In response to the sinking of the Cheonan by the North Koreans, the South Korean government has decided to cut the number of workers operating at the joint industrial complex at the DPRK border city of Kaesong:

The joint Kaesong Industrial Complex was not included on the South Korean government’s list of sanctions against North Korea over the sinking of the Navy corvette Cheonan but is in fact seriously affected.

Firms operating at the industrial park are expected to suffer as a result of the government’s decision to reduce South Korean staff there by half. CEOs say if the situation continues production will be affected and orders will dwindle.

The Unification Ministry on Monday wrote to businesses operating in the industrial park advising them how many staff can stay there and telling them to send all surplus staff back to South Korea by Thursday.

The ministry decided to cut staff by 50 to 60 percent of the 900-1,000 South Koreans who work there on weekdays.

None of the 204 South Koreans with permits to stay at the industrial park for extended periods were allowed to travel there on Tuesday, while some 401 South Koreans were allowed to go to the border town for the day only. But only 235 went to work and many have given up. North Korean officials did not put any special restrictions on travel of South Korean staffers and transport of raw and subsidiary materials to and from the industrial park on Monday and Tuesday.  [Chosun Ilbo]

However, the North Koreans have come back in response to say they will expel the rest of the workers out of the country any way:

KCNA said the North was also expelling all South Korean workers from a jointly-run factory north of the border.

The move comes after an international report blamed North Korea for sinking a South Korean warship.  [BBC]

I would actually be surprised if the North Koreans do expel all the ROK workers and shut down the complex because it is one of the few cash cows left for the North Korean regime.  That is why I think this may just be more bluster from the North Koreans that they will not follow through on.  Also keeping the ROK workers at the complex keeps another option open for them, which is to take hostages.  They have already did a trial run on executing this option before. 

I have long critical of the Kaesong Industrial Complex because of the use of slave labor that ultimately helps fund the despotic Kim regime.   By the way I have still never received a response from K-Swiss in regards to what they think about the North Koreans manufacturing their products with slave labor.  I may need to do yet another follow up enquiry.

Anyway I include closing the Kaesong Industrial Complex as part of my recommended response to the sinking of the Cheonan, but I think President Lee Myung-bak is likely using the complex as a bargaining chip to use against the North Koreans down the road in response to future provocations.