Archive for the ‘Tourism’ Category

ROK has transferred approx. $1B since 1998

Wednesday, October 18th, 2006

From the Joong Ang:
Ministry: North got $1 billion since 1998
10/18/2006
Lee Young-jong
Ser Myo-ja

The Unification Ministry yesterday defended itself against accusations that the Roh Moo-hyun administration and its predecessor, that of Kim Dae-jung, were at least partly responsible for giving the North the cash it needed to fund its nuclear weapons programs.

Ministry data released yesterday said that South Korea sent nearly $1 billion in cash to the North from March 1998 until August of this year. The ministry said those payments were in connection with “legitimate economic activities.” Nearly half of that cash flow, it said, was from tourism receipts at North Korea’s Mount Kumgang resort, and almost all the remainder was a $500 million payment by Hyundai Group to North Korea for exclusive rights to run the tours.

When Hyundai Group first began the tour program in 1998, Lim Dong-won, then the Blue House senior secretary for security affairs, ordered the Unification Ministry to devise ways of monitoring the payments to ensure that they were not diverted to military uses. But a Unification Ministry official recently admitted the obvious: “There was and is no way to see how the North spent the money,” he said.

The same is true in the other inter-Korean programs, although the amounts are relatively smaller. Nearly $21 million has been paid to the North in the Kaesong Industrial Complex project, including the wages of 800 North Korean workers there. The few million dollars remaining in the total were payments for South Koreans to attend events such as the annual Arirang Festival.

The ministry’s statement yesterday said the Hyundai payment of $500 million was made in August 2000. In fact, it was made in June, just before the first inter-Korean summit that month, and a special counsel who looked into the then-secret payment described it as an inducement for North Korea to agree to the summit. Seven persons were later convicted of violating Korea’s foreign exchange laws in connection with the matter.

Critics on the right believe the ministry’s estimates are woefully incorrect; the Grand National Party, for example, has put the amount at $8.4 billion over the past eight years.

The ministry also challenged the Grand National Party’s argument that South Korea had spent nearly 2.2 trillion won ($2.3 billion) for a failed light-water reactor project in North Korea.

The ministry said the figure was only about 1.4 trillion won.

It also noted that that project was an international one and had begun under the Kim Young-sam administration in 1994. Only a tiny part of that funding involved cash payments to North Korea, the ministry said.

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Cutting ROK/DPRK trade hurts the ROK

Friday, October 13th, 2006

From Yonhap:
Suspension of inter-Korean business only hurts S. Korea: official
10/13/2006

Suspending South Korea’s joint business projects with North Korea would do more harm to the South than the North while doing little to convince the communist state to halt additional nuclear tests, a ranking South Korean official said Friday.

“Cutting off (inter-Korean economic projects) now would only show our firm will (to retaliate against North Korea for its claimed nuclear test) by inflicting wounds on parts of our own body,” the official told reporters, asking not to be identified.

“The damage North Korea would suffer would be very insignificant compared to the damages we would suffer,” the official added.

The remarks came amid calls from here and abroad for the Seoul government to immediately halt cross-border business projects with the North in retaliation for the North’s claimed nuclear test on Monday.

The main opposition Grand National Party (GNP) claims the country’s economic cooperation for the impoverished North has helped the North’s missile and nuclear weapons program.

“In the current situation, (South Korea) must strengthen its alliance with the United States and actively participate in U.N. Security Council sanctions on the North while cutting off all of its cash assistance to the North,” GNP floor leader Kim Hyong-o said Friday at a party leadership meeting.

An average of 40,000 South Koreans travel to a scenic resort on North Korea’s Mount Geumgang every month, paying about US$1 million in admission fees to the North, according to Hyundai Asan, the South Korean developer of the resort.

Fifteen South Korean companies also pay about $600,000 a month on average to North Korea in wages for the 8,700 North Korean employees at an industrial complex being developed by the two Koreas near the North’s border town of Kaesong, according to the Unification Ministry.

