South Korea to go ahead with talks on joint venture with North

By Kim Hyun
SEOUL, June 15 (Yonhap) -- South Korea will hold talks with the North as
scheduled this week regarding a joint industrial park, a spokesman with Seoul's
Unification Ministry said Monday, as diplomatic tensions over Pyongyang's nuclear
program escalate.

The inter-Korean talks set for Friday are a follow-up to last week's round, in
which North Korea demanded steep hikes in wages and rent from South Korean firms
operating at the industrial park in the North's border town of Kaesong.
"Many people are concerned about the recent developments," Unification Ministry
spokesman Chun Hae-sung said in a press briefing. "But an agreement has been
reached to hold the additional talks."
Protesting a recent U.N. Security Council resolution condemning its May 25
nuclear test, the North said over the weekend that it will "weaponize" all
plutonium it has and start enriching uranium to provide fuel for a light-water
reactor it plans to build. The latter has sparked concerns the plan may be a
disguise for another nuclear weapons program.
Ahead of the inter-Korean talks, South Korea is set to hold a summit meeting with
the United States on Tuesday. President Lee Myung-bak left for Washington on
Monday for the summit with U.S. President Barack Obama, with North Korea's
nuclear drive expected to top their agenda.
In Seoul, meanwhile, officials prepared for the talks with Pyongyang though
expectations for any agreement remain low.
In the previous talks held Thursda, North Korea demanded a four-fold wage
increase to US$300 per-month and a 31-fold raise in rent to $500 million from
South Korea. The Corporate Association of Kaesong Industrial Complex, which
represents the 106 South Korean firms operating at the park, rejected the North
Korean demands. The existing contracts set a 5-percent cap on wage increases and
gave South Korea a 50-year right to develop the industrial zone at a cost of $16
million when the park opened in 2004.
"The businesses cannot accept any kind of unilateral proposal that overrides laws
and contracts that were provided by South and North Korean governments at the
time they moved in," the association said in a statement.
Toward the Seoul government, the firms demanded the construction of dorms and
nurseries for their North Korean employees, mostly women in their 20s and 30s, as
was promised to the North.
North Korea has declared all contracts on the joint park "null and void," saying
it has no reason for retaining "preferential measures" while historic summit
accords that gave birth to the park are "totally negated" by the Seoul
government.
Pyongyang claims that the joint park, an outcome of the 2000 inter-Korean summit,
endows special favors for South Korean firms, including low wages, rent and
taxes. For the North, the venture is a rare source of income for the North's
cash-strapped economy, with $26 million paid in wages by South Korean firms last
year.
Monday is the 9th anniversary of the historic summit between then South Korean
President Kim Dae-jung and North Korean leader Kim Jong-il. Low key celebrations
were held, with conservatives sharpening their criticism against the engagement
policy pursued by the country's past liberal governments.
Along the border region, a group of North Korean defectors flew balloons carrying
about 100,000 leaflets into the North, criticizing the North Korean leader.
hkim@yna.co.kr
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