SEOUL • South Korea yesterday defended its decision to abruptly pull out of an inter-Korean industrial zone, claiming that 70 per cent of the wages for North Korean workers were for years used to fund Pyongyang's nuclear and missile development.
Seoul announced last Wednesday that it would withdraw from the Kaesong Industrial Complex - where South Korean firms operated factories that employed North Korean workers - to punish Pyongyang for its latest nuclear and missile tests staged in violation of United Nations resolutions.
"Any foreign currency earned in North Korea is transferred to the Workers' Party, where the money is used to develop nuclear weapons or missiles, or to purchase luxury goods," said South Korean Unification Minister Hong Yong Pyo.
"About 70 per cent of the US dollars paid in wages are taken by the government, while the workers are given only tickets to buy food and other essential items, as well as some local currency."
The zone, which sits 10km north of the tense border, was officially shuttered last Thursday after Pyongyang expelled all South Korean managers and placed the complex under military control.
The shock shutdown of the complex - a major symbol of inter-Korean cooperation since its opening in 2004 - sharply escalated tensions and caused massive damage to the 124 Seoul firms operating there.
The Seoul firms over the years have paid wages worth US$560 million (S$780 million) - including US$120 million over the past year alone - to the North's state authorities supervising 53,000 workers at the complex.
Seoul was aware of the problem of wages being siphoned off but had maintained the project because of its status as a symbol of inter-Korean cooperation, said Mr Hong. "But the project continued to siphon off so much money (to the North's regime) and the concerns we had about the complex remained unsolved."
The isolated but nuclear-armed North staged its fourth atomic test on Jan 6 and put a satellite into orbit on Feb 7 with a rocket launch that most of the international community condemned as a disguised ballistic missile test.
Meanwhile, a top Chinese foreign policy official said the United States and North Korea need to formally declare an end to 76 years of hostility if the international community wants North Korean leader Kim Jong Un to stop developing nuclear weapons.
"North Korea and the US still have not made peace. They have been in an extended ceasefire," said Ms Fu Ying, who chairs the foreign affairs committee of China's National People's Congress. "You need to think of how to bring an end to the war and enter a more normal relationship."
The US and North Korea agreed to a UN-backed armistice in 1953 that ended three years of fighting in the Korean War.
The military stalemate split the Korean peninsula along the 38th parallel after the conflict claimed the lives of more than half a million troops from China, the US, as well as North and South Korea.
Speaking last Saturday at the Munich Security Conference, Ms Fu said that while her country was displeased with the recent nuclear test by North Korea, Chinese citizens are even more concerned by the US response.
"The Chinese public is also angry about the nuclear issue but they're even angrier about Thaad," Ms Fu said, referring to the anti-ballistic missile system that the US says it is considering deploying in South Korea to protect it against the North.
"It covers more territory in China than in North and South Korea together," she said.
AGENCE FRANCE- PRESSE, BLOOMBERG