The added value of the Kaesong Complex shutdown

News broke out this past Thursday, with events unfolding quickly thereafter: the Democratic People's Republic of Korea was willing to talk to the Republic of Korea. Initially calling for working level talks on July 15 to begin the process of trying to restart operations at the Kaesong Industrial Complex and resume South Korean tours of the Mt. Kumgang resort, after restoring a telephone line across the border already on Friday, the two parties ended up meeting on Sunday, June 9, in Panmunjom, agreeing to hold ministerial talks just three days later in Seoul ‒ after North Korea ultimately accepted nearly all of the conditions South Korea laid out in a proposal last month. The two sides last held working-level talks in 2011 and ministerial-level talks in 2007.

According to South Korean sources, one of the key items of the agenda will be discussing ways to prevent another suspension of operations of their joint industrial park, which ground to a halt in early April when the communist country withdrew all of its 53,000 workers from the zone, just five days after blocking access to the region to all South Korean citizens, in anger over new U.N. sanctions against it and American-involved military drills in the South. Their wages and related money transfers, amounting somewhere between $90 and $120 million per year, had been paid directly to the North Korean government.

On 17 April 2013, North Korea barred a delegation of 10 South Korean businessmen from delivering food and supplies to the approximately 200 South Korean staff who remained in the industrial zone. On 26 April, South Korea decided it would withdraw all remaining staff. Finally, on 4 May, the last seven South Koreans left the Kaesong Industrial Region, shutting it down completely for the last month. 

Even with South Korean President Park Geun-hye proudly asserting that North Korea's proposal is the product of Seoul maintaining firm deterrence against Pyongyang's threats and provocations and a U.S. Air Force Commander making similar remarks in Washington, several other explanations for Pyongyang's sudden reversal of strategy come to mind. A first possible explanation is the growing sense of urgency tied to increasing food shortages across the country, which led to the recent halting of several food processing factories and to the approval by the World Food Programme of a new two-year operation for North Korea, with a budget of $200 million and to begin already on July 1. 

A second popular explanation for the new tide of events is the one put forward by The Diplomat's Zachary Keck, who asserts that China is the more likely reason North Korea suddenly reversed its position. In late May, Kim Jong-un sent Vice Marshal Choe Ryong-hae to China, with the ultimate goal of convincing Chinese officials to accord Kim a state visit. Although Choe was eventually given audience with President Xi Jinping, the trip did not go well for North Korea, as Kim did not receive the offer to visit China that he was seeking. Moreover, in what Keck calls "the ultimate snub to North Korea", China and South Korea jointly announced President Park would visit China in June while Choe was in Beijing. Even Russia has largely remained on the same page as the other parties of the Six-Party Talks, as evidenced by its desire to hold a summit with the Republic of Korea on the sidelines of the upcoming G-20 summit in St. Petersburg.

However, there is an additional dimension to the shutdown of the Kaesong Industrial Complex that has not yet been pointed out and deserves some consideration: the Kaesong complex closure was, in some sense, just a conveniently timed maneuver by the North Korean government to recycle a workforce that might have been exposed to pernicious South Korean influence for too long. As reputed North Korea expert Andrei Lankov once asserted, projects where North and South Koreans work together have the potential to produce situations in which uncontrolled and unscripted exchanges beteween them will take place, prompting him to suggest that the decision to encourage the Kaesong Industrial Complex was perhaps the biggest mistake ever made by the North Korean oligarchs.

Just a few days after its closure, it was already reported that North Korea had assigned workers withdrawn from the Kaesong Industrial Complex to new jobs, even prompting speculation that Pyongyang wanted to end the venture to use it again as a manufacturing center of its own. In mid-April, North Korean authorities asked their Chinese counterparts in the border city of Dandong to hire North Korean workers withdrawn from the inter-Korean joint venture, with Pyongyang desperately seeking to maintain a valuable source of hard currency by switching partners to China and requesting new, less ideologically dangerous employers for the skilled workers withdrawn from Kaesong. However, China declined the proposal, prompting North Korea to invite the disgruntled workers to return to their homes in Pyongyang, Sinuiju and other parts of the country. Now cash-strapped Pyongyang  hopes to restart operations in the complex as soon as possible, but there are seemingly no guarantees that the returning North Korean manpower will be composed by the same experienced, skilled workers as before.

Despite the optimism shown by some South Korean news outlets (admittedly not shared by them all), we should not realistically expect that the upcoming round of bilateral talks will lead to a sincere, far-reaching discussion of North Korea's denuclearization, even if Presidents Xi and Obama added this goal to their ever-expanding bilateral superpower shopping list. As reputed North Korean expert Stephan Haggard recently pointed out, in the North Korean call for dialogue there is no mention of the broader security context, including the nuclear issue. Discussions will therefore focus just on the Kaesong and the Mt. Kumgang issues, as well as on additional symbolic confidence-building measures, such as potential family reunions and the participation of South Korean citizens in the celebrations commemorating the 13th anniversary of the June 15 Declaration. Any security-related discussions would have to emerge organically from these initial steps.

The shutdown of the Kaesong Industrial Complex might have already fulfilled one of its most understated but perverse goals: the renewal of a skilled but ideologically dangerous workforce. As Zachary Keck also points out, North Korea’s actions appear to be desperate attempts to salvage some gains from the crisis, and they might well have partially succeeded yet again.

UPDATE: Just one day after writing the post, news broke out that the two Koreas had cancelled their talks due to discrepancies in the composition of the respective delegations and the content of the talks. While this last-minute disagreement might suggest further internal tensions within the DPRK regarding the real need to reopen the Kaesong Complex, it mostly underlines the fact that North Korea was decided not to let these initial conversations go too far, while also highlighting Pyongyang's interest in emphasizing civilian-level contacts – a clever plot to further polarize an already divided South Korean opinion. In any case, as J. Erling reminds us in his article for Die Welt, the zig-zagging negotiating strategy of North Korea, aimed at maximizing rewards, should come as nothing new and should be taken with the right mix of patience and resolve in Seoul.