UPDATE 1-S.Korea's Moon names confidant to drive improved ties with North

South Korean President Moon Jae-in has replaced his unification minister who played a major role in last year's detente with the North, his office said on Friday, and named a longtime confidant to lead Moon's drive for "a new Korean peninsula". Kim Yeon-chul, a pro-engagement scholar who heads the state-run Korea Institute for National Unification, will replace Cho Myoung-gyon pending a confirmation hearing.

"He's the right man who can actively embody the president's vision for a new Korean peninsula, a new peace and cooperation community, by carrying out the Unification Ministry's main policy tasks without a hitch and implementing inter-Korean agreements in a speedy manner," Moon's spokesman told a news briefing. The change was part of Moon's largest cabinet reshuffle since taking office in 2017, with new ministers for the interior, land and transportation, culture and sport, oceans and fisheries, science and technology, and small and medium enterprises.

The shake-up allows incumbent aides to run in parliamentary elections next year, analysts said, and turns a page for an administration facing a sluggish economy and sagging popularity. The removal of Cho, who has yet to say if he will enter politics, comes a week after the second summit between U.S. President Donald Trump and North Korean leader Kim Jong Un failed to narrow their differences on dismantling the North's nuclear programme and U.S. willingness to ease sanctions.

The failed summit was a blow for Moon, who had hoped U.S. sanctions relief would boost South-North projects including a factory park, tourism zone and railway network. Ahead of the Hanoi summit, a rift opened within Moon's administration over how to advance Korean ties without undercutting international sanctions and the alliance with the United States.

Some top aides, including national security adviser Chung Eui-yong, had pushed for the economic projects to go ahead. Cho and other aides favoured sticking to Trump's "maximum pressure" campaign to force the North's denuclearisation. Cho's advocacy of strict sanctions enforcement surprised - and drew complaints from - many officials.

The appointment of Kim Yeon-chul, a staunch backer of Korean reconciliation, may further improve ties with the North, officials said. It could also signal deeper divisions within Moon's government, some analysts said, and fuel U.S. concerns that the South may be moving too quickly with the North.

Kim, 55, is a North Korea studies professor and adviser to a previous administration in which Moon also served. More recently, he advised Moon's office on Korean summits before moving to head the think tank affiliated with the Unification Ministry.

Kim was a vocal critic of the 2016 decision to close the Kaesong factory after Seoul's then-conservative government said the North had diverted wages paid to its workers by South Korean firms to bankroll its weapons programmes. A private panel appointed by the Unification Ministry under Moon said there was no evidence to back up that charge, and Kim has since called for the factory to reopen.

The factory, alongside a railway and tourism project, are important parts of Moon's initiative to build a pan-peninsula economic community which he has said will also benefit South Korea's economy. (Reporting by Hyonhee Shin Editing by Darren Schuettler)

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