In the ancient city of Kaesong, once the capital of a unified Korea, officials from South Korea and North Korea will discuss how best to push ahead with the most ambitious reconciliation project undertaken since the 1950-53 Korean War.

While South Korea prepares to invest billions of dollars in the plan to build a vast industrial park inside the communist state, other South Korean officials are readying for another round of negotiations of a different nature -- military talks with the United States on the biggest withdrawal of US troops from their country since the Vietnam War.

Of the two sets of talks, those with the US ally are expected to be more tense and less cordial than those with the communist neighbour.

Following the last round of inconclusive six-party talks in Beijing in February, Washington said that it had achieved one significant goal -- a unanimity of purpose among all participants, except for North Korea, supporting the US position on unconditional nuclear surrender.

North Korea made the contrary claim that all parties had come to see the sense of its own offer of a partial freeze of the nuclear facilities in return for aid and concessions.

Wherever the truth may lie, South Korea is caught between its drive for reconciliation with North Korea and the reality of a strained alliance with the United States.

For many young South Koreans who swept former human rights lawyer Roh Moo-Hyun to the presidency during massive anti-American protests in late 2002, America's hard line represents a greater threat to security than the communist North.

For North Korea, regime survival is the ultimate goal and South Korean policymakers share that aim, according to some analysts here.

"Our message to North Korea is that we can guarantee the survival of leader Kim Jong-Il, and probably even of his successor too. Any more than that we can't promise," said a former senior Roh administration official.

For many South Koreans, the survival of North Korea and the survival of their own country amount to the same thing. The reasoning is simple -- war on the Korean peninsula would destroy both North and South Korea, while the collapse of North Korea would drag down the South, flooded by hundreds of thousands of bewildered communist refuges and unable to foot the bill.

Hence South Korea's willingness to bankroll the North Koreans through economic exchanges that seem to many people to flow in only one direction and have had no visible impact on slowing North Korea's nuclear weapons drive nor on curbing the regime's human rights abuses.

"Without reciprocal gestures by the target state, engagement becomes appeasement," said Victor Cha, of Washington's Georgetown University, in a recent commentary.

Very little criticism of North Korea and its Stalinist dictator is heard in South Korea, a fact lamented recently by ex-Czech Republic president Vaclav Havel.

"The (South Korean) policy costs South Korea hundreds of millions of dollars, but it is not helping in the effort to save innocent lives. In the end, the policy only keeps the leader of Pyongyang in power," he wrote

South Korea's embrace of the Stalinist state amid rising anti-American sentiment in Seoul has raised red flags in Washington.

"Basically, the US doesn't believe South Korea is a reliable ally anymore," said a western military attache based in Seoul.

Hence the US decision last month to pull out one third of its 37,000 troops from South Korea, which will be on the agenda at military talks between South Korea and the US later this year, he said.

At the same time, Japan is engaged in its own bilateral track of diplomacy with North Korea, while China, North Korea's closest ally, has recently cast doubt on the basic assumption on which Washington has pinned its key demand at the talks -- a complete, verifiable and irreversible end to the Stalinist state's nuclear weapons facilities.

For Japan, the abduction of it citizens by North Korea in the 1970s and 1980s is more compelling than the nuclear standoff and drew Japanese leader Junichiro Koizumi to Pyongyang for a summit last month.

And for China, US pressure on the Stalinist state is seen as a direct threat to its own interests in Northeast Asia. China has been more critical than any other country, North Korea excepted, of the US stand on the nuclear impasse and last month expressed doubt over US charges that North Korea had an enriched uranium program, the claim that originally triggered the 20-month nuclear crisis.

WAR.WIRE