Arbeit Macht Nichts: The End of Kaesong?

kaesong-satellite-photo.JPGThe second of the twin pillars of the Sunshine Experiment, the Kaesong Industrial Project, may have gone to join the Kumgang Tourist Project on the ash heap of history this week with North Korea’s closure of the border between North and South.  With that closure, South Koreans inside the North Korean enclave have been served with their eviction notices.  The North Korean directive may yet prove to be a bluff, but it will still mean the end of Kaesong as an attractive source of international investment.

It always struck me as odd how unificationistas — the type who could probably nail 99 theses of class-war agitprop to the gates of factories in Indonesia that paid better wages — saw no contradiction in investing all of their dreamy ambitions in Kaesong, a place where North Koreans work as slave laborers and yet consider themselves more fortunate than their neighbors.  Most observers agree that the regime banks most of the workers’ wages.  What, if anything, is left over for them is a matter of speculation.  One recent report claims they are paid a pittance in ration stamps, which many reinvest on the black market.  This can’t be the sort of transformation either Seoul or Pyongyang wanted.

The Unification Ministry once predicted that 350,000 North Korean workers would be employed at Kaesong during its final phase, between 2009 and 2012.  Proponents told us that Kaesong would bloom with international capital, enrich North Korea’s economy, transform North Korean society, and propel both Koreas toward a lowering of military tensions and eventual reunification.

The problem with this theory is that it assumed, despite all of the evidence to the contrary, that the North Korean regime was willing to let itself be transformed. Many of us knew all along that Kaesong would fail to achieve its lofty promise.  In fact, Kaesong at its height never employed more than 35,000 workers, and as of today, it’s almost a sure thing that it never will:

Senior North Korean military officers reportedly told South Korean companies in the joint Kaesong Industrial Complex to go home and take their factories with them. The North Korean delegation included Lt. Gen. Kim Yong-chol, head of the Policy Planning Office of the North Korean National Defense Commission, who inspected the facility last Thursday in what was widely seen as a shot before the prow ahead of a threat to cut all cross-border communication this week.

In a closed-door meeting between Unification Minister Kim Ha-joong and representatives of the firms in Seoul, one of the representatives said his staff told him that North Korean officers made the remarks when they spent 45 minutes at the factory last Thursday. He quoted the North Korean officers as claiming the land belongs to the military.

It was earlier reported that Kim asked the South Korean company managers how long it would take for the South Korean firms to pull out.

Prof. Nam Joo-hong of Gyonggi University said, “If the North Korean military is taking the lead in pressuring the South, we cannot rule out a partial closure of the Kaesong complex or deportation of South Korean staff, or that the North will take over management of the complex.   [Chosun Ilbo]

North Korea need not follow through on this threat for it to be fatal to Kaesong.  For Kaesong to be profitable, it had to attract both international investors and export markets overseas.  Yet economically, its success was always limited by the North Korean regime’s greed and unpredictability.  The reunificationistas made Living Art company’s “peace pots” the focus of their fanfare.  There was less of that when Living Art went bankrupt a year later.  The record was similarly mixed with other operations at Kaesong.  Of  23 enterprises that had committed to start operations in Kaesong by 2005, just 7 had actually done so by 2007.  Clearly, Kaesong was not proving to be viable based on economics alone:

It is not yet clear whether South Korean companies operating in the KIC are doing so primarily for political purposes or whether their operations in the complex are economically viable. Also, it is not clear whether companies in the complex would be economically viable without South Korean government support in providing infrastructure and loans with below-market interest rates.  [Congressional Research Service, July 2007]

Even in theory, the rules that applied to Kaesong were vague; in practice, they were subject to the regime’s perpetual reinterpretation.  Capital is a cowardly thing, and the world is full of venues with cheap labor and governments far less likely to hold it hostage to its political whim.  By closing the border between the Koreas last week, North Korea has demonstrated that to every potential Kaesong investor.

If you expect the North Koreans to respond rationally to economic incentives, this makes little sense.  By all accounts, Kaesong was far more profitable for the North Korean regime than it ever was for either the North Korea workers or the mostly South Korean companies that had invested there.  The regime has lost much of its revenue from direct South Korean aid and from the Kumgang tourist project, a revenue source the regime lost when its soldiers shot and killed a South Korean housewife there.  It’s hard for me to imagine that the regime would, as Curtis at NK Econ Watch puts it, turn away free money — as much as $9.5 billion dollars:

This would include $4.6 billion in foreign currency earnings with $700 million derived directly from the operation of the KIC, $2.5 billion from sales of raw materials and other industrial products, and $1.4 billion from corporate taxes.  [Congressional Research Service]

This figure does not include South Korea’s massive investments in infrastructure, electricity, and materials that may now be expropriated just as they were at the KEDO project.

