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Category: Kaesong

January 11, 2019

How to make Kaesong a safety valve for sanctions and a(nother) test of engagement

Fifteen years after the opening of Kaesong and more than twelve years after the approval of UNSCR 1718, Seoul has finally gotten around to reading the resolution that Kaesong violated for a decade. As I’ve harped on during that entire period, paragraph 8(d) required Seoul to “ensure” that its bulk dollar transfers to Pyongyang, which it deceptively called “wages,” were not diverted for nukes, missiles, or luxury goods. No matter how obnoxiously I would present that question to the South...
Categories Kaesong
July 26, 2018

Kaesong is a buffalo jump for amoral politicians & unlawyered cretins

Mark Lambert, who is a “U.S. State Department official in charge of Korean affairs,” and who is also a mensch, is in South Korea this week, where he will meet with Korean officials, and also with “a group of South Korean businesspeople involved in inter-Korean economic projects.” Over the course of 15 years, this blog has followed the various get-broke-quick buffalo jumps that promoters, most of them amoral politicians who specialize in throwing away other people’s money, euphemistically call “inter-Korean projects.”...
Categories Kaesong/Sunshine
April 30, 2018

Moon Jae-in just put Seoul on a collision course with U.S. & U.N. sanctions (updated)

THE ONE INVIOLABLE RULE OF INTER-KOREAN SUMMITS IS THAT THERE IS ALWAYS A SCANDAL sooner or later. Kim Dae-jung’s summit with Kim Jong-il in 2000 resulted in a Nobel Peace Prize, eight indictments, six convictions, and a bunch of suspended prison sentences for an illegal payment of $500 million to North Korea. Otherwise, it did not disarm North Korea and did not produce a lasting reduction of tensions.((Previously said $500,000. Since corrected.)) Roh Moo-hyun’s 2007 summit with Kim Jong-il also failed...
Categories An Alliance?/Kaesong/North-South/Sanctions/Sunshine
May 10, 2017

No, Moon Jae-In’s election probably doesn’t mean Sunshine 2.0

I’ll have to keep this post short because of time constraints, but my interest in South Korea’s election is mostly related to how Seoul’s policies toward North Korea will shift. I’ll refer you to this post and this one on why it’s likely to change less than John Delury might like, this piece in NK News where I offer some thoughts, and this excellent post by Marcus Noland and Kent Boydston. Much will depend on how hard President Trump pushes...
Categories Kaesong/Korean Politics/Sunshine
February 10, 2017

Eight reasons why reopening Kaesong could be a deal-breaker for the U.S.-Korea alliance

More and more, I am hearing that Moon Jae-in, the left-wing front-runner in the South Korean presidential election, is talking about reopening and expanding the Kaesong Industrial Complex. It’s apparent that Mr. Moon and his supporters haven’t thought through the potential legal and diplomatic consequences of that. Perhaps this post will help concentrate some minds by telling Koreans, in frank terms, what most people in Washington really think about that idea. 1. Kaesong violates U.N. sanctions. I heard somewhere that...
Categories An Alliance?/Kaesong/Sunshine
December 15, 2016

What’s that? You want the Sunshine Policy back? Good luck with that.

If Nate Silver is feeling humble these days, just let him try to predict who wins the next election in South Korea. In the 12 months between now and the time South Korea elects its next president, the ruling Saenuri party will probably break up. God willing, new candidates will emerge to supplant the dismal fare it has served until now. Divisions between the pro- and anti-Park Geun-hye factions may or may not heal. Ban Ki-moon may or may not...
Categories Kaesong/Korean Politics/Sunshine/U.S. & Korea
March 11, 2016

Park Geun-hye finds her inner Thatcher

This week, the South Korean government imposed bilateral sanctions on North Korea, banning from its harbors ships that have been to North Korea in the last 180 days, cancelling a joint logistics project with Russia to export coal through Rajin, and designating “30 companies with links to the North’s nuclear and missile programs …, 38 North Korean nationals and two foreigners.” The targets include “Leonard Lai, president of ­Singapore-based Senat Shipping” (see this post) and “the Taiwanese president of Royal Team...
Categories Kaesong/Korean Politics/North-South/Sunshine
February 16, 2016

In The Weekly Standard: Kaesong, where life imitated Monty Python & the Holy Grail

In Monty Python and the Holy Grail, the Knights of Camelot are on a quest for the Holy Grail, but find their way barred by a group of ornery French knights – never mind what they are doing in England – who have walled themselves inside an impregnable castle. After a pathetic attempt to breach the walls fails, Sir Bedivere the Wise devises a scheme to do through guile what could not be done through force. He persuades King Arthur...
Categories Appeasement/Engagement/Kaesong/Sunshine
February 15, 2016

The rebirth of an alliance: The U.S., South Korea & Japan are finally getting North Korea policy right

