North Korea Expels Eight South Koreans, Threatens to Shut Last Border Post

Wednesday, May 26, 2010
By Paul Martin

By Bomi Lim and Nicole Gaouette

May 26 (Bloomberg) — North Korea expelled eight South Korean government workers and threatened to close the border as U.S. Secretary of State Hillary Clinton said it wasn’t too late to make amends for sinking one of the South’s warships.

“There is an opportunity here for the North Koreans to see that their behavior is unacceptable,” Clinton said in Seoul today after meeting with Foreign Minister Yu Myung Hwan.“They need to look internally to see what they could do to improve the standing of their own people and provide a different future.”

North Korea’s threats to sever all ties in retaliation for an accusation it denies have yet to include about 890 non- government workers at the 121 South Korean companies operating in the joint Gaeseong industrial park within its borders. South Korea’s benchmark stock index climbed 1.4 percent, recovering about half of yesterday’s decline, on investor optimism that the worst tension on the peninsula in two decades may soon subside.

South Korean stocks are a “screaming buy for investors looking for a quick rebound,” Henry Seggerman, president of New York-based International Investment Advisers, said in a Bloomberg Television interview. “The pullback in the Korean stock market is making it the cheapest market in Asia.”

North Korea yesterday said it will cut all ties to the South in response to the findings of an international panel that concluded the North was behind the March 26 sinking of the Cheonan. Kim ordered his military to be combat-ready, a Seoul- based dissident group said yesterday, sending the Korean won down 3 percent against the dollar. The South has responded by resuming radio broadcasts into North Korea that it called the “voice of freedom.” The won was little changed today at 1,252.28.

‘Premeditated Provocation’

South Korea’s broadcasting of propaganda into North Korea was “a deliberate and premeditated provocation” aimed at pushing the peninsula “to the brink of war,” the state-run Korean Central News Agency said today.

Amid dual threats of military retaliation, about 890 South Koreans crossed the border as usual today to work at the Gaeseong industrial complex.

South Korea has not detected any abnormalities within North Korea or along the border, presidential spokesman Park Sun Kyoo told reporters today in Seoul. South Korea is closely monitoring the situation, Park said.

Clinton will be followed to South Korea by Chinese Premier Wen Jiabao, who arrives May 28 for a summit with President Lee Myung Bak and Japan’s Prime Minister Yukio Hatoyama. China, North Korea’s main ally, has so far refused to be drawn into taking a stand on the sinking of the Cheonan, in which 46 South Korean sailors died.

Cautious Assessment

“We are seriously and cautiously looking at assessing the information coming in from all sides,” Vice Foreign Minister Zhang Zhijun said in Beijing today. “We will objectively handle this case depending on the merits. If our region falls into chaos it will undermine the interests of all parties concerned.”

South and North Korea have traded accusations and threats of military action since the May 20 report by an international panel that included experts from the U.S., Australia, the U.K. and Sweden. South Korea announced military exercises with the U.S. close to the disputed border with the North, barred investment and cut trade — excluding the industrial zone.

The Gaeseong complex employs almost 44,000 North Korean workers. The zone accounted for 56 percent of North Korea’s $1.7 billion in international trade last year, according to the South’s Unification Ministry. North Korea, which doesn’t release its own trade data, relies on aid from and trade with China to stay afloat.

UN Sanctions

United Nations sanctions imposed after the North carried out a second nuclear test in 2009 caused trade to drop 9.7 percent last year to $5.1 billion, the ministry said. China now accounts for about 80 percent of commerce with the country.

As well as being North Korea’s main ally, China also hosts international talks intended to prod the North to abandon its nuclear weapons program. In addition to the two Koreas, the talks include the U.S. Japan and Russia. The U.S., China and Russia have veto power on the UN Security Council.

Russia will cooperate in sending a “clear signal” to North Korea, President Dmitry Medvedev said in a phone conversation with Lee yesterday, according to a statement posted on the website of Lee’s office in Seoul.

It may take time to convince China and Russia to join global condemnation against North Korea, Yu said. “They won’t be able to ignore the truth,” he said at a joint press conference with Clinton.

Deepening Ties

The North Korean crisis comes as U.S. President Obama pursues a strategic goal in Asia of deepening ties with China as its economic and military power expands.

The U.S. military is preparing exercises with South Korea in anti-submarine maneuvers and interdicting vessels. The U.S. has about 28,500 troops in South Korea, a legacy of its Korean War involvement in the 1950s.

“With all the talk about military drills, this is an opportunity for the U.S. to increase its influence in the region,” Abraham Kim, Asia analyst for the Eurasia Group, a New York-based political-risk analysis firm, said in an interview. “China would consider that problematic, so they may feel forced to take some kind of measures to stabilize the situation.”

Threats of war by North Korea carried by KCNA are common. A March 26 report warned of “unprecedented nuclear strikes” against enemies while a June 9, 2009, bulletin warned of “merciless strikes” using the country’s nuclear deterrent.

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