2 Koreas Fail to Agree on Terms to Reopen Factory Complex

http://www.nytimes.com/2013/07/26/world/asia/2-koreas-fail-to-agree-on-terms-to-reopen-factory-complex.html

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SEOUL, South Korea — South and North Korea threatened to terminate their last remaining joint economic project on Thursday after they failed to narrow differences over reopening the project, a jointly operated industrial complex at Kaesong just north of the border the countries share.

The complex, where companies manufactured consumer goods using Southern capital and technology and a mainly Northern work force, has been shuttered for three and a half months. Officials from both Koreas met in Kaesong on Thursday, their sixth round of talks this month, but the talks ended without an agreement or a date for further talks.

The North withdrew its 53,000 workers from the complex April 8, blaming tensions it said were caused by joint American-South Korean military exercises. The South later withdrew its own citizens, most of them factory managers.

A major issue in the talks has been the South’s demand that the North take responsibility for the damage caused by the abrupt shutdown of the factories. The North says the shutdown was the South’s fault and that the South’s confrontational attitude has kept it from reopening.

Inter-Korean relations deteriorated earlier this year as the two sides exchanged threats after the North’s nuclear test in February. Some dialogue between the governments has since resumed, but the barbed exchanges on Thursday revealed their deep mutual mistrust.

Both sides say that the fate of the Kaesong industrial park has become a watershed: whether they can reach a deal to reopen it will have broad implications for broader relations between them.

The conservative government of President Park Geun-hye in South Korea appears determined to use the Kaesong talks to end a “vicious cycle” of provocative behavior by the North and appeasement by the South.

The Kaesong complex was the last of a group of cross-border projects set up during an earlier period of rapprochement and then halted one by one as relations soured. It opened in 2004 and produced $470 million worth of goods last year.