S. Korea cuts utilities of Inter-Korean industrial complex
South Korea has cut the power and water supply of the Inter-Korean industrial complex located in Kaesong, North Korea. It was done after North Korea ordered a military takeover of the complex and deported all the South Korean workers. This has further escalated the tensions between the 2 nations which were already at their peak after North Korea launched a satellite earlier this week.
The Inter-Korean Industrial complex or the Kaesong Industrial complex, launched in 2004, is a joint venture between the South Korea and North Korea and is located 10 km north of the demilitarised zone on the western side of the border.
The complex is the last symbol of cooperation between the 2 nations. About 124 South Korean companies had invested $835 million in the park which provides employment to 53,000 North Korean workers. The industrial park allows the South Korean firms to employ cheap but skilled North Korean workforce while North Korea gets important foreign income in the form of wages and rent.
The tensions between the two nations rose in 2010 when North drowned a South Korean ship. However, the operations in the Kaesong industrial complex were not suspended despite sanctions being imposed by South Korea on its northern rival.
The Kaesong industrial complex was closed for the first time in 2013 after tensions increased between the two Koreas. North Korea pulled out its workers from the industrial complex due to the military drill between South Korea and the US. The operations, which resumed after 160 days when an inter-Korean agreement was signed, had cost $870 million to South Korean companies.
Kaesong industrial complex opened a shop in the South Korean capital Seoul. The store which sells made in Kaesong products received a huge response from South Korean people. The quality of products had been good as the raw material is mainly sourced from South Korea. It had helped in improving the brand image of North Korean products in the minds of South Korean people.
Although North Korea does not release its economic data, according to the South Korean central bank, North Korea's GDP is about $28.5 billion or 2% of South Koreas's GDP.
South Korea announced that it would suspend the operations at Kaesong industrial complex as a means to cut foreign money supply to North Korea. South Korea alleged that North Korea used this money to pursue its missile and nuclear programs. However, the South Korean industry is opposing the decision as the move would escalate anxiety among South Korean people besides affecting the companies.
North Korea seized the assets of South Korea in the Kaesong industrial complex and had put the complex under military control. North's response came after Seoul suspended operations at Kaesong which North termed as a "dangerous declaration of war". Pyongyang also ordered the shutting off vital cross-border communication hotlines between the 2 nations. Seoul termed the seizure of assets at the factory as "illegal".