The government official, however, said the government had no immediate plans to scrap the inter-Korean projects, claiming the money paid to the North through the projects is not aimed at assisting the North’s weapons program and that the amount is insignificant.

He said the country would align its North Korea policy and economic cooperation with a U.N. Security Council resolution when one is passed, but claimed a U.S. draft of the resolution, even if approved by the Security Council, would not call for a suspension or reduction of inter-Korean economic cooperation.

“Vice Foreign Minister Yu Myung-hwan said at the National Assembly Thursday that there is nothing in the U.S. draft resolution” that would call for a suspension of the two cross-border projects, the official said.

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Kumgang tourism hits the American media

Sunday, October 8th, 2006

LA Times:
Helen Sung
10/8/2006

“WHEN I was in North Korea last year …,” I began, over dim sum one recent Sunday afternoon with a professor friend, a sophisticated Manhattanite.

“You’ve been to North Korea?” he interrupted. “Anyone can go,” I told him. “It’s a tour.”

While living in Seoul last year, I learned that a division of the South Korean mega-conglomerate Hyundai has been operating tours to Mt. Kumgang from South Korea since 1998. Considered the most beautiful mountain range on the Korean peninsula, Mt. Kumgang has been immortalized for centuries in poetry, art and song.

Before the Mt. Kumgang tour, South Koreans had been unable to travel north of the demilitarized zone — at least it was legally barred. The DMZ, established in 1953 at the end of the Korean War, sliced Korea in two, leading to the Republic of Korea in the south and the Democratic People’s Republic of Korea, or DPRK, in the north. The 2 1/2 -mile-wide DMZ sealed off the border between the two Koreas. To this day, tensions remain. Just last week, North Korea vowed to go ahead with a nuclear test, to the increasing dismay of world leaders.

But for Americans, to whom North Korea rarely, if ever, grants tourist visas (though it does to other foreigners), the tour offers one way to get inside the Communist country.

“Let’s go!” I said to a South Korean photographer friend and colleague after I learned of the tours.

“No way. It’s just a tourist trap,” he scoffed. “I heard they monitor everything, and you can’t go anywhere on your own. It’s not like you see the real North Korea or meet any regular North Koreans.”

“That’s all part of the charm of going to a totalitarian country,” I said, trying to persuade him. “Don’t you want to see what it’s all about?”

In the end, he did. Who wouldn’t want to peek inside one of the most politically isolated countries in the world?

*

Papers in order

TO go on the trip, we filled out simple registration forms and submitted copies of our passports and photographs to the tour agency. A couple of days later, our reservations were confirmed, and we submitted payment in South Korean won, equivalent to about $350 per person for the two-night, three-day trip. (For visa information, contact North Korea’s United Nations office, [212] 972-3105.)

On a wintry February morning, we assembled at a meeting point 100 miles northeast of Seoul and received identification cards that we were to wear at all times.

Mobile phones, high-powered camera lenses and South Korean magazines were among the items not allowed into North Korea. The tour included journalists (two Germans and a South Korean), the photographer I was traveling with and about 100 South Korean tourists.

Some of the tourists came to sightsee, but I suspect more came for the opportunity to set foot on northern soil.

We drove through the DMZ — the idea of it turned out to be more thrilling than the actual act — escorted by South Korean military. We passed vast dirt fields marked by occasional shrubs, trees and tunnels. Our tour guide warned us not to take any pictures.

At the military demarcation line our tour bus stopped. Two North Korean soldiers boarded. As one soldier stood guard at the front of the bus, the other strolled down the aisle, counting heads as he went. Once the soldiers left the bus, we were allowed to continue.

Whereas the south was highly industrialized and modern, the north looked like the land that time forgot. Civilians were walking, riding bicycles and pushing wheelbarrows. Other than the occasional military truck, there were no vehicles. Tattered pieces of cloth covered cracked and broken windows in abandoned-looking houses with worn roofs and crumbling tiles.

