Pyongyang on Thursday froze South Korean assets in the inter-Korean industrial complex in its border city of Gaeseong, closed the factory park and declared it as a military off-limit zone in an angry response to Seoul’s decision to pull out of it.

The unpredictable regime ordered South Koreans to leave the complex by 5:30 p.m. on the day and allowed them to bring to the South only “personal belongings,” according to a statement from the North’s Committee for Peaceful Unification of the Fatherland handling cross-border relations.

“The frozen equipment, materials and products will be managed by the committee of Gaeseong people,” the statement said.

“From 10 p.m. (10:30 p.m., South Korean time) on Feb. 11, (the North) will seal off the industrial park and nearby military demarcation line, shut the western overland route and declare the park as a military off-limit zone.”

Seoul’s Unification Ministry said in response that it would prioritize ensuring the safe return of South Koreans from the complex. The government also vowed to minimize damages to the 124 firms that operated factories in the complex.

The North’s move came as South Korea began pulling out of the industrial complex. The previous day, Seoul announced the suspension of the factory park as a retaliatory step following Pyongyang’s recent nuclear and rocket tests.

The decision to shut down the complex, a symbol of cross-border reconciliation and cooperation, has sparked concerns that bilateral tensions could spiral out of control and Seoul’s trust-building efforts may be headed down the drain.
 

The South Korean firms operating in the complex sent one truck each to Gaeseong to bring to the South their finished products, production materials, equipment and other belongings, while Seoul authorities vowed to try their utmost to minimize possible damages to firms.

An additional 130 South Koreans entered the complex to prepare for the suspension of factory operations. There were 70 more South Koreans in the park from the previous day as more workers were sent to carry out the government’s withdrawal instructions.

Apparently in line with Pyongyang’s instructions, North Korean workers did not show up at the park, Seoul officials said. Some 55,000 North Korean workers worked at the complex through which Pyongyang raked in around $100 million annually.

Factory owners have expressed concerns that they would have to shut down their businesses as they would fail to meet their respective deadlines for supplying goods to clients. South Korean employees would also feel apprehensive about their impending unemployment.

“I feel bitter when I think about the possibility that I might lose my job due to the suspension of the factory operations,” said Yun Sang-eun, a worker who drove a 22-ton truck back to the South with factory products from Gaeseong. 

Later in the day, South and North Korean officials in charge of management of the complex held consultations over the procedures of the pullout. Observers say they could be at odds over various issues including those concerning Seoul’s cuts in the supply of electricity and water to the complex.

A senior official at Seoul’s Foreign Ministry said that the pullout decision was an “administrative act that was carried out for public interest based on highly political judgment.”

“This (pullout) decision is to ensure the safety of our citizens, end the vicious circle of provocations and pressure Pyongyang to change course,” he told reporters on the customary condition of anonymity.

“The government would offer the maximum support to the firms who would sustain damages in the process of pulling out of the complex.”

His remarks came after a progressive association of local lawyers demanded that the presidential office of Cheong Wa Dae and the Unification Ministry explain the “legal grounds” on which they decided to close the Gaeseong park.

The association argued that the government’s decision restricts corporate activities and the property rights of companies operating in Gaeseong, hence it should be made according to clear legal grounds, and implemented through legitimate procedures.

In the afternoon, vice ministers of related government agencies held a meeting to discuss ways to support South Korean companies that are expected to suffer damages due to the suspension of factory operations in Gaeseong.

They formed a special task force to support the firms. The team, led by Lee Suk-joon, head of the Office for Government Policy Coordination under the prime minister‘s office, consists of vice minister-level officials from 11 government agencies including the Ministry of Strategy and Finance, Ministry of Trade, Industry and Energy and Ministry of the Interior.

The task force is expected to offer financial assistance to the affected firms in the form of tax benefits, loans and insurance payments, among other measures. 

By Song Sang-ho (sshluck@heraldcorp.com)