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N Korean workers 'no-show' at Kaesong

09 April 2013, 09:03

Seoul - North Korean workers failed to report to work on Tuesday at the joint Kaesong industrial zone with South Korea after Pyongyang suspended operations, upping the pressure on Seoul in an escalating military crisis.

"As of now, no North Korean workers have reported to work this morning," said a spokesperson for the South's Unification Ministry.

North Korea announced it was taking the unprecedented step of temporarily shutting Kaesong down on Monday, following a tour of the zone by senior ruling party official Kim Yang-Gon.

Some 53 000 North Koreans work for the 123 South Korean companies set up in Kaesong, which was established in 2004 and lies 10km inside North Korea.

After pulling out the workforce and temporarily suspending operations, Pyongyang will "examine the issue of whether it will allow its existence or close it," Kim said.

A rare symbol of cross-border economic co-operation, Kaesong is a crucial hard currency source for the impoverished North, through taxes and revenues, and from its cut of the 53 000 workers' wages.

Turnover in 2012 was reported at $469.5m, with accumulated turnover since 2004 standing at $1.98bn.

Kaesong faces bankruptcy

The complex has never been closed before, and Pyongyang's move reflects the depth of the current crisis on the Korean peninsula, which has otherwise been more notable for rhetorical mud-slinging than substantive action.

South Korean President Park Geun-Hye said the North's action was "very disappointing" and displayed a total disregard for investment norms that would haunt Pyongyang in the future.

"If North Korea, under the full eyes of the international community, breaches international rules and promises like this, then there will be no country or company which will invest in North Korea," Park said.

Pyongyang has blocked South Korean access to Kaesong since Wednesday, forcing 13 South Korean firms to halt production.

Yu Chang-Geun, vice president of the association representing the South Korean companies, said operations would have to be normalised swiftly to prevent permanent collateral damage.

"All firms have reached their limit. If things go on like this, all of us would face bankruptcy," Yu said.

Pyongyang’s dignity affronted

South Korean stocks were trading flat on Tuesday, with analysts saying the situation in Kaesong had already been factored in.

The US State Department said permanent closure of the complex would be "regrettable".

Announcing the suspension of operations, Kim Yang-Gon said Kaesong's future was entirely dependent on "the attitude of the South Korean authorities".

The North has indicated that South Korean media reports that it would never dare close Kaesong had affronted Pyongyang's "dignity".

It also took particular exception to comments by the South's defence minister last week that Seoul had a "military" contingency plan to ensure the safety of its citizens in Kaesong.

More than 300 South Koreans have left Kaesong and returned to the South since North Korea banned access last week.

Of the 475 remaining, the Unification Ministry said 77 had signed up to leave on Tuesday.

Missile launch-test

The Korean peninsula has been locked in a cycle of escalating military tensions since the North's third nuclear test in February, which drew toughened UN sanctions.

Pyongyang's bellicose rhetoric has reached fever pitch in recent weeks, with near-daily threats of attacks on US military bases and South Korea in response to ongoing South Korea-US military exercises.

South Korean media on Monday had cited intelligence reports of stepped-up activity at the North's Punggye-ri nuclear test site, but the defence ministry said the movement was routine.

"There is no indication that a nuclear test is imminent," ministry spokesperson Kim Min-Seok said.

There is, however, widespread expectation that the North will conduct a missile launch-test in the coming week, ahead of the 15 April birthday of late founding leader Kim Il-Sung.

Such a move would be highly provocative, especially given the strong rebuke the North's sole ally China delivered on Sunday, with President Xi Jinping warning: "No one should be allowed to throw a region, even the whole world, into chaos for selfish gains."

The United States, which has met the North's threats with some military muscle-flexing of its own, offered a calibrated concession Saturday by delaying a planned inter-continental ballistic missile test.



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