PAJU, South Korea - Rare talks between North and South Koreas fizzled on Tuesday with the rivals unable to even agree on a venue for the meeting, which had already been clouded by Pyongyang's threat to restart its nuclear arms plant.

The problems with the talks could add to growing frustration among regional powers with North Korea, which defied South Korea, Japan and the United States earlier this month to launch a rocket in what was widely seen as a disguised long-range missile test.

North Korea hurriedly requested the meeting last week over a joint industrial park located just north of their heavily armed border. The venture was once hailed as a model of economic cooperation but has now increasingly been the focus of mounting tension.

The South Korean nine-member economic delegation crossed into the Kaesong Industrial Park early on Tuesday but failed to have formal talks due to differences over the venue and format, the South's Unification Ministry said.

If the discussions do not reach a conclusion, the two sides could meet again on Wednesday, a ministry official said.

Seoul is trying to win the release of a South Korean worker held for nearly a month at Kaesong by the North on suspicion of bad-mouthing North Korea's communist system.

North Korea, angered by the decision of President Lee Myung-bak after he took office a year ago to cut a steady flow of aid to his impoverished neighbor, has disrupted work at the Kaesong Industrial Park at times to put pressure on Seoul to drop its hard line.

Despite the North's moves, the number of firms at Kaesong continues to grow due to its low costs and was at 93 at the end of February, employing nearly 39,000 North Korean workers.

South Korean firms can take advantage of cheap North Korean labor and land to make goods, while the cash-strapped North receives a steady flow of foreign currency in return.

SHUT THE PARK?

Yun Duk-min, an expert on North Korea at the South's Institute of Foreign Affairs and National Security, said the unpredictable North was looking to call the shots at the meeting.

South Korea accepted the talks on the slight hope of winning the release of the worker. North Korea could abruptly drop a bomb and say it wants to shut down the Kaesong park, Yun said.

North Korea has all but suspended dialogue with Lee's government and dubbed him a traitor to the Korean nation for tying aid, which has helped prop up the North's wobbly economy, to progress Pyongyang makes in giving up nuclear arms.

But the North may now be even more dependent on the money generated by the Kaesong park because the United Nations has called for tightened sanctions on Pyongyang after its defiant rocket launch earlier this month, widely seen as a disguised long-range missile test that violated U.N. resolutions.

In response, Pyongyang said it would boycott six-party nuclear disarmament talks, restart a plant that makes bomb-grade plutonium that was being dismantled under a deal reached at those discussions, and threatened war with the South if it joined a U.S. initiative to halt the proliferation of illicit weapons.

Some analysts said North Korea may threaten to shut down the Kaesong park if South Korea joins the Proliferation Security Initiative because it could harm the North's arms trade, which is an important source of cash.

But few expect Pyongyang to actually shut down the park because it would harm its already tarnished reputation as an international business partner, lead to the loss of a steady stream of income and force the North to find jobs for tens of thousands of its displaced workers.

The latest nuclear rumblings from the North have not upset financial players used to the North's threats, but worries may increase if the North restarts its aging Yongbyon nuclear plant and tries to produce more plutonium for bombs.

Russian Foreign Minister Sergei Lavrov will visit Pyongyang this week, the ministry said. Interfax news agency said he will try to persuade the North to return to the sputtering nuclear talks with China, Japan, Russia, South Korea and the United States.

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