S. Korean advance team leaves for talks in North amid grim outlook

By Kim Hyun
SEOUL, June 17 (Yonhap) -- A South Korean advance team left for the North on
Wednesday to prepare for upcoming inter-Korean talks over a joint industrial
venture, but prospects for any meaningful settlement are low following President
Lee Myung-bak's stern message.
In a summit with U.S. President Barack Obama in Washington, Lee called for close
cooperation between the allies and renounced North Korea's "unacceptable" demands
over the joint park, even hinting at a pullout from the last remaining
inter-Korean venture.
Amid the grim outlook, a four-member advance team from Seoul's Unification
Ministry traveled to the industrial park in the North's border town of Kaesong
two days ahead of the main talks. The working-level officials will ensure that
communications and other facilities are operational at the meeting venue, said
ministry officials.
Friday's talks are a follow-up to an earlier round last week, during which North
Korea demanded a four-fold wage increase for its workers at the complex to US$300
per month and a 31-fold raise in rent to $500 million from South Korean firms
operating at the park. It remains to be seen how North Korea will respond to
Lee's uncompromising stance.
"We urge North Korea not to make any unacceptable demands because we really do
not know what will happen if they keep on this path," Lee said in a joint press
conference with Obama shortly after their summit talks at the White House on
Tuesday (Washington time).
The stern message signaled a change of position by Lee on the Kaesong park, who
earlier said the only surviving reconciliatory project between the Koreas should
be kept alive despite the diplomatic standoff.
As an outcome of the first historic inter-Korean summit four years earlier, the
joint park opened in 2004 and has continued to grow until recently. With low
monthly wages -- between $70-80 -- and nearly tax-free, more than 100 South
Korean firms currently operate there, making clothes, kitchenware, electronic
equipment and other labor-intensive goods with about 40,000 North Korean
employees.
But unravelling political relations have taken their toll on the businesses.
North Korea curtailed cross-border traffic this year and at times completely
banned it to protest Seoul's conservative policy. A South Korean worker,
meanwhile, is being held in North Korea on charges of criticizing its political
system. North Korea has given no word about the fate of the Hyundai Asan Corp.
employee, who was detained at the venture in March.
As a sign of the increased stress on companies there, a clothing firm withdrew
this month in the first pullout by a South Korean firm from the North Korean
park.
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 endows special favors for South Korean firms.
For the North, the venture is a rare source of income, with $26 million paid in
wages by South Korean firms last year, most of which was deposited in state-held
accounts.
Cho Bong-hyun, a North Korea analyst with South Korean lender IBK, feared the
tit-for-tat between the two Koreas would lead to a shutdown of the joint park,
which would be a "catastrophe" for inter-Korean relations.
He said a shutdown would cost South Korea 14 trillion won ($11 billion) that
includes losses from rising security risks and falling national credit ratings as
well as damages to the businesses.
"As the political stalemate deepens, North Korea will increase pressure on our
government and the businesses by pushing for operational conditions that are
unacceptable. Should North Korea insist on this stance, the shutdown of the
Kaesong industrial complex would be inevitable," he said.
hkim@yna.co.kr
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