South Korea warns North over ‘illegal’ asset freeze following Kaesong shutdown

A vehicle of the Kaesong industrial complex near the border checkpoints near the DMZ in Gyeonggi province, South Korea, on Feb 11 2016.
A vehicle of the Kaesong industrial complex near the border checkpoints near the DMZ in Gyeonggi province, South Korea, on Feb 11 2016. PHOTO: EPA

SEOUL (AFP) – South Korea warned North Korea on Friday (Feb 12) that it had acted “illegally” in freezing the assets of South Korean companies and staff expelled from the jointly run Kaesong industrial zone.

Seoul’s Unification Minister Hong Yong Pyo said Pyongyang’s decision to kick out the South Korean firms was “very regrettable” and added the North would have to take full responsibility for any consequences.

North Korea on Thursday (Feb 11) said it was closing Kaesong completely and placing it under military control.

All South Koreans working in the zone, which lies 10km inside North Korea, were expelled and told they could only take their personal belongings.

It also ordered a “complete freeze” of all assets left behind, including raw materials, products and equipment.

Pyongyang said the move was a response to Seoul’s decision the day before to shut down the operations of the 124 South Korean companies in Kaesong – a protest at the North’s recent nuclear test and long-range rocket test.

“North Korea expelled our people with very short notice, banned them from taking out finished products and illegally froze valuable assets,” Hong said.

He also condemned the “unjustified and extreme measure” taken by Pyongyang of cutting off the only two remaining communication hotlines with the South.

“North Korea will have to take responsibility for anything that happens now,” he added, without elaborating.

Born out of the “sunshine” reconciliation policy of the late 1990s, Kaesong opened in 2004 and, until now, had proved remarkably resilient, riding out repeated crises that ended every other facet of inter-Korean cooperation.

But the latest crisis seems to have finally snuffed out what, for years, had been the last glimmer of working North-South cooperation.

After the North expelled the South Koreans on Thursday (Feb 11), Seoul cut off all power and electricity to Kaesong.

Pyongyang declared that the complex, which employed around 53,000 North Korean workers, would be placed under military control.

Before it had been transformed into an industrial park, Kaesong was a military camp hosting two mechanised divisions and an artillery brigade.

Defending Seoul’s initial move to shut down operations at Kaesong, which triggered the North’s aggressive response, Hong said Pyongyang’s decision to push ahead with its nuclear weapons programme had left the government no choice.

North Korea conducted its fourth nuclear test on Jan 6 and last Sunday (Feb 7)  put a satellite in orbit with a rocket launch that most of the wider international community condemned as a disguised ballistic missile test.

The owners of the companies based in Kaesong had reacted furiously to the South’s shutdown order, saying their businesses were being sacrificed to politics.

Hong promised the government would provide “sufficient support” to help the firms over their losses.