By Blaine Harden
Washington Post Foreign Service
Thursday, May 27, 2010; A12
SEOUL -- Despite North Korea's vow this week to cut all economic and political ties with South Korea, an important symbol of cross-border economic cooperation appeared to remain intact and open for business Wednesday.
Production continued at the Kaesong industrial complex, a six-year-old factory park just north of the heavily armed border that separates North and South Korea. About 45,000 North Koreans went to work as usual for 121 South Korean companies in the complex, the sole remaining symbol of economic cooperation between the neighbors.
South Korea began anti-submarine exercises Thursday morning off its west coast, with 10 warships testing depth charges and naval guns. But the training occurred well away from a disputed sea border between the two Koreas, military officials told local media.
North Korea had threatened Tuesday that it would sever all relations with the South. Its move followed Seoul's imposition Monday of trade and other sanctions on Pyongyang for its apparent role in a torpedo attack on a South Korean naval ship two months ago that killed 46 sailors.
The North denies sinking the ship and has threatened war if there is any move to punish it. But its actions at Kaesong were not nearly as uncompromising as its rhetoric: It allowed several hundred South Korean managers and engineers to cross the border Wednesday and go to work.
It did expel at least eight South Korean government officials and cut North-South phone lines for some manufacturers. But one company official said that North Korean workers were allowed to work and that South Korean managers were allowed to manage.
"The situation at Kaesong at this moment is that nothing much has changed," said Song Ki-suk, former chairman of Korea Micro Filter, a South Korean auto parts company that employees 350 North Koreans.
That status quo is at risk. North Korea warned Wednesday that it would "totally ban" South Koreans from Kaesong if Seoul installs propaganda loudspeakers at the border, as it threatened to do early this week. The speakers were taken down in 2004, when relations between the two Koreas were less frosty.
The North is also threatening to blow up any speakers the South erects near the border.
Still, it appears that North Korea wants Kaesong to keep operating. The industrial park injects more than $60 million a year in rent, fees and workers' salaries into the country's moribund economy.
Pyongyang has periodically threatened to close the complex unless demands were met for higher rent, increased wages and other concessions. But those demands have had a history of softening or going away -- as the flow of hard currency quietly prevails over North Korean quibbles.
As Kaesong hummed along Wednesday, Secretary of State Hillary Rodham Clinton paid a quick visit to Seoul to repeat that the Obama administration supports South Korea in blaming the North for the attack that sank the 1,200-ton Cheonan on March 26.
Clinton arrived here from Beijing, where she had urged Chinese leaders to accept the findings of an international investigation that found overwhelming evidence of North Korea's role in the vessel's sinking.
China is North Korea's largest trading partner and principal patron, and Chinese officials have declined to condemn the government of Kim Jong Il for the sinking of the ship. They say they are still examining evidence and have called for calm on all sides.
In remarks to reporters, Clinton suggested that China may continue to be a hard sell, as the United States, South Korea and Japan prepare to press the U.N. Security Council to condemn North Korea for an unprovoked attack.
"We hope that China will take us up on our offer to really understand the details of what happened and the objectivity of the investigation that led to the conclusions," she said.
There have been reports this week that Kim's government, in a cable radio broadcast to North Korean homes, has told the army to be ready for war. But South Korea's military said Wednesday that it saw no indications of unusual activity by troops in the North.