North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-7-15-1
7/15/2009

Despite the fact that inter-Korean relations continue to be stalled, North Korea authorities reportedly provided approximately 1,300 new workers in June for businesses entering the Kaesong Industrial Complex (KIC). Despite the fact that there has been no progress in inter-Korean working-level talks between authorities involved in the KIC, the North is continuing to provide a labor force for South Korean businesses in the complex.

An official from the Kaesong Industrial District Management Committee verified that “approximately 1,300 new laborers were supplied last month,” and that “there are some young workers, as well, but the majority are 30 to 40-year-old women.” The official also explained, “the number of laborers was reduced slightly at the beginning of the year; while [their number] was insufficient, laborers continue to come…up until June of this year, while the number fluctuated, an average of around 700 per month [were provided].” Last year, the number of new workers each month was around 1,000.

New workers continue to be provided to the KIC, but there has also been a sharp increase in the number of workers quitting or being removed from their positions. At the end of June, there were 40,255 North Korean laborers; the overall number of workers provided by the North has only increased by 1,324 since the end of last year.

The source explained that at the beginning of 2009, more than 2000 construction workers quit. It appears, according to the numerous reports on the status of employment in the KIC, that the supply of workers is still insufficient, but that the North Korean authorities are working as hard as possible to provide what manpower they can.

North Korea’s Central Special Zone Development Guidance General Bureau recently held a general assembly for all North Korean labor representatives, and ordered them to “work to the max” in order to alleviate all complaints by South Korean businesses. However, as there has still been no resolution to the issue of constructing additional dormitories for the workers, this issue will continue to restrict growth in the number of North Korean laborers, regardless of the attitude in Pyongyang.

Anna Louise Strong (November 24, 1885 – March 29, 1970) was a twentieth-century American journalist and activist best known for her reporting on and support for communist movements in the Soviet Union and the People’s Republic of China.

In 1949 she wrote a pamphlet for Soviet Russia Today titled, “In North Korea: First Eye-Witness Report” (Many will be familiar with the DPRK equivalent, Korea Today, which has survived long enough to be published on the internet)

The text is relatively short, but since this is exam season, I will not get around to it for a couple of weeks.  Enjoy.

(hat tip Alina)

This week, The South Korean government announced that if the North unilaterally files formal charges against a detained South Korean worker it will reevaluate regulations for its citizens to enter the zone which would require each border crosser to obtain a written guarantee of his safety from Pyongyang before leaving South Korea.  Although the number of South Korean workers allowed to cross the DMZ was reduced after the North’s missile launch, this would effectively prevent South Korean managers from entering the Kaesong Zone and would likely bring an end to operations there.  According to Yonhap:

South Koreans may be barred from visiting North Korea if the communist country takes legal action against a Hyundai Asan employee who has been unlawfully detained by Pyongyang, a government source said Sunday.

The Hyundai employee, who works at the Kaesong Industrial Complex and is identified only by his family name of Yu, has been held for 28 days for allegedly criticizing Pyongyang’s political system and trying to lure a North Korean female worker to defect to the South.

The worker in his 40s has yet to be interviewed by South Korean authorities to determine the exact nature of the detention.

“Under the special arrangement governing the Kaesong complex, the two Koreas must reach an understanding on how to deal with serious offenses involving South Koreans (that carry punishments) exceeding warnings, fines and expulsions,” the source, who declined to be identified, said.

“If Pyongyang takes unilateral action to indict the worker, it will be a violation of the fundamental rules related to cross-border interactions and will compel Seoul to rethink its stance on allowing South Korean to visit the North,” the source stressed.

The bilateral agreement makes clear that Pyongyang should respect the rights of South Korean workers, dwellings and property in Kaesong and the special tourist region in Mount Kumgang on the east coast. The latter has been closed since the shooting death of a female tourist by North Korean guards last July.

He said that if protection for South Koreans nationals cannot be ensured, Seoul will be compelled to review its policies on allowing visits from scratch.

“If this is the case, even employees working at Kaesong will have to get individual, written permission from North Korea that they will not be detained,” the official said.

Such a move could effectively make it hard for South Koreans to go to North Korea, crippling normal operations at the complex just north of the demilitarized zone that separates the two countries.

