Gaeseong Industrial Complex and Inter-Korea Relations

July 08, 2007

By Sandip Kumar Mishra

Around six miles north of the demilitarized zone (DMZ) separating North and South Korea, you can find something quite contrary to the typical perception of inter-Korea relations. At the Gaeseong Industrial Complex (GIC), North and South Koreans laugh together, sharing jokes as well as the stress and pleasure of work. Vehicles with South Korean license plates are parked along side those bearing numbers issued by Pyongyang. The mutual hostility, which was the status quo for decades after the division of the peninsula, is no where to be seen. When I visited the complex along with a few other foreign scholars on a study trip organized by the Kim Dae-jung Presidential Library and Museum, I came to feel that construction of more Gaeseongs in North Korea would change the face of the Korean Peninsula altogether.

The complex, which has been in operation for around one and half years, is a unique mix of economic incentives, political calculations and optimism about the future of the Korean Peninsula. The project provides South Korean companies cheap, disciplined and hard working laborers and puts competition with Chinese companies on a more level playing field. For North Korea, it provides better employment opportunities and a way to negotiate globalization and liberalization. The GIC could also be seen as the limited opening of the North Korean economy envisioned in the July 2000 reform proposal. For its partial open-door policy, North Korea first established special economic zones (rajing-sonbong) such as the one in Sinuiju. The Gaeseong and Mt. Geumgang projects could also be seen as North Korean efforts to open itself partially, so that it could recover from its difficult economic crises without any threat to its communist political system.

  Politically, the project helps justify South Korea's engagement policy vis-à-vis North Korea and proves that it has been able to pierce – albeit by a small fraction -- the hard casing of the closed communist state. Critics of the project consider it devoid of any significant economic benefits and say that Gaeseong's long gestation period in terms of investment and production cannot be rationalized. They say political, not economic, calculations are what are really driving both Koreas' development of this project.

Project developers always looked beyond mere economic gain as they sought to open channels of communication between the two Koreas and build mutual trust on the peninsula. Until people of both countries are able to interact with each other, all the efforts at the government level will be less than sufficient to build a peace regime. As part of South Korea's engagement policies -- called ‘sunshine' or ‘peace and prosperity' -- Korean companies have relaxed immediate economic imperatives and are instead looking for Gaeseong to provide much more substantial long–term returns.

The political knot of the sometimes seemingly unilaterally pursued inter-Korean relations impinged on the completion of the first phase of the project. However, it is significant that -- while actual work on the project started in the shadow of the emergence of the second nuclear crisis on the Korean Peninsula -- all through the six-party negotiations to arrive at a peaceful resolution of the North Korean nuclear issue, the ups and downs definitely affected the project, but both countries kept treading amidst all the stormy weather. With the North Korean nuclear and missile tests in 2006, apprehension about the success of the project was expressed, but there has not been any substantial obstacle in the running of the project.

A Model for People to People Contact

The endeavor to reach the people of North Korea through engagement, which is well-reflected in the Gaeseong Project, seems to have had an enormous affect on inter-Korean interactions.

  As of this printing, 23 South Korean companies have been operating in the industrial complex and they employ more than 13,000 North Koreans in their factories. If the second and third phases of the project are concluded successfully, it is said that around 300,000 North Korean workers will be working hand and hand with 30,000 South Koreans. Even though the political systems of South and North Korea might try to restrict relations between their peoples to regimented exchanges, working hand in hand, they are bound to interact on a human level. Co-workers are definitely going to share their hope and despair with one another. Apart from other factors, this will undoubtedly lead to a better understanding of themselves and their counterparts and a consciousness that has been severally hampered in the atmosphere of propaganda and rhetoric.

  Thus Gaeseong has not only been preparing for a less-costly inter-Korean reunification in the long term; it is bringing the people of both countries together, strengthening the civil societies of North and South Korea. A better understanding and sustained people-to-people relations will bring a new element to their political discourse. The political regimes are being pressed to cooperate and gain from each other. The point is especially important for North Korea as civil society there has been overshadowed by the political elites.

  It's true that the project will help the North Korean economy and might be instrumental in sustaining the current power structure in the short term. In the long term, it will certainly pose a question mark to the legitimacy of the North's communist regime. It should also be well understood that North Korean economic gains through this project and others, have not fueled North Korean missile or nuclear weapons development. Ultimately, the policy failure was on the American side. The short-sighted approach of George W. Bush drove Pyongyang to develop these weapons of mass destruction out of a sense of self preservation. Even if South Korea had provided no economic or humanitarian assistance to Pyongyang, the communist regime would have followed the same course. The only difference being, South Korea would have faced a more alarming security threat.

South Korea's present policy of strengthening the North Korean economy, differentiating between humanitarian and other economic aid, and attempting to open North Korea for South Korean and foreign companies is based on the assumption that in the long term, increased interaction between North Koreans and the outside world will provide their brothers to the north with a greater awareness of other models of state building.

Economic and other forms of interdependence, a by-product of this policy should minimize the chance of North Korea opting for a confrontational policy in the future. The Gaeseong Industrial Complex is a model of inter-Korea interaction with different economic and political facets. To judge it on any one of those bases alone would not be appropriate. A comprehensive, long-term and constructive view suggests that the sharing of jokes between North and South Koreans have changed something fundamentally in inter-Korea relations. If one catches that small, subtle but so significant change in inter-Korean relations, then Gaeseong is clearly a futuristic project, which could transform inter-Korean dynamics in a very substantial way.

The author teaches at the Department of East Asian Studies, University of Delhi, India. He could be contacted on email: sandipmishra10@gmail.com.

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