North and South Korea's peace process takes a major backward step as Pyongyang pulls out of DMZ liaison office

• North Korea abruptly pulled out of a liaison office set up to improve inter-Korean relations, South Korea said on Friday.
• The joint office was established last September to improve relations and allow regular communication between the rivals.
• Pyongyang's withdrawal comes shortly after US-North Korean talks collapsed in February, and the US imposed new sanctions on Chinese companies that allegedly helped the North evade sanctions.
• Analysts say North Korea withdrew from the office because South Korea did not show enough influence as a mediator between Pyongyang and Washington.

North Korea abruptly withdrew from a liaison office that allowed it to communicate with South Korea, marking a major setback to the ongoing peace talks between the historic rivals.

South Korea's Unification Ministry announced Pyongyang's decision on Friday, citing "instructions from the superior authority" in the North, The Associated Press (AP) reported.

The two countries set up the joint office in Kaesong, near the demilitarized zone (DMZ), after North Korean leader Kim Jong Un and South Korean President Moon Jae-in met for the first time last April.

North Korea's withdrawal comes shortly after the US imposed fresh sanctions on Chinese companies that allegedly helped North Korea evade international sanctions.

International sanctions have proven to be a sore point for North Korea.

Talks between Kim and President Donald Trump in Hanoi, Vietnam, abruptly broke down in February over disagreements over sanctions.

Trump said Kim had demanded a full relaxation of international sanctions on his country in exchange for only a few nuclear site closures.

But North Korea's foreign minister, Ri Yong Ho, said Pyongyang had only asked for a partial - not full - lifting of sanctions. Ri added that North Korea offered to dismantle its primary nuclear facility and to permanently halt the testing of nuclear weapons and long-range missiles, but the US asked for more.

Read more: Photos show how Trump's 2nd nuclear summit with Kim Jong Un played out in Vietnam

The North blames the South for strained relations with Trump

The site of the liaison office had been a symbol of the improving collaboration between the two Koreas, which technically remain at war.

North Korean media have been criticizing South Korea's limited influence in improving US-North Korea relations since the failed Hanoi summit, NK News reported.

The state-run Meari news outlet said on Friday, according to NK News: "How can the South Korean authorities, which cannot do anything without the US's approval and instruction, play the role of mediator and facilitator?"

Meari added that the Moon administration had not taken any "practical measures to fundamentally improve inter-Korean relations," and is "walking on eggshells around its master, the US."

Chad O'Carroll, the founder of NK News and chief executive of the Korea Risk Group, said that North Korea's withdrawal also sent the message: "What's the point of [inter-Korean] talks when sanctions prevent practical cooperation?"

'Sad and unfortunate'

South Korea's vice minister of unification, Chun Hae-sung, told reporters that the withdrawal was "sad and unfortunate," and that Seoul will need time to figure out next steps, according to CNN.

"We regard such a withdrawal as very sad and unfortunate [and] we hope that the North will return shortly and hope that the liaison contact office will operate normally as soon as possible," Chun said.

A statement by Seoul's Unification Ministry also called the decision "regrettable," but ensured that South Korea would continue staffing the office, the AP reported.

The two Koreas had been hoping to revive a joint industrial complex in Kaesong that combined the South's capital and technical knowledge with the North's cheap labor, the AP reported.

But a reopening would require the US to make exceptions on its stiff sanctions on Pyongyang because the factory is near the Korean DMZ.