To buy time, the South Korean government paid Hyundai Asan about US$45 million in June in return for assets in Kumgang. The cash from this partial nationalization of the project allowed the resort operator temporarily to resume payments to the North. "The government didn't want to give up," said Chung Kyu-nam, of the South Korea National Tourism Organization, which is now responsible for Kumgang.
"It regards the project not only as a commercial venture, but as the sole link between the two nations."
But even with the injection of public funds, the monthly payments to the North have slipped from US$12 million a month to just US$400,000. This is an enormous loss to Pyongyang, which was earning almost as much foreign currency from Mt Kumgang as from every other source of trade income combined.
The two sides are now back in the stalemate they have been trapped in for most of the past 50 years. Pyongyang is accusing the South of reneging on Hyundai Asan's contract. Seoul is blaming the North for failing to open up a land link as promised. The talks at Mt Kumgang last week were seen as an opportunity to break this impasse.
Running out of time
But after opening with a power failure, the meeting ended prematurely with an acrimonious dispute.
Although South Korea has promised to continue talks, Mt Kumgang and the sunshine policy are running out of time.
President Kim Dae-jung, who came to power on a wave of expectation, has lost support in parliament and with little more than a year left of his term in office, is increasingly seen as a lame duck.
The engagement policy with the North is losing support among South Koreans and even officials in South Korea's usually optimistic unification ministry are preparing for the worst. "Mt Kumgang is a symbol of reconciliation, so we hope that tourism will continue, but it is possible that it will come to a stop," said Park Chan-bong, deputy assistant minister of unification. "The project is basically a private enterprise. Its survival is up to the function of the market."
Without a last-minute rescue plan, Mt Kumgang looks set to be remembered not as a step towards reunification, but as a monument to the dangers of leaving national reconciliation to the private sector.
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