hankyoreh

heads of the North and South Korean delegations to working-level talks on the Kaesong Industrial Complex

By Gil Yun-hyung, staff reporter

The South Korean government urged Pyongyang to respond to its recent offer for dialogue on the Kaesong Industrial Complex, noting the extent of the damage the ongoing shutdown has caused to the South Korean tenant businesses that had operated there as well as the South Korean government.

The message could be read as a warning in response to North Korea’s failure to respond for the past week to the proposal for a seventh round of working-level talks. This week could end up being a pivotal point in the complex’s fate.

Kim Hyung-suk, a spokesman for the South Korean Ministry of Unification, issued a statement on Aug. 4 calling for Pyongyang to act responsibly. “It has been four months since operations at the Kaesong Industrial Complex were halted by North Korea’s unilateral decision to shut off access and pull out its workers. If the North truly wishes to end the suffering of the tenant companies and workers, it needs to show its willingness to do so not through silence, but through responsible words and actions,” Kim said.

He also estimated the scale of the damages to South Korean companies at 450 billion won (US$402 million) in invested assets and 300 billion won (US$268 million) in operating losses.

North Korean authorities “need to take responsible action that is comprehensible to the South Korean public and the tenant companies, including compensation for the companies’ losses,” he said.

The Ministry of Unification also estimated the financial losses for the South Korean government at US$13 million in payment of outstanding balances on behalf of the companies, and around 80 billion won (US$71.5 million) in loans to the companies that suffered losses.

“Paying out the economic cooperation insurance claims made by the 110 companies would require an additional 280 billion won (US$250 million) from the inter-Korean cooperation fund and other sources,” the Ministry said.

On July 28, following the breakdown of the sixth round of inter-Korean working-level talks to resume operations at the complex, the ministry made a “final offer” of dialogue to Pyongyang in the same of Minister Ryoo Kihl-jae. Over the last week, North Korea has yet to respond.

Differences from past statements include the explicit and detailed listing of damages to tenant companies and the South Korean government along with the demand for “compensation.” Previous statements focused more on issues related to the future of the complex, including measures to prevent future shutdowns, a statement of responsibility from Pyongyang, and efforts to “internationalize” the complex. Even the statement from July 8 avoided mentioning the losses, instead demanding “a clear, immediate answer on how North Korea plans to prevent future shutdowns” and warning that South Korea would “be forced to make a serious decision” if it did not give one.

The latest statement, in contrast, reads as a kind of ultimatum, demanding that North Korea take concrete measures “comprehensible to the South Korean public” for the major losses inflicted on the South Korean tenant companies and government - and suggesting that South Korea may give up on the complex otherwise.

Kim said the insurance payout could take place at any time once the review process ends on Aug. 5, at which point Seoul inherits the creditor’s subrogation rights on the complex’s assets. However, he declined to elaborate on the nature of the “serious measures,” which suggest a complete pullout from the complex or equivalent action.

“I’m not going to say too much,” he said.

Kim Yeon-chul, a Professor of Unification Studies at Inje University, said Pyongyang was unlikely to meet Seoul’s demands.

“Right now, the tenant companies are all saying that they want the South Korean government to show some flexibility in its negotiations so the complex can get up and running again, but the government appears to think it has the option of giving up on the complex as a way of bringing Pyongyang in line,” he said.

“The statement was basically calling for capitulation, and it doesn’t look likely that North Korea will meet that demand under the present circumstances,” he added.

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