North and South Korea agreed today to reopen their Kaesong joint industrial park next week, five months after it was shut during soaring military tensions.

Following a marathon negotiation session, the two sides set a date of September 16 for restarting the shuttered complex, the South’s Unification Ministry said.

South Korean firms in Kaesong, which lies 10 kilometres over the border in North Korea, will be allowed to resume operations after a trial run on Monday, the ministry said.

The agreement came at a second round of talks between the two Koreas in a newly created Kaesong joint committee that began yesterday morning and stretched through the night.

Born out of the “sunshine” reconciliation policy initiated in the late 1990s by then-South Korean president Kim Dae-Jung, Kaesong was established in 2004 as a rare symbol of inter-Korean cooperation.

It has provided an important hard currency source for the impoverished North through taxes, other revenues, and its cut of workers’ wages.

It had appeared immune to previous downward spirals in North-South relations, but finally fell victim to two months of intense military tensions that followed the North’s nuclear test in February.

Both sides blamed the other for its closure, with the North insisting that its hand was forced by hostile South Korean actions – in particular, a series of joint military exercises with the United States.

As military tensions eased, the two Koreas agreed last month to work together to resume operations at the zone.

As part of the deal, the North accepted the South’s demand that Kaesong be opened to foreign investors – a move seen by Seoul as a guarantee against the North shutting the complex down again in the future.

Today’s agreement included plans to host a road show for foreign investors at Kaesong in October.

Once Kaesong is reopened, Pyongyang is likely to step up pressure on Seoul to revive another cross-border project – South Korean tours to the North’s Mount Kumgang resort.

The South suspended the tours – another important source of hard currency for the North – after a North Korean soldier in 2008 shot dead a female tourist from the South who strayed into a restricted zone.

In response the North scrapped a deal with the resort’s developer – Seoul’s Hyundai Asan company – and seized its properties there.

Seoul has agreed to discuss resuming the Kumgang tours but has delayed the date for talks to begin.

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