N. Korea scraps contracts with South on joint venture

N. Korea scraps contracts with South on joint venture
(ATTN: ADDS S. Korean money paid for Kaesong, businessman's quote, TRIMS headline,
MODIFIES lead)
By Kim Hyun
SEOUL, May 15 (Yonhap) -- North Korea said Friday it has scrapped all contracts
with South Korea regarding a joint industrial venture, accusing Seoul of being
"confrontational" and suggesting it 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.
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," the North's bureau said, referring to the matter of the
detained worker.
Pyongyang will unilaterally revise contracts to raise wages and land fees, and
South Korean firms that cannot accept them should leave, it 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.
The presidential office swiftly held a meeting to gauge North Korea's intentions.
"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.
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 welcomed the trial date as a possible
sign of their early release.
The Kaesong park, just an hour's drive from Seoul, is a major inter-Korean
reconciliatory symbol generated by the first inter-Korean summit in 2000 between
then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il.
More than 100 South Korean firms now operate at the venture, producing clothes,
utensils, electronic equipment and other labor-intensive products with nearly
40,000 North Korean workers.
Yoo Chang-geun, vice chairman of the Kaesong Industrial Council that represents
businesses investing in the zone, said it is "impossible to leave Kaesong"
because pulling out would result in enormous losses.
The South Korean government and firms injected US$26.86 million to develop the
park that opened in late 2004, according to the Unification Ministry. The firms
paid about $26 million in wages last year.
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."
Lee Su-seok, an analyst with the state-run Institute for National Security
Strategy, said North Korea wants more cash from the South, but it is willing to
sacrifice the profitable venture for political aims.
North Korea's hard-line military has been displeased with the joint park, where
routine day-to-day contact between South Korean managers and North Korean
employees has caused capitalist influence to filter in, Lee said.
Inter-Korean relations rapidly soured after the conservative Lee took office in
February last year. Lee took a tougher stance on North Korea's nuclear program
and ended the unconditional flow of economic aid to the North pursued by his
liberal predecessors for a decade.
Pyongyang suspended government-level dialogue and reunions of families separated
by the Korean War.
hkim@yna.co.kr
(END)