Significance of the closing of the Kaesong Industrial Complex

In his New Year’s speech on 2012 Jan. 2, Lee Myung-bak said that “If North Korean shows an attitude of sincerity,a new era on the Korean Peninsula can begin”. This cooperation is more than required for North Korea especially taking in account its failed economy.

The symbol of the economic cooperation between both Koreas was the Industrial Complex of Kaesong (개성공업지구, established in 2001), one of the three Special Economic Zones of North Korea. The two others are the Rason Economic Zone (1991) and the Hwanggumpyong Economic Zone (2010). There are also some “Economic Development Districts (경제개발구, 13 established in November 2013 and 6 in July 2014), nevertheless these are still green fields. In a nutshell the Industrial Complex of Kaesong is a structure where as of march 2015, 124 South Korean companies are employing 53,947 North Korean workers.

Kaesong accounted for virtually 100 percent of South Korean economic exchange with North Korea in 2015 , around USD 1,800 mln. 59% of operating firms are dealing with Textile & Sewing industries. Other companies are involved in the Machinery, Electric, Chemical, Paper, Food (Cuckoo Electronics) and Mineral Industries. 84% of North Korean workers are only High School Graduates and 16% are above college level. Around 69% of employees are women. This complex established in 2006 was fully financed by South Korean authorities. Everything (including pens, furnitures, paper,…) was brought and displayed by South Korea. The power is supplied by the Pyeonghwa (평화, it means peace in Korean) Substation operated by KEPCO, the most important distributor of Energy in South Korea. As a part of the deal between North and South Korean authorities, the South had to build a water reservoir for Kaesong with a daily capacity of 22,000 MT.

These operations are consigned to Korea Water Ressources Development Corporation. Also according to North Korean defectors, the best water in North Korea is in Kaesong. These is also a large support facilities such as a Bank (Woori Bank), some covenience stores (Cu, Family Mart), a daycare center, a fire station,…all was financed, established and is managed by South Korean companies. Interrestingly, there is also a church at the Kaesong Industrial Zone. However, North Koreans can’t access it.

The KEZ operations were recently stopped by South Korean authorities after the launch of ballistic missile technology on the 7th February 2016.  As a result, North Korean authorities closed this structure. According to the KCNA (the North Korean Press Agency), the Kaesong Economic Zone has been put in the state of total closure under the “regime” of Park Geun Hye, a traitor for all ages, though it operated for the common prosperity for more than a decade amid the concern and expectation of all compatriots since the adoption of the June 15 Joint Declaration.

The recent provocative measure is a declaration of an end to the last lifeline of the north-south relations, total denial of the June 15 North-South Joint Declaration and a dangerous declaration of a war driving the situation in the Korean Peninsula to the brink of a war.

S5001236People from Kaesong (source: Nicolas Levi)

Since the outset of its office, the Park’s group has desperately worked to close the KIZ, describing it as a “financial source” for the north. This time it finally took the action of totally suspending its operation after unreasonably raising matters having nothing to do with the north-south relations.

Such act is a product of Park Geun Hye’s inveterate sycophancy and abnormal confrontational hysteria kicked off by her at the prodding of the U.S.

As the south Korean people are condemning the above-said action with indignation, the total suspension of the operation in the KIZ is little short of an act of dropping an axe on one’s own foot. Hit hard by this action are entrepreneurs and people of south Korea and it is the Park Geun Hye group of traitors who should pay a dear price for it.

 20150709_131719.jpg

The Railways Station (from the South Korean Side) which connects South Korea to Kaesong (source: Nicolas Levi)

Unpardonable is the puppet group’s act of totally suspending the operation in the KIZ, finding fault with the DPRK’s H-bomb test and launch of a satellite, a just measure for self-defense and an exercise of its legitimate right.

The CPRK solemnly clarifies internally and externally the following crucial measures in view of the prevailing situation:

Firstly, the DPRK will totally block the Military Demarcation Line near the KIZ from 10 am, Feb. 11, 2016, cut off the roads along the west coast in the areas under the control of the north and the south and close the KIZ and declare it as the area under the military control.

Secondly, it will expel all persons of the south side in the KIZ till 5 pm, Feb. 11, 2016.

Thirdly, it will completely freeze all assets including equipment, materials and products of the south Korean enterprises and relevant organs in the KIZ. The persons to be expelled are not allowed to take things out of the zone, except for their personal belongings, and the frozen equipment, materials and products will be put under the control of Kaeso’ng City People’s Committee.

Fourthly, the military communication and Panmunjom hotline will be cut off the moment the personnel of the south side are expelled.

Fifthly, all workers of the DPRK will leave the KIZ on Feb. 11, 2016.

The south Korean puppet group will experience what disastrous and painful consequences will be entailed by its action.

Source: KCNA

Recommendations

Many analysts and counterparts (such as Christopher Green, Aidan Foster-Carter) are critizing the closing of this structure. I disagree with them for the following reasons:

  • The Industrial Complex of Kaesong, a leading Joint Venture for Inter Korean prosperity represented a true project for the Bonanza Policy and for the mutual prosperity of both Koreas. Nevertheless the behavior of the “bad” North Korean leadership cannot be tolerated. North Korea is violating international regulations and threatening the peace on the Korean Peninsula. The 15 council members of the United Nations security council  unanimously approved a statement that stressed how any launch of ballistic missile technology, “even if characterised as a satellite launch or space launch vehicle”, contributes to North Korea’s development of systems to deliver nuclear weapons. The North Korean regime (I will call it the “bad leadership”) is destabilizing the peace on the Korean Peninsula and to a greater extent in North-East Asia.
  • The North Korean authorities turned the Industrial Kaesong Complex form a “peace zone” to a “battle field”.
  • In spite of international critics, the suspension of operations in Kaesong may be temporary. For sure it will affect the life of the 55,000 North Korean workers and their families. To a lower extent it will also affect the owners of the 123 South Korean companies based there. Nevertheless, the South Korean authorities plan to help South Korean companies based in Kaesong.
  • The Kaesong is a project which is fully funded by the South Korean authorities. In any cases, North Korea financed the existence of this Industrial Zone. Its negotiating is consequently very low.
  • 200,000 citizens of Kaesong (employees plus their direct families) benefit from the Industrial Complex of Kaesong. There is a low turnover at the ICK and a stable workforce nevertheless Kim Jong-un’s threats are hazardous for more than 20 million of Koreans (Seoul). Therefore, the South Korean governement should ensure in priority the security of its citizens instead of those from Kaesong. The South Korean government might especially take in account the repeated number of purges in the North Korean leadership which is a indicator of the unstability of the applied policy toward South Korea. I also consider that foreign governments should prepare repatriation plans for their citizens based in South Korea.
  • I also consider that hard currency earned from the Kaesong Industrial Complex may be used for developing nuclear weapon and long-range missiles.
  • Similar projects realized between China and North Korea might be also closed. I also believe that entities cooperating with North Korean sanctioned companies and concerned people might be severly punished or divulgated to the International Community.
  • The inflow of cash is limited for South Korean companies. « the Kaesong experiment has had mixed economic results, at best, with many companies struggling even as overall North-South trade reached new heights. Most companies at the complex have yet to turn a profit. »
  • Kim Yong-chol: the North Korean secretary for Inter Korean affairs (who was in Laos last week), didn’t formulate any sentences regarding the closing of the KIC. A lack of communication is also a misleading form of solving issues.
  • Therefore the policy of North Korea is escalating doubts about Kim Jong-un’s expectations.

 

 

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