By Jack Kim
SEOUL (Reuters) - If North Korea goes ahead with reunions of families separated by the 1950-53 Korean war it is going to expect rewards from the South in return, perhaps the reopening of a border tourist spot or even tacit acceptance of an expected missile test.
South Korean President Park Geun-hye wants to build confidence with the unpredictable North under her policy of "Trustpolitik".
But the South is loath to rush back into negotiations as it draws up a strategy for government-level contacts to follow an accord in August that defused the latest confrontation between the old rivals.
Reunions of families separated by the war have been held several times since 1985, providing the opportunity for humanitarian cooperation, and perhaps a first step to building ties, amid poignant scenes of elderly folk meeting long-lost loved ones.
The government of South Korea also wins a popularity boost from the reunions.
For the North, not concerned about opinion polls, the reunions, the last of which took place in February 2014, are more of an inconvenience, but one that can be leveraged.
Cho Min, vice president of the South Korean government-run Korea Institute for National Unification, said the North saw the family meeting planned for next month as a concession to the South.
"The reunions are a hassle for the North. There is cost in looking for the people, and to feed them and dress them up," he said.
"There are big administrative costs in doing it, so they expect something in return."
North Korea is at least expected to seek the resumption of cross-border tours from the South to its Mount Kumgang resort, Cho said. The tours were once a $40 million-a-year money spinner for the impoverished North.
The North may also expect the South not to raise too much of a fuss if it goes ahead with a widely anticipated missile launch.
This week, the North announced a plan to fire a long-range rocket that it says is for a space program. It also said it was working to improve its nuclear arsenal.
"The fact that they are talking about a long-range missile launch as preparations are being made to hold the reunions, the message for the South is: 'let's see some major incentive if you want the reunions to go ahead'," said Shin In-kyun, who heads the Korea Defence Network, a private forum based in Seoul.
South Korea has been restrained in its response to the North's tough talk, an indication it does not want to disrupt the fragile improvement in ties since negotiations ended a tense standoff last month.
During those talks, the North raised the possibility of resuming the tours to the scenic Mount Kumgang, a South Korean official said at the time.
Ties between the two Koreas warmed after their leaders held their first ever summit in 2000 but deteriorated after a conservative president came to power in the South in 2008.
Relations went into deep freeze following the 2010 sinking of a South Korean navy ship, with the loss of 46 sailors, which South Korea blamed on the North. It denied any role.
Under North Korean leader Kim Jong Un, who took power after his father died in 2011, the isolated North has looked to tourism as a way to earn cash and has developed a ski resort and built a new airport in its capital, Pyongyang.
The Mount Kumgang resort drew as many as 345,000 South Koreans a year at its peak but was shut in 2008 when a woman tourist wandered off hotel grounds into a military zone during a pre-dawn stroll. A North Korea soldier shot her dead.
The South is being cautious as it tries to make progress with the North and hopes the reunions can be a start, said a South Korean official involved in the process.
"The aim is to make substantive and forward-looking progress in South-North ties, not to talk for the sake of talking," he said, requesting anonymity because he was not authorized to speak to the media.
"This is a start. And as we say, it's important to do the first shirt-button right."
(Editing by Tony Munroe, Robert Birsel)