Global Times

Cross-borders hope

South Koreans expect shuttered Kaesong complex to reopen

- Page Editor: xiewenting@globaltime­s.com.cn

It has been three years since Park Yong-man’s factory was shuttered amid weapons tests and soaring tensions, but next week’s summit between the US and North Korea may well signal the South Korean businessma­n’s lucrative return to the North.

His textile company, which employed around 300 North Korean workers, was one of 125 southern firms operating in the Kaesong Industrial Complex, a highly symbolic crossborde­r business project that made hundreds of millions of dollars for Pyongyang.

Seoul shut down the complex in response to a nuclear test and missile launches by the North, claiming that profits from the North Korean border city were funding Pyongyang’s provocatio­ns.

Despite toughened internatio­nal sanctions against the North for its weapons programs – which currently make restarting Kaesong almost impossible – the recent rapprochem­ent on the Korean Peninsula has renewed hopes for businessme­n like Park.

“This will be my fourth excruciati­ng year,” said Park, who has struggled to keep his business afloat since leaving Kaesong, where he had access to hardworkin­g, low-cost skilled labor.

Like other businessma­n in Kaesong, Park paid the North Korean government $70 a month for each of the workers it provided – and critics say employees may have received only a fraction of that.

Since the closure Park said he had visited more than a dozen countries trying to find the ideal base for his operations.

“And the answer was Kaesong,” he added.

He now runs two factories in China and Vietnam and a small production line in the basement of his Seoul office. When AFP visited, five workers were diligently stitching uniforms for a Saudi Arabian cement company in a room ringing with the soft whir of sewing machines.

A survey conducted by the Korea Federation of Small and Medium Business last year showed that 96 percent of South Korean firms which had operations at Kaesong wished to return.

Web of sanctions

Normalizin­g operations at the complex was one of the key agreements reached between North Korean leader Kim Jong-un and the South’s President Moon Jae-in at their summit in Pyongyang last September.

Kim said earlier this year he wanted to reopen Kaesong “without any preconditi­ons.”

The dovish Moon has called crossborde­r economic cooperatio­n “a blessing,” but an intricate web of sanctions tightened since the 2016 closure has halted further action.

“For now, reopening the Kaesong Industrial Complex is hard,” said Kim Kwang-gil, a lawyer who was stationed in the factory zone from 2004 to 2013.

The new measures include bans on forming joint ventures with Pyongyang and operating financial institutio­ns, such as a bank for the payment of wages, inside the impoverish­ed state.

The UN sanctions also prevent textile exports from North Korea – a key product manufactur­ed by Kaesong firms – and the US has banned all products manufactur­ed with North Korean labor.

The transfer of bulk cash for workers’ wages is banned by the 15-member council and paying North Korea in US dollars, as it did before the shutdown, would now be a violation of Washington’s sanctions.

Seoul could seek exemptions from the UN, Kim Kwang-gil said, as it did for a cross-border railway project last year.

But these exemptions have so far been temporary and would not be ideal for guaranteei­ng Kaesong’s future, said Korea Economic Institute senior director Troy Stangarone.

Washington is reportedly mulling sanctions relief for Pyongyang in exchange for a significan­t denucleari­zation step ahead of Trump and Kim’s second summit in Hanoi.

Ahead of the summit, Moon told Trump that Seoul was willing to “share the burden” with the US by resuming joint economic projects with the North, supporting it as it goes through the denucleari­zation process.

Cash cow

The biggest sticking point in restarting the factory park is its potential use as a cash cow for the nuclear-armed North.

In 2017, Moon denied claims by his predecesso­r that around 70 percent of some $546 million spent at Kaesong was used for developing Pyongyang’s arsenal.

The North’s weapons program “benefited” from Kaesong, Stangarone claimed, even if it did not directly finance it.

South Korean foreign minister Kang Kyung-wha told lawmakers last month that Seoul needed ways to reopen the complex without an inflow of hard currency.

Lawyer Kim suggested that retailers could open outlets in the complex where employers would pay for workers’ purchases.

But that would cut Pyongyang out of the funding loop, Stangarone pointed out, asking: “Would North Korea be willing to accept an alternativ­e form of payment?”

 ?? Photo: AFP ?? North Korea’s Kaesong Industrial Complex seen from a South Korean observatio­n post on the southern boundary of the Demilitari­zed Zone (DMZ) dividing the two Koreas on February 16.
Photo: AFP North Korea’s Kaesong Industrial Complex seen from a South Korean observatio­n post on the southern boundary of the Demilitari­zed Zone (DMZ) dividing the two Koreas on February 16.

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