Seoul drying up North Korea's cash flow

By Kim Hyo-jin

To counter North Korea’s ceaseless development of weapons of mass destruction (WMDs), the government has increased efforts to plug Pyongyang’s sources of funding and curb its ambitions.

However, analysts doubt whether such measures will pay off.

The Kim Jong-un regime conducted its fourth nuclear test on Jan. 6, followed by a long-range rocket launch on Feb. 7 ― regarded as a cover for a long-range ballistic missile test ― both of which violated United Nations’ resolutions.

In response, while appealing to the international community for tougher sanctions to ban cash flows into the North, Seoul last week shut down the Gaeseong Industrial Complex (GIC), the last remaining symbol of inter-Korean reconciliation, on basis that its payment to North Korean workers were funneled into the North’s nuclear and missile programs.

In addition, the Park Geun-hye administration has suspended provision of humanitarian aid to the isolated country, according to a governmental official.

“Aid for infants and children will be on hold, too,” said the official on condition of anonymity. “It is inevitable to suspend humanitarian assistance as well as overall exchanges now that we closed down the inter-Korean industrial complex.”

The Park administration previously provided financially support to vulnerable citizens in the North through international bodies such as UNICEF and WHO. Approximately 10 billion won ($8.28 million) was sent each year since Park was inaugurated in 2013.

“A series of harsh moves might slow down its nuclear development to some extent, but that doesn’t mean that it could pressure the North enough to drop the plan itself,” said Chang Yong-seok, a senior researcher at the Institute for Peace and Unification Studies at Seoul National University.

Chon Hyun-joon, head of the Northeast Asia Peace and Cooperation Institute, echoed Chang’s view, saying it also has limited influence in controlling the flow of hard currency to the Kim Jong-un regime.

According to the unification ministry, about $560 million has flowed to the repressive regime via the joint industrial park, with $120 million alone last year. However, profits from the industrial complex account for around 1 percent of North Korea’s annual trade revenue, he noted.

The government’s strong stance on North Korea is regarded as pressing China, the North’s major ally, to join the international drive to impose tough sanctions against Pyongyang.

One government official commented that the rare decisions were also intended to enable Seoul to have a bigger say on the international stage by setting an example.

However, the analysts pointed out that this could bring backlash to the South Korean government.

“The GIC was the last card for Park in dealing with Pyongyang. If U.N. sanctions are imposed at a moderate level while Beijing continues to be in discord with Seoul and Washington, Seoul will be left empty handed in the end, with no leverage whatsoever against Pyongyang in the future,” Chang said.

While Seoul stepped up its efforts for seeking international cooperation, saying a “terminating resolution” is needed against the North, Beijing is voicing a somewhat different tone.

At a meeting with Foreign Minister Yun Byung-se on Thursday, Chinese Foreign Minister Wang Yi agreed on the need to accelerate consultations on a new U.N. resolution, but underlined the need for a “prudent response” in consideration of interests and concern for neighboring nations and regional security.

In the face of the North’s provocations, President Park plans to give a speech this week at the National Assembly to ask for bipartisan cooperation in ensuring security, Cheong Wa Dae said Sunday.

“The President is expected to underline the need for unity among the people to ease security concerns,” Kim Sung-woo, the senior presidential secretary for public relations, told reporters, adding that Park had requested the Assembly’s permission to make the speech Tuesday.

Park may also meet with leaders of the ruling Saenuri Party and the opposition Minjoo Party of Korea after her address, according to the presidential office.