North Korea Pulls Out of Factories It Runs With South

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SEOUL, South Korea -- North Korea said on Monday that it was withdrawing all its 53,000 workers from an industrial park jointly run with South Korea, casting doubt on the future of the last remaining symbol of inter-Korean reconciliation.

The Kaesong industrial complex, in the North Korean border town of the same name, operated for eight years despite political and military tension, including the North Korean artillery attack on a South Korean island three years ago. North Korea's decision to withdraw its workers, although it called the move temporary, presented the most serious challenge to its viability.

North Korea "will temporarily suspend the operations in the zone and examine the issue of whether it will allow its existence or close it," the country's official Korean Central News Agency quoted Kim Yang-gon, a secretary of the Central Committee of the North's ruling Workers' Party of Korea, as saying after visiting Kaesong on Monday. The North's final decision will depend on the Seoul government's attitude, he said, making it clear that Pyongyang was using the future of the factory park to pressure Seoul for political concessions.

South Koreans had hoped that the North's growing dependence on the complex as an important source of hard currency would provide Seoul with leverage on the North's recalcitrant leadership and a possible buffer against military conflict. But the North's decision on Monday indicated that Pyongyang was subordinating financial gains to political and military priorities in the crisis, analysts said.

Hours earlier, South Korea said it had no intention of talking with North Korea. Doing so amid a torrent of North Korean threats to attack Seoul and the United States with nuclear weapons would be tantamount to capitulation and would only embolden the North's brinkmanship, officials here said. "If the Kaesong project is stopped and we have to pull our workers completely, it will be a tremendous setback to South-North relations," Unification Minister Ryoo Kihl-jae of South Korea said during a parliamentary hearing. "If we can bring about concrete results through dialogue, perhaps we will swallow our pride and start dialogue, but this is not such a time."

"We don't need photo-ops or talks for talk's sake," he said.

North Korea has blocked South Korean managers and cargo trucks from crossing the heavily armed border to Kaesong for six days to protest United Nations sanctions and joint military drills that the United States and South Korea are conducting on the Korean Peninsula. The blockade quickly dried up the fuel, food and raw materials for 123 South Korean factories there, forcing 20 of them to stop operating as of Monday, even before the North's decision to pull out its workers.

More than 470 South Koreans remained in Kaesong on Monday, hoping that the North would lift the blockade. Long lines of South Korean trucks loaded with supplies for the Kaesong factories were stalled at the border on Monday, waiting in vain for the North to let them cross.

For nearly a decade, the complex, where South Korean factories hired North Korean workers and the North's Communist authorities experienced the first taste of South Korean capitalism, has been held up as a test case for how reunification of the two Koreas might look. The factories, near the western edge of the border, produced $470 million worth of textiles and other labor-intensive products last year.

As relations deteriorated in recent years, however, the factory park has also become controversial in South Korea. Some conservative South Koreans argued that the complex, which generates $90 million a year in wages for the 53,000 North Koreans employed there, helped undermine the impact of United Nations sanctions by extending a lifeline to the North Korean regime, which the South blamed for the island attack and the 2010 sinking of a South Korean warship that killed 46 sailors.

North Korea's threat this month to close the complex was met with skepticism from some news media analysts who indicated that the North's leader, Kim Jong-un, would not want to risk an important source of hard currency. North Korea was enraged, claiming on Monday that it "gets few economic benefits from the zone while the South side largely benefits from it."

Mr. Kim "is not accountable to his people, and thereby can afford to raise tension almost indefinitely at a great cost to his own people," said Lee Sung-yoon, a North Korea specialist at the Fletcher School of Law and Diplomacy at Tufts University in Massachusetts, recalling that the government did not change its policy even after a famine killed an estimated 10 percent of its population in the mid-1990s.

Jang Sung-min, a North Korea expert at the World and Northeast Asia Peace Forum in Seoul, noted that the decision to pull out North Korean workers was announced not by the hard-line military but by Kim Yang-gon, who is in charge of relations with Seoul.

"This is a shocking way of forcing South Korea to offer dialogue with the North," Mr. Jang said. "I don't think Kim Jong-un wanted to lose the project."

South Korea "deeply regrets" the North Korean move, the Seoul government said in a statement.

"North Korea will be held responsible for all the consequences," it said. "We will calmly but firmly handle North Korea's indiscreet action, and we will do our best to secure the safety of our people and the protection of our property."

North Korea has issued a daily barrage of bellicose language since early March, denouncing the United States and South Korea for the joint military drills and for spearheading the United Nations' sanctions after a nuclear test in February, its third.

In the past week, North Korea appeared to move beyond just talk. It told foreign embassies in Pyongyang to consider evacuating their personnel because of rising tensions, and it moved one of its medium-range missiles to its east coast for a possible test launching, which South Korea said could happen as early as this week.

On Monday, South Korean officials reported activities at North Korea's main nuclear test site, but said it was too early to tell whether the country would conduct another underground nuclear test despite escalating tensions. North Korea detonated a nuclear device on Feb. 12 inside one of the two tunnels it was believed to have prepared in its main test site in the northeastern of the country.

South Korea has lately detected vehicle, cargo and personnel movements around the entrance of the other unused tunnel, officials here said. "For now, we don't see them as an indication of a nuclear test," said Kim Min-seok, a spokesman of the Defense Ministry. "But since they prepared both tunnels for the last test, we believe that once North Korea makes up its mind, it can conduct another nuclear test any time."

The measured statement came as South Korean officials were still unsure whether North Korea intended to push ahead with another nuclear test, which would lead to more United Nations sanctions and aggravate tensions, or whether it was posturing to draw Washington and Seoul back to the negotiating table.

"How far can they take this?" asked Kim Yong-hyun, a professor of North Korean studies at Dongguk University in Seoul, saying that the prolonged standoff between Pyongyang and the United States and South Korea carried a considerable political and economic risk for both Koreas.

The closure of the Kaesong complex was also a blow to factory owners who have invested millions of dollars during the years when Seoul pushed for economic cooperation as a way to encourage political reconciliation. Faced with the prospect of closing their factories, they urged the government to start talks with Pyongyang to defuse tensions.

Although the Kaesong operation accounts for an almost inconsequential portion of the South Korean economy, its trouble highlighted prolonged geopolitical tensions that have shown signs of hurting investors' confidence.

South Korea has spent nearly $1 billion to build the factory park, which was begun under an agreement reached at the historic inter-Korean summit in 2000. It has remained the last economic link between the two Koreas after the South cut off other trade ties after the sinking of the navy ship in 2010. Nearly 820,000 people and a half-million cars from the South have crossed the sealed border to travel there since 2005.

The industrial complex is also the biggest employer in Kaesong, the North's third-largest city. Its closing would affect the lives of 200,000 to 300,000 people in the area, South Korean analysts estimated.

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This article originally appeared in The New York Times.


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