If S. Korea won’t close Kaesong, let it pay N. Korea in food.

The bad news from North Korea’s nuclear test is that its yield exceeded those of its 2006, 2009, and 2013 tests. The good news is that while the blast wasn’t thermonuclear, it was still hot enough to burn away plenty of policy fog. In Congress, sanctions legislation has sailed through the House, and seems to have good prospects in the Senate. Opinions are shifting among Korea scholars here, too. This morning, I had a chance to finish reading last week’s testimony before the House Foreign Affairs Committee’s Asia Subcommittee. It’s telling, and quite gratifying, to see that two of those witnesses, Bruce Klingner (a good friend) and Victor Cha (whom I can’t say I know personally) cited this humblebrag blog in their written testimony. 

It seems the mainstream has caught up with me.

There is also encouraging diplomatic clarity. Just before the test, South Korea and Japan came to an admittedly imperfect but timely agreement on Japan’s wartime sexual enslavement of Korean women, almost as if both governments knew what was to come. The agreement came far too late to undo the harm to those poor women, but may have come just in time to give the last survivors a measure of compensation, and just some of their stolen dignity back. It may also help to protect future generations of Koreans through cooperation with Japan toward shared interests in disarming Kim Jong-un. 

If the agreement holds, perhaps the controversial statue of that young sex slave should be moved to the doorstep of the Chinese Embassy, given all that China’s policies are doing to keep North Korean women in sexual slavery today. After all, there is still time to prevent some of those women from being enslaved and raped by Chinese men.

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Today, in no small part because of that agreement, South Korea, U.S., and Japan appear to be coordinating their policy responses, like the natural allies they should be. All three governments are pushing for tougher U.N. sanctions, but there is still little public information on the specifics. Deputy Secretary of State Tony Blinken will visit Tokyo, Seoul, and Beijing this week, to talk about a draft U.N. Security Council resolution and sanctions enforcement. Oh, and John Kerry will also visit China later this month.

As a long-time reader would say: “Tremble, Commies.”

South Korea, cognizant of the fact that its own security is the most at risk from North Korea’s nuclear arsenal, is asking Japan to impose tougher sanctionsJapan unilaterally relaxed its sanctions in 2014, after North Korea made a successful divide-and-rule ploy, promising to “investigate” its own past abductions of Japanese. Naturally, that deal has yielded no actual progress on the return of any abductees or their remains.

Seoul is also asking Beijing to support tougher sanctions. Although China says it’s willing to sign on for some sort of resolution on paper, it’s also trying “to water down the U.N.-led sanctions on the North in a familiar pattern following its nuclear and long-range missile tests” and to minimize the sanctions’ impact. China is also stalling, perhaps hoping that other events and priorities will intervene and weaken the U.S. and South Korean position.

In return, South Korean President Park Geun-hye is hinting at the deployment of the THAAD missile defense system in South Korea, apparently as a way to pressure Beijing. 

For the time being, Park has also stopped feeding the South Korean people implausible feel-good Sunshine Lite twaddle about dialogue, Trustpolitik, and reunification. Instead, she’s calling for the “strongest yet sanctions” on Pyongyang and trying to awaken them to the danger posed by nuclear-armed eliminationists with no regard for human life:

On Wednesday, a week after the North’s nuclear test, Park described the South as facing “emergency situations” both in security and the economy.

She voiced concern that Pyongyang’s provocation, allegedly hydrogen-based, may lead to a “fundamental change” in the regional security landscape. Many are anxious about the possibility of an arms race in Northeast Asia, with Japan widely viewed as capable of producing nuclear bombs.

Park said her government will make every diplomatic effort to make the North’s regime feel “bone-numbing” pain through the United Nations. 

[Yonhap]

It’s a welcome step back toward reality for South Korea, which continues its long, slow awakening from the national acid trip known as the Sunshine Policy.

pink elephant in the room

But it also puts South Korea in an awkward position, because Japan, China, and the U.S. can’t help staring at the very thing South Korea doesn’t want them to notice.