I saw the first of many carvings that marred the smooth surfaces of towering mountains in and around Mt. Kumgang. Etched in large Korean and Chinese characters, the signs touted the leadership of former Chairman Kim Il-Sung and current leader Kim Jong II.

Once at the mountain resort, we lined up to clear immigration. The North Korean official gave my American passport and Korean face a quizzical look. Maybe he had never met a Korean American.

“How safe is the tour?” I asked Young Sil Jung, a Hyundai Asan tour guide.

“It’s very safe,” she said. “It’s like South Korea.”

Indeed. It felt more like I was at a South Korean resort — maybe because I essentially was.

Hyundai Asan had developed a resort consisting of a hotel (a second has since opened), cozy wooden cabins, a hot springs spa and a rest area where frenetic South Korean pop music blared from loudspeakers in the parking lot.

There was a Family Mart (a South Korean chain of convenience stores akin to 7-Eleven). A sprawling shop sold North Korean souvenirs, the most popular being whiskey (purportedly made from snakes) and cigarettes “made in D.P.R.K.”

There was even a Hyundai duty-free shop selling Ferragamo, Chanel and Prada, among other luxury brands. At the restaurant, an all-you-can-eat buffet featured warming pans piled high with seasoned beef, shrimp, sautéed vegetables and tofu, noodles and steamed rice.

There was no hint that we were in one of the poorest, most oppressed countries in the world, and the scene in the hotel lobby, where a Filipino band sang American pop songs, bumped us into the realm of the surreal.

*

Trail ‘guides’

AS we headed out the next morning for our first day of hiking, our tour guide warned us not to take unauthorized photos, especially of North Korean guides, who were more like minders who kept close watch over us. Male and female guides monitored the trails to ensure tourists did not litter or show disrespect to the many monuments to father and son.

As I walked along Guryongyeon trail, an easy hike over gently ascending terrain, the North Korean guides chatted amiably with the South Koreans. I met a 68-year-old South Korean man, just a boy when Korea was divided, who had wanted his whole life to see the beauty of Mt. Kumgang. When I asked him how he felt, he replied, “There are no words.”

I could see what he meant. Mt. Kumgang was impressive with its great, hulking mountains and tall, craggy peaks. At Bibong Falls, South Korean ice climbers looked like ants scaling a towering waterfall that had been transformed into a wall of sheer ice.

At the bottom of the mountain, North Koreans sold roasted potatoes and fermented rice wine to the tourists for $1 each, accepting only American dollars. “They know the smell of money now,” said Ha Jung Byun, a senior manager with Hyundai Asan.

North Koreans were selling more local products at nearby Samilpo Lake. In a large, windowed room overlooking the frozen lake, women sold steamed mussels and potato pancakes, as well as North Korean calendars and cigarettes.

The next day, we hiked Manmulsang trail, known for its thousands of interesting rock formations. It’s a rigorous hike but worth it. The scope of the surrounding rugged peaks and the steep gorges and valleys were magnificent.

At the base of the trail, I met a director of the North Korean guides. He peppered me with questions about American politics and criticized the United States, saying that the “imperialist country” needed to stay out of North-South Korea relations.

I was curious how he felt about American tourists. He replied that he welcomed Americans and all foreigners to come view the beauty of Mt. Kumgang and meet North Koreans. On the way back, the Hyundai Asan guide pointed out dirt fields where the company planned to build a beach resort and golf course. Why anyone would want to go on the tour to North Korea to lie on a man-made beach or play golf was beyond me. The real merit of this tour was the sliver of Communist life I had seen on the way to the mountain resort and meeting some real North Koreans.

GETTING THERE:

From LAX, Korean Airways and Asiana offer nonstop service to Seoul. All Nippon Airways, Northwest, JAL and United offer connecting service (change of planes). Restricted round-trip fares begin at $939.

