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When North Korea allegedly torpedoed a South Korean ship in 2010, killing 46 sailors, an industrial park jointly operated by South Korean companies and the North's government kept on running. When Pyongyang rained artillery shells on a Seoul-held island later that year, the park's factories continued churning out goods.
But in the latest sign that North Korea's warlike stance toward South Korea and the United States is moving from words to action, Pyongyang on Wednesday barred South Korean managers and trucks delivering supplies from crossing the border to enter the Kaesong industrial park. It's an announcement that further escalates a torrent of provocations analysts say is aimed at pressuring the U.S. and South Korea to change their policies toward Pyongyang.
The Kaesong move came a day after Pyongyang said it would restart its long-shuttered plutonium reactor and a uranium enrichment plant. Both could produce fuel for nuclear weapons that Pyongyang is developing and has threatened to hurl at the U.S. but which experts don't think it will be able to accomplish for years.
The North's rising rhetoric has been met by a display of U.S. military strength, including flights of nuclear-capable bombers and stealth jets at the annual South Korean-U.S. military drills that the allies call routine and North Korea claims are invasion preparations.
The Kaesong industrial park started producing goods in 2004 and has been an unusual point of cooperation in an otherwise hostile relationship between the Koreas, whose three-year war ended in 1953 with an armistice. Its continued operation even through past episodes of high tension, and the park's high economic value to impoverished North Korea, has reassured foreign multinationals that another Korean War is unlikely and their investments in prosperous dynamic South Korea are safe.
"What we are seeing right now is something that was less expected, that is, less directly in North Korea's interests," said Patrick Cronin, a senior analyst with the Washington-based Center for a New American Security. "Is this a short-term demonstration of North Korean dissatisfaction with U.S-South Korean policy, or a portent of something more drastic at Kaesong," he said.
Drastic could range from a complete shutdown of Kaesong to North Korea taking South Korean workers at the facility hostage, which is a risk that has long hung over the joint project, Cronin said.
On Tuesday, a senior South Korean government official said Seoul has a contingency plan for its citizens in Kaesong, which number over 800 on weekdays. Most South Korean managers at Kaesong return to South Korea on the weekends. The official spoke on condition of anonymity, saying he was not authorized to speak publicly to the media.
It is unclear how long North Korea will prevent South Koreans from entering the industrial park, which is located in the grim North Korean border city of Kaesong and provides jobs for more than 50,000 North Koreans who make goods such as textiles, clothing and electronic components. The last major disruption at the park amid tensions over U.S.-South Korean military drills in 2009 lasted just three days.
Seoul's Unification Ministry spokesman Kim Hyung-suk said Pyongyang was allowing South Koreans to return home from Kaesong. Some 33 workers of about 860 South Koreans at Kaesong returned Wednesday. But Kim said about 480 South Koreans who had planned to travel to the park Wednesday were being refused entry.
Trucks streamed back into South Korea through its Paju border checkpoint in the morning, just minutes after heading through it, after being refused entry into the North.
Pyongyang threatened last week to shut down the park, which is run with North Korean labor and South Korean know-how. It expressed anger over South Korean media reports that said North Korea hadn't yet shut the park because it is a source of crucial hard currency for the impoverished country.
Its March 30 statement published by North Korea's KCNA news agency said "no one can see an inch ahead as regards the destiny" of Kaesong. It characterized the continued existence of the industrial park as a "very unusual thing" in light of tensions on the Korean peninsula.
About 120 South Korean companies operate factories in Kaesong which produced $470 million of goods such as clocks, clothing and shoes last year that are trucked back to the South for export to other countries. The industrial park is crucial for the small businesses that operate there to take advantage of North Korea's low wages but not important for the South Korean economy overall.
It has more significance to cash-strapped North Korea since, according to the South Korean government, wages for North Korean workers totaled some $81 million last year. On top of that, nearly all the trade between the Koreas, which totaled $2 billion in 2012, passed through Kaesong. North Korea appearing to act against its own interests with Kaesong has underlined the risks that its brinkmanship will result in a miscalculation that results in an even more dangerous polarization of the Korean peninsula.
Barring entry to South Koreas is a "slap in the face" after the South Korean government recently extended medical aid to the North, said Lee Choon-kun, a North Korea researcher at the Korea Economic Research Institute, a Seoul-based think tank. "I see this as a start for more provocative actions," he said.
"The North has made too many threats to stop short of any real action."
Kaesong, initially conceived as a test case for reunification and reconciliation, also provides an irksome reminder for Pyongyang that what it lacks, the South has in abundance - material prosperity. An enormous gap emerged between the two Koreas in the decades after the Korean War as the South embraced a form of state-directed capitalism while the North adhered to communist central planning.
Every morning, North Korean workers commute to the complex on the edge of Kaesong on South Korean-made Hyundai buses. Once inside the gates of the complex, it's a world apart. The paved streets and sidewalks are marked with South Korean traffic signals and signs and the parking lots are filled with the Hyundai, Samsung and KIA cars driven by South Korean managers.
Inside several factories visited by The Associated Press last year, the posters on the walls are not party slogans but safety warnings. "Beware of fires," read one; "Wash your hands" read another. While most factories in North Korea are drafty, and few have running water, the facilities in Kaesong are equipped with hot water, flush toilets and air conditioners.
In the rest of the Korean Peninsula, it is illegal for Koreans from North and South to interact without government permission. But inside Kaesong, North Korean workers work side by side with South Korean managers, discussing orders and mapping out production.
However, they tend not to socialize with one another. At most factories, North Korean workers take their meals in cafeterias that serve basic stews and rice while the South Koreans dine separately.
Park Yun-kyu, who heads a men's apparel maker that employs 700 North Korean workers in Kaesong, said he was worried he couldn't send fresh food to his eight South Korean workers in Kaesong.
"They were working normally when I called them in the morning," said Park who returned to Seoul after being refused entry into Kaesong. "The problem is food. I hope North Korea would at least let us send food. We have to send food and some materials for production every day."
- James Walsh, research associate at MIT
This segment aired on April 3, 2013.
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