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SEOUL: North and South Korea have resumed talks on the fate of their last remaining reconciliation project, amid high tensions between Pyongyang and the outside world over its nuclear programme.
The future of the Kaesong joint industrial estate just north of the border has become increasingly uncertain as North-South relations worsened and the nuclear standoff intensified.
Pyongyang is demanding extra payments worth hundreds of millions of dollars for Seoul's use of the estate and refuses to grant access to a South Korean employee it detained at Kaesong.
Seoul officials were outwardly optimistic.
"The weather is good today, so wouldn't the talks go well?" unification ministry official Kim Young-Tak told Yonhap news agency before crossing the heavily fortified border.
He heads a 14-member delegation due to resume the talks at Kaesong at 10:00 am (0100 GMT). Reporters are barred from covering the discussions.
The communist state last week stunned Seoul by demanding a wage rise for its 40,000 workers at Kaesong to US$300 per month from around US$75 currently.
It also demanded an increase in rent for the Seoul-funded estate to US$500 million, compared with the current US$16 million for a 50-year contract.
The estate is the last functioning reconciliation project between the two countries, which have remained technically at war since their 1950-53 conflict.
Kim said the South will press for the release of the employee detained since March 30 for "slandering" the North's political system and allegedly trying to incite a local female worker to defect.
Representatives of the 106 South Korean firms at Kaesong, and President Lee Myung-Bak, have rejected the financial demands as excessive.
"The North is now making excessive demands concerning the Kaesong industrial zone. We will not accept them," Lee told a press conference in Washington Tuesday.
"If Kaesong shuts down, 40,000 North Koreans would lose jobs. This is why the North must stop making excessive demands for its own interest."
His strong comments spurred speculation that Seoul may have shifted from its stance of trying to keep the venture going under any circumstances.
Lee was speaking after a summit with US President Barack Obama, who described a nuclear-armed North Korea as a "grave threat."
The North has angrily rejected UN sanctions imposed for its May 25 nuclear test and has vowed to build more atomic bombs.
Cho Bong-Hyun, an analyst with IBK bank, told Yonhap Lee's message would draw a response from North Korea since its military is believed willing to see Kaesong shut down.
"North Korea has heard South Korea's response and it will come to the talks with a tougher position, with extra demands like tax charges," Cho said.
The impoverished communist North received US$26 million last year in wage payments. Yet some analysts say it may be willing to forgo the cash because it fears the effects of exposing its workers to the South Korean lifestyle.
Cross-border relations have been hostile for the past year after Lee's conservative government rolled back Seoul's previous "sunshine" aid and engagement policy with Pyongyang.
The North has intermittently restricted access to Kaesong and expelled some South Korean staff.
- AFP/yb
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