The meeting point for the tour is at a hotel called Kumgangsan Condo, about 100 miles northeast of Seoul. Round-trip charter bus service from Seoul is available to the meeting spot for $30. The bus trip takes about four hours.

TELEPHONES:

To call the South Korean numbers listed below from the U.S., dial 011 (the international dialing code) and 82 (country code for South Korea), followed by the number.

WHERE TO STAY:

JW Marriott Hotel Seoul, 19-3, Banpo-dong, Seocho-gu, Seoul; (888) 236-2427, http://www.marriott.com . An upscale, luxury hotel in central Seoul near shopping and business districts. Doubles begin at about $225.

Ibis Seoul, 893-1, Daechi-dong, Gangnam-gu, Seoul; 2-3011-8888; http://www.ambatel.com . A new hotel offering simple yet good-quality accommodations for the budget-conscious traveler. Doubles begin at $90.

BEFORE YOU GO:

To go on the Mt. Kumgang tour, visitors must register with a travel agency and provide the requisite documentation at least 10 days before the desired departure date. In Los Angeles, Smile Tour, (213) 365-2100, provides booking and other tour information. Hyundai Asan also provides information in English; call 2-3669-3691.

TOUR PRICES:

Hyundai Asan offers two-night, three-day packages starting at $290 (all prices are per person based on double occupancy), depending on the season and level of accommodations. The price includes lodging, breakfast, entrance and departure immigration fees, and hiking-related fees. Shorter trips are also available.

TO LEARN MORE:

Korea National Tourism Organization, (800) 868-7567 or (323) 634-0280, http://www.tour2korea.com .

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Mt. Paektu Tour Impossible Before June

Tuesday, October 3rd, 2006

Korea Times
Kim Yon-se
10/3/2006

A tour to Mt. Paektu via North Korean territory for South Koreans has become virtually impossible this year even though Hyundai Asan, the inter-Korean tourism operator, has pushed the project for more than a year.

Should Hyundai Asan reach a final agreement with the North to open tours soon, bad weather conditions on the mountain will make it impossible for tourists to travel to Mt. Paektu, located on the border of the North and China.

“Because of early snowfall and chilly weather there, ordinary tourists are not allowed to climb Mt. Paektu after September,’’ a spokeswoman of the Hyundai Group said yesterday.

Ordinary tours will be possible only between June and September, she said. “So the launch of tours will not be feasible until next May at least.’’

Since Hyundai Group Chairwoman Hyun Jeong-eun agreed with North Korean leader Kim Jong-il to develop the mountain as a tourist venue in July 2005, Hyundai Asan had to delay running pilot tours twice.

Apart from political setbacks, involving the United States’ unfavorable views toward inter-Korean businesses, the spokeswoman attributed the continuous delay to unfinished construction of a link between the mountain entrance and Mt. Paektu Airport.

Besides technical problems, Hyundai Asan, the tourism unit of Hyundai Group, have been troubled by the ongoing allegations that the North is still seeking a new South Korean partner for tours to Kaesong City and Mt. Paektu.

Furthermore, some media reports said last month that North Korea allegedly asked Lotte Tours to take on the business of Kaesong Industrial Complex operated by Hyundai Asan.

But the spokeswoman, a close aide to Hyun, said the possibility of Lotte’s obtaining of inter-Korean business rights is low. “We hold the exclusive rights legally. And we haven’t received any proposals from Lotte,’’ she said.

After Lotte Tours made it clear that it had stopped talks with North Korea on replacing Hyundai Asan to pursue inter-Korean tourism projects, last year, the company is declining to comment on the issue this year.

Chairwoman Hyun has not taken a trip to the mountain via North Korean entrance _ only a few Hyundai Asan officials have surveyed the tour route.

A Hyundai Asan official predicted beyond planned ordinary tours, South Koreans will also enjoy skiing there between April and May in a few years. 

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Kumgang price increase

Saturday, September 23rd, 2006

Yonhap:
9/23/2006

Fees paid by South Koreans for a visit to a scenic North Korean mountain resort has risen sharply in the past two years, a government report showed Saturday.

