N. Korea Cuts South's Access to Factory Site

Reductions of South Korean staff -- and sharp cutbacks in hours during which border crossings are allowed -- are expected to inconvenience companies operating in Kaesong, but they will not drastically disrupt factory operations, said one South Korean businessman who runs a factory there and spoke on the condition of anonymity.

"North Korea has too much at stake to kick out the manufacturing business community," the businessman said. "North Korean officials assured us that our business activities will not be hurt. No one from the manufacturing sector has been asked to leave yet. It would be too much of a risk for North Korea to give up cash payments they get for wages and rent."

At Kaesong, companies pay North Korean workers about $68 a month, with about $53 of that going directly to the North Korean government, according to recent estimates. The livelihoods of about 110,000 people living near Kaesong depend directly on the complex.

In cash-starved North Korea, revenue from the complex "is spread out to support people who surround Kim Jong Il," said Cha Jae-hoon, a professor of politics at Kyonggi University in Seoul.

North Korea has a long history of using threats and provocations as part of its negotiating strategy.

Its explosion of a small nuclear device two years ago triggered an abrupt reversal of the Bush administration's long-standing refusal to negotiate directly with Kim's government. Those negotiations this fall produced an outcome that North Korea had been seeking for years -- its removal from the U.S. list of states that sponsor terrorism.

"The North's strategy with South Korea seems to be the same: create crisis and extract concessions," said Koh, the North Korean specialist at Dongguk University. "If they really shut down Kaesong, that means they are severing ties with Lee. They are not doing that now. They are giving Lee a chance to respond."

Special correspondent Stella Kim contributed to this report.