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article imageBitter legacy of rival Koreas' Kaesong experiment

By Jung Ha-Won (AFP)     Jul 11, 2016 in World

Five months after Seoul shut down a jointly run industrial park in North Korea, South Korean factory owners are still waging a defiant campaign to reopen what was the last major symbol of inter-Korean cooperation.

The shock closure of the Kaesong complex in early February forced businessmen behind the 124 South Korean plants operating there to abandon everything.

What has remained is a bitter resentment towards the South Korean government over its handling of the affair, and a feeling among the owners that they and their businesses were sacrificed to political point-scoring.

"For years, the government kept praising us for working on the frontier of inter-Korea cooperation and promised our business would be protected regardless of politics," said Jeong Gi-Seob, CEO of a Seoul clothing firm, S&G.

"Was that just an empty promise?" said Jeong, who heads an association of the former Kaesong-based companies.

The Seoul-funded zone, born out of the "sunshine" reconciliation policy of the late 1990s, was opened in 2004 just north of the border.

At its peak, Kaesong was home to 124 South Korean plants employing 53,000 North Korean workers who churned out products from watches to clothes.

Vehicles leaving Kaesong pass through disinfectant spray before a checkpoint near the Demilitarized ...
Vehicles leaving Kaesong pass through disinfectant spray before a checkpoint near the Demilitarized Zone in Paju on February 11, 2016
Ed Jones, AFP/File

For more than a decade it managed to ride the highly volatile swings in North-South relations, but that all came crashing down in February when Seoul announced the shutdown in response to the North's fourth nuclear test a month earlier.

The next day, an angry Pyongyang ordered the immediate expulsion of all South Korean managers and the seizure of their assets -- including the plants, raw materials and finished goods worth hundreds of millions of dollars.

- Court challenge -

In early June, the owners demanded that Seoul green-light a trip to Kaesong, to allow them to check on the state of their factories before the rainy season begins.

The Unification Ministry turned down the request with spokesman Jeong Joon-Hee saying it would be "inappropriate" at a time when the international community is stepping up sanctions on the North to denuclearise.

At the time of the pullout, North Korea said it was placing the complex under military control, and since then there has been something of an information blackout.

"It's hard for us to figure out exactly what is happening inside Kaesong because there is no inter-Korea communication about that," said a government official who declined to be identified because of the sensitivity surrounding the issue.

At its peak  Kaesong was home to 124 South Korean plants employing 53 000 North Korean workers who c...
At its peak, Kaesong was home to 124 South Korean plants employing 53,000 North Korean workers who churned out products from watches to clothes
Kim Doo-Ha, AFP/File

"We don't see any particular movement there, except for a small number of people coming in and out, perhaps to maintain the facilities," the official said.

The owners, meanwhile, have grown increasingly impatient with what they see as government indifference to their plight.

In May, a group of businessmen representing 100 Kaesong plants filed a complaint with the Constitutional Court, challenging the legality of the closure on the grounds that it had violated their property rights.

- Protest campaign -

And Jeong's association is currently planning an "all-out campaign", including street rallies and protests, to push for Kaesong to be reopened and proper compensation paid.

Seoul has offered financial assistance worth 520 billion won ($440 million), but the owners say their losses are twice that amount.

Jeong noted that he had moved his firm's entire production to Kaesong last year, investing over 10 billion won ($8.6 million) to expand an existing factory.

"They are saying we need to move on, because the government changed its policy direction ... but we can't accept that," Jeong said.

"We haven't given up on Kaesong," he added.

But some government official argue that the owners' complaints are exaggerated.

"Investment involves risk, and the Kaesong companies must have been fully aware of the risk of doing business in the North," said a Unification Ministry official who also declined to be named.

A worker secures cargo recovered from the closure of Kaesong near a checkpoint at the Demilitarized ...
A worker secures cargo recovered from the closure of Kaesong near a checkpoint at the Demilitarized Zone on February 11, 2016
Ed Jones, AFP/File

One of the roles initially envisaged by Seoul was of Kaesong as a beachhead for market reforms in North Korea that would spread from the complex and expose others in the isolated country to the outside world's way of doing business.

Although that vision never really materialised, some analysts believe it was an ideal worth persevering with.

"Kaesong was the only test bed for people to experiment on how Koreans could work and do business together," said Hong Soon-Jik, research fellow at the Korea Institute for National Unification.

"Kaesong was a beacon that offered North Koreans a first taste of capitalism ... and the loss of that experience is immeasurable," Hong told AFP.

- Choco Pie market -

One small capitalist breakthrough, was the black market Kaesong spawned for Choco Pies -- South Korean snacks that were handed out as a bonus to North Korean workers.

They proved so popular that, according to some estimates, up to 2.5 million Choco Pies were being traded in North Korean private markets every month.

Kim Kyoung-Jin spent five years delivering Choco Pies to Kaesong and, now unemployed, deeply regrets its closure.

"I still can't believe that they just shut it down, with no consideration for so many people whose lives depended on it," Kim said.

"Maybe for them, we are just chips to be moved around on their political chess set."

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