President Moon Jae-in's packed schedule for the G20 Summit in Osaka has an unwanted gap a gap that was supposed to be filled by a meeting with Japanese Prime Minister Shinzo Abe.
According to a senior Blue House official, South Korea proposed holding bilateral talks, but heard nothing back from Japan.
Bilateral relations have deteriorated sharply since Seoul's Supreme Court ordered Japanese companies last year, to compensate Korean victims of forced labor during Japan's colonial rule.
Japan has repeatedly called for an arbitration panel involving a third party, to which South Korea is yet to respond.
South Korea has also recently proposed settling the wartime labor dispute through a joint fund between companies from both countries, to compensate the Korean victims, but this was also rejected by Japan.
Observers have speculated that this is the reason Abe has decided not to arrange the talks.
But this leader-to-leader meeting was seen as the best chance the two sides had, to narrow their differences on the issue.
"With diplomacy moving with the Blue House at the center and with all authority given to President Moon, the president needs to be the one solving this issue. We can't say that the top-down approach is the best way, but this situation can no longer be resolved at the working level. The leaders have to meet and solve it."
Observers say that the government could seek to hold a summit after Japan's upper house election on July 21.
This is out of the belief that Prime Minister Abe is unable to be flexible ahead of the election, when it comes to the sensitive political issue of South Korea-Japan relations.
But the senior official also says the possibility of a one-on-one in Osaka cannot be ruled out completely.
If Japan requests to meet on the spot, the official says that the top office will accept.
But seeing that sufficient time and preparations are needed for the meeting to provide a tangible answer to the strained South Korea-Japan relations, the anticipated breakthrough could be unlikely even if an informal meeting does take place.
Park Hee-jun, Arirang News.