Production at the Kaesong Industrial Complex (KIC) will restart next Monday after the two Koreas arrived at an agreement late last night. If it goes ahead on time, the restart will take place 161 days after production initially ceased.
South Korean workers were initially denied access to the complex on April 3rd, when North Korea claimed that joint U.S.-South Korea military drills had “debased our highest dignity,” meaning offended the leader, Kim Jong Eun. A week later, on April 9th, North Korea withdrew its 50,000 workers.
Thereafter, South Korean calls for working-level talks were rejected by Pyongyang, leading South Korea to evacuate its remaining workers and, by May 3rd, the inter-Korean manufacturing zone was completely shuttered.
The ensuing rhetoric between North and South Korea took on an increasingly fierce tone, but then a chink of light appeared. On June 6th, North Korea proposed a high-level meeting. But, Pyongyang then cancelled it, accusing South Korea of failing to send a chief delegate of a sufficient rank.
Finally, one month later on July 6th, both sides did sit down for working-level talks at Panmunjom, and in principle agreed to a restart the complex. Yet follow-up talks bore no fruit for the remainder of July, as both sides struggled to reach common ground.
Then, during the sixth round of working-level negotiations, North and South Korea approached a partial agreement including institutional protections, the internationalization of the complex, and its overall normalization. On August 14th, although insufficient to please all parties, an agreement to normalize operations was adopted by both North and South Korea, and both sides agreed to measures safeguarding against any recurrence.
Yet deep antagonism remains regarding measures targeting those responsible for the shutdown, and as the complex moves towards a reopening, it is anticipated that a great deal of additional issues will require attention. Compensation payments for businesses and maintaining stability are two of the keys.
Under the restart agreement, KIC businesses are to be exempt from tax payments for all of 2013, and the issue of back pay for North Korean workers will be dealt with in due course. A seminar aimed at attracting foreign investment is also on the cards.
However, in order for the complex to attract real international investment, the two Koreas must find a more fundamental way to reduce tensions. There is also the question of whether the agreement is enough to have a positive effect on the future of tourism at Mt. Geumgang, and inter-Korean relations overall.
One anonymous North Korea analyzed the events surrounding Kaesong today, telling Daily NK, “In the past, inter-Korean negotiations were either dragged around by North Korea, or South Korea was forced to yield. But this time the South Korean government really took the lead.”
“We’ll have to keep an eye on North Korea’s attitude in future,” he went on. “But it is a positive development that the principled response of the South Korean government has led to a change in North Korea’s attitude. The South needs to continue to work toward changing North Korea’s negotiating tactics, which feature unilaterally broken promises, greed and stubbornness.”