As you and I both know, I spend a lot of keystrokes here kvetching about the lax enforcement of sanctions against North Korea, but I’ve also written that diplomacy is essential to making sanctions work. Now, for the first time I can recall, the U.S., South Korea, and Japan are coordinating their policies as allies should. They’ve coordinated their defense responses to the North’s missile test, their calls for tougher U.N. sanctions, their strategies to strengthen sanctions enforcement, and their recruitment of new...
Categories Diplomacy/Kaesong/Sanctions/Sunshine
February 10, 2016

The End of Sunshine: S. Korea suspends ops at Kaesong, “suspected” of funding N. Korea’s WMD programs

Year after year, and almost alone, I have argued that the Kaesong Industrial Park was incompatible with U.N. Security Council resolutions sanctioning Pyongyang. At Kaesong, “South Korea has 124 companies … employing 54,700 North Korean workers … whose wages are paid to a North Korean state agency.” All told, those fees, taxes, and “wages,” which the North Korean workers probably never saw after Kim Jong-un took his cut, totaled $110 million last year alone. Contrary to Kaesong’s founding purpose of promoting North-South engagement and people-to-people...
Categories Engagement/Kaesong/North-South/Sunshine
January 17, 2016

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...
Categories Kaesong/Sunshine
August 11, 2015

North Korean Men Cross DMZ (and plant land mines)

By now, you’ve read that South Korea’s government has accused the North Korean military of sending soldiers across the DMZ to plant mines near South Korean guard posts, an act that blew the legs off two South Korean soldiers last week. The two South Koreans, both staff sergeants, triggered the mines last Tuesday just outside their post, within the South Korean half of the 2.5-mile-wide Demilitarized Zone, a buffer separating the two Korean armies. One lost both legs in the...
Categories Appeasement/Kaesong/Korean War II/North-South/Propaganda/ROK Military/Sunshine/Useful Idiocy
May 14, 2015

N. Korea’s expatriate labor needs ethical and financial limits

N. Korea increasingly relies on expat labor for hard currency A series of new reports suggests that the export of labor has become a major source of income for Pyongyang. The Financial Times cites an NGO estimate that the regime earns $1.5 to $2.3 billion a year from contract labor, in line with educated estimates of its annual revenue from missile sales ($1.5 billion) or arms deals with Iran ($1.5 billion to $2 billion). (Update: Marcus Noland questions that estimate,...
Categories Engagement/Human Rights/Kaesong/Russian Far East/Sanctions
May 12, 2015

Kaesong promised us peace and reform. It delivered conflict, tension, and exploitation.

In April 2013, Kim Jong Un pulled 50,000 North Korean workers out of Kaesong, in retaliation for South Korea’s support for U.N. Security Council Resolution 2094. The shutdown lasted for five months and cost investors (and ultimately, the South Korean government that still subsidizes them) millions of dollars. Kaesong eventually recovered to pre-shutdown levels of operation, but the shutdown probably scared away potential foreign investors for years. A few months after the shutdown ended, a new dispute arose when North Korea told Kaesong investors to pay back...
Categories Kaesong/North-South/Sunshine
March 9, 2015

Why legal investments in North Korea are a money laundering risk

You’ve often seen me write about the importance of “financial transparency” in transactions with North Korea. For a decade, economic engagement has mostly been done by one of two models: (1) controlled interactions with members of the elite, the actual effects of which are negligible at best; and (2) barbed-wire capitalism, where a few North Korean officials relay orders from foreign managers to hand-picked workers, and where the regime seals the whole enterprise off to prevent it from influencing the local community. The former are, for the most part, of little...
Categories Engagement/Kaesong/Money Laundering/Sanctions/Sunshine
December 17, 2014

Max Fisher’s criticism of the Sunshine Policy is spot-on

Washington Post alumnus Max Fisher, now writing at Vox, presents a graph and data showing how, despite all of its abhorrent behavior, North Korea’s trade (most of it with China and South Korea) has grown, and how that leads to more abhorrent behavior. The way it’s supposed to work is that North Korea’s belligerence, aggression, and horrific human rights abuses lead the world to isolate it economically, imposing a punishing cost and deterring future misdeeds. What’s actually happening is that North...
Categories Appeasement/Kaesong/Sunshine
December 12, 2014

This is why no rational person would invest in Kaesong

North Korea has unilaterally raised those “wages” that South Korean companies pay the North Korean regime for labor at Kaesong—wages that the workers probably never see, and that for all the Unification Ministry knows, are used to buy iron maidens, centrifuge bearings, and 300-millimeter rocket fuses. The Unification Ministry isn’t happy, but only because wage hikes are bad for business: “Our firm position is that it’s impossible to revise the wage system without consultations between the South and North,” the...
Categories Kaesong
November 4, 2014

Another Kaesong firm folds

An unidentified small manufacturer for watch and mobile phones cases on Wednesday submitted an application for dissolution to the committee handling affairs at the joint park, according to officials from Seoul’s unification ministry. It marked the second case since June 2009 that South Korean firms operating at the Kaesong Complex have closed their businesses. It also marked the first time since the operation of the park had been halted briefly last year. The company, which had employed about 100 North...
Categories Kaesong