In a variation on the swords-to-ploughshares theme, North Korea is swapping heavy artillery for golf clubs.

This is not the communist state's latest secret weapon, nor a disarmament gesture, rather a new scheme to attract golf-crazy South Koreans to an enclave in the North just across the Demilitarised Zone border.

Due to open in two years, the 6,860-metre Diamond Country Club course will host golfers amid the scenic, mountainous Kumgang resort.

Players of the quintessentially capitalist sport will walk where a communist military base once stood, its heavy artillery pointed at the South. But the only bunkers will be those filled with sand to trap wayward golfers.

South Korea's Hyundai Asan is developing the 18-hole course with investment from Seoul-based Emerson Pacific to help promote tourism in the Kumgang special district. A second, 9-hole, course is also planned.

"It's not the prospect of financial profit I'm in this for," said Lee Joong-myun, chairman of Emerson Pacific, which is investing 60 billion won ($56 million) in the project.

"We are looking at the bigger perspective of cooperation between North and South Korea and we want to play a role," Lee told Reuters at the groundbreaking for the course.

Hyundai operates Kumgang tours under a 50-year lease from the North Korean government in what has been the most visible accomplishment in warming ties between the two Cold War foes.

North and South Korea technically remain at war as the 1950-53 Korean War ended in a truce and not a full peace treaty.

Over the past six years, Hyundai has brought about 820,000 mostly South Korean tourists to the region, but has yet to turn a profit for its more than $1 billion investment.

Emerson Pacific does not expect its investment will alter the financial picture.

NO FLY ZONE

Military tensions remain high on the peninsula, despite improved commercial ties since a June 2000 North-South summit.

Hyundai has organised both government and private financing of projects to attract more tourists to Kumgang, even though critics say commercial links with the North may help Pyongyang fund its military ambitions -- notably its nuclear aspirations.

There is little resistance among South Koreans to the idea of crossing the world's most heavily fortified border into the communist state for one-, two- or three-day tours in Kumgang.

Yet the pace has not met Hyundai's expectations.

The project has not been helped by the absence of passenger flights over the border. A ferry service has been suspended.

For now, tourists who brave hours of winding highways in South Korea's northern Kangwon province to reach the frontier face two hours of border processing and a bus ride into Kumgang.

Hyundai officials said the idea of introducing flights was unlikely to be discussed with the authorities of both North and South Korea any time soon.

North Korea has increasingly softened its initially hysterical treatment of South Koreans visiting Kumgang. Guides now converse more freely.

But it was not clear what the North Korean authorities make of a golf course replacing a military base. The likelihood is that other bases still cover target areas in the South.

GUN SHELLS TO GOLF BALLS

No North Korean dignitaries were present as Emerson Pacific's Lee led a group of South Korean parliamentarians, Hyundai Asan officials and golf association representatives to tee off against a target on a nearby hilltop.

"They wouldn't be coming to something like this," said South Korean Vice Unification Minister Rhee Bong-jo, without elaborating.

Kim Won-woong, a South Korean member of parliament and among those to tee off among the still barren hills, said the only way to proceed with arguably the highest-profile North-South commercial project was forward.

"Yesterday, this was an artillery base. Today, we set golf balls soaring," Kim said, though most of the VIP guests displayed a less than impressive golf swing.

A careful eye can still detect signs of the last remaining Cold War-style conflict at the sparse resort. Perched on the hills across a dry stream close to the planned golf course are what look like artillery guns.

South Korean authorities and Hyundai officials could not confirm whether these were actual weapons or models, saying the hills were not part of the special tourist district carved out by the North for Hyundai's use.

It was not clear whether North Korean leader Kim Jong-il -- who official media reports have said routinely scores several holes-in-one every time he plays golf -- will play the course once it opens.