North Korea squeezes South with border clampdown

(For related factbox see KOREA-NORTH/KAESONG)

By Jon Herskovitz

SEOUL, Dec 1 (Reuters) - North Korea limited entry to South Korean workers at a joint industrial enclave in the North on Monday in a border clampdown seen as a pressure tactic designed to change Seoul's hardline policy toward its destitute neighbour.

The move comes just a week before North Korea discusses a disarmament deal it reached with five regional powers that promises Pyongyang economic and energy aid in exchange for taking apart its nuclear programme and allowing inspections.

Last week, South Korea cut runs of a highly symbolic freight train across the border and ended tours to the North Korean border city of Kaesong ahead of the North's clampdown on the one remaining land crossing between the states, which have yet to officially end their 1950-53 war.

The two Koreas reached a deal last week where 1,700 out of the nearly 4,200 South Koreans permitted to work at the joint factory park in Kaesong would be allowed to remain.

They are keeping nearly 90 factories running there that employ about 33,000 North Koreans.

"The South Koreans crossed the border at about 9:00 a.m. (0000 GMT) without any difficulty," said a South Korean official stationed on the South's side of the crossing.

The Kaesong factory park, about 70 km (45 miles) northwest of Seoul, produces items such as watches, shoes and kitchen goods. It has provided North Korea's leaders with hundreds of millions of dollars.

Analysts said closing the Kaesong park could deal a further blow to North Korea's already tainted image as a reliable business partner, hurting Pyongyang's campaign in recent months to find investors in Europe and Southeast Asia.

Ties between the two Koreas have chilled since President Lee Myung-bak took office in February and ended unconditional aid to the communist state, saying Seoul would tie its largess to moves the North makes to end its nuclear arms programme.

An angry Pyongyang has lashed out at Lee, calling him a "traitor" and threatening to reduce the South to ashes.

Jang Cheol-hyeon, a former high-ranking North Korean official who defected and now works for a think tank affiliated with the South's spy agency, said Pyongyang's leaders have seen Kaesong as a cash cow that could also be exploited for political purposes.

"The Kaesong Industrial Complex was designed as a strategic tool to threaten the South when necessary, and now it is being taken into action," Jang said.

The other border crossing between the two Koreas effectively closed in July after a South Korean tourist at a mountain resort in the North was gunned down by a North Korean soldier. (Additional reporting by Kim Junghyun; Editing by Jonathan Hopfner and Jerry Norton)