In an effort to make North Korea pay for recently launching a long-range rocket and exploding a nuclear device, South Korea on Wednesday announced that it will close an industrial park that the two countries jointly operate.
Shuttering the Kaesong Industrial Complex in the border town of the same name could have an impact that goes beyond sanctions already announced by the United States and other countries because the complex generates desperately-needed hard currency for North Korea.
The likely impact of the closing is a matter of conjecture, according to experts on the secretive country.
"South Korea is sending the North a stark message that its provocations will no longer be tolerated as business as usual,” Greg Scarlatoiu, executive director of the Washington-based Committee for Human Rights in North Korea, told RFA’s Korea service.
“Clearly, South Korea can't tolerate the Kim Jong Un regime's 'byungjin line,'" Scarlatoiu said, referring to the name of North Korea’s policy of simultaneous nuclear and economic development.
“North Korea faces a clear choice between continuing to pose threats to international peace and security and [having] economic development. It simply can't have both," Scarlatoiu said.
It’s unclear, however, if shutting the facility will force the country to change, Andrei Lankov, a noted Russian expert on North Korea, told RFA.
“Of course, Seoul’s shutdown of the Kaesong Industrial Complex will deal a blow to North Korea, but not a severe one,” Lankov said. “U.S. $100 million is a big sum of money to the North, but it’s far from a decisive factor.”
On Wednesday, Seoul said 616 billion won (U.S. $560 million) had flowed into North Korea through the industrial complex since its opening, with 132 billion won (U.S. $120 million) flowing into North Korea last year alone.
In making the announcement, South Korean Unification Minister Hong Yong-pyo accused Pyongyang of using the money to fund its weapons program, instead of using the cash to help the nation’s impoverished population.
“It appears that such funds have not been used to pave the way to peace as the international community had hoped, but rather to upgrade its nuclear weapons and long-range missiles,” the ministry said.
Daniel R. Russel, Assistant Secretary of State for East Asian and Pacific Affairs, called the decision a difficult one for the South Korean government, but said it is “a compelling indicator of the seriousness with which they regard the provocative steps taken” by North Korea.
“It is a decision that is consistent with the widespread view in the international community that more steps are needed to convince the [North Korean] leadership that it is not going to be possible to have access to the international economic system, let alone economic or financial aid, as long as North Korea continues to pursue a nuclear and a missile program in direct contravention of the U.N. Security Council resolutions,” he said.
There was no immediate reaction from North Korea.
Shutting down Kaesong could cause political problems for North Korea as Kaesong’s thousands of workers are sent home, but those workers may end up blaming the West instead of North Korean leader Kim Jong Un, Lankov said.
“When they lose these jobs overnight as a result of Seoul’s shutdown, they will be hit financially very hard,” he said.
“They might not know whether such a shutdown has been caused by the North Korean regime or the U.S. and South Korea, but the bottom line is the shutdown of Kaesong Industrial Complex will deal a big blow to its thousands of workers there, but not a severe one to the North Korean regime,” he said.
End of an era
Until Wednesday, Kaesong was one of the few instances where the two countries cooperate.
Established in 2004, the industrial park is the last remnant of former South Korean President Kim Dae-Jung’s Sunshine Policy, which also led to a historic summit with then-North Korean leader Kim Jong Il in 2000.
While Kim was awarded the Nobel Peace Prize for implementing the Sunshine Policy, his legacy was dismantled in 2010 when South Korea’s Unification Ministry declared the policy a failure.
Closing Kaesong now snuffs out what remains of North-South cooperation and closes a window through which some North Koreans could get a taste of life in the south, Lankov said.
“I have supported the continued operation of the Kaesong complex because of the enormous effects of South Korean Choco Pie cookies on the North Korean workers, which the North Korean regime banned distribution of some time ago,” Lankov said.
“The Kaesong Industrial Complex has served as sort of a window through which its North Korean workers can get a glimpse of life in South Korea,” he added.
Labeled a special administrative industrial region of North Korea, Kaesong operated as a collaborative economic development zone that hosts South Korean companies attracted by its access to cheap labor. Kaesong is only six miles inside North Korea, with direct rail and highway access to the south.
The industrial park has been controversial in South Korea, as some conservative South Koreans argue that it extends a lifeline to the North Korean leadership, undermining United Nations sanctions.
Kaesong has been closed before.
In 2013, North Korea pulled its 53,000 workers from the plant in a show of strength during an earlier time of rising tensions between the two nations. At the time, North Korea said it “gets few economic benefits from the zone while the South side largely benefits from it.”
While the earlier closure did not last, the closure announced Wednesday looks set to become permanent.
Extremely provocative act
“North Korea has pushed ahead with the extremely provocative act of launching a long-range missile on the heels of its fourth nuclear test, showing disregard for the repeated warnings of the international community and the suffering of its people,” South Korea's Unification Ministry said in a statement.
The ministry added: “North Korea’s provocations are a direct challenge to peace and stability on the Korean Peninsula and in the international community, and its actions are absolutely unacceptable.”
Feelings among the 124 mostly textile businesses that used the park have been mixed.
In a statement, the association of South Korean companies in Kaesong denounced the government's decision as "entirely incomprehensible and unjust."
Lee Eun Haeng, chairman of Il Sung Leports, which produces fashion goods at the park, told the Associated Press that the companies had become "victims" of a political situation.
"For the companies and for their suppliers to survive, the government should give enough compensation," Lee told the AP. "There are hundreds of thousands of South Korean workers and families who rely on the Kaesong park for their living. They have become jobless overnight."
Nonetheless, he said, he had no choice but to accept the government's measures because they were taken for the sake of "national security."
Lankov thinks that this view of national security is illusory.
“If they lose the money, maybe they will have to slow down a bit their speed of developing nuclear weapons and missiles,” he said. “But I think that the Kaesong complex not only helps the North Korean regime fund its nuclear and missile development, but also helps ordinary North Koreans get a peek at the real picture of life in South Korea, and works as a firewall to block the rise of crises in inter-Korean relations.”
“In that respect Seoul’s decision is a big mistake,” he said.
Reported by RFA's Korea Service. Translated by Changsop Pyon. Written in English by Brooks Boliek.