SEOUL, South Korea - North Korea declared all contracts on running a lucrative, joint industrial complex with South Korea invalid Friday, the latest move that raises tensions on the Korean peninsula.
The announcement called into question the fate of a factory park once heralded as a promising example of collaboration between the two wartime foes. More than 100 South Korean firms operating in the northern border town of Kaesong employ some 38,000 North Koreans to make everything from clocks to shoes.
With its relations with Seoul steadily souring, Pyongyang said it will draw up its own regulations on wages and taxes for Kaesong. The announcement was carried by the country's official Korean Central News Agency.
South Korea must accept the new regulations unconditionally -- or leave Kaesong, the statement said.
The South said the announcement was unacceptable and called the North "irresponsible."
"This is a measure that fundamentally threatens the stability of the Kaesong complex, and it is not acceptable at all," said Unification Ministry spokesman Kim Ho-nyeon. "It is irresponsible for the North to say that (companies) should leave unless they unconditionally accept its unilateral measure."
The two Koreas technically remain at war because their three-year conflict ended in a truce in 1953, not a peace treaty. They remain divided by a heavily fortified border.
The industrial park opened in 2004 at a time of budding reconciliation between the two Koreas. However, relations have deteriorated since conservative President Lee Myung-bak took office in Seoul last year.
Angered by his policies, North Korea cut off reconciliation talks and suspended key joint projects -- except the factory park, which provides the impoverished North with much-needed currency.
Last month, North Korea demanded higher wages and said it would raise prices for use of North Korean land.
Seoul said earlier Friday that it proposed a meeting with North Korean officials early next week to discuss recent tensions over the Kaesong park and the detention of a South Korean worker there more than a month ago for allegedly denouncing North Korea's political system.
