updated 4/21/2009 4:51:23 PM ET 2009-04-21T20:51:23

North Korea refused Tuesday to release a seized South Korean worker during tense talks with Seoul officials and said it would reconsider benefits for companies from the South that invested in a troubled joint industrial project in the communist country.

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The office of South Korean President Lee Myung-bak said in a statement that Pyongyang rejected Seoul's demand to free the worker during the brief talks held at the Kaesong Industrial Complex just across the border in North Korea.

The North seized him last month for allegedly denouncing its political system. His detention came amid already fraying ties between the two Koreas and as the North is also holding two U.S. journalists it seized last month and has vowed to put on trial.

"We made it clear that our government will react strongly unless the North side immediately releases the detainee," the statement said. "All responsibility for the following situation lies with the North."

North Korean state media were silent on the outcome of the talks.

The meeting came amid rising tensions over Pyongyang's moves to pull out of six-nation negotiations aimed at ridding it of atomic weapons and restart its nuclear program following U.N. Security Council condemnation of the North's April 5 rocket launch.

Russia will dispatch its top diplomat to the North this week, and he is expected to try to persuade the regime to reverse that decision. Foreign Minister Sergey Lavrov will be in Pyongyang on Thursday and Friday, his ministry announced.

The South Korean statement also said North Korea will reconsider preferential treatment — such as free land and cheap wages paid to North Korean workers — it gives to South Korea at the complex, where more than 100 of its companies have invested in factories that manufacture mostly light industrial goods for export to the South.

Short meeting
The meeting had been billed as a major step — the first government-to-government dialogue since the conservative Lee took office in February last year with a vow to get tough on North Korea over its nuclear ambitions.

But the talks — which lasted just 22 minutes — only started after a full day of bickering between the two sides over how it should be conducted. South Korean officials spent more than 11 hours in the North before the formal meeting started.

The difficulty in getting the dialogue started underlines the soured nature of relations between the two countries. North Korea has mostly refused to deal with South Korea under Lee, though the two states have conducted military talks and met on the sidelines of six-nation nuclear negotiations.

Putting additional strain on the meeting was North Korea's recent warning that the South not join a U.S.-led program to stop the spread of weapons of mass destruction, which Pyongyang says it would consider a declaration of war.

South Korea had planned to announce on Sunday that would join the Proliferation Security Initiative, though delayed that after the North's surprise invitation last week to talk about the Kaesong complex.

Lee said Tuesday that South Korea's intention to join the program remains unchanged, according to Yonhap news agency. Lee made the comments during an emergency meeting of security-related Cabinet ministers.

Detained worker
The Kaesong complex, about an hour's drive from Seoul, marries South Korean capital and management skills with cheap North Korean labor. The project, however, has been beset by troubles since last year, with North Korea tightening border controls that have inconvenienced South Korean businesses operating there and sparked worries about its continued viability.

It began in 2004 amid a period of detente between the two sides and has been seen as symbolizing efforts to overcome the past of division and bloody conflict since the peninsula was divided at the end of World War II. The two Koreas fought the 1950-53 Korean War, which ended with a cease-fire rather than a peace treaty.

Lee Jong-joo, a spokeswoman for South Korea's Unification Ministry, said earlier North Korea is prohibited from taking steps against the detained worker other than a fine, warning or expulsion under agreements the two sides have reached in the past to handle such cases.

There has been media speculation in South Korea that the North might put the worker on trial. He was detained on March 30 and he has only been identified by his surname Yoo.

"We are sorry to the public for having failed even to meet our worker and returned home with him due to North Korea's unilateral rejection," South Korea's delegation to the talks said in a statement released after officials returned to the South. "We will do our best to resolve this issue."

Further dialogue
The two sides, however, appeared to leave room for further meetings.

"Dialogue between South and North (Korean) authorities will continue," the presidential statement said, but did not provide any timeframe.

South Korea proposed another round to address pending issues, including the movement of South Koreans into and out of Kaesong. It remained unclear how the North reacted.

North Korea demanded that the South come "faithfully forward for necessary contacts" for negotiations to reconsider existing contracts regarding the complex, the statement said.

Andrei Lankov, a Russian expert on North Korea at Kookmin University in Seoul, said that North Koreans were using what he called "their favorite tactics" in negotiations: raising tensions and simultaneously sending signals they are ready to talk.

"They hope that pressure will make the opposite side more ready to make concessions," he said.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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