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2009/03/19 10:34 KST
NORTH KOREA NEWSLETTER NO. 46 (March 19, 2009)

   *** TOPIC OF THE WEEK (Part 1)

North Korean Border Closures Threaten Future of Kaesong

SEOUL (Yonhap) -- North Korea jeapordized normal operations at an inter-Korean industrial complex inside the country after its military closed the shared border with the South for the second time in 10 days.

   The move, which stranded hundreds of South Korean workers at the complex located 10 kilometers north of the border, came amid heightened tensions as a joint military exercise between U.S. and South Korean forces got underway in the South. Pyongyang has blasted the "Key Resolve" drill as a "war rehearsal."

   The border was partially reopened on March 16 to allow the South Korean workers to return South and was fully reopened the following day, bringing in much needed supplies to factories in Kaesong that warned of a production stoppage due to the closure. Cargo traffic to the complex had been banned since March 13, putting a major strain on factories there.

   Uncertainty lingers, however, about whether the border will remain open as the North provided no reason for its second closure. The first came on March 9 when Pyongyang announced it was cutting off a final military communication channel with Seoul that is used to notify the North of all border traffic to and from the complex. The border was reopened a day later but closed again on March 13 without explanation. Seoul's Unification Ministry warned that the crossing was still "very unstable" and encouraged firms to minimize border trips.

   The ministry said on March 18 that North Korea hand-delivered a letter to the South giving approval for 739 South Korean workers and managers to visit Kaesong and 485 to return. Concern about the future of operations at the complex remain, however, as managers weigh the consequences of the supply shortage caused by the closure. "North Korea's delay and blockade of passage is very regretful," ministry spokesman Kim Ho-nyoun said two days earlier. "We make it clear all responsibility for this incident, including breaks in production and economic losses, lie with North Korea." North Korean employees were also forced to take leave because of the closure.

   The Kaesong venture is the only major inter-Korean reconciliatory project that remains intact, an outcome of the first inter-Korean summit in 2000. Other projects -- including tours to the North's scenic Mt. Kumgang and historic sites in Kaesong, an ancient Korean capital -- have all been suspended as political relations have deteriorated since the inauguration in Seoul of conservative President Lee Myung-bak. Ninety-three South Korean firms operate in Kaesong, employing about 39,000 North Koreans who produce clothes, watches, kitchenware, electronic equipment and other labor-intensive goods. Their combined output was US$250 million last year.

   The North Korean government received US$26.8 million in wages from South Korean firms last year, according to ministry data, a sizable amount compared to the North's estimated overall export volume of $4 billion. South Korean firms pay $70 to $110 a month for each North Korean worker, which is deposited directly into government accounts.

   Analysts say the North's move was intended as a protest against the joint South Korean-U.S. military drill and Seoul's continued hardline policy against it. Cho Bong-hyun, a North Korea analyst with South Korean major lender IBK, said North Korea may take risks with the profitable complex to pressure the Lee Myung-bak administration into dropping its tough policy. "North Korea could give up economic benefits for political gain, given the nature of the regime," Cho said. "It wants to show which side is going to suffer more from damaged political relations."

   Yoo Ho-yeol, a political science professor at Korea University, echoed that view. "For the North Korean military, its priority is not the stable operation of the Kaesong industrial complex but letting South Korea and the United States know its complaints."

   There could also be discord between the North's hardline military and inter-Korean decision-making bodies in Pyongyang about how to handle the joint complex, said Koh Yu-hwan, a North Korean studies professor at Dongguk University in Seoul. "The North Korean military took the action, not considering the civilian business aspect of the complex. My view is that there wasn't a general consensus inside North Korea," Koh said.

   North Korea cut off the last remaining official phone and fax channel with South Korea on March 9, denouncing the March 9-20 joint exercise as a rehearsal for a "second Korean War." It also warned that it would not guarantee the safety of South Korean passenger jets in its airspace while the annual joint exercise is underway.

   North Korean media made no mention of the border closure, but repeated its denunciations of President Lee Myung-bak's policy. "The reality clearly proves that inter-Korean ties will never be improved as long as such most wicked confrontational maniacs, traitors to the nation as Lee stay in power," Rodong Sinmun, the official newspaper of the ruling Worker's Party, said in a commentary on March 16.

   "North Korea sees the Key Resolve drill as the consummation of the South Korean-U.S. hostile policy toward it," Hong Ihk-pyo, an analyst with the Korea Institute for International Economic Policy in Seoul, said. "But it doesn't want to be seen as holding civilians," he added. "North Korea's goal is neither detaining civilians nor shutting down the Kaesong complex. It wants to tell South Korea that everything will remain unstable as long as the hostile relations continue."

   South Koreans are divided about the future of the Kaesong complex. According to a survey of 1,000 people commissioned by the ministry, 47 percent of respondents said Seoul should immediately start dialogue with Pyongyang to resolve tensions, while 45 percent backed shutting down the Kaesong complex should North Korea fail to guarantee the safety of South Korean workers. Government officials refrained from contemplating a possible shutdown of the Kaesong complex, but conservative calls for Seoul to toughen up grew.

   Seoul officials remain without a direct means of contact with North Korea as the communication line remains severed, limiting ways to determine Pyongyang's motives. South Korean officials now communicate with North Korea through a commercial phone line owned by South Korean fixed-line operator KT Corp., and the North responds via hand-delivered letters. Seoul's point man on North Korea, however, ruled out closing the joint industrial park. Unification Minister Hyun In-taek said on March 18 that his government is not considering closing the complex despite lingering uncertainty over border stability.

   "We are not considering shutting it down," Hyun said in a forum with journalists in Seoul. "Our government's position is that the Kaesong industrial complex should be developed in a stable manner," he said. "If North Korea continues to... cause losses to our companies and creates an environment that is worrisome to outside investors, the complex will not develop," he said. "North Korea should not repeat this behavior."

   The minister also hinted that Seoul has no plans to immediately resume the suspended tours to the North's scenic Mt. Kumgang. The Kumgang tours "can resume when there is a common sense understanding that the life and safety of our citizens is guaranteed," Hyun said. Seoul suspended the tour program to Mt. Kumgang after a South Korean tourist was shot and killed by a North Korean soldier while strolling in the mountain resort last July. North Korea refused to allow South Korean investigators to visit the site.