N.Korea in Extortionate Demands for Kaesong Complex

      June 12, 2009 08:42

      North Korea wants South Korea to quadruple wages for North Korean workers and pay 31 times the rent at the joint Kaesong Industrial Complex. The North made the new demand in a second round of inter-Korean talks at the industrial park Thursday. That dims prospects for the project even further, but the two Koreas agreed to meet again on June 19 to continue talks.

      The Unification Ministry said North Korea demanded that workers' wages are raised from the current US$75, including social insurance, to $300 per month. Most of the wages already go to the regime, not the workers.

      It also demanded $500 million in rent for 3.3 million sq.m land put aside for the first phase of the industrial park, for which Hyundai Asan and the Korea Land Corporation in 2004 already paid in $16 million for a 50-year lease. In addition, the North wants another $10 per 3.3 sq.m for 1.98 million sq.m land currently allotted to the industrial park a year from 2010.

      An intelligence officer said, "If we pay $500 million in rent and increase the per capita wage to $300 per month, North Korea will earn $600 million to $700 million in cash this year alone. That's nearly 70 percent of North Korea's annual export volume of $900 million" as of 2007.

      The South Korean side called on Pyongyang to release a Hyundai Asan staffer identified as Yoo who has been held incommunicado in Kaesong for some 70 days. It wants the two sides establish a committee on travel between the two Koreas, which will serve as a forum to discuss the safety of South Koreans traveling to the North. Seoul also urged Pyongyang to stop conducting nuclear tests and creating military tension, resume inter-Korean talks and return to the six-party nuclear talks.

      Prof. Nam Ju-hong of Kyonggi University commented, "North Korea may want to close the Kaesong industrial park unilaterally, but it also has to be mindful of Chinese and other foreign investors who have money in the North. It is apparently attempting to choke off South Korean firms to make them leave of their own accord."

      But some feel there still is room for negotiations with the North. Prof. Kim Yong-hyun of Dongguk University said, "If it had decided to close down the industrial park, the North would have unilaterally told Seoul that it would do so, without setting a date for the next round of talks. It seems that Pyongyang is trying to see how Seoul would respond to a maximum demand."

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