It’s all up to Pyongyang

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It’s all up to Pyongyang

Inter-Korean talks on reopening the Kaesong Industrial Complex are deadlocked, the fifth round having ended without a breakthrough in key differences. While the two governments talk, South Korean businessmen have been able to retrieve raw materials, goods and machinery from the joint business park, which has been shut down since April. Despite the current impasse, the two Koreas are still committed to working through the disagreements and reactivating the complex.

The key issue is a safeguard to prevent a unilateral suspension of operations. Seoul demands that Pyongyang not abuse its jurisdictional authority and disrupt operations for political purposes, such as to demand an end to joint Korea-U.S. military drills. But Pyongyang refuses to make such a guarantee.

North Korea has restricted operations at the complex several times. This last time, it shut down Kaesong completely for the first time in its near-decade of operations, pulling all of its 53,000 workers. The move has put the 123 South Korean Kaesong manufacturers in serious jeopardy. They earn money by securing orders, producing goods and delivering them. But their activities have been critically hampered by the Pyongyang authorities. As a result, they have lost both clients and profits.

The businesses have been on shaky ground before but have never faced a crisis like this. South Korean firms and their customers have been forced to realize that their businesses could suddenly be halted at any time by Pyongyang. Few would dare resume operations under such circumstances.

North Korea must understand the state of uncertainty that South Korean investors are in. Some may not choose to stay at Kaesong even if Pyongyang makes a solid promise not to repeat this unilateral closure. They may consider pulling out once they reach the breakeven point in their investment.

If North Korea is sincere about resuming operations, it must ease investors’ jitters. Seoul is not making the demand for political purposes, but from a business perspective. If both sides don’t come to a valid agreement on ensuring business security, companies and investors will lose interest in working in the North.

Security can pave the way for further development of the complex and its global appeal. If the two Koreas resolve the nuclear issue and build mutual trust, the Kaesong complex could one day expand to an industrial city of 20 million pyong (16,338 acres), as in the original plan. North Korea could also draw foreign investment. This all depends on North Korea making the right decision.
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