South Korea has notified Japan of its intention to dissolve a foundation set up as part of a 2015 agreement to resolve the long-standing issue of Korean "comfort women" who were forced to work in Japanese wartime military brothels, sources familiar with bilateral ties have said.
The move would signal a further souring of relations between the neighboring nations following a controversial South Korean Supreme Court ruling over forced labor at Japanese companies during World War II.
Jin Sun-mee, South Korea's minister of gender equality and family, is expected to formally announce the dissolution of the Reconciliation and Healing Foundation soon, sources said Friday.
The foundation was the centerpiece of a landmark agreement between the governments of Prime Minister Shinzo Abe and then-South Korean President Park Geun-hye to definitively resolve the issue.
It was put in charge of handing out cash payments to victims and their families from a ¥1 billion (about $8.8 million) fund provided by Japan, but had been inactive amid a public outcry in South Korea.
South Korean President Moon Jae-in told Abe in September that the foundation was not functioning as intended and suggested it may need to be discontinued.
According to the sources, South Korean officials at that point had already informed Japan in unofficial talks in Seoul of its plan to disband the organization.
Japan has expressed strong opposition to the plan, saying it goes against the 2015 deal and would deal a large blow to bilateral relations.
Ties have already been strained after South Korea's Supreme Court late last month ordered steel-maker Nippon Steel & Sumitomo Metal Corp. to compensate four South Koreans subject to forced labor during Japanese colonial rule.
Tokyo contends that the issue of compensation was resolved under a 1965 bilateral accord.