SEOUL (Reuters) - South Korean President Moon Jae-in has replaced his unification minister who played a major role in detente with North Korea over the past year, his office said on Friday, and named a longtime confidant to lead a drive for “a new Korean peninsula”.

South Korean President Moon Jae-in delivers a speech during a ceremony celebrating the 100th anniversary of the March First Independence Movement against Japanese colonial rule, in central Seoul, South Korea, March 1, 2019. REUTERS/Kim Hong-Ji

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.

The Ministry of Unification handles relations with North Korea.

“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 transport, culture and sport, oceans and fisheries, science and technology, and small and medium enterprises.

The shake-up allows the outgoing ministers to run in parliamentary elections next year 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 would enter politics, comes a week after a second summit between U.S. President Donald Trump and North Korean leader Kim Jong Un, in Vietnam, failed to narrow their differences on dismantling the North’s nuclear program 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 summit in Vietnam’s capital of Hanoi, 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 economic projects with North Korea to go ahead.

Cho and other aides favored sticking to Trump’s “maximum pressure” campaign to force the North’s denuclearization.

Cho’s advocacy of strict sanctions enforcement surprised - and drew complaints from - many officials.

DIVISIONS

Following the breakdown of the summit, Moon reorganized his national security council, tasking Choi Jong-kun, one of Moon’s foreign policy architects who steered an inter-Korean military accord last year, with the nuclear issues.

Moon’s spokesman said the recent changes, including Cho’s dismissal, did not mean a policy change, but Kim Yeon-chul would expedite Moon’s initiative for “peace-driven economy”.

But Kim’s appointment could also exacerbate divisions within Moon’s government, some analysts said, and fuel U.S. concerns that the South may be moving too quickly with the North.

A staunch backer of Korean reconciliation, Kim was 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 a think-tank affiliated with the unification ministry.

Kim, 55, was a vocal critic of a 2016 decision to close the Kaesong factory complex just on the North Korean side of the border, after Seoul’s then-conservative government said the North had diverted wages paid to workers by South Korean firms to bankroll its weapons programs.

A private panel appointed by the unification ministry under Moon said there was no evidence to back up that accusation, and Kim had since called for the factory complex to reopen.

The industrial park, along with a railway and tourism project, are important parts of Moon’s initiative to build a pan-peninsula economic community that he has said will also benefit South Korea’s economy.