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The elephant, of course, is the Kaesong Industrial Park, a complex just north of the DMZ where regime-picked North Korean workers labor in South Korean-run maquiladoras for “wages” that are either low or non-existent, at least after Kim Jong-un skims his cut off the top. According to some sources, Kaesong provided Pyongyang $90 million in cash annually, even before its most recent unilateral hikes in “wages” and land-use taxes.

Since the January 6th nuclear test, calls to close Kaesong have been growing. The most surprising proponent of this is the usually pro-engagement Daniel Pinkston, who has the eccentric habit of referring to North Korea as “Songun Korea,” complete with diacritical marks (which this blog does not like to display, sadly). I enjoy reading Dan’s views, if only because I never quite know if they’ll cause me to applaud or cock my head like a dog hearing a new sound. When he wrote this comment on one of my tweets that auto-posted to Facebook, I’ll admit to having had both reactions:

KIC was a good experiment, but it operates like it’s the International Space Station. No backward or forward linkages to local enterprises that could be established as part of an opening and liberalization process. We now see that the regime is not interested in becoming integrated with the international economy. They only want cash payments as rents to the KWP. I congratulate and admire Kim Dae-jung for getting KIC started and trying. I supported it at the time. But we tested that hypothesis and the results are in. I think it should be closed down. And better to do it before there is a crisis and the ROK citizens in KIC become hostages. [Daniel Pinkston, Jan. 7, 2016]

That is to say, Kaesong failed to achieve the purpose that justified its establishment — to draw North Korea out of its isolation and into compliance with international norms and standards. As I said last May, Kaesong promised us peace and reform. It delivered conflict, tension, and exploitation.

It also surprised me when Victor Cha, a long-time advocate of “hawk engagement,” wrote this in his testimony last week.

Kaesong Industrial Complex: Another useful asymmetric pressure point is the Kaesong Industrial Complex. A legacy of the sunshine policy, this project now provides $90 million in annual wages (around $245.7 million from December 2004 to July 2012) of hard currency to North Korean authorities with little wages actually going to the factory workers. The South Korean government will be opposed to shutting this down, as even conservative governments in South Korea have grown attached to the project as symbolic of the future potential of a united Korea, but difficult times call for difficult measures. [Victor Cha, Testimony before the House Foreign Affairs Committee, Asia Subcommittee, Jan. 13, 2016]

See also the testimony of Bruce Klingner, who also called for Kaesong’s closure.

South Korea must surely perceive the awkwardness of its position here. No wonder its statements about Kaesong have been so confusing. On January 8th, two days after the test, the Unifiction Ministry said, “At this stage, we don’t think it is appropriate to talk about withdrawal or closure of the complex.” On the 11th, it said it would further limit access to Kaesong, allowing only “businessmen directly involved in the operation of factories” (but no contractors) to stay overnight, reducing the number of South Koreans staying at Kaesong from 800 to 650. South Korea left open the possibility of further restrictions, depending on “relevant circumstances.” The next day, the Unifiction Ministry reverted to its previous talking points, saying, “At this stage, it is too early to talk about a possible closure of the factory zone,” and, “We are not considering shutting down the complex for now.” But then, on the 13th, Park Geun-hye “said the fate of the Kaesong Industrial Complex will depend on the North’s move down the road.”

So, is all that perfectly clear? No?

I’ve written before that until the three allied nations get their act together on sanctions enforcement, North Korea will continue to divide them and nullify the effect of sanctions. North Korea uses abductees to weaken Japan’s sanctions, uses hostages and denuclearization deals to weaken U.S. sanctions, uses hegemonic aspirations and anti-American mischief-making to weaken Russia’s and China’s sanctions, uses the lure of engagement to weaken Europe’s sanctions, and uses ethno-nationalism to weaken South Korea’s sanctions. Without much better cooperation among these governments, a low-overhead regime like North Korea’s can resist reform and disarmament indefinitely. For South Korea’s calls for tougher sanctions to be credible, it must make some sacrifices of its own. After all, its own interests are the most affected by North Korea’s nukes.

