SEOUL - SOUTH Korea on Wednesday offered aid to develop North Korea's crumbling economy on condition its impoverished and hostile neighbour accepts dialogue.

The call came from Unification Minister Kim Ha Joong after a year marked by growing tensions and the communist North's decision to cut almost all official ties with the South.

But Yonhap news agency, which quoted the minister, said that in an apparent conciliatory gesture he did not openly link relations to Pyongyang's denuclearisation.

Mr Kim, whose ministry handles cross-border ties, was briefing President Lee Myung Bak on its policy goals for 2009. He said it would continue offering economic incentives but nothing would materialise if Pyongyang refused to talk.

'As long as North Korea shows no change in its attitude, the situation is expected to remain the same as now,' the minister was quoted as saying.

The conservative Mr Lee, who took office in February, enraged the North by linking major economic aid to progress in denuclearisation and by pledging to raise its human rights record.

Seoul did not make its customary shipment of hundreds of thousands of tons of rice and fertiliser aid this year, because Pyongyang did not request it amid icy relations.

Mr Kim offered to help plant trees, build railways and roads and develop mineral mines in the North. But all those measures would be taken 'according to the progress of inter-Korean relations,' he said.

South Korea will also seek 'a fundamental solution' to have former soldiers and civilians held in North Korea returned, the minister said without giving details.

The Seoul government says 494 South Koreans - mostly fishermen - were seized by the North during the Cold War, and more than 500 prisoners of war were never sent home at the end of the 1950-53 conflict. -- AFP