The proposal by the president, Moon Jae-in, included joint economic zones along the North-South border, a linked rail network and other steps.
If implemented, they could significantly ease tensions along the world’s most heavily fortified frontier, which has divided the two Koreas for more than seven decades.
But Mr. Moon’s proposal, dangled as a lure for the North to start denuclearizing, also raised the risk of going well beyond what his country’s most important ally, the United States, is prepared to do.
Despite the goal of denuclearization pledged at the June summit meeting between President Trump and Kim Jong-un, the North Korean leader, Mr. Kim has taken no meaningful steps toward that goal, an increased source of friction with the United States.
Mr. Moon announced his proposal during a speech commemorating National Liberation Day, the end of Japan’s colonial rule over a then-unified Korea with the Allied victory in World War II. He framed the proposal as a way for both Koreas to move forward.
“We must overcome division for our survival and prosperity,” Mr. Moon said.
“Even though political unification is still far away, building a single economic community first by settling peace and freely traveling back and forth between the two Koreas will become genuine liberation for us.”
He also suggested that South Korea should be a leader, not a spectator, in resolving the dispute between North Korea and the Trump administration over the North’s nuclear weapons.
“It is important to recognize that we are the protagonists in Korean Peninsula-related issues,” Mr. Moon said. “Developments in inter-Korean relations are not the by-effects of progress in the relationship between the North and the United States. Rather, advancement in inter-Korean relations is the driving force behind denuclearization of the Korean Peninsula.”
That appeared to be a subtle but contentious shift in South Korea’s role in the diplomacy around the North’s nuclear weapons. The South and the United States have both said that their relations with the North will develop at roughly the same pace.
But Secretary of State Mike Pompeo has said there will be no sanctions relief on North Korea until denuclearization is complete. American officials also have said the signing of a peace treaty with North Korea to replace the armistice that halted the 1950-53 Korean War — a basic demand of Mr. Kim’s — will not happen before the North denuclearizes.
When Mr. Kim met with President Trump in Singapore two months ago, the leaders adopted a broad, vague agreement on improving bilateral relations, building what they called a peace regime on the Korean Peninsula and denuclearizing it.
But talks between Washington and Pyongyang are deadlocked over differences about how denuclearization should proceed. Meanwhile, the Koreas have been laying the groundwork for improving their relationship on multiple fronts.
Next week, North and South Korea plan to hold another of the periodic reunions of families that were separated during the Korean War of 1950-53. Next month, Mr. Moon is expected to visit North Korea for his third summit meeting with Mr.Kim.
Mr. Moon has bet his political fortunes on resolving the standoff over the North’s nuclear weapons. In his first two meetings with Mr. Kim in April and in May, he came away with an agreement to ease military tensions on the border and boost economic cooperation. Both sides have since conducted field studies on linking their rail networks.
But the stalemate in the US-North Korea talks risks stalling the overall diplomatic momentum that Mr. Moon helped to create. Domestically, his approval ratings have slipped in recent weeks, as some of the euphoria in the South over the two summits with Mr. Kim has dissipated.
For weeks, North Korea has been accusing Mr. Moon of dragging his feet on implementing the inter-Korean agreements, suggesting that he is doing so at the Americans’ bidding.
But if Mr. Moon carries inter-Korean relations too far without the North’s denuclearization, he will contradict American policy. His conservative political opponents in South Korea have already accused him of playing into a North Korean strategy of driving a wedge between Seoul and Washington.
On Wednesday, Mr. Moon said economic cooperation with the North could begin in earnest only when “peace is established on the Korean Peninsula along with complete denuclearization.” But he also said he would “build a relationship based on deeper trust between the two Koreas” and “simultaneously lead efforts to promote dialogue on denuclearization between North Korea and the United States.”
He reaffirmed that he and Mr. Kim want the United States to join them in jointly declaring an end to the Korean War as a confidence-building measure. Washington says the North must start dismantling its nuclear program before that symbolic gesture, which would precede a formal peace treaty replacing the armistice of 1953, can be made.
While the American focus in talks with the North is on nuclear weapons, South Korea has a broader agenda. Besides its interest in a lasting peace with its neighbor, the South also sees economic exchanges as a potential source of growth and jobs, with its own economy losing momentum and its youth unemployment at a record high.
On Wednesday, Mr. Moon said linking the two Koreas’ rail networks would make it easier for South Korean exports to reach China, Russia and Europe, and for Russian gas and oil to reach South Korea. His government hopes to hold groundbreaking ceremonies this year for connecting inter-Korean highways as well as railroads, but it is unclear when traffic could actually start flowing across the border.
Mr. Moon also proposed establishing “special unification economic zones” along the border once military tensions ease further. Two similar joint projects, both in North Korea — a factory park in the border town of Kaesong and a tourism project at Mount Kumgang — were shut down years ago at moments of high tension between the Koreas.
Since the April summit, the Koreas have discussed a variety of exchanges, including basketball games and soccer matches. They have also agreed in principle to shut down, on a trial basis, some military guard posts within the heavily fortified Demilitarized Zone along the border, Mr. Moon said on Wednesday. And they plan to open a joint liaison office in Kaesong, home to the defunct factory park.
Cheong Seong-chang, a senior analyst at the Sejong Institute near Seoul, said Mr. Moon’s economic vision might look “too idealistic” but that he was being far more aggressive than any of his predecessors about genuinely engaging the North.
But not everyone welcomed the latest announcements. “The aspiration to resume inter-Korean projects I found counterproductive,” said Lee Sung-yoon, a professor of Korean studies at Tufts University. “It will please Pyongyang, yes, but only make Washington wary. Moon’s message was, ‘Don’t stand in our way as we try to resume Mount Kumgang and Kaesong.’ ”