[Editorial] Permanent shutdown?

The industrial complex for South Korean corporations in the North Korean border town of Gaeseong is at risk of permanent closure now that all South Koreans are being withdrawn from the complex as a consequence of escalating inter-Korea tensions. North Korea would have more to lose than the South.

Held accountable is North Korea, which has been blocking entry to South Korean factory managers and cargo since April 3. It has been ignoring a repeated South Korean plea that the remaining personnel, who were running out of foodstuffs, medicine and other necessities, be permitted access to additional supplies.

On Friday, South Korea decided to pull out all of the 175 personnel remaining in the complex shortly after the North turned down a call for talks. It had few other options when the North said the proposal to hold talks was deceptive, citing the ongoing South Korean-U.S. military exercise as proof.

The North even threatened to “take a final and decisive grave measure,” alluding to the complex’s permanent shutdown. The warning could not be taken lightly, given that the North confiscated a South Korean company’s properties in the Geumgang mountain resort after a prolonged conflict over the death of a South Korean, who was shot when she strayed into an off-limits area in 2008.

Even so, South Korea decided to withdraw all remaining staff. It had to put their safety before the potential losses to the 123 South Korean companies operating factories in the complex. As the South Korean unification minister put it, the decision was unavoidable, given the fear that they could be taken hostage in a worse situation.

A responsible South Korean government would have to be prepared for the possibility, no matter how remote it appeared to be. Against this backdrop, the South Korean defense minister referred earlier in the month to military action that could be taken for the rescue of the personnel if they were to be held hostage.

Of course, those bearing the brunt of the decision are the South Korean government and the companies that have invested a combined estimate of 1 trillion won in power and water supplies and communications as well as manufacturing facilities. The government may provide subsidies for the companies out of its South-North cooperation fund. But the subsidies would fall far short of the 370 billion won they have sunk into their assembly lines.

The losses would snowball when adding on the lost production at their factories and at their suppliers. One estimate put the total losses at 5 trillion won to 6 trillion won. In addition, as many as 15,000 people could lose their jobs.

The damage would hurt the South Korean economy undergoing a slump. Still, it is strong enough to sustain the damage.

But the pain would be greater for North Korea, with 53,000 workers being exposed to the risk of losing their jobs. North Korea would have to forgo $86 million in wages paid to them each year ― not a small sum for the hard-pressed North Korean economy.

Moreover, confiscation would be of little help, with the production facilities, once taken by the North, set to be made obsolete. It would be virtually impossible for the North to restart the stalled operations if South Korea were to cut off its power supply to the industrial park. It would not be the same as with the facilities in the tourist resort that the North has been running for foreigners since it confiscated them from Hyundai Asan, the South Korean tourism operator.

Even worse, North Korea would forfeit its professed desire to make itself an economic powerhouse with investments from abroad. Who in his right mind would invest in the North if Pyongyang failed to honor the property rights once again?

The industrial complex is an asset whose value is not limited to economic gain for both the South and the North. It also shows what they can do together in other areas as well once they decide to abandon the idea of provoking each other and instead pursue peace and common prosperity. Moreover, it even survived the North’s deadly torpedo attack on a South Korean warship and its bombarding of a South Korean island in 2010.

North Korea will have to think twice before making a decision to shut down the industrial complex ― one of the few remaining conduits of inter-Korean economic exchanges. It could be nearly impossible to reopen it if it were to be closed.