SEOUL - COMMUNIST North Korea is prepared to shut down a sprawling Seoul-funded industrial estate - at least temporarily - as part of its fierce dispute with South Korea's conservative government, analysts say.
The future of the Kaesong estate has been clouded by uncertainty since the North announced it would impose even tougher border controls from Dec 1.
It said it would halt a cross-border rail service and a day tour and 'selectively expel' South Koreans from the estate, which was built just north of the border as a symbol of reconciliation under a previous Seoul government.
The curbs are likely to hamper operations at Kaesong, where 35,000 North Koreans earning about US$70(S$106) a month work for 88 South Korean light industrial firms.
The North indicated this week it would not force the closure of the estate but some analysts believe this is on the cards.
They said the North always feared that Kaesong - seen as an experiment in capitalism - could undermine its rigid state-directed economic structure.
Pyongyang now sees little hope that Seoul's government will fund a planned expansion of the estate and has concluded that the economic gains are not worth the political risk, according to Professor Kim Yong Hyun of Dongguk University.
Prof Kim said rosy hopes for gains led the impoverished North to agree to Kaesong, even though it feared its system could be undermined.
But plans for a major expansion at Kaesong have effectively been suspended since President Lee Myung Bak came to power in February after 10 years of liberal rule.
Mr Lee linked full-scale economic cooperation with progress in disarming the nuclear-armed North.
'The North is apparently prepared to go to the extreme and shut it (Kaesong) down as it sees little possibility of the South moving on to the second-stage expansion plan under Mr Lee's government,' Prof Kim told wires agencies.
He said that despite economic difficulties the North could afford to give up the estimated income of US$50 million (S$76 million) a year from the industrial estate and from the day tour.
Leader Kim Jong Il recently visited factories in Sinuiju city near the border with China. Dongguk University's Prof Kim said this was a signal that Pyongyang will seek stronger ties with Beijing to compensate for worsening links with Seoul.
A researcher who recently visited Pyongyang said party and government officials told him a decision was made in October to shut down the estate.
'I heard from North Korean officials that highly placed authorities have decided to shut down Kaesong by the end of December,' Mr Cho Bong Hyun, of the IBK Economic Research Institute, told wires.
'They also decided not to deal with the current South Korean government until its term expires in four years' time,' Mr Cho said.
Cho said Pyongyang was angry at Seoul's tougher policy and concerned at 'bad influences' to which Kaesong workers were exposed while dealing with South Koreans.
It also believed the Seoul government is backing activists who send propaganda leaflets northwards.
North Korea sent inspectors to the estate earlier this month. One was quoted as saying a decision had already been made on its fate and it is 'therefore not necessary to discuss it any further.'
Mr Baek Seung Joo of the Korea Institute for Defence Analyses said the North might close the estate temporarily, but could not afford to do so permanently.
'The North used every possible means, even a nuclear card, to have itself successfully removed from the US list of terror-sponsoring states in order to attract foreign funds and ease economic difficulties,' Mr Baek said.
'If it closes down Kaesong for good, it would nullify the effect of the removal from the list,' he said.
Professor Yang Moo Jin at the University of North Korean Studies said Pyongyang was using Kaesong to press the South to change course.
'Kaesong is the only possible leverage for the North to put pressure on the South because it cannot afford military means, which would irritate the US and its upcoming Democratic administration,' Prof Yang said. -- AFP
