News Focus) N. Korea keeps dialogue open for joint park amid U.N. sanctions

(By Kim Hyun
SEOUL, June 19 (Yonhap) -- North Korea agreed to meet again and even offered a
small olive branch to South Korea in Friday's talks over a joint industrial park,
a gesture suggesting it intends to keep the cash cow amid sharpened international
sanctions, watchers said.

Pyongyang's growing confrontation with the outside world raised fears it would
try to shut down the business park as a form of retaliation, but there was more
to consider, they said.
The two sides made no progress over key issues, as Pyongyang refused to release a
detained South Korean worker and insisted on steep hikes in wages and rent at the
joint park on its soil. But new proposals were exchanged, and the next meeting
was set for July 2.
North Korea offered to lift a traffic curfew on South Koreans traveling to the
park. It also allowed a 40-minute speech by South Korea's delegation, compared to
its earlier blunt refusal to permit such presentations.
Koh Yu-hwan, a North Korea studies professor at Dongguk University, said the
business park now means more than ever to North Korea's cash-strapped economy
after the U.N. Security Council entirely banned its weapons trade and most of its
arms imports to punish it for its May 25 nuclear test.
"North Korea is in a difficult economic situation. Other sources of dollar income
have mostly been suspended," Koh said. South Korean firms paid US$26.8 million in
wages to the North Korean government last year, nearly twice the $13.8 million it
received in 2007.
With hundreds of South Koreans and cargo trucks crossing the heavily fortified
border every day, the joint park is also a security buffer for the two Koreas,
which are technically at war, Koh noted. The 1950-53 Korean War ended in an
armistice, not a peace treaty.
"Both South and North Korea are co-dependent on the Kaesong park. It is difficult
for either of them to take a unilateral action. The joint park was introduced for
such purpose of co-dependence," he said.
The Kaesong venture, just an hour's drive from Seoul, opened in 2004 as an
outcome of the first inter-Korean summit between then President Kim Dae-jung and
North Korean leader Kim Jong-il four years earlier. Initially hailed a win-win
idea for the North's frail economy and the South's small firms, the venture faced
growing uncertainty as political relations rapidly chilled after conservative
President Lee Myung-bak took office in Seoul last year.
In April, North Korea declared all contracts governing the park "null and void,"
protesting Lee's conservative policy.
In a sign of growing stress on businesses, a clothing firm pulled out this month
in the first withdrawal from the Kaesong park. The venture currently hosts 105
firms making clothes, kitchenware, electronic equipment and other labor-intensive
goods with about 40,000 North Korean workers.
Friday's talks were held amid growing tensions over the North's nuclear and
missile activities. The U.N. Security Council adopted Resolution 1874 to sharpen
financial sanctions and allow searches of North Korean vessels suspected of
carrying missile and nuclear materials. In response, Pyongyang vowed to bolster
its nuclear deterrence and threatened a "military response" in case of search
attempts.
In a summit with U.S. President Barack Obama, Lee sounded unusually tough. He
hinted at a possible pullout from the joint park, saying "we cannot really know
what will happen if they continue on this path." He pledged to pursue
reunification with the North "on the principles of a free democracy and a market
economy."
Yoo Ho-yeol, a North Korean studies professor at Korea University, believes Lee's
messages were "hard to accept more than ever for North Korea," but it chose to
wait out rather than immediately retaliate.
Cho Myung-cheol, a former economics professor at Pyongyang's Kim Il Sung
University and now a think tank analyst in Seoul, said North Korea may lower its
demands to expedite an agreement.
North Korea demanded South Korean firms quadruple monthly wages for local workers
to US$300 from the current $70-$80. Pyongyang also wants $500 million for the
50-year rental fee for land. South Korean developers already paid $16 million in
rent when the park opened.
"As long as the amount is bigger than what it is getting now, North Korea can
settle for less," he said. "North Korea won't give up the Kaesong industrial
park, especially now that it faces U.N. sanctions."
hkim@yna.co.kr
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