updated 3/16/2009 9:56:55 PM ET 2009-03-17T01:56:55

Seoul's Unification Ministry says North Korea has agreed to let South Koreans back across the border to work at factories at a joint industrial zone in the north.

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Ministry spokeswoman Lee Jong-joo says the North relayed a message saying it will allow cross-border traffic to and from the Kaesong complex.

The full reopening Tuesday comes four days after Pyongyang shut down the border last week, stranding hundreds of South Koreans who work in Kaesong and live in South Korea.

The North partially reopened the border yesterday but only for South Koreans leaving the north.

On Monday, South Korean firms began suspending operations at factories in the North as Pyongyang blocked trucks hauling raw materials to their joint industrial zone, undermining a key reconciliation project between the sides.

At least 10 firms have halted operations in the wake of two recent border shutdowns by the North, and many more will be forced to suspend production within a week if the restrictions aren't eased, the business association for South Korean factories the northern border town of Kaesong said.

No explanation of closure
North Korea provided no official explanation for the closures, but Pyongyang has been engaged in a war of words with South Korea since conservative President Lee Myung-bak took office a year ago vowing to hold the North accountable for its disarmament pledges.

South Korea warned Monday that the North would be held accountable for any economic losses to the joint economic zone once hailed as a shining example of reconciliation between the two wartime rivals.

"North Korea's delay and blockade of passage is very regretful," Unification Ministry spokesman Kim Ho-nyeon said in a strong statement. "We make it clear all responsibilities for this incident, including breaks in production and economic losses, lie with North Korea."

Dozens of factories in Kaesong rely on cargo and managerial know-how from the South and cheap labor from the North to produce everything from watches and shoes to kitchenware and electronic goods.

After shutting down the border Friday and stranding more than 700 South Koreans in the north all weekend, North Korea allowed them to return home Monday, Unification Ministry spokeswoman Lee Jong-joo said.

The two Koreas technically remain at war because their three-year conflict ended in 1953 with an armistice, not a peace treaty. The Demilitarized Zone dividing the foes is one of the world's most heavily armed.

Relations improved under two liberal presidents in Seoul but have deteriorated since Lee stopped the flow of unconditional aid to the impoverished North. Most of the landmark, joint inter-Korean projects created during an earlier bloom in relations have been suspended since Pyongyang severely restricted border traffic in December.

Tensions have further intensified in recent weeks with the North announcing it will send a satellite into space — a launch some fear will be a cover for testing its long-range missile technology.

Firms give cash to N. Korea
A skeleton staff of South Koreans has been allowed to cross the border to run the last joint project remaining: more than 100 Kaesong factories employing some 38,0000 North Koreans. The firms give North Korean authorities about $70-$75 cash per worker each month, providing the regime with much-needed hard currency, according to the Unification Ministry.

Pyongyang last week cut off the only communications hot line left between the two Koreas and shut down the border for a day to protest joint U.S.-South Korean military exercises taking place across the South. Hundreds were stuck in Kaesong when North Korean officials shut the crossing again Friday.

The North agreed to let some 450 South Koreans return home Monday but refused permission to 650 others in the south seeking to get to jobs in Kaesong, Unification Ministry officials said. With the prospect of severe short-staffing Tuesday, many chose to remain in Kaesong another night, with fewer than 300 returning to the south, the ministry said.

One South Korean working at footwear maker Samduk Stafild said by telephone from Kaesong that his factory is struggling from a lack of raw materials. He asked not to be named, saying he was not authorized to speak to the media.

North Korea is using Kaesong to pressure Seoul into softening its hard-line policy toward Pyongyang, analyst Paik Hak-soon said.

"The North hopes South Korea will switch back to a policy of reconciliation and cooperation" to prevent a complete shutdown of Kaesong, the North Korea expert at the private Sejong Institute said Monday.

President Lee has refused to ply the North with aid until Pyongyang abides by its commitment to dismantle its nuclear program. The North agreed in 2007 to disarm in exchange for aid.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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