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South Korean soldiers erect a barricade on the road to the Inter-Korean Transit Office in Paju

Relations between North and South Korea are hurtling toward a catastrophe. After the administration of South Korean President Park Geun-hye decided to completely suspend operations at the Kaesong Industrial Complex in a bid to push the international community to impose sanctions on North Korea following the North’s fourth nuclear weapons test and its launch of a long-range rocket, the North countered by expelling South Korean workers from the complex, freezing South Korean assets at the complex and shutting the complex down. With North and South Korean leaders engaged in a struggle with no end in sight, the Kaesong Industrial Complex - which is the last bastion of inter-Korean cooperation - is on the verge of being snuffed out.

The “severe measures” announced by the North’s Committee for the Peaceful Reunification of the Fatherland are not limited to the Kaesong Complex. North Korea also announced that it would be cutting the military communication lines with South Korea and shutting down the liaison office at Panmunjeom. This means the effective end not only of cooperation and exchange but also of the channels for emergency communication between North and South Korea.

Since the Kaesong Complex first opened for business on Dec. 15, 2004, there have been a number of incidents at the complex. There was a work slowdown from Dec. 1, 2008 to Sep. 1, 2009 as part of North Korea’s Dec. 1 measures limiting the number of South Korean staff in the complex, and operations at the complex were suspended by South Korea for 165 days after North Korea pulled out its workers on Apr. 8, 2013. But even during those incidents, North Korea had never expelled all the South Korean staff or shut down the complex.

In Feb. 2013, the People’s Economic Cooperation Committee, an organization affiliated with the North Korean cabinet, stated that it would turn Kaesong into a military region if South Korea tampered with it in any way, but the North did not follow through on that threat. But this time, the situation is completely different.

The only comparable incident in the history of inter-Korean relations is probably tours to Mount Geumgang. South Korean tours to the mountain resort were halted after a South Korean tourist named Park Wang-ja was fatally shot by North Korean soldiers on July 11, 2008. When the ban on tours dragged on, North Korea made conciliatory gestures on a number of occasions, with then-North Korean leader Kim Jong-il meeting Hyundai Group Chairwoman Hyun Jeong-eun on Aug. 17, 2009 and a proposal for working level talks to resume on Jan. 14, 2010.

But then the administration of South Korean President Lee Myung-bak responded to North Korea’s sinking of the Cheonan corvette on Mar. 26, 2010 with the May 24 punitive measures against North Korea. Around this time, North Korea froze some of the South Korean assets at the resort and confiscated others and forced groups of South Korean workers to leave, with the last workers leaving on Aug. 23, 2011.

Today, the assets of the South Korean government and state-owned enterprises at the resort are impounded, while the assets of Hyundai Asan and other private-sector companies are frozen.

The process by which tours to Mount Geumgang were shut down can serve as a basis for comparing the severity of this incident and also for predicting future developments. At Mount Geumgang, it took three years, one month, and 12 days from the time that South Korea halted tours until North Korea kicked out the last of the South Korean workers. But at the Kaesong Complex, North Korea expelled all of the workers just one day after South Korea decided to halt all work at the complex.

When tours to Mount Geumgang were halted, this was North Korea’s fault, and it was also a pressing issue for both North and South Korea. In this situation, however, the two sides are making irreconcilable claims. North Korea defends its nuclear test and rocket launch as falling under its sovereign right to self-defense, while South Korea describes its complete suspension of work at the complex as the result of an “agonizing decision” to lead the international community in imposing sanctions on the North.

This time around, it will be much harder to find a solution.

But not all hope is lost. It is important to note that North Korea only froze South Korean assets at the Kaesong Complex instead of outright confiscating them.

Through this measure, North Korea appears to be trying to exercise its “right to indemnity,” arguing that it was the South Korean authorities that violated an agreement reached by the two sides on Aug. 14, 2013, in which they guaranteed that the complex would continue to operate normally regardless of the circumstances.

But at the same time, since the North has seized the assets without officially confiscating them, this leaves open the possibility for negotiations. It is not outside the realm of possibility that, depending on the choices of the North and South Korean authorities, this could be the catalyst for turning the situation around.

But if the South and North Korean governments continue their struggle and the Kaesong Complex is shut down permanently, there is a high likelihood that a unit of the Korean People’s Army (KPA), as the North Korean military is known, will return to the spot. This would mean the disappearance of a peaceful buffer zone on the western front, which was the main invasion route for the KPA during the Korean War.

Moody’s, one of the world’s top three credit rating services, observed that South Korea is one of three countries in the world whose national credit rating is affected by its geopolitical position (the others being Taiwan and Israel). As a consequence, the company said, South Korea must be able to control the threat of North Korea, even if it cannot eliminate it entirely.

Shutting down the Kaesong Complex permanently presents the double risk of not only creating a security crisis but also bringing along an economic one.

By Lee Je-hun, staff reporter

Please direct questions or comments to [english@hani.co.kr]