As of March, 101 South Korean factories operated in the complex, employing about 39,000 North Korean workers. The Kaesong park opened in 2005 and produces labor-intensive goods such as clothing, kitchen wares and watches. (Yonhap)

Given the trajectory of North-South relations this year, it is no surprise that inter-Korean trade dropped 30% in March.  According to Yonhap:

Monthly trade between South and North Korea fell more than 30 percent on-year in March, as tensions ran high over South Korea-U.S. joint military exercise, government data showed Monday.

The two Koreas exchanged goods and services worth US$108.74 million over the last month, down 31.1 percent from $157.9 million in the same period in 2008, the data from the Unification Ministry said.

North Korea sealed the border three times in March, disrupting South Korean production in a joint industrial complex in the North’s border town of Kaesong. Pyongyang imposed the ban in retaliation against a joint military exercise South Korea staged with the United States from March 9 to 20 south of the border.

Pyongyang blasted the joint exercise as a rehearsal for a “second Korean War,” while the two allies say the annual drill is purely defensive.

More than 100 South Korean firms operate in the Kaesong industrial venture, just an hour’s drive from Seoul, joining their capital and technology with North Korea’s cheap but skilled labor.

North Korea demanded the South raise wages, pay fees for land use and revise existing contracts for the Kaesong venture during inter-Korean government talks last week, the first official dialogue in more than a year. Seoul is gathering opinion from South Korean firms and plans to respond to the North Korean demand as early as this week.

Hyundai Asan, which has seen a dramatic reversal of fortune in the last year, has launched a new tourism project to make up some of its lost revenue.  Unable to offer trips to Kaesong and Kumgangsan, they are still trying to capitalize on the mystery of the DPRK:

Hyundai Asan said its new programme includes one-day tours costing 46,000 won (34 dollars) per person to border areas at Paju and Yeoncheon, north of Seoul.

Two-day tours to the border area at Yanggu, 175 kilometres northeast of Seoul, and to Mount Sorak on the east coast, will cost 118,000 won.

“Along with trips to front-line fences, tourists will be allowed to see wildlife and other places which remained untouched for decades,” a Hyundai Asan official told AFP.

Visitors will not be allowed inside the DMZ itself.

Hyundai Asan said the new programme would help ease its financial woes, which began when a South Korean woman tourist was shot dead when she strayed into a military zone at Kumgang last July.

The Seoul government halted tours to Kumgang after the shooting, while Pyongyang barred the one-day tours to Kaesong city as relations worsened.

The company’s other major joint project, the joint industrial complex near Kaesong city, is also facing problems due to sour cross-border ties.

The communist North has expelled hundreds of South Korean staff and restricted access to the Seoul-funded complex.

On March 30 it detained a Hyundai Asan employee for allegedly criticising the North’s regime and trying to persuade a local woman worker to defect.

Read the full stories below:
Gov’t warns it can bar S. Koreans from visiting N. Korea
Yonhap
4/26/2009

Inter-Korean trade drops 30 percent in March during political tension
Yonhap
4/27/2009

South Korean firm to start tours along North Korea border
Channel News Asia
4/27/2009

According to Yonhap (excerpts):

The two Koreas met Tuesday for their first government-level talks in more than a year, during which the North demanded negotiations begin on operational changes at the joint complex in its border town of Kaesong. Pyongyang said it will reconsider all “special benefits” that have been granted to South Korean firms, such as low wages for North Korean employees and free land use.

The proposed measure, if actualized, is expected to deal a serious blow to more than 100 South Korean firms in Kaesong, mostly small manufacturers producing garments, utensils, watches and other labor-intensive products and already struggling to survive the global economic downturn.

Under a contract signed between Hyundai and the North Korean government in 2000, South Korean firms pay their North Korean employees between US$70-$80 on average a month, but the wages are wired directly to North Korean government bank accounts. The annual wages last year amounted to $26 million, according to ministry data. About 39,000 cheap but skilled North Korean workers are employed there.

North Korea also said it will begin charging land fees starting next year. North Korea initially set a 10-year grace period on rent when the complex opened, allowing the South Korean firms to use its land in Kaesong for free until 2014.

The [South Korean Unification] minister criticized North Korea’s prolonged detention of a South Korean worker as “against justice.” Pyongyang officials did not answer questions about the Hyundai Asan employee during Tuesday’s talks, he said.

