North Korea stands to lose a key source of hard currency for its troubled economy if it closes an industrial complex it operates with South Korea.
The eight-year-old Kaesong factory complex is the last remaining direct economic tie between the two Koreas. The 123 South Korean companies that operate at the facility, 10 kilometers north of the demilitarized zone separating the two countries, employ more than 50,000 North Koreans, with the communist government taking a significant portion of the workers' salaries of about $110 a month.
The North Koreans also collect taxes and revenue from the operation of the facility, which last year produced $470 million worth of textiles, automotive parts and wiring for household appliances. About 800 South Koreans work at the complex, but last week North Korea blocked further South Korean access to it, which forced some of the companies to suspend their operations when they could no longer transport fuel, food and raw materials from South Korea.
Nearly 500 South Koreans remained at the facility as North Korean announced it was pulling its workforce from the complex.
The official announcement broadcast in North Korea blamed South Korea and the United States for insulting its dignity and said North Korea would decide whether to close the facility.
"(North Korea) will withdraw all its workers from the Kaesong Industrial Zone. As South Korea and the United States insult the country's dignity and make the zone a starting point of war, the Kaesong Industrial Zone will be halted from now on. We will review the issues of keeping or discarding the Kaesong Industrial Zone."
One South Korean who works at Kaesong, Hwang Jung-yeon, said he thinks the closure will be temporary.
"I think it is just a temporary problem caused by Kim Yang Gon's (the secretary of the Central Committee of the Workers' Party of Korea) visit to the Kaesong industrial complex. I think North Korea is trying to scare us, but I still think the situation can be resolved by dialogue."