N. Korea scraps contracts with South on joint venture amid tension

N. Korea scraps contracts with South on joint venture amid tension
(ATTN: ADDS Seoul official's remarks for reason for delay, expert's quote)
By Kim Hyun
SEOUL, May 15 (Yonhap) -- North Korea said Friday that all contracts with South
Korea regarding a joint industrial venture are now void, accusing Seoul of being
"confrontational" in negotiations and suggesting Pyongyang may even shut down the
complex.

South Korea expressed "deep regret" and said it cannot accept the North's "very
irresponsible" decision.
The warning came after days of negotiations to set up official talks over the
joint venture in the North's border town of Kaesong ended with no breakthrough.
"We declare null and void the rules and contracts on the land rent, land use tax,
wages, all sorts of taxes, etc.," the North's Central Special Zone Development
Guidance General Bureau, which is in charge of the joint park, said in a
statement carried by the official Korean Central News Agency.
Pyongyang called for inter-Korean talks last month to discuss operations at the
Kaesong park -- the first dialogue proposal in more than a year. In the first
round April 21, North Korea demanded wage hikes and contract revisions.
The talks lasted only 22 minutes, as North Korea refused to discuss Seoul's major
concern -- the fate of a detained South Korean worker. The employee of Hyundai
Asan Corp., the South Korean developer of the joint park, was arrested in Kaesong
March 30 on charges of criticizing the North's political system.
North Korea sent a letter last week, urging Seoul to quickly set the date for the
second round.
Seoul's delegation traveled to Kaesong on Tuesday to arrange the next talks, but
differences on the agenda thwarted their efforts.
The South "responded to our sincere efforts with a confrontational stand at
last," the North's bureau said.
Seoul "delayed informing the north of the date for more than 20 days while
getting hell-bent on a racket of confrontation with the DPRK over an issue
outside the agenda," it said, referring to the matter of the detained worker.
Pyongyang will revise contracts to abolish "special favor" it has given South
Korean firms in Kaesong, such as low wages and free land use, the North's bureau
said.
"The enterprises and personnel concerned of the south side in the KIZ (Kaesong
Industrial Zone) should unconditionally accept the above-mentioned matters and we
do not care about them leaving the KIZ if they have no will to carry them out,"
it said.
"We can not show favor for an indefinite period to those who seek confrontation
with fellow countrymen," it said.
"This poses a fundamental threat to the stability of the Kaesong park, and we
make clear that it can never be accepted," Unification Ministry spokesman Kim
Ho-nyoun said.
"It is very irresponsible behavior," he said. The Seoul government needs time to
collect opinions from the firms in Kaesong, as the North Korean demand reflects
their direct interest, the spokesman explained.
Unification Minister Hyun In-taek earlier this week criticized the prolonged
detention as "an unwarranted violation of human rights."
North Korea said May 1 the South is raising the rights issue "without knowing
about the essence of the case." The detained worker, identified by his family
name of Yu, "malignantly slandered the dignified system of the DPRK (North
Korea)," the Korean Central News Agency said, without specifying charges.
Pyongyang has yet to give information about the current condition of the South
Korean. North Korea said Thursday that two American female journalists detained
on charges of illegally entering the country March 17 will stand trial on June 4.
U.S. Secretary of State Hillary Clinton said setting the trial date may lead to
"a resolution as soon as possible."
The Kaesong park, just an hour's drive from Seoul, is a major inter-Korean
reconciliatory symbol that was an outcome of the first inter-Korean summit in
2000 between then South Korean President Kim Dae-jung and North Korean leader Kim
Jong-il.
Despite its notable growth over the years, the joint venture has often fallen
victim to political aims. In the latest such case, North Korea banned South
Korean traffic to the joint park three times in March in protest of South Korea's
military exercise with the U.S.
Yang Moo-jin, a professor at the University of North Korean Studies in Seoul,
said Pyongyang further raised tension to pressure the Lee Myung-bak government
into changing its conservative policy.
"The warning is not to receive more money," he said. "The North is telling the
Lee government to choose -- continue its North Korea policy or lose the Kaesong
park."
In a similar tactic in January, North Korea declared the western sea border with
the South void.
More than 100 South Korean firms now operate at the Kaesong venture, producing
clothes, utensils, electronic equipment and other labor-intensive products with
nearly 40,000 North Korean workers.
South Korean firms pay about $70-$80 in monthly wages for each North Korean
employee, but the payment is directly wired to North Korean government accounts.
Pyongyang suspended dialogue with Seoul after Lee took office in February last
year, taking a tougher stance on North Korea's nuclear program and ending the
unconditional flow of economic aid to the North.
hkim@yna.co.kr
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