Was Kaesong a Hole in the Korean Iron Curtain or a Subsidy to the Kim Monarchy?



The following was originally published at the Diplomat here.

So it increasingly looks like the inter-Korean Kaesong industrial zone is closed for good. (The Wikipedia write-up is a pretty good quick history of it if you don’t know the basics.)

The zone was set-up during the Sunshine Policy period (1998-2007). It was to do 3 things: 1) Lead to some liberal-capitalist spill-over in the North, 2) Expose regular North Koreans (the workers in the area) to regular South Koreans (the managers and staff), and 3) Generally provide some inter-Korean cooperation that might hopefully reduce larger tensions. A resort area in North Korea (Mt. Kumgang) was also opened along these lines in the Sunshine period. Broadly the idea was along the lines of liberal explanations for the Soviet Union’s changes in the 1980s: the Helsinki Accords and CSCE opened the USSR to the outside world, and the inflowing liberalism slowly changed attitudes that eventually helped wind-down the Cold War. Unfortunately, none of this seems to working in the NK case.

Kumgang got closed after a SK tourist was shot in 2008 by NK guards. Kaesong has been a geopolitical football for years. Neither seemed to lead to much spill-over. Instead, NK basically sealed off both facilities entirely, managing them as enclave economies with tight controls. No capitalist-liberalizing influences seemed to be allowed to spread. No semi-private NK industries have sprung up around the Kaesong zone, e.g. The people who work in these areas are checked and proofed by the NK government. Nor did the zone seem to cool tensions; instead Kaesong would get instrumentalized in those tensions – as in this current crisis.

It is true that there are lots of private grey markets in NK, especially in the north. But that comes from the semi-legal-but-tolerated interactions with China and border merchants, not from Kaesong/Kumgang. Causality of NK partial marketization is obviously really hard to track here – I suppose it could be from Kaesong – but I think the analyst community would disagree and say NK black/grey markets sprung up as a desperation measure to cope with the famine of the 1990s, and the state has been unwilling or unable, or both, to crack down.

Finally, it is unknowable how much psychological liberalization there has been; that is, whether the everyday exposure and interaction of North and South Koreans has created a ‘gestalt shift’ in those North Koreans regarding South Korea. Ideally, these changed North Koreans would then tell their family and friends, and one might see some moderation in NK bubbling up from below over the years to come. Andrei Lankov particularly is well-known for making this sort of argument for long-term change in NK.

My own sense from talking to South Koreans is disappointment over the near-closure. Kaesong seemed to suggest that the Koreas could get along, that NK could be nice and open at least a little, that NK didn’t have to be fearsome and terrifying all the time, and so on. One hears this touching anecdote a lot: North Korean workers in Kaesong would save their snack cookies (choco pies) from the SK managers and trade them on the black market at home. There is fear in the South that closing Kaesong means the loss of the last shreds of Sunshine Policy cooperation/inter-action.

On the other hand, it needs to be noted that the SK companies that operated in Kaesong and Kumgang paid the North Korean government, not the NK staff, and paid them in US dollars. The staff were paid later in all-but-worthless NK won and coupons. So effectively, Kaesong and Kumgang became a big, easy cash-cow subsidy for the hard currency-starved North. As it became increasingly obvious that neither zone was leading to spill-over liberalization or tension-reduction, SK conservatives increasingly turned against these zones as little more than subsidies for the Pyongyang ‘court economy.’ These dollars allowed the Kims and cronies to get foreign liquor, HDTVs, cigarettes, appliances, etc., despite the sanctions.

I’m not sure which interpretation is correct; I tilt toward the right probably. Given how little the hoped-for benefits from Kaesong actually showed-up, it’s hard at this point not to see it as just a subsidy to the degenerate clique that’s impoverished the whole country while living well on sanction-busting. Like the Sunshine Policy, I think Kaesong was a worth a try. Just about anything that might encourage change in NK is worth a try at this point; we should not be precious or ideological with a regime that is so dangerous. At the the time, we just didn’t know how the North would respond, so it was worth a real effort.

That said, I think it also needs to be admitted after awhile, that these policies in fact failed. My left-progressive students tell me that 10 years was not enough for the Sunshine Policy and Kaesong; that NK needs more time to come around; that hawks like me and all those American-influenced SK think-tanks in Seoul make NK permanently paranoid, so 10 years is too short. Maybe; I guess that’s possible. But 10 years is a long time for SK to be the sucker in the PD-game with NK. It’s hard to miss that SK was also effectively subsidizing NK in those years and getting very little in return. I dunno. It’s a tough dilemma.

13 thoughts on “Was Kaesong a Hole in the Korean Iron Curtain or a Subsidy to the Kim Monarchy?

  1. “That said, I think it also needs to be admitted after awhile, that these policies in fact failed.”

    I think a point that needs to be made is that just because the outcome wasn’t what we wished for, doesn’t mean the decision was necessarily wrong – hindsight is 20/20.

    Diplomacy and dialogue are generally much, much preferable to war – but that doesn’t mean that diplomacy & dialogue always work. Sometimes, to put it crudely, “sh– just doesn’t work.” So you have to choose the best option out of a crappy set while recognizing that the “best option” will not lead to “best outcome.”


  2. “At the the time, we just didn’t know how the North would respond, so it was worth a real effort.”