The inter-Korean talks opened after a half-day delay due to procedural disputes but lasted only 22 minutes, during which the two sides exchanged documents laying out their demands and positions.

Read the full story here:
S. Korea reviewing N. Korea’s call to revise industrial contracts: minister
Yonhap
4/22/2009

Following up on a previous blog post, the Choson Ilbo informs us of the DPRK’s new policies designed to collect “back wages” for North Korean workers in the Kaesong Industrial Zone:

South Korean firms will be ordered to close down or pay fines if they delay pay for North Korean staff at the joint Kaesong Industrial Complex, North Korean authorities reportedly told the firms in November.

The Kaesong Industrial Council on Wednesday said North Korea last November notified South Korea’s Unification Ministry and the Kaesong Industrial Complex management committee of 27-point labor rules in the Kaesong Industrial Complex. Under the rules, South Korean firms will be fined up to US$2,000 if they delay a month’s pay and ordered to suspend operations for 10 days and pay an additional 300 percent of basic pay to staff who have worked for more than 24 hours without a break if they delay pay for two months.

The council worries that now firms in the Kaesong complex are receiving fewer orders due to the recession, they could face heavy costs if the rules are strictly applied.

A total of 93 South Korean firms are currently operating in Kaesong. They are paying about $75, including the minimum wage and social security, per month on average to each North Korean worker.

To get a better idea of the context of this story see a previous post here. 

The full article can be read here:
N.Korea Warned Kaesong Firms Over Staff Pay
Choson Ilbo
3/5/2009

The global financial crisis/recession is affecting some of the DPRK’s most visible assets. 

The first example comes from the Kaesong Industrial Zone, where South Korean firms are obliged to pay North Korean workers’ wages in $US directly to the North Korean government.  Since the South Korean Won/$US exchange rate has risen significantly in recent months, companies in the Zone have seen their labor costs (denominated in $US) soar.  Since wages are fixed and firms are unable to lay off workers, some have responded by simply not paying wages—which does not affect the workers so much as it does the North Korean government’s finances, since it keeps most of the funds.

Quoting from Radio Free Asia:

Authorities in North Korea have warned South Korean companies in its Kaesong industrial area they must pay workers’ wages or face fines, as many investors begin to feel the effects of the economic downturn.

Lee Lim-dong, secretary general of the Committee of the Association of Enterprises Invested in the Kaesong Industrial Complex, said the issue of unpaid salaries was brought up late last year but had now become a formal demand.

“This time around, official notification was issued to all South Korean enterprises invested in Kaesong, through the Kaesong Industrial District Management Committee (KIDMC),” Lee said.

South Korean businesses invested in Kaesong have already incurred serious losses due to the depreciation of the South Korean won against the U.S. dollar, according to Kim Kyu Chol, head of the Forum for Inter-Korean Relations, a Seoul-based group monitoring inter-Korean business relations.

“They already have to spend 30-45 percent more on labor [because of this],” he said, adding that the lives of South Korean entrepreneurs in the Kaesong economic zone would now be even more difficult.

… 

According to Park Yong-man, director of Green Textile Co.—a South Korean company invested in Kaesong—“The official notification was sent to all South Korean companies in Kaesong on Feb. 10.”

Meanwhile, Kim said, one South Korean electroplating company had already failed to pay its North Korean workers for more than three months and had been suspended.

Seven South Korean companies in Kaesong are currently unable to pay their North Korean workers on time and will soon be in bigger trouble because of the new measures, Kim said.

South Korean companies operating in Kaesong are not allowed to recruit or dismiss North Korean staff directly, and North Korean authorities impose quotas of staffing numbers on them.

In early February, North Korean officials said that salaries of North Korean supervisors watching over the night shift at South Korean enterprises in Kaesong would have to increase by 200-300 percent, putting further pressure on labor costs.

And companies can be suspended from operations for failing to pay their employees for more than a month.

Kim said South Korean companies in Kaesong don’t need more supervisors or clerical workers, which the North Korean side has sought.

“They are already facing a managerial crisis, and a [demanded] 50 percent increase in the number of North Korean managerial staff is pushing it too hard,” he said, adding that South Korean enterprises would find this hard to accept.

Until recently, the Kaesong Industrial District Management Committee (KIDMC), a joint North-South panel overseeing the complex, was responsible for half of the U.S. $10 a month transportation allowance given to North Korean workers in Kaesong.

