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North and South Korea on Sunday made a crucial step forward in winding down months of high tension, agreeing to reopen a joint industrial zone seen as the last remaining symbol of cross-border reconciliation.
The deal follows months of friction and threats of war by Pyongyang after its February nuclear test attracted tougher UN sanctions, further squeezing its struggling economy.
At the end of gruelling 15-hour talks, the two sides said in a joint statement that they had agreed to let South Korean firms restart their shuttered plants at the Kaesong complex near the border when conditions are ripe.
"The South and the North will let business companies at Kaesong resume operation when (they are) ready to do so," said the joint statement.
The two sides will meet again on Wednesday at Kaesong to discuss details over reopening the zone, including a demand from Seoul that the North guarantees it will never again unilaterally shut down the estate.
The North, however, will likely find it hard to accept such a demand as it would amount to Pyongyang accepting full responsibility for the suspension.
The complex -- built in 2004 about 10 kilometres (six miles) north of the border as a rare symbol of inter-Korea cooperation -- had previously remained largely resilient to turbulence in relations.
But the North, citing military tensions and Seoul's hostility, pulled out all its 53,000 workers from the 123 Seoul-owned factories in April, prompting the South to withdraw the managers of around 120 companies in early May.
After signing the agreement, Suh Ho, Seoul's chief delegate for the latest talks, said the North's officials had appeared "very enthusiastic" in negotiations to rescue the complex -- a valuable source of hard currency for the impoverished communist state.
Neither side declared the complex officially closed, instead referring to a temporary shutdown, while blaming each other for its suspension.
"I've got an impression that the North was making very active efforts to solve the issue of the Kaesong complex," Suh told journalists.
Under the agreement Seoul businessmen will be allowed to cross the border to check on their facilities at Kaesong from Wednesday.
The news was warmly welcomed by the South Korean firms at Kaesong.
"I was overcome with emotions and shed tears for a while," said Moon Chang-Seop, a top representative of the 123 companies.
But other businessmen expressed concern that it would be difficult for them to solicit buyers who have left them during the past three months of suspension.
The zone had become the most high-profile casualty of recent elevated tensions on the peninsula.
Representatives of South Korean companies based there had repeatedly urged the two sides to open talks to revive the moribund industrial park.
Some firms have threatened to withdraw from Kaesong, complaining they have fallen victim to political bickering between the two rivals.
After repeatedly threatening Seoul and Washington with conventional and nuclear attack, Pyongyang has appeared in recent weeks to want to move towards dialogue.
Analysts say North Korea is mindful of a US demand that it improve ties with Seoul before there can be any direct talks with Washington.
The North made a surprise move last Wednesday by restoring a cross-border military hotline and promising to let South Korean businessmen visit Kaesong.
"The talks are boiled down to this: North wants to restart Kaesong up front while the South calls for a guarantee against such unilateral actions to suspend Kaesong," professor Yang Moo-Jin of the University of North Korean Studies told AFP.
The two sides have so far been unable to resolve this question but it is significant that they have discussed the issue and set a date for a further round of talks, he said.
"Wednesday's talks will serve as a good indicator to see where the two Koreas are headed -- restoration of dialogue or build-up of tension."
Sunday's agreement was a turnaround from last month when high-level talks on the estate's future collapsed before they took off over a dispute on who should lead each other's delegation.