I’m under no illusions about the political challenge this presents for Park. She knows that pan-Korean nationalism remains popular among many of her voters. So does the idea of economic cooperation with Pyongyang, for all its failure to produce any positive results for South Korea’s security. But the fact remains — Park can’t credibly ask Japan, China, the U.N. and the U.S. to help it impose “bone-numbing” sanctions while it continues to pour a massive subsidy into Kim Jong-un’s bank accounts through Kaesong. Other governments would rightly view that as Korean Exceptionalism and a sign that Seoul isn’t serious. Years ago, after all, Treasury Undersecretary (and now CIA Deputy Director*) David Cohen had expressed his concerns about how Pyongyang is using that cash.

Maybe Park is fiddling with access to Kaesong and dropping hints about closing it because she can see the awkwardness of her position, and knows she has to feign some toughness for foreign consumption. Maybe these are trial balloons to test the reaction on the streets of left-leaning Kwangju. Maybe she wants to goad the North Koreans into shutting Kaesong down themselves, as they did in 2013, thus saving her the political cost of doing so herself. Maybe she’s signaling to foreign investors that both Korean governments are putting political burdens on Kaesong, in the hope that the whole sordid project will wither during her successor’s tenure.

Unfortunately, South Korea’s security won’t wait that long. Her successor may not share her own clarity about the security risk that her country faces. The choice Park faces now is to continue with what has failed, or to return to what has worked.

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Having said all this, I doubt Park will have the political courage to shut Kaesong down outright. In that case, she has other alternatives at her disposal that would work almost as well, at less political cost. Rather than closing Kaesong down herself, she need only hold Kaesong to the same international norms and standards that the Sunshine Policy promised to spread into North Korea, but hasn’t.

First, she could set a timeline for Kaesong to comply with International Labor Organization standards, to protect the rights of the workers there. The most important of these rights is the right of each worker to keep her wages. In tandem with this, South Korea should look toward Marcus Noland’s suggestion that all joint ventures with North Korea, including Kaesong, adopt baseline standards for worker protection.

Second, Park should announce the phase-out of subsidies to Kaesong. If Kaesong can’t turn a profit without state subsidies a decade after its establishment, it isn’t really introducing capitalism to the North, it’s just nuclear welfare by another name. Cutting subsidies will also discourage Pyongyang from any more unilateral wage and tax raises.

Finally, South Korea must abide by U.N. Security Council Resolution 2094, paragraphs 11 and 15, which require it to ensure that North Korea isn’t using the proceeds of Kaesong for purposes prohibited by the resolutions. How can South Korea possibly expect to know this? One way would be for Pyongyang to accede, at long last, to a degree of financial transparency about where Kaesong’s proceeds go, and how much the workers are allowed to earn and spend. Not likely, you say. And you’re probably right.

Alternatively, South Korea could comply with UNSCR 2094 by announcing that henceforth, Seoul will only pay Pyongyang for Kaesong rents and labor in kind — in food, fertilizer, seed, medicine, humanitarian supplies, and humanitarian services, all of which would be distributed by the World Food Program. After all, if the U.N. is correct that the vast majority of North Koreans barely get enough to eat and have dismal medical care, does Kim Jong-un really have a sovereign right to spend that money on luxury goods and ski resorts instead? Humanitarian aid has its own diversion risks, but those risks are far fewer than those that come with paying Pyongyang in dollars, no questions asked.

Perhaps Pyongyang will respond by shutting Kaesong down entirely. But then, if Pyongyang has that reaction after all these years of gentle inducements, who can really argue that Kaesong was likely to serve its intended purposes anyway?

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* A previous version said “Director.” Thanks to a reader for the correction.

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