South Korea's point man on North Korea blamed the communist state's leaders on Thursday for icy cross-border relations, accusing them of blunders both at home and abroad.
Unification Minister Hyun In-Taek said the North has only itself to blame for its international isolation.
Tensions are high after the South accused the North of torpedoing a warship -- an accusation furiously denied by Pyongyang, which on Wednesday threatened a "do or die" battle in response to any censure at the United Nations.
"North Korea argues this (soured relations) happened because of our hardline policy, but the North Korea policy of our government is one based on engagement and embracement," Hyun told business executives in the western city of Incheon,
"Strained relations were not caused by our policy but by their mistakes."
Hyun said "three major mistakes" by the North led to the current situation: rebuffing the South's offer to rebuild the North's economy, taking a hardline approach with the new US administration, and failing to understand its own crumbling economy.
The minister said the failed currency revaluation that the North implemented last November demonstrates its inability to feed its people.
The revaluation -- seen as an attempt by the regime to crack down on private business -- worsened food shortages and sparked rare public unrest, according to widespread reports.
In a separate speech Hyun said the increasing number of North Koreans fleeing their homeland illustrates its problems.
"It teaches us what we should prepare for the future," Yonhap news agency quoted him as saying, without elaborating.
The minister was speaking at a ceremony marking the 11th anniversary of the opening of Hanawon, a training centre for refugees at Ansan south of Seoul.
More than 18,000 North Koreans have found their way to the South since the 1950-53 war, the vast majority in recent years.
Relations have worsened since South Korean President Lee Myung-Bak took office in February 2008. He offered the North massive economic aid if it scrapped its nuclear weapons programme, a condition which infuriated Pyongyang.
The South announced its own non-military reprisals after a multinational investigation team concluded that a North Korean submarine sank the warship in March with the loss of 46 lives.
It also asked the UN Security Council to censure Pyongyang, but permanent council members China and Russia have not publicly accepted the North's guilt.
The North has threatened a military response to any censure.
If the council adopts a document "pulling up (North Korea) even a bit through sordid collusion and nexus," the North will regard this as "an intolerable and grave infringement" on its dignity, a state body said on Wednesday.
The army and people "will not rule out a just, do-or-die battle to protect the sovereignty of the country," the Committee for the Peaceful Unification of the Fatherland said.