Why turn down money you’ve never needed more?  There must be some other motive than mere emotion.  One possibility is that proponents of Kaesong weren’t completely wrong.  Perhaps the minimal North-South interaction there really was starting to have a transformative effect.  This, I predicted, would never be tolerated by the regime.  It’s a more likely reason for the North to have taken this action than a few leaflets blowing in the wind.

Curtis Melvin sees the same irony here as I do — North Korea’s ostensible reason for closing the border is its anger at a small number of non-governmental activists sending leaflet balloons into North Korea.  Yet many of us who support the leafleting — provided it is done from the safety of South Korean territory or waters — seek to embarrass governments that are enriching the regime, publicize North Korea’s oppressive system, and cut off regime-sustaining funding sources like Kaesong.  And ironically, it is the North Korean regime — not democratic governments or news media — that has helped us advance those very goals.

15 Responses

  1. I find it strange that you are so incredulous of the real impact and threat that the airborne pamphlets actually pose to the Juche religion.

    Now that the external global media is making inroads into the DPRK through pirated and clandestine vehicles (to include a proliferation of hand held devices), the only way to assure control is to ratchet up the Juche cult.

    The real threat here is the emboldening of dissidents and the underground Church. South Korea’s zealous missionary enterprise is poised for a full tilt exploitation of every opportunity to evangelize their beleagured brethren north of the MDL. Even reports that the dear leader is incapacitated pose less long term threats than the conversion of souls to Christ.

    I fully understand the secular world view which sees Juche as a mere political philiosophy. But I contend that until one fully accepts it as a religion, we cannot fully appreciate the role of Juche and its actual vulnerability. Juche is the military and political center-of-gravity (Clauswitz), and as such, is the primary target necessary to bring down the slave regime of Kim Jong Il.

    The threat of a preemptive strike last week by a senior North Korean negotiator was issued in response to the balloon-borne leaflets. From my foxhole, that is a very revealing sign.

  2. Scoff if you like. DPRK Studies agrees with me.

    The exposure of the North Korean people to reality vis-à-vis the cult is an enormous vulnerability for the regime.”>

  3. If there were more of those pamphlets, I’d see their legitimacy as a provocation. But there are so few of them, and they’re so likely to end up in the sea or uninhabited areas, that I doubt that they could be North Korea’s real motive here. Radio broadcasts by defectors almost certainly get a wider audience. Why hasn’t the North focused on those?

  4. I don’t know why it didn’t post the whole quotation, but here it is (link in post above):

    “The key to understating North Korea’s motivations, policy decisions, and interpreting what it seeks from its trademark brinksmanship is rooted in the cult that is the foundation of the Kim regime. That cult evolved into a state religion with the Kim family as the object of worship. The exposure of the North Korean people to reality vis-à-vis the cult is an enormous vulnerability for the regime.”

  5. Because, as the DPRK Studies’ Richardson observes, the real threats are to the religious cult of the Kims, and many of the tracts and pamphlets have religious appeals to Christianity. My Korean staffer just dug this info out of the Korean media for me.

    More from DPRK Studies:

    “The Role of the Kim Family Cult in Regime Survival and Disengagement

    Kim Jong-il is sometimes described as crazy, although he is more likely a sociopath (and may have other issues). At any rate, he is well aware of the unique vulnerability posed to his cult of personality by outside information, and has for years taken active measures to ensure the isolation of the regime, as his father did. Kim Il-sung, however, had an established, if greatly exaggerated, history of fighting the Japanese and was a charismatic leader; Kim Jong-il is none of those things and is much more at risk for it.

    The goal of North Korea is regime survival, and I agree with Nicholas Eberstadt here (h/t Marmot):

    Pundits often observe that Pyongyang is intent, foremost, upon regime survival. While incontestably true, this “insight” is also utterly superficial, insofar as all governments regard their own survival as a paramount priority. What distinguishes North Korea’s quest for survival are the peculiar and punitive conditions that must be satisfied in order to prolong Kim Jong Il’s rule.”

  6. Sorry for the multiple posts, but I forgot Richardson’s caveat:

    “What distinguishes North Korea’s quest for survival are the peculiar and punitive conditions that must be satisfied in order to prolong Kim Jong Il’s rule. I will take this a level further and say that what distinguishes North Korea more precisely is the enormous vulnerability the cult foundation has to engagement with the outside world.”

