The troubled economy of North Korea (DPRK) may be the first casualty of further escalation.
Despite plenty of wartime bluster coming out of Pyongyang about the so-called “puppet government” of the South, DPRK actually relies on its neighbour for a huge source of income.
Charitable economic deals and shipments of food and fertiliser to the North under the South’s “Sunshine Policy” came to an end under conservative South Korean President Lee Myung-bak.
But one link still remains in a successful trade zone that hosts workers from both sides.
Just over the border between the two countries is the Kaesong industrial zone, a plot of land housing more than 120 factories and employing more than 50,000 North Koreans and hundreds of South Koreans managing them, according to the BBC.
Besides being one of the few places where the two sides can come together, it’s also providing crucial revenue to a flailing North Korean economy. NBC News estimates it’s one of the biggest money makers for Pyongyang, to the tune of $2 billion a year.
Hyundai and the other South Korean firms that use the Kaesong site don’t pay their North Korean employees directly — they pay the North Korean government, which keeps an enormous portion of the pittances for itself. According to the CRS report, up to 45 per cent of the official wage ends up going to the Kim Jong Il [now Kim Jong-un] regime. Sherman says the actual per cent taken from the government may be much higher — workers could receive only $8 a month, he said.
With trade between the two countries reaching a record high in 2012 ($1.97 billion from previous $1.91 billion in 2010), the latest provocations from the North to block South Korean workers from entering Kaesong makes little sense in terms of self interest.
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