North Korea on Wednesday threatened to close the inter-Korean Kaesong Industrial Complex, peeved at South Korea's decision to sanction the North over last year's rocket launch. In a statement, the North's National Economic Cooperation Committee pledged to "a resolute response, including turning the industrial complex back into a military zone."
The former military district was turned into an industrial zone in 2002, and the joint industrial park opened in 2004. Some 124 South Korean companies make things like garments and shoes there with cheap North Korean labor.
Pyongyang is upset by Unification Minister Yu Woo-ik's remarks at the National Assembly on Monday that Seoul will put into effect a UN Security Council resolution of Jan. 23 and beef up checks of materials bound for Kaesong.
But a ministry official said, "If the industrial complex is closed, it's the North that will take the blow." The complex is one of the few remaining sources of hard currency for the cash-strapped North, which pockets most of the workers' wages.
Since the complex opened in March 2004, the regime has repeatedly taken it hostage when inter-Korean relations became strained.
After the North sank the South Korean Navy corvette Cheonan in March 2010, Seoul also considered closing the complex, and decided the cost of some US$500 million would be bearable.
But for Pyongyang it would mean the loss of some $90 million in cash annually from the wages for some 53,500 North Korean workers, which it can ill afford amid tighter international sanctions.
Another 250,000 to 300,000 residents of Kaesong and surrounds rely to some extent on workers at the complex. Electricity and tap water are supplied to the city via the complex by South Korea.
That is why the regime kept the complex running even as the inter-Korean relations came to an almost complete standstill after the 2010 attacks.