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Breaking News | Latest News | Current News – FOXNews.com

The tensions emanating from Pyongyang are beginning to hit nascent business ties with the South: a Seoul-based fur manufacturer became the first South Korean company to announce Monday it was pulling out of an industrial complex in the North’s border town of Kaesong.

The complex, which opened in 2004, is a key symbol of rapprochement between the two Koreas but the goodwill is evaporating quickly in the wake of North Korea’s nuclear test on May 25 and subsequent missile tests.

>> Click to read more on North Korea’s nuclear program.Pyongyang raised tensions a notch by reviving its rhetoric in a commentary in the state-run Minju Joson newspaper Tuesday.

“Our nuclear deterrent will be a strong defensive means … as well as a merciless offensive means to deal a just retaliatory strike to those who touch the country’s dignity and sovereignty even a bit,” said the commentary, carried by the official Korean Central News Agency.It appeared to be the first time that North Korea referred to its nuclear arsenal as “offensive” in nature. Pyongyang has long claimed that its nuclear weapons program is a deterrent and only for self-defense against what it calls U.S. attempts to invade it.

The tough talk came as South Korea and the U.S. lead an effort at the U.N. Security Council to have the North punished for its nuclear test with tough sanctions.

Relations between the two Koreas have significantly worsened since a pro-U.S, conservative government took office in Seoul last year, advocating a tougher policy on the North. Since then, reconciliation talks have been cut off and all key joint projects except the factory park in Kaesong have been suspended.

Some 40,000 North Koreans are employed at the zone, making everything from electronics and watches to shoes and utensils, providing a major source of revenue for the cash-strapped North. The park combines South Korean technology and management expertise with cheap North Korean labor.A total of 106 South Korean companies operate in the park. That number will go down by the end of the month when Skinnet, the fur-maker, completes its pullout.

A Skinnet company official said the decision was primarily over “security concerns” for its employees, and also because of a decline in orders from clients concerned over possible disruptions to operations amid the soaring tensions.

The official spoke on condition of anonymity because he was not authorized to speak with reporters.

The industrial park’s fate has been in doubt since last month when North Korea threatened to scrap all contracts on running the joint complex and said it would write new rules of its own and the South must accept them or pull out of the zone.

The companies have also been concerned by the detention of a South Korean man working at the complex by North Korean authorities since late March for allegedly denouncing the regime’s political system.

The two sides are to hold talks on the fate of the park Thursday.

Intensifying its confrontation with the U.S., North Korea handed down 12-year prison terms to two detained American journalists on Monday.

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