Pyongyang's notice Tuesday to rethink "special favors" for South Korean firms in Gaeseong Industrial Complex is as preposterous as it is embarrassing. North Korea may think it's providing "big privileges" - namely cheap land and labor - to 101 South Korean businesses operating in the joint industrial park in its border town. But it was seoul that turned the barren outskirts of an ancient North Korean city into a major cash cow for Kim Jong-il and a showpiece for inter-Korean economic cooperation through massive investment. Even if Pyongyang had some complaints about the wage levels and other contract terms, North Korean officials' insolence in expressing them was regrettable, as they one-sidedly notified southerners of their decision during the "contact," which lasted less than half an hour after wrangling almost half a day. Nevertheless, some officials here tried to find some comfort in the fact that the Koreas had their first government meeting since the Lee Myung-bak administration took office more than a year ago and that Pyongyang did not go as far as to shut down the industrial park. North Korea didn't even accept South Korea's official document of demands nor bother to talk about the Hyundai Asan official detained there without any detailed explanations about why or opportunities to meet his colleagues for nearly a month. Seoul seems to be at its lowest point in recent memory vis-avis Pyongyang under an administration, which started with a pledge to "cure the habits" of the communist country. As we have repeatedly said, most of this is due to the government's half-backed North Korea policy, marked by incoherence and inconsistency. Conservatives may press Seoul to squarely hit back Pyongyang's hardball tactics, but under current global political circumstances, it would probably please - and benefit - only the troubled Japanese Prime Minister, Taro Aso, and his right-wing Cabinet. Even now, the government's national security team is split into two, as the unification ministry is trying to use this meeting as an opportunity to resume inter-Korean dialogue and the foreign ministry is calling for full-scale participation in the U.S.-led Proliferation Security Initiative. Foreign ministry officials argue the government should tackle the inter-Korean relationship in a global context, which is right. What they don't realize, however, is international politics are shifting to a bi-polar system revolving round the U.S.-China axis, and the U.S.-Japan-South Korea alliance may not work well even in Northeast Asia. They need to see through Washington's lukewarm, unofficial welcome to Seoul's hastily reported full participation in the PSI. That said, the need for dealing with inter-Korean ties in a worldwide context is being felt more acutely in the isolationist. Kim Jong-il ought to ponder why U.S. President Barack Obama is shaking the hands of most of its longtime adversaries, including Cuba, Venezuela, Syria and even Iran, while warning against Pyongyang to pay the price for its recalcitrance. Blaming an unfriendly government in Seoul may be an excuse for Kim but would not save his country from deepening isolation and eventral collapse.