Seizing Kaesong’s factories may be North Korea’s latest miscalculation


The Kaesong Industrial Complex is seen across the demilitarised zone (DMZ) separating North Korea from South Korea in this picture taken from Dora observatory in Paju, 55 km (34 miles) north of Seoul, September 25, 2013.
Credit: REUTERS/Lee Jae-Won

The border between North and South Korea is about as tense as it gets, with armed guards from both sides eyeing each other through binoculars and apparently ready to shoot at the slightest provocation.

But there is one place near that border where the two Koreas have tried to play nice: the Kaesong Industrial Zone. It’s located in North Korea and employs a largely North Korean workforce. But South Korean companies operate there, usually with their own managers.

Today, though, North Korea’s military seized the factories, and ordered the several hundred South Korean workers in Kaesong to pack up.

“North Korea only took these steps after South Korea said it was going to temporarily halt operations at the complex,” points out Seoul-based reporter Jason Strother. “North Korea did not take too kindly to Seoul’s words that they were going to close down.”

South Korea’s government alleges that the money North Korea earns from Kaesong was going to fund its nuclear weapon program and long range missile tests. “These have been very hot issues over the past month here in Seoul,” says Strother, “and South Korea says this will deprive the Kim Jung Un regime of having the resources to carry out these nuclear programs.”

More than 50,000 North Koreans work in the cluster of 124 South Korean-owned factories. They don’t produce shiny Samsung smartphones or new Hyundai cars, instead it’s mostly cheap, low tech stuff, like clothes, shoes, kitchen utensils and wristwatches. Still, Kaesong was a rare source of cash for North Korea. Since it opened in 2004, the Kaesong complex has generated about $90 million annually in wages paid directly to Pyongyang’s state agency that manages the zone.

More important perhaps than the jobs and the cash was the symbolism of the joint North-South economic zone. It was originally part of a “sunshine” policy to let the light shine on North Korea so that it would open up, says Strother. He says there’s little evidence to show that it worked, but “it was seen as helping to loosen the mind control that the Pyongyang government has over its citizens and workers … so it was the last bastion of hope here on the Korean peninsula that there could be better days ahead for the two nations.”

For now, it seems that a more conservative South Korean government is taking a tougher line. In response to the North’s nuclear tests, South Korea is looking to cut off any sort of ties with Pyongyang.

So, for now, the factories are closed for business.