Asia Minute: Chill Winds on the Korean Peninsula

Feb 12, 2016

Credit Chris Marchant / Flickr

Tensions on the Korean peninsula have been continuing all week, after North Korea’s latest satellite launch over the weekend. One area of cooperation has been shut down and now North Korea is threatening to cut its communications hotline with the South. HPR’s Bill Dorman has more in today’s Asia Minute.

Three communication tie lines link North and South Korea—one used by the military, one used by United Nations forces in the Demilitarized Zone, and one run by the Red Cross.  Pyongyang last cut communications in 2013…but soon restored them.

What sparked the latest threat was South Korea’s move to shut down the Kaesong Industrial Complex—just over the border in North Korea.  It’s a sprawling set of factories---a massive operation that employs nearly 55-thousand North Korean workers, and about 3-thousand South Koreans—who mostly work as managers.  To give you a sense of perspective, that’s a work force that’s nearly twice the size of Nike’s.  Each year, the Kaesong complex churns out manufactured goods worth more than half a billion dollars.

South Korea’s government says too many of the proceeds have gone to North Korea’s nuclear and missile programs.  One hundred-twenty four South Korean companies produce goods there—and some of them say they will face bankruptcy if the facility does not reopen.

Late Thursday, the prime minister’s office held an emergency meeting to discuss corporate compensation.  South Korea’s Export-Import Bank handles the insurance for companies at the Kaesong complex…and bank officials say nearly forty-percent of those companies are not insured.