Tuesday, April 9, 2013
SEOUL — North Korean workers at a joint industrial complex with South Korea didn’t report this morning, severing the last exchange link between the two countries as tensions rise over Kim Jong Un’s nuclear program.
South Korea is in communication with its northern counterparts at the Gaeseong complex, Unification Ministry spokeswoman Park Soo Jin said by phone today. It was the first time since the industrial park opened in 2005 that North Korean employees didn’t show up for work, Park said.
The North’s decision to suspend operations at the complex, announced Monday, follows threats by Kim’s regime to launch pre-emptive nuclear strikes against the United States and South Korea in the face of tighter United Nations sanctions.
All foreigners in South Korea, including tourists, should take safety measures, North Korea warned today via the Korean Central News Agency.
The North may be ready to conduct a nuclear test or missile launch as early as this week, according to the South Korean government.
Shuttering Gaeseong is “a brinkmanship tactic,” Kim Choong Whan, a lawmaker in the ruling New Fronter Party until April 2012 who led the National Assembly’s foreign affairs committee, said by phone today. “We’re unlikely to see the Gaeseong complex closing down permanently as it would really be bad for North Korea’s plans to attract foreign investment.”
South Korean companies employ more than 53,000 North Korean workers at Gaeseong, located about 10 miles (16 kilometers) north of the demilitarized zone between the two countries. Removing the workers denies Kim’s impoverished regime a source of foreign currency and indicates the North thinks it has nothing left to lose given the sanctions, said Koh Yu Hwan, a North Korean studies professor at Dongguk University in Seoul.
Shares of companies operating in Gaeseong fell in Seoul. Shinwon Corp., an apparel maker, declined 2 percent and watchmaker Romanson Co. slumped 3.6 percent. Good People Co., an underwear maker, fell 1 percent.
Overseas investors have pulled some $1.9 billion from Korean stocks since the North conducted its third nuclear test on Feb. 12, helping drive the Kospi index down 1.5 percent and contributing to a 3.6 percent slide in the won.
Still, the Kospi’s 3.8 percent drop this year is less than the 4.1 percent decline in the MSCI Emerging Markets Index and the won is only 1 percent weaker than its average level for the past three years.
South Korea’s military saw no immediate signs of North Korea making preparations for an attack, Defense Ministry spokesman Kim Min Seok said today, a day after he confirmed the North has been ready since February to conduct a fourth underground atomic weapon test at its Punggye-ri site. National Security Chief Kim Jang Soo said April 7 the North may stage a provocation including a ballistic missile test tomorrow.
As North Korea withdrew its workers, neighboring countries made preparations against a possible missile launch. Japan has deployed PAC-3 missile interceptors including around Tokyo, Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters today.
Taiwan’s Ministry of National Defense will use various devices, including radar, to monitor developments on the Korean peninsula, spokesman David Lo said by phone. He said he was unaware of any request for Taiwan’s air force to strengthen early warning systems, after the China Post reported Taiwan had boosted its long-range radar sweeps at the urging of the U.S.
The North’s development of nuclear weapons and long-range missiles poses a “direct threat” to the U.S. and its allies, Admiral Samuel Locklear, the head of the U.S. Pacific Command, said in prepared testimony for a Senate Armed Services Committee hearing set for today.
Representatives of the South Korean companies at Gaeseong held an emergency meeting in Seoul today. The companies urged President Park Geun Hye’s government to send a delegation to the North to discuss resuming work at the complex, said Han Jae Kwon, who heads the group of businesses.
While Han couldn’t provide an estimate for damages incurred since the suspension, he said the companies cannot afford to have the situation “further dither.”
The complex last year produced about $1.3 million of goods a day or $470 million for all of 2012, the highest since the park opened eight years ago, Unification Ministry data show.
President Park Geun Hye called the Gaeseong halt “very disappointing” and expressed concern that a 1.83 trillion won ($1.6 billion) inter-Korean cooperation fund will be used to cover business losses rather than on future ventures.
“No company nor country will want to invest in North Korea if it continues to break promises with the international community and hinder Gaeseong operations,” Park told her cabinet today, according to a statement on her website.
Only 50 billion won from the fund is earmarked for insurance for inter-Korean projects, according to the Unification Ministry’s 2013 plan for the fund.
None of Shinwon’s 2,200 North Korean workers at Gaeseong reported for work today, according to a company spokeswoman who declined to be identified. The company is considering ways to replace production at Gaeseong at its factories in Myanmar, China or in South Korea, the spokeswoman said.
South Korean assets and 475 citizens working there are unharmed, Unification Ministry spokeswoman Park said. The North generates $100 million in profits annually from the project and South Korea makes quadruple that amount, according to Yang Moo Jin, a professor at the University of North Korean Studies in Seoul.
“Factories haven’t been able to operate to full capacity anyway because of North Korea’s entry ban on South Koreans and raw materials from the South,” said Yoo Dong Ok, a spokesman for the South Korean businesses operating in the zone.