Kaesong Industrial Complex key to Inter-Korea relations

Kaesong Industrial Complex key to Inter-Korea relations

On the 15th of August, talks between North and South Korea reached a deal to reopen Kaesong Industrial Complex (KIC), which has been closed since April this year. Operations will to resume within the next month after the necessary controls have been carried out within the plants. Continuing operations in KIC may to reduce the risk of war on the peninsula as well as induce reform in North Korea, thus putting the Korean peninsula, and other East Asian countries, at ease.

Besides being an important source of income for both North and South Korea, KIC has been a vital symbol of cooperation between North and South Korea since it opened in 2004. It lies about 10 km into North Korea, and latest data indicate that 123 South Korean manufacturers employ 53,000 North Koreans at KIC, all of whom were pulled out in April.

Since the decision to revive operations at KIC, staff members from companies within the KIC have entered the inter-Korean manufacturing zone. The reason for this visit, as quoted by a staff member to reporters, was to make sure that facilities were ready to resume operation.

Operations in KIC ceased when North Korea withdrew its workers amid tensions as a result of military exercises between the United Stated and South Korea in response to North Korea’s nuclear testing in February. Several months and seven rounds of talks later, the deadlock between the two nations persisted with Seoul insisting that Pyongyang must guarantee not to close down operations again.

This situation led to large economic losses for both North and South Korea earlier this year – something that South Korea is hoping to prevent from happening again by encouraging Pyongyang to guarantee a unilateral closure in the future. Sources estimate this loss to be nearing $1 billion. Insurance payments worth £163m, or $250m will be released to the South Korean factory owners affected by the closure.

Resuming operations at KIC has put the entire Korean peninsula, and Pacific Asia, at ease. Alongside many other experts, Professor Andrei Lankov argues that the chances of military conflict between the two nations have been greatly reduced as a result of this move, improving the likelihood of a stable economic environment in the region.

Operations in Kaesong are also important, according to Andrei Lankov, as they are a successful way for North Korean workers to be exposed to modern production techniques and industrial organization. Such exposure demonstrates to North Korean employees that South Korea is not the oppressed nation it is officially reported by the North Korean media to be. Hope is that this will eventually lead to economic and social reform in North Korea, whose citizens are led to believe that South Korea suffers enormously under American occupation.

On top of this, new confirmations of aid from Seoul to North Korea have also created more peace of mind on the Korean peninsula, as it is yet another indication of willingness to cooperate between two nations officially still at war. Cooperation between the two is part of President Park Geun-hye’s ongoing strategy of “trust-building”, in an ongoing effort to improve relations between the North and the South.

The improvement in relations between the North and South of Korea will have a positive impact on the entire region, as every effort of cooperation between the two decreases the likelihood of military conflict in an otherwise relatively stable environment. On top of this, KIC provides the hope, for many in both North and South Korea, that both Koreas will one day be reunited.

Categories: Asia Pacific, Security

About Author

Margaux Schreurs

Margaux lives in Beijing and works as an editor at a Beijing-based magazine and website, and writes on a freelance basis for a wide range of publications throughout the world, mainly focusing on East and Southeast Asian current affairs. She is a London School of Economics and Political Science MSc graduate.