South Korean President Moon Jae-in will not visit Japan for the Tokyo Olympics, the presidential Blue House in Seoul announced Monday, ending the prospect of bringing Moon together with Prime Minister Yoshihide Suga for their first in-person summit.

Although Tokyo-Seoul ties would take a hit from the decision, the South Korean side emphasized the two sides had held “meaningful discussions” on the visit, a possible sign of progress in repairing their damaged relationship.

Still, the move was also expected to have wider implications, putting a damper on U.S. efforts to bring its two allies closer as Washington seeks to create a united front in taking on Chinese assertiveness and reining in North Korea’s nuclear ambitions.

Speaking to reporters after the announcement, Suga thanked Moon for wishing Japan a successful Olympics, adding that he hoped to continue to see improving ties between the two countries.

"In order to restore healthy Japan-South Korea relations, I would like to communicate with the South Korean side based on Japan's consistent position," he said.

Moon had voiced his desire to attend the Games’ opening ceremony, scheduled for Friday, while also holding talks with Suga, and the two sides had held consultations discussing such a move.

However, the Blue House said that although the two countries "had meaningful discussions on progress regarding historical issues and future-oriented cooperation," producing a “significant level" of mutual understanding, progress was still deemed "insufficient” in terms of the two sides reaching any kind of breakthrough.

Moon’s office also noted that a number of other issues had been considered when coming to the decision to refrain from visiting Japan.

Plans for the Moon visit had hit a snag over the weekend, when a senior Japanese diplomat made disparaging remarks about the South Korean leader, comparing his efforts to improve ties with Tokyo to “masturbating.” The diplomat, the deputy chief of mission, reportedly admitted to making the remarks, retracting them during a meeting with the Japanese ambassador.

On Saturday, South Korean Vice Foreign Minister Choi Jong-kun had summoned Japanese Ambassador Koichi Aiboshi to protest the remarks, demanding that Tokyo “promptly take tangible and due steps to prevent a recurrence of such a situation.”

Later Monday, a Blue House official was quoted as saying that the remarks had affected Moon's decision not to visit Tokyo, the Yonhap news agency reported.

"We had to consider that public sentiment and the internal mood of the Blue House (regarding the issue of Moon's Japan visit) turned skeptical (following the report)," Yonhap quoted the unidentified official as saying.

Asked about the remarks Monday, Suga called them “inappropriate” and “regrettable.” It was not clear what would happen to the senior diplomat, but the Yomiuri newspaper reported that Japan was planning to replace him.

The highly anticipated meet-up, taking advantage of a global athletic event that has been touted as “a festival of peace,” would have come at a time when bilateral relations between the two neighbors have no immediate prospect for improvement.

Ties between the two countries have been strained amid a series of tit-for-tat moves over court cases involving wartime labor and so-called comfort women — who suffered under Japan’s military brothel system — during Japan’s 1910-1945 colonial rule of the Korean Peninsula.

The bilateral relationship, which has at times been turbulent, became particularly tense in the aftermath of 2018 South Korean Supreme Court rulings that ordered Japanese firms to pay compensation for wartime labor. The judicial decision contradicted Tokyo's view that a key 1965 pact settled all post-colonial compensation issues, covering both comfort women and wartime labor.

The ruling unleashed a subsequent tit-for-tat fracas, with Tokyo tightening controls on exports of certain chemicals to South Korea and Seoul threatening to terminate a key military-intelligence sharing pact.

The continued division also highlights the challenge facing U.S. President Joe Biden as he seeks to help bridge the gap between the two American allies, which Washington views as crucial in not only Washington’s larger strategic battle with China but also in making progress on the North Korean nuclear issue.

Moon’s decision also comes as U.S. Deputy Secretary of State Wendy Sherman is due to visit Japan and South Korea, as well as Mongolia, to meet with Japanese Vice Foreign Minister Takeo Mori and South Korean Vice Foreign Minister Choi on Tuesday. Mori and Choi are also scheduled to hold bilateral talks later that day.

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