By Jack Kim
SEOUL (Reuters) - North and South Korea agreed on Friday to proceed with reunions of families separated by the Korean War despite an earlier North Korean demand that they could only go ahead if the South postponed military exercises with the United States.
The agreement clearly represented a concession by the North, which has made unpredictable diplomatic moves over the past month. The North had proposed the reunions, but then threatened to withdraw consent over a sortie by a U.S. B52 bomber.
It had also demanded that the South call off annual defense drills later this month with the United States on grounds that they overlapped with the proposed reunions. The South refused, saying the reunions and the military exercises should be treated separately.
In the end, there was no link between the issues in a three-point agreement reached after two sessions of talks this week, the first high-level meetings between the sides in seven years.
"We tried to drive home the point that the family reunion event will be the first step in building trust so we should press ahead with it," South Korea's chief delegate, Kim Kyou-hyun, told a news briefing.
"The North accepted this point in the end and we came to the agreement," he said. Kim is South Korean President Park Geun-hye's deputy national security adviser.
U.S. Secretary of State John Kerry said in Seoul on Thursday it was inappropriate for North Korea to link the family reunions with the military exercises.
The two Koreas, still in theory at war as the 1950-53 Korean War ended only with an armistice, also agreed to stop engaging in denunciations of each other's leadership. In a third point, they said the two sides would meet again to discuss matters of interest.
Only a week ago, the reclusive North reversed position and withdraw at the last minute an invitation for a U.S. envoy to visit its capital to discuss the release of a U.S. missionary jailed for "hostile acts".
North Korea's chief delegate to the talks at the Panmunjom "truce" village on the border was Won Tong Yon, the second highest ranking official in the ruling Workers' Party United Front Department, which looks after dealings with the South.
Jeung Young-tae of the Korea Institute for National Unification in Seoul said both sides came away with a face-saving deal and were able to claim a small victory.
"Using family reunions, North Korea has achieved one of its goals of getting the South to agree to stop denouncing each other's leadership," he said. "And South Korea also got what it has been pursuing - opening the door to dialogue."
The North denounces the annual exercises with the United States, which maintains about 28,500 troops in the South, as a rehearsal for an invasion. The South and Washington say they have been conducted for years without incident.
The North threatened during last year's drills to attack the South and the United States in weeks of shrill rhetoric that following the imposition of new U.N. sanctions in response to a new nuclear test by Pyongyang.
China, North Korea's sole diplomatic ally, pushed back against a call from Kerry during his visit to Seoul for China to do more to bring North Korea into line.
Chinese Foreign Minister Wang Yi told Kerry in Beijing on Friday, in comments reported by China's state media, that Beijing would not tolerate any chaos or war on the Korean peninsula.
(Additional reporting by Ju-min Park and by Ben Blanchard in Beijing; Editing by Ron Popeski)