  7. The regime’s long term success at isolating and manipulating the people really has created its greatest weakness – in more ways than one:

    Economically, Juche has created a completely unworkable economic model from national to regional to local levels. The society can only survive on international handouts and/or periodic culls of the population through famine and disease. It simply cannot sustain itself.

    In terms of information, closing the masses off from the world and convincing them they lived in paradise leaves them open to astonishing disalusionment as the truth comes in.

    These things are also why Kaesong was always a stupid idea economically —– without fundamental reform of the regime.

    Trickle up reform was unlikely —- due to the instability within the system(s).

    Why?

    Because, any time things looked unstable, North Korea had proven time and time and time again — it would clam shut.

    Also, the regime was never going to allow the clam to open up much in the first place.

    For Kaesong to have a trickle up influence on the state, it would have to have been viable long term — and it simple could never have been without a reform of mind at the top.

    Which I guess is a kinda contradiction. Kaesong couldn’t be viable long term to help change the society and regime without the regime changing enough to allow that viability in the first place.

    And Kaesong never, ever showed signs that the regime had reformed enough to make it viable or allow bottom up influence:

    It was always clear Kaesong was hamstrung and that the regime would shut it down whenever it felt like it.

    The only purpose it has served is to — help prop up the regime – and I believe that was one of the primary purposes both inside the regime and outside in the halls of power in places like South Korea and even in Washington.

    Lastly, on the information and Christianity item, I had to repost this – I deleted most of my blog archives recently —-

    The post was somewhat lengthy — it was a brainstorm post about — Looking back at the history of Christianity in Korea for ideas on — How to Condition North Korea for the Collapse.

    By which I meant both helping the North collapse and/or helping ease the transition when the collapse does come.

    In a nutshell, it seems to me the fact that Korean society, long before it was divided into a North and South, showed a favorableness to the work of Christian missionaries and the spread of Christianity above what was seen in other East Asian areas — suggests we might look at the social conditions of the time inside the Hermit Kingdom – and find some parallels in the North. That the same social paradigm of isolation, tyranny, and poverty can be found in Korea during the time of the early introduction of Christianity and in North Korea today — and the spread of Christianity in the North would connect those influenced to a larger world community.

    Efforts like this have to be done if we hope to mitigate the disaster that will come with a collapse.

  8. USinKorea, I applaud your post, your blog entry, and your analysis. I feel a little bit less like John the Baptist crying in the wilderness now, thanks!

    I would like to use your original work if I may for inclusion into some staff work we are doing here. My email address is abnjumpmaster56m@yahoo.com (don’t want to post my AKO address here).

    What most people do not consider is that Pyong Yang once hosted 250,000 Christians (most fled when Stalins goons arrived) and that ties between north and south are still very strong. North Korea is ranked 167th out of 167 nations by Open Door when it comes to nations most hostile towards Christianity.

    If you are a Christian, the worst place to live in the world is North Korea, according to Open Doors’ 2008 World Watch List released Monday.
    The annual country persecution list ranked North Korea in the No. 1 spot for the sixth year in a row. There were more arrests of Christians in the country in 2007 than in 2006, according to Open Doors.
    In North Korea, considered by many the most repressive regime, citizens are strictly banned from worshipping any other gods beside those enforced in the state religion – a personality cult revolving around current dictator Kim Jong Il, and his deceased father, Kim Il Sung.
    Moreover, Christianity is considered a serious threat to the regime’s power and there are many reports of Christians being publicly executed, tortured or imprisoned indefinitely simply because of the discovery of their faith.
    It is estimated that there are at least 200,000 underground Christians and up to 400,000 to 500,000 believers secretly practicing their faith in North Korea. At least a quarter of the Christians are imprisoned for their faith in political prison camps, from which people rarely get out alive, according to an Open Doors local source.

    Now, couple that withis fact: South Korea sends out more missionaries than any other nation in the world save the United States (per capita, its not even close – South Korea is easily the most zealous missionary nation on earth).

    Now, you tell me dear readers, who does Kim Jong Il fear? And why such bellicosity over a few balloons? Because mass conversions to Christ are the next step for a beleagured, despirited ex-Juche adherents after the regime collapses. To quote USinKorea:

    “The history of Korean society’s reaction and absorption of Christianity might give us clues as to what could happen in North Korea if terms of —– conditioning the North Korean people to an acceptance of the outside world unimaginable if we only consider that they will face that same world post-collapse with only their incredibly paranoia-driven and anti-Outside World ideology the Kim Il Sung-Kim Jong Il regime has instilled in them for over 50 years.

    Meaning: if all we face post-collapse is a Korean society filled with people who have been conditioned by nothing but Kim Jong-Il/Il-Sung-ism —- we’re fucked.

