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09.22 (일)

[In the Eyes of Kyunghyang] The Kaesong Industrial Complex: Two Years of Torture by Hope

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Daewha Fuel Pump, an automobile parts manufacturer that entered the Kaesong Industrial Complex, was a sturdy company, once even designated as a global small but strong company by the government in 2011. But during the three years following the shutdown of the Kaesong industrial park, business deteriorated, and recently the company filed for bankruptcy after it failed to settle hundreds of millions of won. Chung Ki-sup, co-chairman of the Kaesong Industrial Complex emergency committee, ran a garment factory in Kaesong, but he ended up closing two factories in South Korea. He said, "We had managed to balance the losses from the two factories in South Korea by the money we earned from the Kaesong plant, but with the extended shutdown, we couldn't hold up any longer."

It has been over three years since the industrial park shut down, and the businessmen with factories in Kaesong are running out of strength to hold on. Access to bank loans was blocked a long time ago, and more than a handful of companies are resorting to private loans just to survive. More than ten companies are at risk of bankruptcy. There are many companies that are actually closed, but only maintain an office to secure their qualification as an inter-Korean cooperation business.

In February 2016, the Park Geun-hye government suspended operations at the Kaesong Industrial Complex without prior notice. The businessmen, who believed the inter-Korean agreement of 2013, which stated that the two Koreas would guarantee the normal operation of the industrial park regardless of the political situation, were forced to suffer huge losses and were even accused of supporting North Korea--"They funded North Korea's nuclear program." The government estimated their damages with very low standards, and only supported 70% of those losses. In reality, the only support that the government provided was a loan for emergency operation expenses and the payment of the economic cooperation insurance. The companies have to return the insurance money when the industrial park is reopened.

When the Constitutional Court decided to impeach President Park Geun-hye on March 10, 2017, the businessmen were hopeful that the Kaesong industrial park would reopen. But nothing has changed other than the additional support of 66 billion won to the companies in Kaesong. The "torture by hope" has been ongoing for nearly two years. The Policy Innovation Committee at the Ministry of Unification announced an investigation result claiming that the government's decision to suspend operations at the Kaesong Industrial Complex at the end of 2017 was "determined by a unilateral and verbal order by former President Park Geun-hye, without any debate or discussions by an official decision-making system." Yet the government has not apologized for the shut down of the industrial park. This is completely different from the comfort women agreement signed with Japan, which even President Moon Jae-in openly stated was wrong.

Experts on North Korea believe we can obtain the understanding of the international community on resuming operations at the Kaesong Industrial Complex by aggressively interpreting the latest United Nations sanctions on North Korea (#2397) adopted in December 2017, which allows exemptions for individual issues (Article 25) and welcomes and stresses the maintenance of peace and stability on the Korean Peninsula and in Northeast Asia, efforts to resolve issues through dialogue, and activities to ease tensions (Article 27), as well as U.S. law strengthening sanctions on North Korea, which allows exemptions for contributions to the democratic and peaceful reunification of the Korean Peninsula. Considering that North Korea has ceased its nuclear and missile tests and that North Korea is engaging in dialogue with South Korea and the United States, this is an alternative worth reviewing.

But it is difficult to find any active effort from the Ministry of Unification, which oversees the Kaesong Industrial Complex, to resume operations at the industrial park in Kaesong. The unification ministry is an organization that promotes policies linked to inter-Korean relations and to the unique political situation of the Korean Peninsula. Obviously, it should be able to voice different views from the international community. But when it comes to the current ministry, people even criticize that the ministry is more sensitive to the U.S. than the foreign ministry is. The government is telling the businessmen to "stay still," blocking them from visiting North Korea to inspect their factory facilities. They refused to approve visits to North Korea on seven occasions after the shutdown of Kaesong--four of which were refused by the Moon Jae-in government. The unification ministry claims that it was because of the "lack of understanding from the international community," but this is difficult to accept. "Facilities these days involve many electronic devices, so if we leave them alone for too long, they'll break down. It's too much for the government to block me from checking to see if the factory facilities, which are my property, are intact," said Chung Ki-sup.

The behavior of the opposition party is also hard to understand. In a meeting with U.S. experts on the Korean Peninsula on February 11 (local time), the Liberty Korea Party's delegation to the United States said that it was not in our best interest to give North Korea too much, such as resuming operations at Kaesong Industrial Complex and tourism of Mount Kumgang, just based on North Korea's promise to partially dismantle its nuclear weapons. This is not something they can say if they can ever so slightly understand the struggle of the businessmen. They showed no sense of responsibility as the ruling party in the Park Geun-hye government, which closed down the industrial park.

Next week (Feb. 27-28), a second summit between North Korea and the United States will be held in Hanoi, Vietnam. The biggest concern is whether or not the U.S. will include the easing of sanctions on inter-Korean economic cooperation as a countermeasure to North Korea's denuclearization. If the two leaders come up empty-handed from the second meeting, the Kaesong businessmen could run out of patience.

Even now, politicians should try to reopen the Kaesong Industrial Complex. The National Assembly needs to adopt a bipartisan resolution supporting the reopening of the industrial park. It would be a shame to expect Washington to ease sanctions without making such efforts. The response of the government and politicians to the Kaesong Industrial Complex will be an important precedent for the future of inter-Korean economic cooperation. How can they encourage businessmen to head to North Korea without properly making an effort to right the "illegal situation," in which businessmen have been violated of their business activities and property rights?

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