Closing Kaesong: South Korea Withdraws from Joint Industrial Park

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With North Korea bent on making 2016 interesting–testing a nuclear device on January 6 and launching a satellite over this past weekend–South Korea has pulled one of the few cards remaining in its hand and has decided to unilaterally withdraw from the Kaesong Industrial Complex. The South Korean Unification Ministry said in a statement that the complex would be shut down temporarily in response to recent North Korean provocations. The complex was cited by the Ministry as source of income for North Korea:

“Until now, about 616 billion Korean won (about $516 million) have flowed into North Korea via the KIC, with 132 billion won alone last year. It is crucial for South Korea to actively get involved in sanctions while the international community discusses tougher sanctions (on North Korea) for violating UN resolutions and pushing forward with a nuclear test and missile launch.”

An unnamed ministry official was more direct to Yonhap News Agency, linking the complex to North Korea’s nuclear program: “The operation of the complex should not be used for North Korea’s development of weapons of mass destruction at a time when the international community is pushing for tougher sanctions against the North.”

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Kaesong opened in 2004 and stood as a symbol of inter-Korean cooperation. The collaborative industrial park sprung from the “Sunshine Policy” of the late 1990s. An estimated 54,000 North Koreans work at the complex for some 124 South Korean companies. Each day, hundreds of South Koreans would cross the border to manage production operations. For South Korea, Kaesong was a symbol of cooperation with their northern brothers and source of cheap labor. For North Korea, Kaesong has been its only major source of hard currency.

This is not Kaesong’s first closure, though it is the first time the South has precipitated the closure of the complex. In 2013, North Korea withdrew its workers from Kaesong after South Korea engaged in military drills with the United States. After five months, however, North Korea toned down its rhetoric (again) and reengaged in Kaesong–having perhaps recognized that the closing hurt Pyongyang more than it hurt Seoul. Previously, in 2009, then-South Korean President Lee Myung-bak aired the specter of closing Kaesong during a press conference while visiting the United States a month after North Korea’s second nuclear test. He said, “If the Kaesong industrial complex were to close, these 40,000 North Korean workers will lose their jobs.” But at the time, South Korea declined to actually withdraw from Kaesong.

According to Yonhap, South Korean officials are not discussing when (or if) operations at Kaesong will resume. An official said, “Whether the park can be reopened will entirely hinge on North Korea…The North should first dispel the international community’s concerns about its nuclear and missile developments, and provide a favorable atmosphere for our firms to normally operate factories.”

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