This week, North Korea closed off the last avenue of economic cooperation with its rival, South Korea. Pyongyang says the closing of Kaesong — a joint North-South Korean industrial complex — is temporary.
But the move is a big symbolic blow on the Korean peninsula and a potential disaster for some of South Korean businesses that have invested there.
Take Tiger Park, for instance. The South Korean businessman is trying to salvage what he can from his clothing factory in North Korea. On Thursday, his workers drove two trucks filled with uniforms across the border and down to Park’s office in Seoul.
But North Korea won’t allow trucks back inside Kaesong, where Park’s company and about 120 others from South Korea have operations. Park expects to lose most of his inventory, worth hundreds of thousands of dollars.
“More concerning and problematic than the monetary loss is the trust,” says Park, “the trust that we’ve built with our suppliers over the past 30 years is crumbling in a matter of days.”
When Park first opened his factory in Kaesong in 2007, he was full of hope.
He saved money using low-wage North Korean workers and thought that, in some small way, he was helping build bridges between the two Koreas.
“I felt that through my business, I could contribute to peace and become part of a step toward the unification of our peoples,” Park says.
But in recent weeks, North Korea has threatened to attack both South Korea and the United States because it is angry about tightening sanctions aimed at its nuclear weapons program.
A Loss Of Trust
With his inventory now held hostage as a result, Park is concerned about the survival of his business and thinks about what could have been.
“I’m disappointed and heartbroken by the fact that the close organic relationships and the trust built between the employees from North and the South are falling apart,” he says.
When Kaesong broke ground in 2003, it seemed like a smart joint-venture. North Korea got much-needed hard currency and the capitalist South had a chance to subtly encourage economic opening in the Stalinist North.
“From a business perspective, it had unlimited potential,” says Kang Tae Ho, who covered Kaesong from its inception for the South Korean newspaper, the Hankyoreh. “You could have said it was gold mine, especially for some mid-size businesses with a heavy reliance on labor, such as textiles.”
But Kaesong became a casualty of politics.
When conservatives came to power in Seoul in 2008, they took a harder line and ended the policy of engagement with the North, which Kaesong symbolized.
The next year, North Korea became angry with joint U.S.-South Korean military drills — as they have again this month — and cut off communications at Kaesong for 12 days. If the North closes Kaesong for good, the two countries won’t have much to build on.
“Kaesong is all that is left,” says John Delury, an assistant professor at Yonsei University in Seoul. “If we lose Kaesong, we’re starting the next five years of the inter-Korean relationship on an extremely bad footing.”
But Delury does see some hope. He thinks the closure of Kaesong is really a negotiating tactic — albeit a typically blunt and aggressive one. Delury believes North Korea is really testing South Korea’s new, conservative president, Park Geun Hye.
“They’re not shutting down Kaesong,” says Delury. “They pulling back temporarily and essentially challenging the South Korean president to say: ‘Who are you? What kind of relationship do you want?'”
South Korea on Thursday called for talks with the North to re-open the complex.
Park, the clothing manufacturer, hopes the North responds. That way, at least he can retrieve all that stranded merchandise across the border and save his business.