Technically, the divided Korean Peninsula remains in a state of war. North Korea last shut down communications at Kaesong four years ago, and that time some workers were temporarily stranded.
North Korea could be trying to stoke worries that the hotline shutdown could mean that a military provocation could come any time without notice.
South Korea urged the North to quickly restore the hotline, and the U.S. State Department said the shutdown was unconstructive.
North Korea's latest threats are seen as efforts to provoke the new government in Seoul, led by President Park Geun-hye, to change its policies toward Pyongyang. North Korea's moves at home to order troops into "combat readiness" also are seen as ways to build domestic unity as young leader Kim Jong Un, who took power after his father's death in December 2011, strengthens his military credentials.
The Kaesong complex is the last major symbol of inter-Korean cooperation. Other rapprochement projects created during a previous era of detente stopped as tension rose in recent years.
At the border Thursday, a trio of uniformed South Korean soldiers stood at one side of a gate as white trucks rumbled through, carrying large pipes and containers to Kaesong. At Dorasan station, a South Korean border checkpoint, a green signboard hung above the trucks with the words "Kaesong" and "Pyongyang" written in English and Korean.
The stalled hotline, which consists of two telephone lines, two fax lines and two lines that can be used for both telephone and fax, was virtually the last remaining direct link between the rival Koreas.
North Korea in recent weeks cut other phone and fax hotlines with South Korea's Red Cross and with the American-led U.N. Command at the border. Three other telephone hotlines used only to exchange information about air traffic were still operating normally Thursday, according to South Korea's Air Traffic Center.
In 2010, ties between the rivals reached one of their lowest points in decades after North Korea's artillery bombardment of a South Korean island and a South Korean warship sinking blamed on a North Korean torpedo attack. A total of 50 South Koreans died.
There is still danger of a confrontation or clash. Kim Jong Un may be more willing to take risks than his father, the late Kim Jong Il, said Yoo Ho-yeol, a North Korea expert at Korea University in South Korea.
Although North Korea has vowed nuclear strikes on the U.S., analysts outside the country have seen no proof that North Korean scientists have yet mastered the technology needed to build a nuclear warhead small enough to mount on a missile.
President Park so far has outlined a policy that looks to re-engage North Korea, stressing the need for greater trust while saying Pyongyang will "pay the price" for any provocation. Last week she approved a shipment of anti-tuberculosis medicine to the North.
Since 2004, the Kaesong factories have operated with South Korean money and know-how, with North Korean factory workers managed by South Koreans.
Inter-Korean trade, which includes a small amount of humanitarian aid sent to the North and components and raw materials sent to Kaesong complex to build finished products, amounted to nearly $2 billion in 2012, according to South Korea's Unification Ministry.
Associated Press writer Youkyung Lee contributed to this report.
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