SEOUL, South Korea – The biggest symbol of reconciliation between North and South Korea — a lucrative joint industrial park — faces doom after Pyongyang on Thursday demanded a 3,000 percent increase in rent for the site, a figure one businessman called "nonsense."
It also asked for a four-fold increase in wages for 40,000 workers employed by South Korean companies at the park, located in the North Korean border town of Kaesong, about two hours drive from Seoul. The demands were made during talks between the two sides at Kaesong, an official said.
Late Thursday, North Korea's official news agency issued a statement saying relations between the two countries had reached the "phase of catastrophe" and the Kaesong complex had been "thrown into a serious crisis."
The motive behind the secretive regime's requisition was unclear but analysts provided a variety of possibilities: supreme leader Kim Jong Il's government is so impoverished that it is clutching at straws to survive; it wants to raise tensions with the South to harden internal unity as the ailing Kim prepares to hand over power to his son; it's a bargaining ploy to force the pro-U.S. government in Seoul to soften its hand-line stand.
Any or all of these theories could be the answer to the enigmatic and unpredictable communist government's actions.
But it is clear that the effort to squeeze hundreds of millions of dollars out of Seoul will further strain ties, already dragged down by Pyongyang's recent nuclear and missile tests and the detention of a South Korean worker at the industrial park in Kaesong.
North Korea also faces tough new U.N. sanctions, likely to become official within days, to punish it for its nuclear activity.
"We have to think about why North Korea made this demand when it is aware that this is not acceptable to us?" said Paik Hak-soon, a senior analyst at the Sejong Institute, a security think tank.
He said North Korea is trying to send a "message that the Kaesong complex, which is the symbol of inter-Korean reconciliation and cooperation, faces the crisis of getting shut down" and therefore South Korea should become more conciliatory toward it.
After a conservative government with a hard-line policy on the North took office in Seoul last year, the reclusive regime cut off ties and halted all major joint projects except the Kaesong Industrial Complex.
The complex, which houses 106 South Korean companies, was hailed as a model of economic cooperation between the rivals when it opened in 2004.
It combines South Korean capital and technology with cheap North Korean labor. Workers are hired on a monthly salary of $70 on average, but the money goes directly into government bank accounts.
At Thursday's meeting, North Korea demanded the salary be increased to $300 a month in the first year, followed by annual hikes of 10 to 20 percent, said Unification Ministry spokeswoman Lee Jong-joo.
"That's nonsense!" Park Jung-ho, a former official of a shoe factory operating in Kaesong, said of the North's wage demand. "We have to look at the productivity of North Korean workers. If South Korean workers produce, say, 100, North Koreans only produce 30."
South Koreans pay about $170 a month to Chinese laborers in their factories in China.
Lee said North Korea also wanted rent of $500 million for the 35 million-square foot 3.3 million-square-meter site. Under an agreement between the two countries, North Korea has already received $16 million as rent for 50 years.
The North Korean news agency said Pyongyang is seeking the "re-examination and re-negotiations of the business" in Kaesong because there is no reason to give South Korean companies preferential treatment any more.
Associated Press writers Kwang-tae Kim and Jae-soon Chang contributed to this report.
Dugong 'Wuru' eats from a special lettuce birthday cake during the Sydney Aquarium's 21st birthday celebration. AFP/Greg Wood
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