The scenic Mount Kumgang resort has been closed since a North Korean soldier shot and killed a South Korean tourist there in 2008, drying up a lucrative source of hard currency for the impoverished North.
Pyongyang has suffered big losses due to the South's "unilateral suspension" of operations at the resort, a spokesman for the North's Guidance Bureau of Special Zone for International Tour of Mt Kumgang.
The North "has so far provided several opportunities for negotiations and made every sincere effort, advancing a variety of choices so that the properties may be dealt with according to the will of enterprises of the South side," he said.
"This is not good," said Chung-in Moon of Yonsei University in Seoul. "North Korea has been sending a very clear message, but our government has been delaying the decision.
"I don't know why they have handled this situation like this."
The resort -- comprising hotels, restaurants and a golf course -- was opened in 1998 during a decade-long period of rapprochement between the two Koreas, known in the South as the "Sunshine policy" years.
That period ended with the election in South Korea of conservative President Lee Myung-bak in 2008, who declared there would be no aid for the destitute neighbor until the North abandoned its nuclear arms programme.
Inter-Korean ties have declined sharply in the past three years, hitting a low last year when 50 South Koreans were killed in two attacks and the North unveiled a uranium enrichment programme, giving it a second path to make a nuclear bomb.
However, tensions have eased on the peninsula this year and a flurry of diplomacy has raised hopes for a resumption of regional talks on disabling the North's nuclear programme.
After months of threats and counter-threats from both sides, Pyongyang said it would now "legally dispose" of South Korean assets from Mt Kumgang after Seoul failed to meet Friday's final deadline to agree on asset disposal.
South Korean assets at the resort, just north of the border, are estimated to be worth about USD 285 million.
North Korea said the South Koreans working there had 72 hours to leave. South Korea's Unification Ministry website said 14 of its nationals were stationed at the complex as of Monday.
"We cannot accept this ultimatum and hold North Korea responsible for all of the consequences that may follow," ministry Chun Hae-sung told reporters in Seoul.
The resort was built by an affiliate of the South's Hyundai Group at a cost of tens of millions of dollars. It was opened in 1998 and has been visited by more than a million South Koreans.
Hyundai Asan called an emergency meeting on Monday to discuss the North's latest announcement, local media reported.
North Korea's estimated USD 17 billion a year economy has been dealt a heavy blow by international sanctions over the past three years, imposed over its reluctance to rein in its nuclear programme, and by a botched currency reform at the end of 2009.
Since the 2008 shooting, Seoul has demanded an investigation by the North, an apology and safety guarantees. Pyongyang has expressed its regret and says that it has done enough.
The North said in June it had revised a law overseeing the resort, effectively ending Hyundai Asan's contract to run all cross-border tours.
Pyongyang has said it wants to redevelop the complex into an international tourist destination, complete with casino, with an eye toward luring big-spending Chinese tourists.
Seoul: Reclusive North Korea on Monday gave South Koreans working at a jointly run tourism resort 72 hours to leave, saying time had run out to resolve a long-running dispute over what was once a symbol of cooperation between the rival Koreas.
First Published: Monday, August 22, 2011, 10:11