The Unification Ministry report to the National Assembly revealed that the admission fees for Mount Geumgang have risen twice since mid-2005, with the fee for a one-day trip jumping around 200 percent.

In 2004, North Korea demanded different admission fees from South Korean tourists depending on the length of their stay in the resort, the report said. Pyongyang has since raised the fees once in May 2005 and again in July of this year, it said.

For example, a tourist taking a one-day tour now should pay US$30, three times more than in 2004, the report said. The revised fees range from US$48 for one night and two days to US$80 for two nights and three days, it said. 

The tour to the North Korean resort has been organized by South Korea’s Hyundai-Asan Corp. since 1998. More than 1 million South Koreans have so far visited the resort.

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Don’t offer candy to guards at Kumgang

Monday, September 18th, 2006

From South African Sunday Times:
NKorea detains 1,000 tourists
9/18/2006

Up to 1,000 South Korean tourists were detained briefly in North Korea after a lawmaker amongst them offered snacks and ice cream to a soldier, a report said.

The group was visiting Mount Kumgang, a craggy tourist enclave in the eastern part of the Stalinist state, when the incident happened, according to tour operator Hyundai Asan, who was quoted by Yonhap news agency.

The tourists were detained for some 40 minutes after the contact between a North Korean military guard and Cha Myung-jin, a lawmaker of South Korea’s opposition Grand National Party, the report said.

The South Koreans were later released and deported home, reportedly after the South Korean side apologised and promised such unauthorised interaction would not happen again.

Amid easing tensions between the two Koreas, more than a million tourists have visited the rugged terrain just a few kilometres north of the border with South Korea since tours began in November 1998.

Visitors to Mount Kumgang enjoy circuses, listen to old Korean ballads, and soak their limbs in natural hot springs, but they are prohibited from stepping outside the zone to talk with North Korean people.

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Asan plans flights to near Kumgang

Monday, September 18th, 2006

From Joong Ang Daily:
9/18/2006
Seo Ji-eun

Hyundai Asan Corp., a Hyundai Group affiliate with the exclusive right to the North Korean tourism business, plans to take advantage of air routes to ratchet up its tourism operation at Mount Kumgang.

The company signed a memorandum of understanding with Jeju Air Co. yesterday to develop tour packages to Mount Kumgang using an air route between two South Korean cities ― Gimpo in Gyeonggi province and Yangyang in Gangwon province, near the border with North Korea. Buses will ferry travelers to Mount Kumgang from Yangyan.

Flying between the two cities will shorten the travel period by almost three hours, from the six hours needed to reach Mount Kumgang by road.

The flights will run twice daily and may increase to three times a day within this year, said Yoon Man-joon, chief executive officer of Hyundai Asan, in a meeting with reporters.

The chief executive forecast that easier access to the North Korean tourist attraction will boost the number of tourists.

“Mount Kumgang travelers using the Yangyang Airport will be given discounts on air fees and travel package expenses,” he added.

He also revealed that Hyundai Asan and North Korea are in discussions to allow tourists to fly directly from Gimpo to Wonsan, a North Korean port city on the East Coast, about 110 kilometers from Mount Kumgang. That route would reduce the travel time to North Korea even further.

“We’ve had a large number of potential customers who gave up on the Kumgang tour because of the long land trip,” Mr. Yoon said.

He stressed that having tourists be able to take airplanes to North Korea has been a long-held dream of the company. He added that the realization of that dream would help the Mount Kumgang tourism business firmly establish itself as a cash cow for Hyundai Asan.

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Firms Blast North’s Business Climate

Tuesday, September 5th, 2006

From the Donga:
9/5/2006

“Problems can arise anytime you do business in North Korea since there is no market order. However, when business partners disregard agreed-upon deals, it is impossible to conduct any new business. Someone who betrays others can always betray me. Now, who will be willing to trust North Korea and make new deals with it?”

