Thu, Oct 12, 2006 - Page 5 News List

North Korea: Test threatens inter-Korean projects

AFP , SEOUL

Landmark inter-Korean projects which earn North Korea tens of millions of US dollars a year have already been hit by the communist state's nuclear test, officials said yesterday.

The number of South Korean tourists to the North's scenic Mount Kumgang resort has declined by more than 30 percent since Pyongyang's shock announcement on Monday.

Officials also warned yesterday that jitters would prolong a delay in expanding a South Korean-built industrial estate at Kaesong in the North as the UN prepares tougher sanctions on Pyongyang.

The two projects, symbols of Seoul's "sunshine" policy of engagement with its communist neighbor since the late 1990s, have faced rising calls to cut off funding that could be used for weapons.

The projects launched by South Korea's Hyundai Group have been major sources of hard currency for the impoverished North.

Hyundai has invested 1.5 trillion won in the two projects. It has also remitted more than US$450 million to North Korea from Mount Kumgang since tours began in late 1998.

Kaesong, where thousands of North Koreans work for South Korean companies, was opened in 2004 and brings Pyongyang up to US$600,000 in wages each month.

Seoul hoped to make it a development model, combining its capital and the North's cheap labor, to reduce tensions which have existed since the 1950-1953 Korean War.

At a meeting with South Korean President Roh Moo-hyun yesterday, businessmen operating in Kumgang and Kaesong demanded that their businesses remain unaffected, according to Roh's office.

"We would carry on even if there was only one Mount Kumgang tourist left. We need lots of help," Hyundai Group chairman Hyun Jeong-eun told Roh, according to the office.

Roh remained cautious in responding, saying he would "consider various things before reaching a conclusion" on the fate of the projects, his aides said.

A poll conducted by the Joong Ang Ilbo newspaper indicated 53 percent of South Koreans want the Kumgang and Kaesong projects to stop while 42 percent want them to continue.

Hyundai Asan, an affiliate of the South Korean group that runs both projects, said 31 percent of the 1,263 South Koreans with bookings for Tuesday had canceled their trips to the Kumgang resort.

Some 43 percent of 888 scheduled visitors canceled their tours yesterday.

"The Mount Kumgang tour is going on as scheduled today though," Hyndai Asan spokesman Choi Yong-man said.

The South's construction ministry and state-run Korea Land Corp reiterated they had no immediate plans to resume the expansion of the Kaesong site.

"There has been a delay since North Korea test-fired missiles in July. The delay will be prolonged even further by its nuclear test," said Bae Kook-yeol, a senior manager of Korea Land Corp.

An unidentified construction ministry official told the Yonhap news agency that Seoul had "indefinitely" postponed the Kaesong land leases, originally rescheduled for late this month, to South Korean firms.

Kaesong is just north of the heavily fortified border. The North has called for the South to expand the industrial site.

Currently 15 South Korean firms operating in Kaesong and Seoul had expressed hopes of attracting some 3,000 factories there by 2024.

Helped by the engagement policy, South Korea became North Korea's second largest trading partner after China in 2002, accounting for one-third of the North's annual trade.

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