Pyongyang to accept new economic deals with Seoul to forget the “dam” incident

Seoul (AsiaNews/Agencies) – In a surprise move designed to cool tensions North Korea has withdrawn demands for a hefty wage increase at the South Korean-run industrial park of Kaesong, accepting a 5 per cent raise instead. Pyongyang’s decision appears to be a compromise with Seoul. It will not officially apologise for the Imjin River incident but will continue the policy of North-South dialogue and economic cooperation of recent weeks.

South Koreans were outraged and incensed by a deadly flash flood caused by the North on the intra-Korean border when it opened the Hwanggang Dam. For government sources in Seoul the act was deliberate. Six South Korean campers were swept away to their death when the North intentionally released 40 million tonnes of water. All six were camping inside the demilitarised zone on the South Korean side of border.

To save face Pyongyang will not officially apologise or explain the incident but has indicated that it is prepared to barter its way out of the situation. It will accept the South’s proposal for a five per cent increase to the wages of North Korean workers employed in Kaesong industrial park, a key source of capital for the North Korean economy, which has been badly affected by decades of isolation. The minimum wage will thus rise to about US$ 58 from the current US$ 55.

Last June in the second round of government-level talks after months of confrontation, the North had demanded that wage minimum wage be raised to US$ 300 and that the corporate tax rate go from 5 to 11-12 per cent, demands now dropped after the dam incident

“After a long time, we heard good news,” said Ok Sung-seok, vice chairman of the Kaesong Industrial Council. Now “I see the environment being refurbished for us to do our job.”

The government in Seoul appears inclined to accept the proposal. “Our management office, after consultations with businesses operating in Kaesong, is going to sign with the North soon,” the South Korean Ministry of Unification announced.