After effectively holding around 720 South Korean workers prisoner in the Kaesong Industrial Complex since Friday, North Korea on Monday allowed 453 of them to return home. But there have been major difficulties in running the industrial complex as North Korea prohibits the entry of South Korean workers and raw materials and other goods. If the situation persists until Friday, when the "Key Resolve" joint military exercises between South Korea and the United States comes to an end, 90 percent of the factories in the complex are expected to shut down. North Korea has used the joint military drills as an excuse to impose the unilateral ban...Talk about "political risk." The place is practically shut down. I guess Lotte World isn't setting up shop anytime soon in the DPRK.
Yet North Korea's sudden treatment of South Korean officials as hostages, taking issue with a joint South Korea-U.S. military drill that has been taking place annually for a decade, raises serious questions whether it can be treated as a reliable business partner. The head of one South Korean business in the complex lamented in a media interview, "We are not toys North Korean authorities can play with." It is outrageous of North Korea to use the Kaesong Industrial Complex as leverage to exert political pressure on South Korea.
Even when North Korea launched a missile and tested a nuclear device in 2006; when the U.S. government took issue with the influx of dollars into the communist country; and even when a South Korean tourist was shot and killed in the Mt. Kumgang resort, the Kaesong Industrial Complex operated normally. Despite mounting criticism from within, the South Korean government kept the complex open, since it symbolized cooperation between the two Koreas.
Truly independent regimes do not exist outside the minds of anti-globalization fantasists. Indeed, there are still goods which need to be procured from the outside world even in cuckoo land, North Korea. The question then becomes, "How do you earn foreign exchange while keeping a lid on corrosive foreign influences?" I had been planning to blog on this but got waylaid a bit. A few weeks ago, I posted about North Korea making a gambit to attract foreign investment via its Kaesong Industrial Complex. Some (brave or foolhardy?) South Korean enterprises have set up shop there. However, the most recent iteration of the US/South Korea "Key Resolve" war games prompted the hermit regime to shut down the border crossing to South Korean workers returning home from Kaesong. So much for the new era of cooperation North Korean officials boast about for investors in Kaesong. Here's an op-ed from the English language version of the Chosun: