Bloomberg News

South Korean Citizens Begin Leaving Gaeseong Zone for Seoul (4)

April 27, 2013

South Korea Pulls Out of Joint Factory After North Rejects Talks

The Gaeseong Industrial Complex is seen in North Korea from the South Korean Army's observation post in the Demilitarized Zone in Paju. Photographer: Seokyong Lee/Bloomberg

South Korean workers began to return to Seoul today from an industrial park jointly run with North Korea.

About 11 of the 175 South Koreans at the Gaeseong industrial zone had come back, while 115 more were expected to follow, after an agreement was reached with North Korean officials on the logistics of the pullout, according to a text message from the South’s Unification Ministry today. The remainder are expected to return by April 29.

South Korea’s President Park Geun Hye made the “inevitable” decision to pull her citizens from Gaeseong, which shut down more than two weeks ago, Unification Minister Ryoo Kihl Jae told reporters yesterday in Seoul. North Korea ignored a deadline to accept an offer for talks on reopening the facility.

The Korean peninsula has been on edge since February, when Kim Jong Un’s regime detonated an atomic bomb in defiance of United Nations sanctions and then threatened preemptive nuclear strikes against its enemies. The North on April 8 recalled its workers from Gaeseong, the last point of inter-Korean exchange and an important cash source for the impoverished nation.

North Korea said late today that the South has “responsibility for the total closure” of Gaeseong, saying it would damage the southern nation, according to the official Korean Central News Agency, which cited a spokesman for the General Bureau for Central Guidance.

‘Serious Measures’

North Korea’s National Defense Commission had threatened “final, decisive and serious measures” against the South’s “ultimatums,” according to a statement on KCNA. The South should withdraw its citizens from Gaeseong if it’s concerned about their wellbeing, KCNA said.

The complex, about 10 kilometers (6 miles) north of the demilitarized zone between the two countries, employs more than 53,000 North Koreans at 123 South Korean companies. North Korea generates $100 million in annual profits there, while South Korea makes quadruple that amount, according to Yang Moo Jin, a professor at the University of North Korean Studies in Seoul.

North Korea on April 3 blocked South Koreans’ access to the complex, only allowing them to leave. With all traffic from the South into Gaeseong banned, the South Koreans have had to endure a shortage of food and medical resources. One citizen returned to Seoul April 25 after suddenly falling ill, the Unification Ministry said.

‘Limited’ Options

With the U.S. and South Korea calling on North Korea to return to negotiations, Park’s options to pressure Kim are “very limited,” said Kim Young Yoon, a research fellow at the Korea Institute for National Unification in Seoul.

South Korean companies operating in Gaeseong have urged the government to break the impasse and seek damages from the loss of operations. The association representing them today called for talks between the two sides.

The South Korean government should provide compensation to help the companies revive their businesses and allow workers to revisit the complex on April 30, the association said in an e- mailed statement.

The Export-Import Bank of Korea revived its pledge to expand financial aid to companies running plants in the complex, the state-run lender said in an e-mailed statement today, without giving details. The bank has provided 300 billion won ($270 million) of aid, including lower lending rates and higher ceilings on loans, it said.

Inexperienced Leader

Kim, who took over as leader in December 2011 following the death of his father, Kim Jong Il, has rebuffed international inducements to abandon nuclear weapons development. The Obama administration has rejected claims North Korea possesses the ability to launch nuclear-armed ballistic missiles, while warning that Kim’s inexperience raises the possibility of errors.

The North is ready to conduct another nuclear test “at any moment,” South Korean Defense Ministry spokesman Kim Min Seok said April 23. North Korea vowed to strengthen its nuclear program after a U.S. State Department report found the country guilty of “egregious and pervasive” human rights abuses.

North Korea said it will hand down a verdict on a detained American citizen accused of crimes against the state, the official Korean Central News Agency reported today.

Pae Jun Ho, who entered North Korea’s Rason City on Nov. 3 as a tourist, will face judgment in the Supreme Court after admitting to the charges, KCNA said, without citing a source for the information. The U.S. had no immediate comment on the KCNA report, Beth Gosselin, a spokeswoman at the State Department in Washington, said by phone.

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net


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