South Korea appears to be counting down to the complete closure of Gaeseong industrial park while Pyongyang remains mum about its repeated offers of talks.
The South’s Unification Ministry on Sunday again pressed the North to accept its “last” proposal made a week ago for a fresh round of dialogue on reopening the idle business district, saying the people are “reaching the limits of their patience.”
It also plans to finish taking insurance claims and begin payment this week to 109 firms that together demanded 272.3 billion won ($243.7 million). That means a virtual pullout of the majority of the 123 companies running plants in the border city.
“With North Korea having the wrong perception and still not giving a clear answer about assurances, the damage for our businesses is continuing to rise,” spokesman Kim Hyung-suk said at a news briefing Monday, adding the crisis is raising public concerns.
“Given this situation, it is not appropriate for the government to wait blindly.”
The sixth round of inter-Korean talks in Gaeseong on July 25 fell apart over how to prevent another closure of the factory zone.
Seoul had threatened “grave action” if the North continued to rebuke the South’s demand for Pyongyang’s safeguards against a future suspension.
The North, in contrast, has called for the two sides’ joint commitments, warning that a failure in normalization would result in remilitarizing the last remaining symbol of cross-border rapprochement.
The Rodong Sinmun, a mouthpiece of the North’s ruling Workers’ Party, on Tuesday blamed the South for the standoff.
The breakdown of the talks was “an inevitable consequence of the South government’s lack of determination to actively carry forward inter-Korean dialogue and cooperation,” it said in an editorial.
With Seoul keen to wrap up the situation and move on, the “grave action” could materialize as early as next week when Unification Minister Ryoo Kihl-jae returns from his summer break.
The ministry did not elaborate on its options but officials have hinted at a permanent shutdown of the complex as an “ultimately inescapable” step. It may first cut the power and water supplies to Gaeseong.
“Power cuts may be seen as one step and could be realized naturally at some time in the future,” a ministry official told reporters Tuesday on condition of anonymity due to the sensitivity of the matter.
Businesses have reportedly suffered collective losses of 1.05 trillion won since Pyongyang barred South Koreans’ entry to the town and pulled out its 53,000 workers in early April over U.N. sanctions and South Korea-U.S. military exercises.
The tally was based on claims submitted to the ministry between May 1 and June 7 by the 123 enterprises that have plants there and their 111 affiliates.
The state-run Export-Import Bank runs the 351.5 billion won insurance scheme joined by 140 firms.
Under the law, the government should finish deliberations on their claims and deliver the results within three months of the filing. Once the companies collect the funds, they are required to relinquish the rights to their property in Gaeseong to the state.
“If the insurance payment actually begins, it will have substantial meaning,” a ministry official said on condition of anonymity.
Another official said the ministry will make “the final, comprehensive decision starting tomorrow” in consultation with the South and North Exchange and Cooperation Promotion Council, a state-run policy advisory panel.
“If the insurance payment is made to a company, the government will take over its subrogation right and can exercise its right to sell off its assets,” spokesman Kim noted Monday.
While sticking to its demands for safeguards, the Park Geun-hye administration last week approved the first humanitarian assistance for North Korea in four months from five civilian groups, worth 1.47 billion won in total.
The ministry also unveiled plans to provide the U.N. Children’s Fund with $6.04 million for programs to help infants and pregnant women in the impoverished country.
It also allowed Hyundai Group chairwoman Hyun Jeong-eun to cross the border and attend a memorial service last Saturday to commemorate the 10th anniversary of the death of her husband, Jeong Mong-hun, the conglomerate’s former chairman.
During the one-day visit, she became the first South Korean to receive a personal voice letter from North Korean leader Kim Jong-un since he took power in December 2011.
The letter largely contained best-wishes messages and no political or business references, but marked a rare gesture of amity.
Such mixed signs apparently complicate both sides’ calculus, a possible reason why Pyongyang has been staying silent.
As both sides are adamant that they will not back down, a new round of talks, if any, would unlikely lead to a breakthrough, observers say.
But an entire closure of the complex means a political burden for Park as it may well prompt criticism for her rigid approach and lack of resolve for better cross-border ties, and gash the much-trumpeted trust-building process, they say.
“The demand for an apology on the part of some may be a poison pill urged by those who have no interest in reopening the zone,” Stephen Haggard, director of the Korea-Pacific Program at the University of California, San Diego, wrote recently to the Washington-based Peterson Institute for International Economics.
“But the question is whether Pyongyang will acknowledge its responsibility for what occurred and promise that they will not do it again. … If I were negotiating for the North, I would think long and hard about this one; the Park administration does not seem in the mood to fold.”
By Shin Hyon-hee (
heeshin@heraldcorp.com)