Upon hearing the news report yesterday that North Korea sold the rights to build a large-scale resort including a golf course within the Gaesong Industrial Complex to South Korean real estate developer Unico, despite the fact that Hyundai Group currently holds the rights, one executive of a large company was assured that North Korea was not a trustworthy investment partner.

“If the South Korean government fails to have a control over ‘lawless’ North Korea, the entire business with North Korea can fall into a crisis,” he worried.

During the Kim Dae-jung administration, Hyundai Group began its North Korean business led by then-chairman Chung Ju-yung. It has invested more than $1 billion in North Korea, including $450 million (about 510 billion won by then exchange rate) illegally transferred to the North as a price for holding the inter-Korean summit in 2000. In the process, the company had to go through a major management crisis and the tragedy of Chairman Chung Mong-hun’s suicide.

At such a great cost, Hyundai earned from the North “seven business rights,” which include the rights to provide electricity, railway, tourism, and a dam. With regards to the 3-phase Gaesong Industrial Complex project, it obtained a certificate with which it is allowed to use the land for 50 years.

Nevertheless, Hyundai is gradually being excluded in North Korean businesses except for the existing Geumgang Mountain tour and the first-phase Gaesong Industrial Complex development. There are even rumors that North Korea is in the final stages of negotiation with Lotte Tours over tourism business in Gaesong and Baekdu Mountain, excluding Hyundai that has the business rights in those areas.

Now that North Korea is found to have sold the rights to use 1.4 million-pyeong of land in Gaesong to Unico at the price of $40 million, there is a greater sense of crisis in Hyundai.

It is needless to say that North Korea bears the largest responsibility for the recent trouble.

However, some point out that the South Korean government has been too lukewarm in its response to the problems with the North, out of fear that inter-Korean relations might suffer. They argue that such an attitude only encourages North Korea’s “derailment.”

“Hyundai Asan’s deal with the North over the second and third phases of the Gaesong Industrial Complex development and Unico’s deal with the North can cause overlaps or conflicts. Thus, the companies will have to negotiate over the matter,” said Goh Gyeong-bin, director-general of the Social and Cultural Exchanges Bureau at the Unification Ministry, yesterday when the news on Unico’s North Korea deal was reported.

“The Ministry of Unification never approved Hyundai Asan of its North Korea business to build a golf course in Gaesong. I believe a double deal is possible here just like it is in the private area,” he added.

This implies that the extraordinary business of inter-Korean economic cooperation is being recognized as an ordinary area of private autonomy where private business partners must resolve problems through self-negotiations.

However, everyone knows that Hyundai’s North Korea business did not start out as a mere private business activity. “The government has drawn no clear line in North Korean business, allowing companies to recklessly engage in such business only to encourage North Korea to develop bad habits,” one executive of an economic organization pointed out.

“In order to effectively manage business deals with unpredictable North Korea, the South Korean government must provide clear trade rules and guidelines. Considering the extraordinary nature of North Korean business, relying on the private sector’s autonomy will only extend uncertainties,” professor Hong Ki-taek of ChungAng University emphasized.

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China Seeks U.N. Title to Mt. Baekdu

Monday, July 31st, 2006

From the Donga:

The Chinese Government is hurriedly working on making the world recognize Mt. Baekdu (or Mt. Changbai in Chinese) as Chinese territory.

The Wenhui Newspaper of Hong Kong reported on July 30 that China has decided to register Mt. Baekdu on the World Geopark list designated by the United Nations Educational Scientific and Cultural Organization (UNESCO).

The Jilin Provincial Government of China has so far made efforts to get Mt. Baekdu registered as a world natural heritage site by the year 2008 when Jilin hosts the general assembly of the UNESCO World Heritage Committee. It might be fair to call this the “Mt. Baekdu Project” of incorporating the old territory of Goguryeo, an ancient Korean kingdom, into Chinese history, as it follows the Northeast Asia Project that focused on incorporating its history into China’s.

