North Korea plans to recall 51,000 workers and temporarily shut down its operations at the Kaesong Industrial Park that it runs jointly with South Korean companies just north of the border.
Analysts in South Korea see the move as a leap in Pyongyang's determination to make sacrifices amid its increasingly belligerent rhetoric, including indications of a fourth nuclear test.
"This is a big deal," said Yoon Sang-Hyun, the ruling Saenuri Party lawmaker and an expert in foreign policy and inter-Korean relations. "No more words, they're really taking a blow economically and demonstrating that they really mean what they've been crying out loud."
Kim Yang Gon, North Korean secretary of the Central Committee of the Workers' Party of Korea, in charge of North-South issues, read a statement after visiting the complex, saying the "zone is now in the grip of a serious crisis" and "has been reduced to a theater of confrontation with fellow countrymen and military provocation, quite contrary to its original nature and mission."
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The industrial complex is a key source of cash for North Korea. Their workers are estimated to have made $80 million in salary last year, according to South Korea's Unification Ministry. Combining cheap North Korean labor and South Korean capital investment, the complex produces textiles, machinery, and other light industry products.
It is the last of several inter-Korean rapprochement projects left from the the period 1998 to 2008, the decade during which the two Koreas made efforts toward peace and economic cooperation.
Kim said they are pulling out the North Korean workers but made no mention of the remaining 475 South Korean managers running the factories there. Entry by commuting South Korean staff into North Korean side of the border was closed last week, blocking transfer of supplies. About a dozen of 123 South Korean companies have already shut down operation.
North Korea has been threatening a nuclear strike against the United States and South Korea for weeks in protest of ongoing joint military drills in the south and the latest U.S.-led U.N. sanctions over its Feb 12 nuclear test.
The South Korean government today mentioned the possibility of a fourth nuclear test coming soon at the Gilju area, northeastern province of Hamkyong. Citing recent activity and movement of soldiers and cargo detected in that area, the Ministry of Defense spokesman Kim Min-Seok confirmed that "North Korea is always ready and prepared to launch another nuclear test" at one of the two underground tunnels.
But he cautioned that that level of activity has always been there and does not mean Pyongyang is readying another test.
United Nations Secretary-General Ban Ki-moon, during a visit to the Netherlands, urged North Korea not to carry out a new nuclear test, saying it would be a "provocative measure" that would breach Security Council resolutions.