N. Korea Scraps Gaeseong Contracts

North Korea announced Friday the nullification of all contracts on rent, salaries and taxes at the Gaeseong Industrial Complex, asking the South to empty the industrial estate unless it honors the North's wishes to amend related laws and rules.

Unification Ministry spokesman Kim Ho-nyoun clears his throat before expressing the Lee Myung-bak administration’s regret over the North’s one-sided announcement to nullify all exisiting laws and contracts on the Gaeseong Industrial Complex at the annex hall of the Integrated Government Complex in central Seoul Friday. He said the South will not accept Pyongyang’s unilateral action.

/ Yonhap

By Kim Sue-young
Staff Reporter

North Korea announced Friday the nullification of all contracts on rent, salaries and taxes at the Gaeseong Industrial Complex, asking the South to empty the industrial estate unless it honors the North's wishes to amend related laws and rules.

The notification came about five hours after the two Koreas were unable to set a date for talks due to their wrangling over the release of a Southern worker detained by the North.

Unification Ministry spokesman Kim Ho-nyoung expressed regret over Pyongyang's one-sided announcement and urged the North to withdraw the demands and engage in dialogue, saying that it won't accept the cancellation of the contracts.

``North Korea has to abandon its unjustifiable attitude and withdraw the announcement,'' he said. ``We call for a prompt response to the inter-Korean talks that we proposed on May 18.''

The statement was made after the North's official Korean Central News Agency (KCNA) said. ``Under the circumstances that the South responded in a confrontational manner, we cannot help but reconsider our stance which has been determined through negotiations,''

The North continued, ``We are nullifying contracts and benefits on rent, salaries and taxes that we have offered in the Gaeseong complex in accordance with the June 15 Joint Declaration.''

The report added that the North will begin to adjust laws and rules to meet with the current situation.

``South Korean companies and officials must accept the notification, if not, they can evacuate from the complex,'' it said.

Pyongyang said the South's ``extreme confrontation policy'' has destroyed the foundation of the industrial park, adding that the future of the complex is up to the South's stance.

About 40,000 North Koreans are working inside the park where more than 100 Southern companies are operating.

Andrei Lankov of Kookmin University and a Korea Times columnist said South Korean authorities now face a dilemma.

``The complex is one of the best things which ever happened in North-South cooperation. It is unlikely that it will be profitable for the South in purely financial terms, and its contribution to local political stability is marginal albeit real,'' he said.

Lankov added, however, the complex is the only place where North and South Koreans work together, and it is also a place where countless encounters lead to the dissemination of knowledge about the South, gradually undermining the North Korean regime and laying foundations for a change in the North.

He advised the South to have clear limits on how far the Seoul government should go in order to save the complex under North Korean pressure.

`` North Koreans are clearly looking for some leverage over the South, and it they come to see the park as a hostage project, they will it use to put forward escalating demands,'' he said.

He predicted, `` If the South Korean government bows to the pressure and makes concessions, there is no doubt that in weeks or months Pyongyang manipulators will make new demands, probably more outrageous.''

``One can hope that the project will survive. Nonetheless, it will become dangerous if Seoul, in trying to save this important project, starts to succumb to Pyongyang's blackmail. So, the project should be supported, at a cost to South Korean taxpayers, but not at the cost of unprincipled political concessions,'' he added.

A government official reiterated that the detainee issue must be discussed for stable development of the complex.

``Family members of businessmen and employees working in the industrial zone are worried about the safety of their fathers and husbands. Some people have already left companies in the complex,'' he told reporters on condition of anonymity.

A 44-year-old man identified as Yoo was detained late March for ``derogatory'' comments on the North Korean regime and for allegedly attempting to entice a North Korean female to defect.

The North has refused to grant the worker a meeting with South Korean officials and attorneys.

Professor Yang Moo-jin at the University of North Korean Studies in Seoul told The Korea Times that if the South changes its stance toward the detainee issue, the North would respond.

``What matters is whether or not to put the issue on the table during the talks. Unless the South drops its request, the meeting will not take place,'' he said.

In an apparent attempt to use the inter-Korean talks to pressure the Lee Myung-bak administration, ``North Korea is seemingly trying to avoid the issue,'' he said.

The expert, instead, suggested that the South should pursue a ``two-track approach'' to end the deadlock.

``Discussions on the detainee issue and the operation of the industrial zone should take place at the same time. But it is necessary to solve the detainee issue separately,'' he said.

ksy@koreatimes.co.kr