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SEOL – The North Korean military has threatened to shut a cross-border route leading to its border town of Gaeseong, but that doesn’t mean the country is willing to give up the lucrative business there with

South Korea.

North Koreans involved in the factory park are reportedly worrying over a possible shutdown after the South halved the number of its citizens stationed in Gaeseong after announcing that the North torpedoed its warship in late March.

A North Korean official told a South Korean staffer in Gaeseong on Sunday that his country will continue efforts to develop the joint factory park, but that it will be more difficult for South Korean companies to take their equipment out of Gaeseong, according to an official at Seoul’s unification ministry.

Pointing to Seoul’s recent measure to reduce the number of South Koreans in the complex, the North Korean official accused the South of taking preparatory steps to close the factory park, the ministry official said on customary condition of anonymity.

The remarks contrast with the North Korean military’s threat to shut the cross-border route to Gaeseong in anger over the South’s resumption of anti-Pyongyang propaganda broadcasts, one of its retaliatory measures against the North’s attack on the South Korean warship in late March.

The threat had cast doubts over the fate of the complex, the last-remaining reconciliatory project between the two Koreas, who are still technically at war as the 1950-53 Korean War ended in a truce, not a peace treaty.

The joint project combines cheap North Korean labor with South Korean capital and technology. About 110 South Korean factories employ some 42,000 North Korean workers at the complex. Revenues from the zone have been a key source of hard currency for the impoverished North.

The factory park’s closure would leave North Korean workers without jobs and the regime without a key source of income. Amid growing fears over the future of the joint industrial park, one of the South Korean companies operating in Gaeseong has begun building a factory in China to replace its North Korean production plant.

A senior official at the company said he was not planning an immediate pullout from the North Korean enclave, but that he expects further expansion in Gaeseong would be unlikely due to a serious labour shortage.

The park was set up when reconciliation between the two Koreas boomed following the first-ever summit of the two Koreas in 2000. But theirties were badly damaged as North Korea strongly protested President Lee Myung-bak’s hard-line policies on Pyongyang, including his linking of aid to progress in international efforts to end North Korea’s nuclear programmes.