    It should be put that bluntly.”

    KCJ

  9. From Open Doors http://www.christianpost.com/article/20080205/top-10-worst-places-to-live-as-a-christian.htm

    “If you are a Christian, the worst place to live in the world is North Korea, according to Open Doors’ 2008 World Watch List released Monday.

    The annual country persecution list ranked North Korea in the No. 1 spot for the sixth year in a row. There were more arrests of Christians in the country in 2007 than in 2006, according to Open Doors.

    In North Korea, considered by many the most repressive regime, citizens are strictly banned from worshipping any other gods beside those enforced in the state religion – a personality cult revolving around current dictator Kim Jong Il, and his deceased father, Kim Il Sung.

    Moreover, Christianity is considered a serious threat to the regime’s power and there are many reports of Christians being publicly executed, tortured or imprisoned indefinitely simply because of the discovery of their faith.

    It is estimated that there are at least 200,000 underground Christians and up to 400,000 to 500,000 believers secretly practicing their faith in North Korea. At least a quarter of the Christians are imprisoned for their faith in political prison camps, from which people rarely get out alive, according to an Open Doors local source.

    “It is certainly not a shock that North Korea is No. 1 on the shame list for the sixth year in a row,” said Carl Moeller, President/CEO of Open Doors USA. “There is no other country in the world where Christians are being persecuted in such a horrible and systematic manner.”

    Now, couple that with the fact that South Korea sends out more Christian missionaries than any other nation (save the US – and per capita, S.Korea is easily the most zealous missionary nation on earth), and you may get an inkling as to why the Juche regime is mortally terrified of the Christian pamphlets attached a few hundred balloons.

    Richardson adds

    “Outside information threatens the fundamentals of the cult mythology upon which the Kim family has build its power, which is why the country maintains its place as the most self-isolated nation on earth. The “military first” policy is specifically meant to maintain isolation from the inside. Again, I agree with Eberstadt on this point:

    In Pyongyang’s telling, “ideological and cultural infiltration”–economic and other contacts with the outside world–brought down Soviet socialism; the masters of Pyongyang have no intention of allowing this bourgeois infection to undo their own gulag paradise.

    More simply put, this level of invasive engagement is deemed as unacceptable to the regime for fear information exchange and the weakening of the cult.”

    (Sorry if this is a repost – I did not see my previous post published)

  10. Here and Here are two follow up posts I did on using Christianity to cushion the blow of a North Korea collapse. I try to wet the appetite for the idea based on secular terms. (Evangelicals already have a very clearly defined reason for the work). The 2nd post focuses on begging secular-minded people not to automatically toss out the idea of using Christianity to reach out to the North Korean people. The 1st post points to three items from Korean history that might show why such an effort could be beneficial not just to Christians who want to save North Korean souls – but also to secularists who want to save their bodies.

  11. USinKorea:
    My only caveats on your profoundly comprehensive vision for Christianity is that we don’t “use” Christianity/Churches, but we can support them in a number of ways:

    1. In a post Kim Juche North Korea (pJnK), after securing WMD and getting control over nK’s military establishment, task #1 should be protecting the people. This includes robust protections for the underground Church which will come out in the daylight if it feels it has a minimum of safety.

    2. Christian NGOs should be escorted and secured by UN forces as they distribute humanitarian aid.

    3. In the case of reluctance of the North Korean people, all public symbols of Juche should be dismantled and destroyed. This will will probably be unneccessary as the people themselves will most likely do the honors, but if not, this will be a national act of collective purgation of the tyrannical idolatry that damned 2 generations of Koreans.

    4. Equal protections and support should be given to Korea’s substantial Buddhist communities who are also planning robust humanitarian assistance efforts in nK on behalf of sincere Buddhist believers.

    5. Religious leaders in the pJnK should serve as a prophetic conscience to warn against mercantilist carpet bagging by South Korean enterpreneurs. This is a real risk in a capital starved, cheap labor pJnK.

    Anyone who underestimates the zeal, intrepedidity, committment or potency of South Korean Christian Churches in regards to their intent to evangelize North Korea is seriously misinformed.

  12. One problem with trying to stick to secular language in discussions of this type are that I tend to end up sounding Machiavellian.

    Anyway, a significant difference between our views is that my thoughts are geared toward how North Korea might be conditioned before the fall whereas your work is with what to do after the fall.

    I want to see the US government working with (overtly or covertly) the orgs who work to promote Christianity and democracy and solidarity with the outside world. In this same spirit, I’d want funding and other aid to go to any Buddhist groups with some tract record of reaching out inside North Korea in the underground.