Korean Tensions Hit Zone

North Korea's rocket launch escalates tensions with South Korea, and the Kaesong border industrial zone feels the pinch.

Kaesong-Close-305.jpg South Korean-owned factories located in the North Korean joint industrial estate of Kaesong, Nov. 24, 2008.

SEOULTensions between the two Koreas are affecting the running of a joint economic zone following the launch of a rocket by the North and the detention of a South Korean factory employee.

Following North Korea's April 6 rocket launch, South Korea began limiting the number of its citizens allowed to cross the border to the Kaesong Industrial Zone, which was set up just inside North Korea amid thawing relations between the two sides in 2004.

"We plan on maintaining the minimum personnel needed to run the Kaesong operations," South Korean Unification Ministry spokeswoman Lee Jong-joo said.

...The skill level of North Korean workers is insufficient, and that’s why South Korean management is essential."

South Korean entrepreneur

"The South Korean government has requested enterprises invested in Kaesong to maintain their staff at the minimum level necessary to avoid disruption of production and business operations in the complex."

South Koreans trying to travel to Kaesong this week were surprised to find their entry permits revoked by the South in the wake of the rocket launch, with the number of South Koreans working in the zone cut to a little above the minimum needed for basic operations.

"Eight persons initially received permission to travel to Kaesong, but eventually only three were allowed to take the trip, and actually most South Korean managerial staff had to stay behind," a Kaesong-based South Korean entrepreneur said.

'Skills gap'

"The big issue here is that the skill level of North Korean workers is insufficient, and that’s why South Korean management is essential."

He warned of negative economic consequences if management personnel were unable to reach the zone from the South.

"Banning South Korean managerial staff from traveling to Kaesong will inevitably have a negative impact on production in the complex," the entrepreneur said.

Tensions have further escalated over the March 30 detention of a South Korean employee of the Kaesong-based Hyundai Asan factory, allegedly for encouraging North Koreans to defect and criticizing the communist regime.

Hyundai's company president visited Kaesong for a second time this week to press North Korean officials for the employee's release, but he was refused permission to see the employee, identified only by his surname, Yoo.

Unification Minister Hyun In-taek warned that Seoul wouldn't tolerate further detention of the employee.

Warning to North

"In the case of Mr. Yoo, the Hyundai Asan employee in the custody of the North Korean authorities, we will react vigorously to any unreasonable extension of the detention of the South Korean," Hyun told a foreign affairs, trade, and unification committee in Seoul.

He also warned against "any punitive measures exceeding what was agreed upon between the two Koreas, such as a warning or expulsion to South Korea."

The South has ruled out the possibility of closing the joint industrial park despite rising tensions with the North, however.

In March, in protest against a joint South Korea-U.S. military exercise, the North blocked the border crossing to the industrial complex several times, affecting production in some factories.

Experts have called for bilateral talks to hash out a clear framework for the running of Kaesong, to prevent economic fallout from political events in future.

"South and North Korea need to discuss and consult on the relevant systemic and legal issues associated with inter-Korean economic cooperation in the area," said Hong Ik-pyo, researcher at the Korea Institute for International Economic Policy.

Dialogue nonexistent

"Such inter-Korean dialogue is simply not happening at this stage, and it is the South Korean enterprises that are facing a risk and have to carry the burden created by the lack of dialogue on relevant issues," he added.

But the government said it had already called for "maximum flexibility" in responding to the needs of South Korean enterprises in Kaesong.

"As of now, there are 865 South Korean residents in Kaesong," Unification Ministry spokesman Kim Ho-nyon told reporters this week.

"This means that the estimated required minimum resident personnel, 700, has been exceeded by 165 persons."

The zone, which employs some 36,000 North Koreans in mostly South Korean factories making textiles, watches, footwear, and other light industrial goods for export, has been criticized for providing Pyongyang with a "cash cow" to finance its military and nuclear ambitions.

South Korean businesses invested in Kaesong have already incurred serious losses because of the South Korean won's depreciation against the U.S. dollar.

Original reporting in Korean by J.W. Noh. Korean service director: Francis Huh. Translated by Grigore Scarlatoiu. Written for the Web in English by Luisetta Mudie. Edited by Sarah Jackson-Han.


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