(News Focus) Harsh reality for N. Korean industrial zone

SEOUL, March 20 (Yonhap) -- South Korea's big dream of engaging North Korea
through a joint industrial complex operating on the North's soil is on the verge
of becoming a nightmare.
As Pyongyang repeatedly blocked border crossings to the Kaesong joint industrial
park just north of the heavily armed inter-Korean border this month, South
Koreans became more cautious about acknowledging the North a reliable business
partner.
Launched in 2003, the Kaesong Industrial Complex has been hailed as the most
high-profile inter-Korean cooperation project initiated by liberal South Korean
governments over the past decade.
But it has not been immune to North Korea's frequent brinkmanship, which led to a
2006 atomic test and the test-firing of ballistic missiles that landed in the
waters off Japan.
After the most recent developments, the industrial zone now appears poised to
become a political hostage. The North has used nearly every diplomatic chip
available to protest the hardline stance of conservative South Korean President
Lee Myung-bak, booting officials and severing lines of communication, and the
Kaesong complex is now the last one on the table.
For the second time this month, North Korea banned the transportation of raw
materials and finished goods to and from the park, putting 98 South Korean firms
that employ some 38,000 North Koreans at risk, despite officials' pleas.
"I strongly urged the North side to guarantee special treatment for firms at the
industrial complex," said Moon Chang-seop, chairman of an industry group
representing the South Korean firms at the border city, after returning home from
North Korea on Thursday.
Asked whether North Korea would commit to keeping the border open, Moon said the
North was "reluctant to give a direct answer."
On Friday, hundreds of South Koreans were again unable to enter the industrial
park.
Some firms are already expressing serious concerns that their businesses will be
put in jeopardy if the border is shut down again.
"As some buyers canceled future contracts in the wake of the travel ban, losses
have snowballed," an executive of a garment maker in the park said.
In a recent survey of 72 companies operating in Kaesong, 68 firms -- or 94
percent -- said they would be forced to stop production if Pyongyang closes the
border for a week.
At least for now, the Kaesong park will keep operating, but it is unclear what
kind of impact South Korean workers and firms at Kaesong can expect if the North
launches what it says a satellite early next month.
South Korea, the United States and Japan have warned that the North's planned
launch, which many outside experts believe is a cover for a long-range missile
test, would lead to U.N. sanctions.
Earlier in the day, an official at the South's Foreign Ministry said his
government is considering fully participating in a U.S.-led anti-proliferation
effort, the Proliferation Security Initiative, to protest the North's launch. The
move would further escalate military tension on the Korean Peninsula.
With the fate of hundreds of South Koreans in the Kaesong park at stake and
government-level relations with Pyongyang deadlocked, the Seoul government has
come under pressure to reconsider the park.
"North Korea has demonstrated that it can exert unreasonable political pressure
on the South by blocking entry into the complex and taking our citizens hostage,"
the Chosun Ilbo, the most widely circulated newspaper in South Korea, said in a
recent editorial.
"Our government must come up with a fundamental plan of action for the future of
the complex," it said. "As long as there is no pledge from North Korea that such
an incident will not be repeated, it will be difficult to promise its
continuation."
Still, most analysts have agreed that the North's recent provocations are
unlikely to lead South Korea closing the Kaesong park.
Kim Yeon-chul, an expert on North Korea at the Hankyoreh Peach Research Institute
in Seoul, said, "North Korea is unlikely to shut down the Kaesong park because so
many North Koreans work there."
For North Korea, the Kaesong park has been a major source of hard currency and
the only site where it can directly experiment with capitalism.
According to the Chosun Ilbo, the total payroll for North Korean workers at
Kaesong amounted to US$34 million a year. The North has also received $16 million
for renting the site over the next 50 years.
Some observers say South Korea must be patient because engagement will be one
part of a successful strategy in dealing with North Korea.
Andrei Lankov, associate professor at Kookmin University, said in his article for
the American Enterprise Institute that the Kaesong park is "extremely useful in
the long run."
"The objective of these interactions will not be to turn Kim Jong-il and his
henchmen into reformers, let alone democrats," Lankov said, saying that would be
"a fool's errand."
"Instead, the goal is gradually to undermine their control over society and
encourage pressure from below. Only through an active policy of subversion can
one hope to foster the social forces that in due time will be able to challenge
and perhaps replace the Kims' clique."
(END)