North Korea Threatens to Shut Down Joint Industrial Region

May 28, 2010 Updated: October 1, 2015

A general view of the inter-Korean industrial complex of Kaesong is shown from a South Korean observation tower in Paju, near the Demilitarized Zone separating the two Koreas on May 26. (Jung Yeon-Je/AFP/Getty Images)
A general view of the inter-Korean industrial complex of Kaesong is shown from a South Korean observation tower in Paju, near the Demilitarized Zone separating the two Koreas on May 26. (Jung Yeon-Je/AFP/Getty Images)
North Korea will block passage to the Kaesong industrial park, a special joint industrial region inside North Korea, if South Korea chooses “psychological warfare.” A North Korean delegate made the statement during inter-Korean military talks on May 26.

The warning by the North Korean regime comes in the aftermath of the sinking of a South Korean naval vessel and accusations by South Korea that the vessel was hit by a North Korean torpedo.

On May 25, North Korea’s state-run news agency, Korean Central News Agency (KCNA), said the Committee for the Peaceful Reunification of Korea declared to take eight measures as the first phase to formally and “totally freeze inter-Korean relations,” as a retaliation to the heightened tension along the demilitarized zone (DMZ).

Psychological Warfare

As part of the Armistice Agreement, during general-level military talks in June 2004, North and South Korea agreed to stop propaganda broadcasts along their border to avoid clashes at sea.

However, in response to confirmation that a North Korean torpedo sank the Cheonan, a South Korean naval vessel, killing 46 South Korean sailors, the South resumed its border radio broadcasts to the North on May 24.

Accordingly, the South said it would reinstall loudspeakers that were dismantled six years ago at 94 locations along the DMZ, along with 11 giant electronic billboards. Meanwhile, Voice of Freedom, a four-hour program, resumed its broadcast into the North, three times a day, on May 24.

In the May 25 KCNA statement, the North declared an “all-out counterattack” against the psychological warfare proposed by the South.

“We will start direct sighting shots to destroy them,” the Korean People’s Army command warned.

The Economic Threat

The KCNA article further states that the Consultative Office for North-South Economic Cooperation in the Kaesong industrial region will be frozen and dismantled, and all South Korean personnel will be expelled without delay.

South Korea’s Unification Ministry said that some 100 of the 121 South Korean firms at the Kaesong industrial region are insured by the inter-Korean Economic Cooperation Fund, and the indemnity insurance will cover up to 90 percent of their investment. But no firm that voluntarily withdraws before the North or South shuts down the industrial park is entitled to insurance payments.

The South Korean government estimates that shutting down the joint industrial region will cost about US$500 million.

However, an executive of a firm operating in the Kaesong industrial park told Chosun Ilbo, “The total investment South Korean firms made in the industrial region probably exceeds US$500 million.

As for the North, the Kaesong industrial region employs over 40,000 North Korean workers and brings in millions of dollars a year for North Korea’s regime leaders.

Yonhap News Agency reported that according to an estimate by a Seoul-based civics group, North Korea will lose $370 million a year and about 80,000 jobs if inter-Korean trade is entirely suspended.

Yonhap speculated that the North had no intention of completely shutting down the Kaesong industrial park, as South Korea also plans to keep the park intact.

Kaesong industrial park is located 170 kilometers south of Pyongyang and 1 kilometer north of the DMZ. The park was developed due to former South Korean President Kim Dae-Jung’s engagement with the North and a joint declaration signed in 2000 between the two states.

Read the original Chinese article.