threats of punishment.

Critics say the engagement policy has helped the North to finance the manufacture of atomic bombs because the cross-border projects have been a cash cow for the impoverished communist country.

Seoul's top officials have indicated they may abandon the engagement policy toward North Korea to punish its "provocative" action that defeated the expectations of South Koreans.

Unification Minister Lee Jong-seok in charge of inter-Korean ties said on Tuesday that South Korea would reduce or suspend its economic exchanges and cooperation with the North if asked to do so by the United States and other countries.

They include the joint industrial complex in the North's border city of Kaesong and the joint hour program on the North's Mount Kumgang resort.

"Regarding the issue of (halting) the Mount Kumgang tour and Kaesong industrial complex development projects, the government would take measures that correspond with measures put out by the international community," Lee told the National Assembly.

He also said it was "unavoidable" for South Korea to revise or change its policy to engage the North in the aftermaths of its alleged nuclear test. "Ongoing projects with the North will go through certain changes due to the nuclear test," he said.

Earlier, President Roh Moo-hyun, who invested significant effort trying to engage the North, said that he was no longer able to claim his policy, asserting Seoul would "not continue to be patient and to yield to North Korea's demands."

In a press conference on Monday, Roh said his government would find it "increasingly difficult to stick to its engagement policy" due to the North's nuclear test. "We must not give up (on dialogue) but the situation is changing," he said.

"North Korea's nuclear weapon test is a grave threat to the peace and stability in Northeast Asia and on the Korean peninsula. It also frustrated the expectations of the South Korean people and the international society for a nuclear-free peninsula," he said.

Roh has been under fire for his unconditional engagement policy particularly since the North fired a volley of missiles in July, which put the Asian-Pacific region alert. He is facing heavier criticism following the North's nuclear test in what local media called the country's worst crisis since the 1950-53 Korean War.

In an apparent sign of policy shift, Roh invited his predecessors as well as top leaders from the political parties, mostly hawks, to gather their opinions.

In the Tuesday meeting, Kim Young-sam, who took office in 1993-98, the engagement policy should be renounced and all joint economic projects suspended, including the Kaesong and the Mount Kumgang programs.

An alliance of more than 220 South Korean conservative groups have organized every-night public candlelight rallies to condemn the North's nuclear bomb test and call for Roh to take tougher stance against the North.

The Kumgang and Kaesong projects launched by South Korea's Hyundai Group have been a symbol of inter-Korean rapprochement and a centerpiece of South Korean government's engagement policy with the North.

They also have been a major source of hard currency for the isolated and impoverished North. Hyundai has invested 1.5 trillion won ($1.6 billion) in them.

With tensions running high over the North's alleged nuclear test, more than 30 percent of South Korean tourists canceled their cross-border trips to Mount Kumgang on Tuesday. The North has earned more than $9 million so far this year.

Pyongyang is also collecting cash from the Kaesong complex, where some 8,300 North Korean laborers are working for 13 South Korean firms. The North has obtained $24.2 million since 2003.

On the back of brisk growth of the Kaesong complex, inter-Korean trade exceeded $775 million in the first eight months of this year, according to the Unification Ministry.

The amount of inter-Korean trade increased to over $1 billion last year, a sharp increase from $290 million in 1995 when the two Koreans initiated cross-border economic exchanges.

Related Links
Bring Order To A World Of Disasters