North Korea demanded as of Jan. 1 that South Korea Kaesong companies must now pay the entire cost.

Now hard bargaining can pay off sometimes, especially for North Korea, but with all that has happened in the Zone recently it seems as if the DPRK actually wants these businesses to leave.  The DPRK’s negotiators are smart enough to know that the pie is shrinking and they naturally want to protect their share, but unfortunately they don’t yet seem to appreciate that their actions will have serious ramifications on future investment in the Zone once the global economy turns the corner.

Example No. 2: Unfortunately, recent economic conditions have also reduced the number of South Korean tourists venturing abroad where they might enjoy diversions such as eating in a North Korean-owned restaurant.

Quoting from Japan Probe:

Ever since a North Korean government restaurant opened in Bangkok two years ago, the Japanese press have been regularly visiting the place with hidden cameras to catch a glimpse of its dinnertime performances. However, it has now been discovered that the restaurant recently went out of business.

Most of its business had come from South Korean tourists, but the weakening of the won and the decline in tourism to Thailand due to the airport protests seem to have dealt a death blow to the restaurant. Attempts to contact North Korea-run restaurants in Cambodia and Vietnam failed, suggesting that those restaurants may have also gone under. It has also been said that a similar North Korean restaurant in China has suffered a big drop in business.

Read the RFA article here:
North Korea Warning Over Labor
Radio Free Asia
J.W. Noh
9/26/2009

The purpose of these types of indexes is to put pressure on world governments to improve their economic policies.  Unfortunately, the DPRK has come in last place for as long as I have been paying attention….

From the 2009 Index of Economic Freedom:

North Korea’s economic freedom score is 2, making its economy the least free in the 2009 Index. North Korea is ranked 41st out of 41 countries in the Asia-Pacific region.

North Korea does not score well in any single area of economic freedom, although it does score some minimal points in investment freedom and property rights. The Communist Party controls and commands almost every aspect of economic activity. Since the early 1990s, North Korea has replaced the doctrine of Marxism’Leninism with the late Kim Il-Sung’s juche (self-reliance) as the official state ideology. Yet the country’s impoverished population is heavily dependent on government subsidies in housing and food rations even though the state-run rationing system has deteriorated significantly in recent years.

North Korea devotes a disproportionately large share of GDP to military spending, further exacerbating the country’s already poor economic situation. Normal foreign trade is minimal, with China and South Korea being the most important trading partners. Trade with India is increasing. No courts are independent of political interference, and private property (particularly land) is strictly regulated by the state. Corruption is rampant but hard to distinguish from regular economic activity in a system in which arbitrary government control is the norm.

The Democratic People’s Republic of Korea is one of the world’s most oppressed and closed societies, and its Communist rulers have repressed basic human rights and nationalized all industry since the country’s founding in 1948. In the 1990s, floods and droughts exacerbated systemic shortcomings and led to severe famine and millions of civilian deaths. North Korea’s economy is mainly supported by international aid and trade with its major trading partners, China and South Korea.

Business Freedom
0.0
The overall freedom to start, operate, and close a business is extremely restricted by North Korea’s national regulatory environment. The state regulates the economy heavily through central planning. Economic reforms implemented in 2002 allegedly brought some changes at the enterprise and industrial levels, but entrepreneurial activity is virtually impossible.

Trade Freedom
0.0
The government controls all imports and exports, and formal trade is minimal. North Korean trade statistics are limited and compiled from trading partners’ data. Most trade is de facto aid, mainly from North Korea’s two main trading partners, China and South Korea. Non-tariff barriers are significant. Inter-Korean trade remains constrained by North Korea’s unwillingness to implement needed reform. Given the minimal level of trade, a score of zero was assigned.

Fiscal Freedom
0.0
No data on income or corporate tax rates are available because no effective tax system is in place. The government plans and manages almost every part of the economy. Given the absence of published official macroeconomic data, such figures as are available with respect to North Korea’s government expenditures are suspect and outdated.

Government Size
0.0
The government owns virtually all property and sets production levels for most products, and state-owned industries account for nearly all GDP. The state directs all significant economic activity. Large military spending further drains scarce resources.

