The Kaesong Delusion

19 Aug

I don’t get the whole Kaesong fixation.

North and South Korea have moved a step closer to reopening a joint industrial complex, raising hopes of improving relations on the peninsula.

Pyongyang and Seoul vowed on Wednesday to “actively” co-operate so that operations could resume, although their statement did not indicate when the Kaesong complex, in the North’s third largest city, might reopen.

The news followed six failed rounds of talks on the issue. Pyongyang said last week that it would reopen the zone – minutes after Seoul indicated it was willing to see the facility closed permanently. Kaesong was the last symbol of inter-Korean engagement until this spring, when tensions soared with the North threatening nuclear strikes against the South and the US after sanctions for its third atomic test in February. It then pulled its 53,000 workers from the site.

Seoul’s chief delegate, Kim Kiwoong, told South Korean media that Wednesday’s joint statement was “not the end but a beginning”.

Unexpectedly, Seoul and Pyongyang said they also sought to attract foreign companies adding that internet and mobile phone connections would be added to the site.

North Korea has sought foreign investors for other economic zones, but companies are likely to be even warier of Kaesong after the four-month shutdown. One of Seoul’s key demands has been a reassurance that Pyongyang will not pull out its workers again.

But has ever a negotiation been conducted in such bad faith by both sides. Seoul looks especially hypocritical – and that’s quite a feat considering Pyongyang’s tactics.

First, it provided an option to cooperate by offering to agree to revised language in which both Koreas, rather than North Korea alone, would be responsible for guarantees of the smooth running of Kaesong.

Second, the South’s stance was coupled with a credible walk-away alternative—for Seoul to stop negotiating and pay a designated insurance payment amount to the businesses forced to leave Kaesong.

Timing and signaling were also critical. South Korea used the term “final” in describing the round of talks. This signaled to North Korea it could no longer continue its positional bargaining strategy.

Regarding timing, the talks and bargaining breakthrough both occurred the day before Aug. 15—known as “Liberation Day” in the Korean peninsula, a national holiday that celebrates the entire Korean peninsula’s independence from Japan’s colonial occupation.

As for Pyongyang, does anyone seriously believe economics trumps security? The reasoning Karin J. Lee deploys concerning food aid is just as relevant for Kaesong.

Well-distributed food aid matters on the ground.  During famines, it saves lives and during shortages it ameliorates the tragic effects of chronic malnutrition especially up to the age of two. From a humanitarian perspective, the conversation should end there. Food aid should be given purely for humanitarian, not political, reasons.

But such an idealistic approach may be out of reach. Some link between food and security, whether implicit as an ‘environment changer’ or explicit as a quid-pro-quo, might be inescapable. If officials are to use food aid in this way, however, they need to understand its limits. At the level of government-to-government relations, it can contribute temporarily to an improved environment, perhaps smoothing the way to more productive negotiations. But just as food aid cannot permanently improve food security, neither can food aid permanently alter security calculations.

Substitute “Kaesong ‘ for “food aid” and “food”, and Kaesong looks like a herculean effort for little diplomatic gain.

Most fundamentally, why does Seoul want to return to Kaesong in the first place? The benefits lop-sidedly accrue to Pyongyang, providing a steady source of hard currency to the beleaguered regime. On the southern side, there is no economic incentive, corporate advocacy or political interest in expanding the complex. Even before the most recent round of North Korean threats, Kaesong was on life-support.

Economically, Kaesong is simply not viable. When the complex opened in 2004, advocates predicted meteoric expansion, fueled by an ever-increasing number of South Korean and foreign firms. But no large South Korean company ever joined it. Foreign investors avoided an enterprise hounded by frequent production stoppages, security risks, and Pyongyang arbitrarily nullifying existing contracts to demand higher wages and retroactive taxes.

Politically, the Kaesong experiment has also failed. Proponents of engagement with Pyongyang argued that North Korean worker exposure to southern counterparts would induce broader reform in the hermit kingdom. These predictions proved hopelessly naive. As Pyongyang announced last year, “To expect policy change and reform and opening from [North Korea] is nothing but a foolish and silly dream.”

Joshua Stanton is only a little more certain about what Klingnor remains skeptical.

Yet, there is still an expert like Andrei Lankov who can be converted, even after the North Koreans attacked South Korea.

Lankov has three reasons why reopening the Kaesong Complex is a positive move: because it reduces the risk of military confrontation; because it changes the North Korean people; and because it teaches a few North Koreans a little bit about modern industrial practices.

He explains in more detail, “As our experience of the Sunshine Policy showed, when North and South Korea interact there is far less chance of military clashes and serious confrontations. I’m not saying that clashes will not happen; we saw some clashes under the Sunshine Policy after all. Nonetheless, the chance of such a clash is much lower, and the chance of such clashes developing into full-scale escalations is quite close to zero.”

No, Professor, it’s the actual process of diplomacy that reduces a risk of confrontation, not the agreement. The solution is to keep the North Koreans at the table indeterminably. On the other hand, Seoul is demonstrating how quickly it has mastered democracy. This populist sop to the conservative party’s geriatric base during the holiday and the corporations desperate for a low-wage army that’s not Southeast Asian – SE Asia is for sex, North Korea is for work – shows that Seoul is right on cue to become as decadent as the western models it admires.

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