In its latest belligerent move, North Korea Wednesday closed access a joint factory zone on the DMZ that earns it $2 billion a year in trade but will let hundreds of South Korean workers go home, officials said, allaying fears they could have been held hostage.
Factories in the Kaesong Industrial Park were still believed to be operating, Reuters reported, but North Korea's decision to block entry is a further sign of the growing tensions on the Korean Peninsula. On Tuesday, Pyongyang said it would restart a mothballed nuclear reactor.
The industrial park has never stopped operations since it was inaugurated in 2000 as part of efforts to improve ties between the two Koreas. It houses 123 companies and is staffed by 50,000 North Koreans and hundreds of South Korean business owners and managers.
More than 800 South Koreans had stayed overnight in the park, just north of the world's most heavily armed border. South Korea's Unification Ministry demanded the park be opened.
When 179 South Korean workers and managers and 153 vehicles heading for Kaesong showed up at a border crossing Wednesday morning, North Korea refused them permission to cross, the Unification Ministry, which is in charge of relations with the North, told The New York Times.
The ministry later said 46 workers would return by 5 p.m. with the remainder staying there, South Korea's Yonhap news agency reported.
"Trust between North and South will fall apart, as well as the trust we have with our buyers. We're going to end up taking the damage from this," Lee Eun-haeng, who runs an apparel firm in Kaesong, told Reuters at the customs office at the town of Paju on the southern side of the border.
Lee's business employs 600 North Koreans who earn $130 on average a month.
Another company official, Jang Sun-woo, said North Korean workers had been unfriendly since the weekend while there had been growing concern that difficulties sending in supplies and oil could hit operations soon.
"It appears to be a temporary measure intended to raise tensions with the South, having declared it is entering a state of war and having been ridiculed for keeping Kaesong open for financial reasons," said Cheong Seong-chang of the Sejong Institute think tank in Seoul.
"At least until the end of April, when (South Korean/U.S.) drills end, the North is likely to keep up the tensions as it had done in previous years. The message is it is capable of dealing a major blow to Kaesong."
News of the Kaesong closure hurt South Korean financial markets. The won currency was trading at a six and a half-month low in early trade.
It was not the first time that North Korea had disrupted the park’s operation. It blocked cross-border traffic for four days in 2009, out of anger over joint military drills by South Korean and American troops. Hundreds of South Koreans were stranded in Kaesong, and inventories of factory supplies nearly dried up. That blockade was lifted when the military exercises ended.