Monetary Freedom
0.0
Price and wage reforms introduced in July 2002 consisted of reducing government subsidies and telling producers to charge prices that more closely reflect costs. Without matching supply-side measures to boost output, the result has been rampant inflation for many staple goods. Because of the ongoing crisis in agriculture, the government has banned sales of grain at markets and returned to rationing. A score of zero was assigned.

Investment Freedom
10.0
North Korea generally does not welcome foreign investment. A small number of projects may be approved by top levels of government; however, the scale of these investments is also small. Numerous countries employ sanctions against North Korea, and ongoing political and security concerns make investment extremely hazardous. Internal laws do not allow for international dispute arbitration. One attempt to open the economy to foreigners was North Korea’s first special economic zone, located at the remote Rajin-Sonbong site in the Northeast. Wage rates in the special zone are unrealistically high because the state controls the labor supply and insists on taking a share of wages. More recent special zones at Mt. Kumgang and Kaesong are more enticing. Aside from these few economic zones where investment is approved on a case-by-case basis, foreign investment is prohibited.

Financial Freedom
0.0
North Korea is a command-and-control economy with virtually no functioning financial sector. Access to financing is very limited and constrained by the country’s failed economy. The central bank also serves as a commercial bank and had more than 200 local branches in 2007. The government provides most funding for industries and takes a percentage from enterprises. Foreign aid agencies have set up microcredit schemes to lend to farmers and small businesses. A rumored overhaul of the financial system to permit firms to borrow from banks instead of receiving state-directed capital has not materialized. Because of debts dating back to the 1970s, most foreign banks will not enter North Korea.

Property Rights
5.0
Property rights are not guaranteed. Almost all property, including nearly all real property, belongs to the state, and the judiciary is not independent. The government even controls all chattel property (domestically produced goods as well as all imports and exports).

Freedom From Corruption
5.0
After the mid-1990s economic collapse and subsequent famines, North Korea developed an immense informal market, especially in agricultural goods. Informal trading with China in currency and goods is active. There are many indicators of corruption in the government and security forces. Military and government officials reportedly divert food aid from international donors and demand bribes before distributing it.

Labor Freedom
0.0
As the main source of employment, the state determines wages. Since the 2002 economic reforms, factory managers have had limited autonomy to set wages and offer incentives, but highly restrictive government regulations hinder any employment and productivity growth.

On market regulations:  North Korean authorities issued three decrees restricting market activity: 1. Markets may only open once every 10 days  2. Only vegetables, fruits, and meat from private citizens can be sold in the markets.  Imported goods and products of state-owned companies are prohibited  3. To reduce the influence and growth of professional merchants, market booths will be allocated on a first-come, first-served basis (no fixed locations).

The “good” news is that the authorities are having trouble implementing these rules:

A Pyongyang source said in a phone conversation with Daily NK on the 7th, “Until now, markets in Pyongyang have been opening at 2 PM every day and operating normally. They are only closed once a week, on Mondays as usual.”

However, the sale of imported industrial goods from China such as clothing, shoes, cosmetics, kitchen utensils and bathing products has become more restricted in the market. Subsequently, street markets or sales of such goods through personal networks have become increasingly popular.

The source noted, “Inspection units regulate the markets with one eye closed and the other eye open, so it is not as if selling is impossible. With a bribe of a few packs of cigarettes, it is easy to be passed over by the units. However, the sale of industrial goods has rapidly decreased and, if unlucky, one can have his or her goods taken, so the number of empty street-stands has been increasing.”

So many North Koreans now buy Chinese kitchen utensils in the same way Americans purchase cocaine!

But even in Pyongyang they are having troubles enforcing the new rules:

“Since December, rations in Pyongyang have consisted of 90 percent rice and 10 percent corn and in the Sadong-district and in surrounding areas, rice and corn have been mixed fifty-fifty percent.”

“It has even been difficult in Pyongyang, where rations are provided, to convert to 10-day markets due to opposition from citizens, so restricting sales in the provinces, where there is virtually no state provision, is impossible in reality. It is highly likely that the recent measure will end as an ineffective decree, like the ones to prohibit the jangmadang or the sale of grain”[.]

On North Korea’s information blockade:  Radio Free Asia published an informative article on the ability and propensity of North Koreans to monitor foreign broadcasts.  The “good” news is that access to unauthorized information continues to grow.  

