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.
(END)