SEOUL, April 26 (Yonhap) -- The very survival of a joint factory zone in North Korea that has been billed as the last remaining symbol of inter-Korean cooperation is in doubt after South Korea decided Friday to withdraw all of its workers there, analysts said.
In one of its latest moves that drastically escalated cross-border tensions, North Korea on April 9 pulled all of its 53,000 workers from 123 South Korean companies operating at its border city of Kaesong.
After its proposal for dialogue was turned down by North Korea, South Korea on Friday said it will pull out all of its 175 workers remaining in Kaesong.
The tit-for-tat followed near-daily threats of war by North Korea after it conducted its third nuclear test in February. The North was particularly enraged by annual joint South Korea-U.S. military exercises that began in early March and will continue through April.
"North Korea may confiscate assets of the 123 companies in Kaesong as they did in 2008 at Mount Kumgang," a North Korea affairs expert in Seoul said, referring to a cross-border sightseeing tour to the North's mountain resort.
After one of its tourists was shot dead by a North Korean soldier at the resort, South Korea stopped the tour, which led the communist country to seize all South Korean investment there, including hotels, amusement facilities and a golf course.
Since the Kaesong joint factory zone was opened in 2004 as a symbol of inter-Korean cooperation, South Korea has poured nearly US$ 1 billion into it. Using cheap North Korean labor, South Korean investors have so far produced about US$1 billion worth of garments, wrist-watches and other labor-intensive goods there. In return, the North earned $245 million in wages.
The South Korean decision to pull out its workers, announced by Unification Minister Ryoo Kihl-jae in a televised news conference, is tantamount to discontinuing the Kaesong project, according North Korea analysts.
North Korea watchers say that tension over Kaesong could rise further as Pyongyang may respond with tough actions of its own in reprisal.
South Korea then may respond by cutting off electricity supply to the factory zone, they added.
One expert says that if Seoul pulls out its workers from Kaesong, to which the North responds by shutting down the zone for good, it will be hard to restart it in the foreseeable future.
He also speculated that the closure of the complex and the potential rift in tensions that can be caused will make it difficult for the incumbent Park Geun-hye administration to push forward its trust building policy, her key campaign pledge since last year's presidential election.
Reflecting this view, Lee Tae-ho, the secretary general of the People's Solidarity for Participatory Democracy, said that the Seoul government should have been a little more patient to lure North Korea to the dialogue table.
"The North was wrong to ignore the proposal for talks, but Seoul could have waited a little longer," he said, adding that closure of the complex can mean considerable financial losses as well for the North.
"Counting the number of North Korean workers and their dependents, Kaesong supported roughly 200,000 people in the communist country," a Seoul government official said. This could pose a serious problem for the impoverished nation and its leadership, he said
If the Kaesong zone is closed, North Korea would face a serious problem attracting foreign investment that is vital for its economic revival, he added.
Because of many underlying problems, there are speculations that the two Koreas may try to reach some kind of agreement about Kaesong at the last minute, according to analysts.