Kaesong’s history offers some hope

It has been more than 100 days since the Kaesong Industrial Complex was shut down. The two Koreas are negotiating to resume operation of the industrial park, but the deadlock continues. South Korean businessmen are now making trips to the factories in Kaesong to take out finished products, raw materials and equipment.

The sticky issue is how to prevent a recurrence of the shutdown in the future. North Korea wanted to restart the factories first, while the South said a concrete measure to prevent any similar incidents is a precondition. The two sides are confronting each other, with neither willing to make a concession.

Still, it is fortunate that both Koreas seem to have no intention to give up on Kaesong, at least officially. I don’t believe the South and the North are simply trying to blame each other for the latest shutdown. And we need to think about the history of Kaesong. Instead of struggling to resolve a problem in hand, it may be helpful to observe the yesterday and today of the project and think about its future.

The beginning of Kaesong Industrial Complex was dramatic. It started with the idea of late Hyundai Group founder Chung Ju-yung. His plan to contribute to the unification of the two Koreas through economic cooperation projects with the North seemed reckless when first proposed. But he showed his typical leadership by crossing the Korean border with a huge herd of cattle in a dramatic event. And he managed to win the exclusive right to operate tours to scenic Mount Kumgang and open an industrial complex in the western coastal area.

Two months after the historic inter-Korean summit of 2000, Kaesong was selected as the site. The two Koreas discussed opening the complex in Haeju, Shinuiju and Nampo. The plan was to secure a site of 20 million pyeong (16,338 acres) near the border to create an industrial city with a population of 200,000. However, it still needed more than four years for factories to operate for the first time because of the conflict surrounding the North’s nuclear program after U.S. President George W. Bush took office in 2002.

Once it was began, the project showed striking growth despite continued conflicts between the North and the United States and between the two Koreas. The number of North Korean laborers at the industrial complex grew from 10,000 in November 2006 to 40,000 in September 2009 and 50,000 in January 2012.

The accumulated amount of production totaled $500 million in November 2008 and continued to grow rapidly. It reached $1 billion in September 2010, $1.5 billion in December 2011 and $2 billion in January 2013.

It took three years and 11 months to reach the first $500 million, but only 22 more months to hit $1 billion, 15 more months to $1.5 billion and 13 more months to $2 billion. It showed that political challenges are not an obstacle when it comes to businesses earning lucrative profits.

The North made its first intervention in the operation of the industrial complex in 2008, when factory production visibly increased. In March of that year, the North expelled 11 South Korean officials from the industrial complex, complaining about the annual joint military exercises between the South and the United States. Three months later, it also restricted the number of South Koreans in the complex and the transportation of goods. The North continued to create problems throughout the year.

In March 2009, the North also restricted passage, citing the annual joint military drill. In June, the North forcibly detained a South Korean worker for 136 days. After releasing him in August, the North did not create any problems in Kaesong.

After the North’s sinking of the South Korean warship Cheonan in 2010, the South Korean government undertook the “May 24 measures” in 2010 to ban South Korean companies from new investments in Kaesong, reducing the number of South Koreans staying in Kaesong by half. After the North’s shelling of the Yeonpyeong Island in November of that year, all visits to Kaesong were temporarily stopped.

The two Koreas, then, stayed away from Kaesong for a while, but the North made an unprecedented move of shutting down the industrial complex this year to complain about the annual military drill between the South and the United States. The history of the project shows both Koreas do not treat the KIC purely with an economic purpose. It grew steadily despite turmoil, but its operation was easily restricted for political reasons.

Of course, the North started it, and now it has become a customary practice. And the South Korean government’s demand for concrete assurance that the North’s change its behavior certainly is convincing. The South demands that the North separate politics and business with regard to Kaesong. And the South appears to be on higher ground in the ongoing negotiations. It withdrew all businessmen from Kaesong and the compensation process for them is under way. The South is fighting with its back to the wall.

The North, however, doesn’t seem to have a resolute attitude. Although it lost the income from its workers’ wages, it doesn’t seem to have a strategy to come up with an alternative. It is easy to guess that the time is on the side of the south.

There is an old saying that the ground will get firm after rain. Will it be applicable to the Kaesong Industrial Complex?

* The author is an editorial writer of the JoongAng Ilbo.

by Kang Young-jin