By Chung Min-uck
The Gaeseong Industrial Complex (GIC) is heading toward permanently shutting down, with Pyongyang showing no signs of accepting Seoul’s proposed talks on reopening the joint complex.
The Ministry of Unification has finalized the administrative procedure to pay insurance worth 280 billion won ($250 million) to 109 companies that claimed compensation of financial loss incurred from the complex’s shutdown, according to the ministry, Monday.
The move is seen as Seoul moving closer to closing down the GIC for good, because after the payment is done the government gains the legal right of disposing of the companies’ assets in the North.
“In the face of mounting damage to our 123 companies at Gaeseong, the North has yet to respond to our proposal to hold talks,” said Unification Ministry Spokesman Kim Hyung-suk, Monday. “Funds that can be utilized for better purpose are used to offset the damages. We again urge the North to break silence and show its willingness to reopen the GIC via action.”
According to the ministry, the four-month suspension has caused 450 billion won ($401 million) worth of damage to the invested assets of the 123 South Korean companies, and 300 billion won ($268 million) in operating losses, among others.
Observers say the government will put into action its earlier call for “grave” measures to be taken before the Ulchi Freedom Guardian military drill with the U.S., which starts on Aug. 19.
The North has long said that the joint drill would cause a further setback in the already-strained, inter-Korean relations.
As of Monday, Pyongyang remained silent for over a week regarding the proposal for “final talks” for reopening the suspended factory park, even after Seoul warned that it was losing patience with Pyongyang’s reticence a day earlier.
Unification Minister Ryoo Kihl-jae called for final talks on July 28, after six rounds of working-level negotiations ended without the two Koreas reaching an agreement on preconditions for resuming operations at the complex. Ryoo also warned of taking practical actions to shut down the complex if the North refuses.
“The North I believe has not reached a conclusion on how to deal with Seoul’s proposal,” said Cho Bong-hyun, a senior researcher at the Industrial Bank of Korea. “It is still possible for working-level talks to take place before the joint military drill.”
However, even if another round of negotiations takes place, many experts do not suspect a positive outcome because the two Koreas are unlikely to budge over their current positions.
Policymakers did not elaborate on details over what actions will be taken, but cutting off all power and water to the complex is an option. This can be followed by measures that could lead to the eventual closure of the park.
In May, the South lowered its daily power supply to the complex from 100,000 kilowatts to 3,000 kilowatts in line with its decision to pull all of its manpower out. The power cut will mean the reservoir will be unable to provide water to Gaeseong as well.
The two sides have made no headway on the crucial issue of safeguards to prevent another work stoppage at the industrial park. South Korea has insisted that Pyongyang must give solid guarantees that it will not take steps to close the complex again, while the North rejected such demands and called for the park’s immediate resumption. Pyongyang also warned that its military may take control of the complex if no understanding is reached.
All operations at Gaeseong came to a halt in early April after the North unilaterally pulled its workers from the complex, citing the holding of joint military drills with the U.S. as a military provocation by the South.