South Korea says controversial foundation doesn’t function properly because of opposition from public and victims.

South Korea has said it would close a controversial Japanese-funded foundation set up to help former war-time sex slaves, a decision Japan said risked souring ties between the two countries.

The foundation was established as part of a 2015 agreement under which Tokyo transferred about $8.8m as compensation for the victims and Seoul agreed not to raise the issue again.

The controversial deal brokered by conservative former president Park Geun-hye angered some victims who said it fell short of holding Japan responsible for abuses during its colonial rule over the Korean Peninsula.

Her successor Moon Jae-in was among the harsh critics of the agreement and earlier this year his administration vowed to return the money to Japan.

Gender Equality Minister Jin Sun Mee said in a statement on Wednesday that her ministry, which is responsible for the foundation, had decided to dissolve it. The ministry would continue to pursue policies to “restore the honour and dignity” of the sexual slavery victims, it added.

Alternative approach

“We have… decided to end the project based on the result of our reviews and current circumstances around the foundation,” the statement said, saying it would seek to find a “reasonable way to handle” the remaining money sent by Japan.

Historians say tens of thousands of women from around Asia, many of them Korean, were sent to front line military brothels during World War II to provide sex to Japanese soldiers.

South Korea’s decision sparked a sharp reaction from Tokyo, which summoned the country’s ambassador and urged Seoul to respect its “international promise”.

The issue of sexual slavery is a highly emotional one that has marred the relationship between South Korea and its former colonial ruler Japan for decades.

Despite both countries being democracies, market economies and US allies that have to contend with the twin threats of an overbearing China and nuclear-armed North Korea, ties between Seoul and Tokyo are heavily influenced by disputes over history and territory.

‘Irreversible resolution’

Japan’s Prime Minister Shinzo Abe reacted strongly, demanding South Korea honour the pact.

“The Japan-South Korea agreement of three years ago was the final and irreversible resolution,” Abe told reporters in Tokyo.

“If an international promise is broken, it becomes impossible to keep ties between one country and another. I hope that South Korea, as a member of the international community, will take a responsible action,” Abe said.

Moon told Abe during a meeting in September the foundation was failing to function properly because of strong opposition from the victims and public.

Dozens of victims or their families have claimed $3.9m from the foundation since it started operations in 2016.

The South Korean government has since provided its own funding.