The Future of the Kaesong Industrial Complex and Liberal Peace on the Korean Peninsula

The security situation on the Korean Peninsula is heading towards its lowest point in recent years with North Korea launching dozens of ballistic missiles last week and a possible nuclear test in the coming weeks or months. Few now seem distracted by the closure of the Kaesong Industrial Complex (KIC), an inter-Korean manufacturing complex in Kaesong, North Korea. It was a symbol of inter-Korean rapprochement, but has been closed since 2016.

Has the time finally come to confirm that the KIC is a dead project?

Only one direction

Park Geun-hye’s government announced the closure of the KIC in February 2016 in response to North Korea’s nuclear and missile tests. He claimed that KIC income it had been used to finance North Korea’s nuclear weapons program. Park’s successor, President Moon Jae-in, failed to keep his promise to reopen the KIC, with failed nuclear negotiations between Washington and Pyongyang followed by a further deterioration in inter-Korean relations.

The inauguration of Yoon Seok-yeol’s government in May 2022 put a nail in KIC’s coffin. A conservative president, Yoon has taken a tougher stance on North Korea, making denuclearization a prerequisite for engagement with Pyongyang. In his Liberation Day speech in August, Yoon proposed a “bold initiative”, promising massive economic assistance to the North only when North Korea denuclearises. He didn’t even comment on the KIC during his speech.

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Legal challenges against the government’s decision to close the KIC have also failed. On January 27, 2022, the South Korean Constitutional Court ruled that former President Park’s 2016 decision to close the KIC did not violate the Constitution. He said in the ruling that the economic sanction was appropriate to protect South Korea’s security and was in line with the international community’s effort to deter North Korea’s development of nuclear weapons. Later, in May, the court also dismissed a lawsuit filed by one of Kaesong’s companies alleging that the government failed in its constitutional duty to enact laws to provide compensation for property rights violations.

Meanwhile, North Korea has not done its part to revive the KIC. Long before its closure in 2016, the Kim Jong Un regime used the KIC as a tool to show discontent and escalate tensions with South Korea. North Korea has deported South Korean officials, imposed border restrictions and unilaterally closed the compound. Four years after its closure by South Korea, North Korea demolished an inter-Korean liaison office building in Kaesong in an escalation of tensions on the Korean peninsula. According to the South Korean Ministry of Unification, the North Korean authorities operated the facilities of the complex without the permission of the South Korean companies that built and owned them.

The Biden administration has also done nothing significant regarding the KIC. The KIC is just one part of the larger, more fundamental North Korea problem and has not been on President Joe Biden’s top agenda when it comes to North Korea. On the one hand, Washington said that meet with north korea if Kim Jong Un is sincere and serious about the nuclear discussions. Apparently he is different from Obama’s “strategic patience” in hinting at sanctions relief for particular steps toward the ultimate goal of denuclearization. However, on the other hand, the Biden administration has resumed joint military exercises with South Korea, which had been scaled back under the Donald Trump administration. The administration has also publicly criticized North Korea for its human rights abuses. Biden’s middle ground approach between Obama and Trump policies toward North Korea has made no significant difference. North Korea’s continuing criticism of US policy is that it is hostile and provocative.

Learned lessons

Despite all signs of its low prominence in inter-Korean relations, the KIC remains a symbol of inter-Korean cooperation and, more importantly, represents a liberal peace project on the Korean peninsula. The idea of ​​liberal peace lives on.

Economic sanctions have failed to deter North Korea from increasing its nuclear and missile capabilities. Stronger deterrence may be considered to balance North Korea’s growing military threats, including positioning US strategic assets in South Korea, redeploying tactical nuclear weapons, strengthening the missile defense system, or enhancing cooperation. Intelligence. But such assertive moves would increase military tension on the Korean peninsula and intensify the great power rivalry between the United States and China in the region. military options such as shooting down missile launches, attacking nuclear sites, or targeting the North Korean leader would not effectively address North Korean threats and has the potential to cause massive casualties. Unless one believes that the regime will collapse internally, voluntarily denuclearize, and initiate political and economic reforms, some form of compromise must be factored into the equation to address the North Korean problem.

The KIC, therefore, could begin to resurface as an important part, even a starting point, of engagement.

However, 15 years of intermittent experience at KIC does not paint a promising picture for a new round of inter-Korean economic cooperation. Without learning important lessons from the KIC experience, any reopening is likely to produce similarly disappointing results.

First and foremost, there must be a solid understanding of the nexus between economic cooperation and security on the Korean peninsula. The economic benefits to South Korean companies using cheaper North Korean labor will not create or sustain the momentum to operate and develop the KIC. In fact, the liberal thesis of peace has causal mechanisms link economic ties with security. They include creating higher opportunity costs that limit North Korea’s conflict behavior, sending stronger and more credible signals to each other through self-inflicted or lasting economic costs, and changing the preferences and interests of the parties. internal stakeholders to steer them away from confrontation and promote greater cooperation. Failure to understand these analytical frameworks for discussing security effects resulted in politically polarized and unfounded arguments in South Korea. To avoid a repeat of the KIC controversy, the security effects of inter-Korean economic ties need to be understood, shared, and evaluated by both proponents and skeptics of inter-Korean engagement.

Internal support and consensus for the engagement policy is also essential to avoid repeating the same mistakes. The security effects may take longer to appear and be recognized as the resumption and operation of the ICC would be limited in the initial phase. Even at full capacity, the KIC would fall short of its initial plan and ambition to expand and create an inter-Korean economic zone. The short-term effects are more likely to be economic gains, accompanied by better inter-Korean relations and a more relaxed security environment on the Korean peninsula.

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It is important not to get carried away with the reopening because the reopening of economic cooperation through the KICs will continue to be a security function, not the other way around. To assess the effects on security, political leaders and national audiences must agree to adopt medium- and long-term perspectives. The first questions would address common security denominators for initiating engagement and reopening the KIC. It could be North Korea’s verifiable freeze on nuclear activities along with a suspension of nuclear and missile tests. Or it could happen at a later time when a peace treaty is negotiated and reached to end the Korean War. Other controversial issues on the means of payment, human rightsand the economic efficiency of the complex must also be addressed to increase internal support.

Returning to reality and ground zero

The current security situation does not offer a realistic timetable for when the KIC, in the grand scheme of engagement, can be discussed and launched again. Nuclear negotiations have not resumed. The South Korean government shows no sign of changing its policy course. The Biden administration does not appear to rank the North Korea issue as a higher priority than domestic economic challenges and the war in Ukraine. However, in a more difficult time, it would be better to go back to basics and review the performance and challenge of KIC’s previous project and engagement policy. The fundamental question of how to deal with North Korea remains the same despite the increased tension on the Korean peninsula. It will go unanswered without preparing a new approach to engage North Korea.

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