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Cooling off Kaesong

Published: 29 Jul. 2013, 20:28

If you want to see a stubborn and narrow-minded bunch, just look across the border at the North Korean delegation supervising the talks on the Kaesong Industrial Complex. The North’s delegates stormed into the press room and released documents regarding the reopening of the complex that criticized the South. They essentially expressed an unwillingness to negotiate. Are they trying to permanently shut down the last remaining cooperation between the South and the North?

Of course, it doesn’t mean a complete breakdown. The annual Korea-U.S. combined military exercise Ulchi-Freedom Guardian is scheduled for next month. Since the military exercise was a justification for the latest breakdown, Pyongyang may feel that the industrial park should remain closed during the exercise. If that was Pyongyang’s calculation, then there could be room for a gradual resolution after a cooling-off period. However, even the most optimistic prospects are far from what we had hoped for when the complex first opened.

Southern and Northern authorities have very different views on the Kaesong complex. In short, Seoul wants to follow international standards, while Pyongyang insists on its own ways to operate the factories on its own turf. The South demands that the North guarantees not to shut down the factories unilaterally. No businessman would be willing to invest in a country that can unilaterally kick you out at any time, without your assets or equipment.

Pyongyang argues that it will guarantee the operation of the industrial park if the South doesn’t “make any defiant political remarks or military threats.” We cannot be sure if they are actually using the industrial park as a means to disturb the joint drill operation, or if they are looking for an excuse to shut down the complex. Perhaps the North wants to create an internal discord in the South.

However, the military exercises are nothing new. Since the South and the North agreed on the Kaesong Industrial Complex project in 2000, the joint drill has been held every single year. Kim Jong-il never used the military exercise as an excuse to threaten the operations at the industrial park. The military may have expanded its influence in Pyongyang. If Kim Jong-un, the First Chairman of the National Defense Commission, is taking a different route from his father, the future is grim. Analysts predicted that he would pursue economic reform since he was educated in Europe, but Pyongyang is actually going in reverse when it comes to the Kaesong Industrial Complex.

According to a Korean saying, “A farmer would keep the seeds safely even if he dies of starvation.” If he eats the seeds to ease his hunger, it would result in even graver pains for the family the following year. The Kaesong Industrial Complex is the seed to create more factories in North Korea. If Pyongyang fails to keep it operating, it would lose both money and trust and drive away potential foreign investors.

Investments are made by companies. Government-assisted investments are limited. Pyongyang may find the nature of a market economy hard to understand. However, the Kaesong issue should be tackled on company terms, not on the government’s. No businessman would put his money in an investment that could be forfeited at any moment.

Uncertainty makes major Korean and foreign companies reluctant to invest in the North. While Hyundai has been burned by its investments in the North and the Kaesong park is shut down for political reasons, companies would hardly find North Korea attractive or trustworthy. Guaranteeing investments in the complex is not a surrender to the South but a means to attract foreign investors.

Pyongyang sounds as if it is suffering a great military loss because of the Kaesong Industrial Complex. However, the South also risks keeping South Korean workers in Kaesong during times of emergencies. It is a risk equivalent to having them be taken as hostages - almost a guarantee that there would never be a provocation by the South. If North Korea feels insecure, it should invite other countries to invest and create more factory parks instead of positioning military units in Kaesong.

Threats to the North Korean system do not come from the outside. It is not easy to make military provocations from the Chinese border. Pyongyang should worry about internal issues, especially economic troubles. North Korea may have the most solid control system, but it cannot control starved people. Its priority should be finding a way to revive the economy.

We may need a cooling-off period. If military interests get involved, we may need higher officials to represent each side for talks. At any rate, we must avoid making hasty conclusions. Destruction is easy, but rebuilding is harder than the initial construction.

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

by Kim Jin-kook