(News Focus) S. Korean companies struggle to survive sinking inter-Korean ties

By Sam Kim
SEOUL, May 25 (Yonhap) -- Once hailed as vanguards of reconciliation between the
two Koreas, hundreds of South Korean companies doing business with North Korea
are struggling this week to find ways to stay alive in the midst of simmering
tension on the divided peninsula.
Chances of a conflict along the heavily armed inter-Korean border are rising
after Seoul condemned Pyongyang last week for the March sinking of a warship just
south of their Yellow Sea border.
Forty-six crew members died in the tragedy that North Korea denies any role in.
Pyongyang has warned of an "all-out war" against any punishment while Seoul says
it will readily exercise its right of self-defense if another provocation occurs.
On Tuesday, a North Korean defector group said the communist state has ordered
its military to be placed on combat alert. A day earlier, the North Korean army
threatened to shoot at South Korean equipment if Seoul goes ahead with the
resumption of its anti-Pyongyang broadcasts along the border.
"Our company cannot survive if the deterioration in relations continues," Lee
Kwan-ho, an official at Seopyong Energy, which imports smokeless coal from North
Korea, said in an interview.
Lee was referring to a South Korean decision earlier this week to ban trade with
the communist country, one of a string of measures Seoul has put in action to
strangle the North's already-impoverished economy in retaliation for the sinking
of the Cheonan.
Lee, who visited the Unification Ministry with other affected businessmen for a
meeting with top government officials, said his company cannot fulfill its
business contracts if it cannot import coal from North Korea, urging the
government to lend help.
"I hope the government will not leave us on our own," he said.
Grimacing before the meeting with the vice unification minister, Choi Yong-gwan,
head of an association of about 200 businessmen and activists, deplored the trade
ban and argued that South Korea is giving up a valuable way to pressure the
reclusive North to open up to the outside world.
"North Koreans now understand the taste of money, and abandoning economic
cooperation is equal to withdrawing our most effective means of prying the
country open," he said.
Trade with South Korea accounts for nearly 40 percent of North Korea's total
trade volume, or 13 percent of the communist country's gross domestic product.
The money from inter-Korean trade has enabled North Korea to expand its trade
with China, its top political and economic partner, according to a recent report
by the Korea Development Institute here.
About 550 South Korean companies were involved in trade, either direct or on
consignment, with North Korea before South Korea announced the measures. The
figures do not include about 110 firms producing goods in the North Korean border
town of Kaesong.
The joint factory complex that employs 42,000 North Korean workers has been a
major symbol of detente since it began operating in 2004, four years after the
leaders of the Koreas agreed on it.
On Monday, South Korea banned the companies from investing in their Kaesong-based
projects, either old or new, and told them to scale down the number of their
personnel there.
"That was like slapping a death penalty on us," Park Yong-man, who runs a garment
factory in Kaesong, said in a telephone interview. "Orders have completely dried
up."
Park said he considered scrapping the Kaesong operations but admitted to the
difficulty of such a move.
"How would I then feed and pay my employees?" he said.
Park Sang-kwon, a prominent South Korean businessman who has set up a car factory
in Pyongyang, said vendors run the risk of going bankrupt if any one of three
factors -- personnel, raw materials or customs clearance -- fails to be provided
in time.
"Now political situations are threatening these factors wildly every day," he
said. "The government needs to devise more sensitive and microscopic measures to
save these companies from wreck."
Park, however, said he respects his government's decision and expressed hope that
the confrontation will in the long run provide a chance for the divided sides to
understand each other better.
Park Young-il, head of companies importing agricultural products and fisheries
from North Korea, said, "There is still hope.
"The shock is huge to people like us who have taken great pride in the belief
that we're pioneers on the road to unification," he said. "It's not over. I'm
hopeful the inter-Korean relations will survive the current circumstances and,
once again, move on."
Despite the ban on trade, South Korea said it has the willingness to maintain the
operations in Kaesong, but warned it will never tolerate any North Korean threat
to its nationals there.
After a decade of thawing, ties between the Koreas began to fray in 2008 when the
conservative Lee Myung-bak government took power in Seoul and tied large-scale
aid to progress in North Korea's denuclearization.
samkim@yna.co.kr
(END)

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