The whole article is worth reading (here), but here is an excerpt:

North Koreans manage to gain limited access to foreign media broadcasts in spite of increasing government crackdowns in the isolated Stalinist state.

“We clamped down on the people watching South Korean television sets, but it wasn’t easy,” a North Korean defector and former policeman who monitored North Koreans’ viewing habits said. He said channels fixed by the North Korean authorities could easily be altered to catch South Korean programming.

“You could watch South Korean television such as KBS and MBC in Haeju, Nampo, Sariwon, even in Wonsan,” he said, referring to regions of Hwanghae province, just north of the border with South Korea.

“They reach also to the port cities near the sea. But you can’t watch them in Pyongyang because it’s blocked by mountains.”

He said the police themselves used to watch South Korean television “all the time” along with their superior officers.

“We would enjoy what we watched, but outside in public, we would praise the superiority of our socialist system. We knew it was rubbish.”

“According to North Korean defectors interviewed who came to South Korea right after living in the North, educated, intelligent people in North Korea do listen to foreign stations despite the inherent danger,” Huh Sun Haeng, director of the Center for Human Rights Information on North Korea, said in a recent interview.

He said he made good money fixing people’s radios, so they could get better reception of foreign broadcasts.

“I made good money readjusting channels on radios, or upgrading them with higher frequency parts for local people who want to listen to broadcasts other than the North’s state-run radios. There were at least a few hundred people that I know of who listened to foreign broadcasts,” he said.

He said no television reception reached the northern part of the country near the Chinese border, so people there watched recorded programs on videotape and video CD (VCD) instead.

Read the full articles here:
Pulling Back from Converting to 10-day Markets
Daily NK
By Jung Kwon Ho
1/9/2009   

Growing Audiences for Foreign Programs
Radio Free Asia
Original reporting in Korean by Won Lee
1/8/2009

Quoting from the article:

North Korea has increased the number of its nationals working at a Seoul-funded industrial estate in the communist state since tighter border controls were introduced, data showed Sunday.

Statistics from South Korea’s unification ministry show North Korean workers numbered 37,168 in Kaesong, the estate just north of the border, on Friday, up from 36,618 on November 31.

On December 1 North Korea imposed stricter border controls and expelled hundreds of South Koreans from Kaesong amid strained cross-border ties, leading to fears in Seoul that Kaesong will eventually be closed down.

“The latest statistics show North Korea will not shut down Kaesong but thoroughly protect business there,” Kim Yong-Hyun, a professor of North Korean studies at Seoul’s Dongguk University, told AFP.

“The North is saying tighter border controls are targeting the Seoul government, not private businesses there, in a dual-track policy on the South.”

Read the full article here:
Number of NKoreans increased at Seoul-funded estate
AFP
12/14/2008

Yonhap
12/10/2008

A North Korean defector who escaped from an inter-Korean industrial complex in the border city of Kaesong where she was employed remains in a third country, a South Korean activist here said Wednesday.

The 27-year-old woman, whose identity was withheld for her safety, fled Kaesong in late September and has since asked for help to travel to South Korea, according to Kim Yong-hwa, who leads a Seoul-based civic group advocating for the human rights of North Korean defectors.

The Unification Ministry and officials from South Korean firms operating in Kaesong said they had not heard about the defection and that there was no sign of abnormality at the complex around that time.

If confirmed, it would be the first known defection from the industrial complex, where about 36,000 North Koreans are employed by dozens of South Korean factories operating under the tight control of authorities from Pyongyang.

Seoul officials say the workers were carefully selected from a pool of young people with good family backgrounds from the North Korean border city or Pyongyang to ensure they would not be unduly influenced by the atmosphere of capitalism at the comoplex.

Exactly what motivated the woman to defect is not known, but Kim said she was apparently forced to choose between her marriage and her job, which earned her a relatively good salary in the impoverished nation.

The communist North bans female workers at Kaesong plants from getting married, a violation of their rights, Kim added. “(The young woman) is said to have gotten a warning once from the authorities over the matter,” he said.

Kim says North Korea exploits its workers at Kaesong by giving them only US$2 out of their monthly wage of about US$60 paid by South Korean firms.

Currently, 88 labor-intensive garment, kitchenware and various other South Korean factories operate in Kaesong. Pyongyang recently expelled hundreds of South Korean officials and managers from the complex in an effort to pressure Seoul to change its hardline North Korea policy.