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

(ATTN: UPDATES with ministry's official position on retaining Kaesong park, more
analysis)
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 a stern
message from President Lee Myung-bak.
In a summit with U.S. President Barack Obama in Washington, Lee called for close
cooperation between the allies and denounced 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 settle
procedural matters, such as schedule and facilities, with their North Korean
counterparts, said Lee Jong-joo, a ministry spokeswoman.
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 and a
31-fold raise in rent. The demand would lift the wages to US$300, from the
current $70~80, and the rent to $500 million, from the $16 million South Korean
developers paid when the park opened in 2004. It remains to be seen how North
Korea will respond to Lee's flat rejection.
"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, with Obama at his
side in the White House Rose Garden 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 should be kept alive
despite the diplomatic standoff.
The unification ministry rushed to contain speculation, with the spokeswoman
saying Seoul's position "to maintain and develop the joint park remains
unchanged."
But many analysts doubt Lee's hardline message would cool down North Korea. By
denying any chance of negotiation in the upcoming talks, Lee vindicated the
position of North Korea's hardline military, which intends to terminate the joint
venture that has opened a door for capitalist culture in the border town, said
Chang Yong-seok with the non-governmental Institute for Peace Affairs.
He also noted that Lee in the joint statement pushed for "peaceful reunification
on the principles of a free democracy and a market economy." That call is certain
to provoke North Korea, sending a signal that the affluent South intends to
absorb the impoverished communist state, Chang said.
"I don't think North Korea demanded the $300 wage and the $500 million rent to
get more money. Those amounts are too ludicrous to be interpreted that way,"
Chang said.
"North Korea has been searching for reasons that would justify shutting down the
complex. Lee might be talking tough ahead of the negotiation, but more than that,
he saw the current phase as a time to apply sanctions and pressure the North.
North Korea may regard his stance as a rejection of any negotiation."
With low wages and nearly tax-free, the joint park was born out of the first
historic inter-Korean summit in 2000 and has continued to grow under liberal
governments despite the North's first nuclear test in 2006. 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. Safety concerns also emerged,
with a South Korean worker having been held in North Korea on charges of
criticizing its political system for nearly 80 days now.
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), a figure
which includes losses from rising security risks and a falling national credit
rating as well as damage to the businesses.
hkim@yna.co.kr
(END)