Back in 1980, China got Mt. Baekdu designated as a UNESCO Man and Biosphere (MAB) zone; the State Council designated Mt. Baekdu as a national-level natural protection zone in 1986 and has since managed it.

Mt. Baekdu has long been managed by the Yanbian Korean Autonomous Prefecture, where people of Korean origin collectively reside. Last year, the Jilin Provincial Government established the “Committee for Protection, Development and Management of Mt. Changbai,” an organization directly belonging to the provincial government and responsible for management of the mountain.

In a meeting with the “First Delegation of Chinese Internet Journalists Visiting Jilin” on July 22, Vice Director Li Zhanwun of the Committee said, “Mt. Changbai ranked second out of 17 places on the preliminary list of the nation’s cultural and natural heritage that the National Construction Ministry announced for the first time in January. Protection and development of the areas near Mt. Changbai has entered a new phase of development.”

The Committee plans to inject two billion Yuan (approximately 240 billion won) to develop the western slope of Mt. Baekdu on the Chinese side and open it around the year starting 2007.

Mt. Changbai Airport, which is currently being constructed in Fusong County 36 kilometers away from the North Korean border, is scheduled to open before the 2008 Beijing Olympics begins. The Jilin Provincial Government is also sparing no investment to expand the transportation networks near Mt. Baekdu, and is planning to complete construction of the Mt. Changbai Eastern Railroad, three highway networks and circular roadways in the next three years.

The Chinese National Tourism Agency and the Jilin Provincial Government recently held the first tourism festival near Mt. Baekdu; they are also active in attracting tourists from Russia and other foreign countries by holding the Yanbian Korean ethnic exposition. They also seek to stimulate the economy by developing mineral water in the areas nearby Mt. Baekdu and expanding cultivation of ginseng there.

Meanwhile, the Chinese government is reportedly seeking to register as UNESCO world cultural heritage the remnants of the Sanggyeong Yongcheonbu, which is the old capital of another ancient Korean kingdom—Balhae—located in the Bohai Bay, Ningan City, Heilongjiang Province.

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US tour company cancel trips to DPRK

Sunday, July 30th, 2006

from Yonhap:

U.S. travel agency cancels tour program to N. Korea

Washington, July 30 (Yonhap) — Travel agencies have scrapped their Pyongyang tour packages after North Korea cancelled its annual propaganda festival, citing flood damage and a joint South Korea-U.S. military training exercise, agency officials said Sunday.

North Korea had allowed travel companies to recruit U.S. and other foreign citizens to attend its Arirang Festival, which was to open on Aug. 15 for a two-month run.

The event, which features mass gymnastic shows, began in 2002 to commemorate the North’s founding leader Kim Il-sung, father of current leader Kim Jong-il.

North Korea said last week it would cancel this year’s Arirang Festival due to recent floods that killed at least 154 people, left 127 others missing and caused serious damage to its infrastructure. The North also cited the Ulji-Focus Lens, an annual South Korea-U.S. drill due to be launched in August, arguing the exercise is a rehearsal for a northward invasion.

On Sunday, Asia Pacific Travel, a U.S. travel company and Koreakonsult, a Swedish travel agency, withheld their Pyongyang trip plans, as the North’s festival was cancelled.

Asia Pacific Travel was to book about 200 Americans for a trip to North Korea, which was also to include visits to scenic Mount Myohyang, the inter-Korean industrial complex in Kaesong and the demilitarized zone.

North Korea has largely been off limits to Americans, since the 1950-53 Korean War ended with an armistice, not a peace treaty. The U.S. fought alongside South Korea to repel invading communist North Korean troops, aided by Chinese soldiers, during the conflict.

The relations between North Korea and the U.S. have worsened since the North conducted multiple missile tests on July 5, despite repeated international warnings. The U.S. and Japan led a U.N. Security Council’s passage of a resolution imposing sanctions on the North.

North Korea and the U.S. don’t have diplomatic relations.

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