Posted : 2008-07-15 17:13
Updated : 2008-07-15 17:13

Koreas See Worst Tension in a Decade

Mount Geumgang tourism stopped: A parking lot at the Donghae Inter-Korean Transit Office in GangwonProvince is almost empty, Tuesday. The parking lot, part of a tourist checkpoint on the South Korean side, was usually filled with vehicles.
/ Yonhap

By Andrei Lankov
Korea Times Columnist

Last week a new crisis hit the inter-Korean relations. In the Geumgang tourist zone, a South Korean female tourist was killed by a North Korean soldier. The circumstances of the incident are still murky: it seems that Park Wang-ja, a 53-year old housewife, inadvertently crossed into a badly marked (or, perhaps, unmarked) prohibited area and was shot by a sentry who perhaps did not even bother to fire a warning shot.

While the South demanded an apology, the North, whose leaders know how efficient bold shamelessness might be, reacted with its own demand of apology. Tours are halted, and the largest project of intra-Korean cooperation is now under threat of collapse.

This is the worst crisis in the decade-long history of the project which has been both extolled as a flagship of inter-Korean cooperation and vilified as a money pump helping to keep the Pyongyang dictators well provided with cash. For an unbiased observer it seems that each of these descriptions contains a seed of truth. At any rate, the project has never one smoothly.

Chung Ju-yung, the founding head of Hyundai Group, became the first South Korean tycoon to go to Pyongyang. The chairman of Korea's largest industrial conglomerate was born in what is now North Korea, and this was probably the reason why in the 1990s the late Chung became such an enthusiastic proponent of South-North cooperation.

It was during his 1989 visit that Chung suggested developing a tourist resort in the picturesque Mt. Geumgang, an area which is conveniently located just next the DMZ.

However, it took some time to actually start a project, not least because until 1995, most observers believed that the North Korean state would soon collapse. Nonetheless, the Kim regime survived nearly impossible odds and, in spite of massive deaths through famine in the late 1990s, remained in firm control of the land. Meanwhile, the South Korean left-leaning forces, far more predisposed toward interacting with their northern neighbor, took power in Seoul. In 1997 the new center-of-the-left administration launched the 'sunshine policy" of unilateral concessions and generous aid to Pyongyang. The Geumgang project was destined to become the first major joint economic operation of the two Korean governments, a flagship of inter-Korean economic cooperation.

Thus Chung moved ahead, and in November 1998, the Geumgang project commenced operations. At first, tourists had to arrive by sea, since a land route did not exist. There were no hotel facilities either, so visitors had to stay aboard a cruise ship.

The project was accepted by North Korean authorities because it provided them with money without exposing the populace to excessive interaction with the rich South Koreans. In order to maintain the project, an area in Mt. Geumgang has been fenced off, with all the local population moved away. All tourist facilities were located inside this fence, and only a few carefully selected North Koreans allowed in, in order to supervise tourists, fish for intelligence and feed guests with heavy doses of nationalist-Stalinist propaganda.

One can doubt, however, whether such intelligence is important or whether such propaganda had much effect. There is no doubt, nonetheless, that the project is bringing good money to the North Korean state coffers. The Hyundai Group pays hefty fees for the right to use the area. In recent years, the North Korean regime has been paid some $72 million as annual rent, plus an additional fee per visitor which brings another $10-15 million a year. Additional income is earned through the sale of overpriced local products and services.

Initially, expectations ran high. Hyundai people do not like to be reminded that in January 1999 they predicted that by the end of 2004, there would have been an accumulative 4.9 million visits to the North. Now we know that the actual figure was about 900,000, some five times lower. At the same time, Hyundai managers predicted that in 2004 alone some 1.2 million tourists would visit the project. Yet as late as 2007 the actual number of visits was 350000. This was presented as a great success, needless to say.

Contrary to initial expectations, South Koreans were not too eager to spend their vacations behind barbed wire. The Geumgang trips are relatively expensive, so for a similar fee South Koreans can visit China or cheaper parts of Southeast Asia, generally a more enjoyable undertaking. The 1997-98 financial crisis led to the breakdown of Hyundai group which also dealt an additional blow to the Geumgang tours.

For a brief while the entire operation appeared to be on the edge of collapse. In 2001, Hyundai even stated that the project would probably be discontinued due to mounting losses. The government, however, could not allow this to happen; by that time the project had acquired huge symbolic importance, being by far the largest intra-Korean economic operation. A generous rescue package, provided by the government, saved the project from demise.

Meanwhile, some improvement was brought about by the opening of a land route in 2003 as well as by growth of the local infrastructure. Therefore, prices were reduced, making the trips somewhat more attractive. The number of visitors began to increase, even though it still remains well below initial optimistic predictions.

The project was not incident free: tourists have died from heart attacks or have fallen from steep cliffs. There were also cases when visitors were briefly (or not so briefly) arrested and interrogated for entering forbidden areas. However, so far only one political incident became widely known. In June 1999, Min Yong-mi, a 35-year-old housewife from Seoul, was engaged in small talk with a North Korean minder. She spoke a few words about South Korea's prosperity and said something to the effect that North Korean defectors in the South were doing well. Reaction was swift: the lady was arrested and spent one week in detention, accused of subversive propaganda.

It seems that the 1999 episode has something in common with the recent tragedy. Even in the most repressive periods of its history, the South Korean state was remarkably more liberal than its northern counterpart. Therefore, the South Koreans sometimes do things that while look perfectly innocent to them, are not acceptable to the North Korean supervisors. One can also speculate that the North Korean soldier who, according to some witnesses, did not give any warning signs, might have been driven by frustration with the South Koreans who appeared to be dirty rich to him (this is pure speculation of course: we are unlikely to learn as much as his real name in the foreseeable future).

It seems that the North will refuse to cooperate in an investigation and will stubbornly stick to its own version of events. If this is the case, the tours will be stopped for weeks or even months. However, in the long run the project is necessary for both sides. The North needs a cash cow, while the South cherishes the symbolic value of this operation. If the Geumgang project is allowed to collapse, it will threaten two other joint operations; Gaesong tours and the Gaesong industrial park. These two operations are of far greater economic and political significance, and Seoul does not want any trouble with them. Therefore, it seems likely that after the exchange of some tough statements, both sides will resume business as usual.

At any rate, it will take years or even decades before we learn what actually happened a few days ago on the Geumgang beach. We can just hope that both sides will install better warning signs. It will also help if tourists finally realize that they are having their vacations in a country which is best described as a mix between a military base and prison camp, so going somewhere alone in the darkness is not really a good idea. Alas, this vision of the North, although completely realistic, is not very fashionable in South Korea these days.
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