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In early April, the North Korean government did something it had not dared to do before: it recalled all North Korean workers from the Gaeseong Industrial Complex ― by far the largest inter-Korean economic project.
Later in the month, South Korea duly reciprocated by recalling South Korean managers from the zone, and so for the first time in nearly a decade the joint factory park is empty and idle.
The future of the zone seems uncertain, even though it is likely that the resumption of its operation will take some time (assuming that it happens at all). So far, the North Korean side has been relatively careful and has tried not to burn bridges.
When a high-level North Korean official made a statement about the withdrawal of North Korean workers, he was careful to emphasize that the future of the zone depends on South Korean actions. It is also notable that the North Korean side allowed South Korean managers leave the zone unharmed.
The position of the South is quite clear. It is willing to resume normal operations in the zone, but it is not willing to bow to North Korean political demands. In other words, if the North Korean side agrees to resume operations, the South will almost definitely agree. However, if the North starts attaching conditions, the zone will likely remain idle. At any rate, it seems that the initiative now lies in the hands of the North Korean side.
It is currently impossible to predict which way Pyongyang will go because the zone is a double-edged sword ― if judged from North Korea's point of view.
On the one hand, the zone is of course a major currency earner for Pyongyang ― the authorities pocket well over half of the worker's wages. They also charge the South for the use of the land and some other taxes as well. As the zone has expanded, the sums involved for the North Korean government have grown too. Right now, it is estimated that the annual earnings from the zone might be close to $90 million. By North Korean standards, this is a substantial amount of money.
South Korean analysts often cite these earnings as proof that the North will never shut the zone. We should, however, keep in that even though the zone provides Pyongyang with a substantial income, it also brings with it great dangers for the regime's stability in the long run.
The survival of Pyongyang relies on its ability to keep the population of North isolated from the outside world. Knowledge of South Korean prosperity is especially dangerous because it highlights the spectacular economic failure of the North Korean regime.
For decades, North Koreans were led to believe that South Korea is a starving American colony, a land of destitution and terror. The alleged deprivation of the South was contrasted favourably with the prosperity of the North ― where, as the story went, everyone was lucky enough to enjoy his or her daily ration of 700g of rice/corn. Such stories are no longer repeated since North Koreans now know that South Korea is not that poor. Nonetheless, most North Koreans do not know the sheer gap between the North and South's economies.
Therefore the North Korean government is understandably worried that its people will start to realize the potentially revolutionary truth. The North Korean government has based its legitimacy on alleged ability to deliver economic growth and affluence to its people. However, it has failed in this endeavour in a very spectacular way ― and comparisons to neighbouring countries are bound to confirm this further to North Koreans themselves.
In the Kaesong industrial zone, 54,000 North Korean workers have remarkably free interaction with nearly 1,000 South Korean managers. Most of the time they avoid dangerous political topics, but after nearly 10 years of the zone, the workers and by extension the people of Kaesong must surely be very well aware of how unbelievably wealthy the South is. They have also gotten glimpses of South Korean's political freedoms.
Even seemingly innocuous things like cookies (South Korea's Choco Pies) speak volumes about the real South Korea.
It would not be much of an exaggeration to say that the last decade of Gaesong's industrial zone has ensured that no one in the city is going to believe the official media when it talks about South Korea. This is a dangerous situation and it is easy to imagine that high-ups in Pyongyang are currently trying to decide what to do about the zone. It is quite possible that they may decide to shut it permanently.
Professor Andrei Lankov was born in St. Petersburg, Russia, and now teaches at Kookmin University in Seoul. You can reach him at anlankov@yahoo.com.
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