    This was enlightening for me, having only believed in the far right aspect on the Korean issue. Maybe there really was genuine “hope” that the North would go along the path the Sunshine policy shined toward.

    But since it has been tried and tried for over a decade (or exactly) it seems that the best option for dealing with the North is neither appeasement nor containment but detachment.

    The term ‘security’ has a wide range of meanings depending on the audience. But the traditional concern of security has always been against external military threats throughout history (Baldwin, 1997: 8). But with the end of the Cold War and with the increasing popularity of liberalism, multi-dimensional views on security have been on the rise. These multi-dimensional views on security are not incorrect nor irrelevant but in a world of scarce resources and competing objectives priorities must be made (Betts, 1997: 12). Thus security should first and foremost deal with the matter of ‘national security’. The plethora of alternative views on security has risen from the general sense of having attained ‘national security’ amongst nations since the end of the Cold War but nevertheless in regards to security the attainment of national security must come first and foremost. With regards to the security situation on the Korean peninsula, South Korea’s depriortisation of its own national security in lieu of liberalist security agendas through rapprochement has ultimately created greater insecurity in all manners of definition and has created an even more unstable security environment for itself. Thus the realist need for prioritisation of national security over other concepts of security shall be outlined with the security crisis on the Korean peninsula as an exemplary case of how their desecuritisation of core national security issues have led to greater insecurity.

    National Security
    With the birth of the nation states the concept of national security arose with national survival as the primary concern. To end the “war of all against all” (Hobbes 1651/1957) citizens defer to the sovereign for protection, thus the state is entrusted with ‘securing domestic peace and safeguarding the life and the property of the people against any foreign threat’ (Baldwin, 1997: 10). Against this realist perception the Kantian view of ‘perpetual peace’ as the norm amongst sensible men, the notion that the subjugation to international law and norms amongst nation states for the peace and prosperity of mankind as the norm arose to form future alternative views on security (Baldwin, 1997: 12). But throughout history the latter view on security has been disproven as the norm whilst the traditional sense of security against external military threats has thrived through the years of conflict. But with the end of the Cold War multi-dimensional views on security has thrived with the traditional sense of security declining to be replaced by other emerging matters. This process of transforming non-traditional security issues in to core security issues is generally referred to as ‘securitisation’ (Kim & Lee 2011: 30).

    Thus with the new array of issues being securitised the definition of ‘security’ has become ambiguous with proposals for higher priority to other matters such as the environment and crime directly resulting in the general desecuritisation and depriortisation of national security. Proponents for the securitisation of these other issues argue about the value of these issues for the people that are to be protected and of their magnitude and significance but as Ullman observes ‘one way of moving toward a more comprehensive definition of security’ is to ask what one would be ‘willing to give up in order to obtain more security’ and that ‘we may not realize what it [i.e.security] is . . . until we are threatened with losing it’ (Baldwin, 1997: 16). Thus it can be argued that these new arguments for the securitisation of these non traditional issues are only possible or even plausible due to the attainment of ‘national security’ as the foundational backdrop. But with the desecuritisation of ‘national security’ the entire aspect of security however it may be interpreted becomes precarious and in danger.

    US General Jacob L. Devers states that,
    …National security is a condition which cannot be qualified. We shall either be secure, or we shall be insecure. We cannot have partial security. If we are only half secure, we are not secure at all. (Baldwin, 1997: 15)

    Thus in a world of scarce resources that must be allocated amongst competing objectives prioritisation is essential especially in regards to policy and thus ‘national security’ must be at the top of the agenda in regards to ‘security’ (Betts, 1997: 12). The dangers of desecuritising core national security issues in lieu of non-traditional issues are evident with the security crisis on the Korean peninsula.

    Security Issues on the Korean peninsula

    The security environment on the Korean peninsula remains as the last vestige of the Cold War. Thus this is a venue where the security concerns of the Cold War remain in conflict with the new security issues of the post-Cold War environment. Securitisation of new threats whilst the desecuritisation of traditional Cold War threats have been taken for granted since the Cold War ended but on the Korean peninsula the desecuritisation of Cold War threats have effectively desecuritiesed the matter of ‘national security’ for South Korea and is a good case of argument for the continued prioritisation of ‘national security’ in regards to security. South Korea’s liberalist pursuit for a Kantian solution to their security issue has put their own ‘national security’ at risk and has placed them in a far more unstable and precarious security environment rather than grant greater security.

    With the inauguration of the South Korean president Kim Dae Jung in 1998, South Korean politics became awashed with a new generation of political leaders with liberalist views in strong contrast to the former realist and conservative military leaders of the past. The most important matter of ‘national security’ for both South Korea and North Korea since their founding has been the relationship between each other with even their constitutions in clash with each other’s cementing that each side is the sole legitimate government on the peninsula (Howe, 2009: 204). With the beginning of Kim’s leadership South Korea began a new approach to the handling of this security issue and relationship. Ending decades of invective towards the North, Kim’s ‘Sunshine policy’ of rapprochement culminating in the June 2000 Summit in Pyongyang with Kim Jong Il and the subsequent Nobel Peace Prize awarded to former president Kim brought hopes for a Kantian peace solution in Korea (Kim, 1999: 40). Pursuing their Kantian ideals the leadership at the time pursued a desecuritised inter Korean relationship in the name of Korean reconciliation and cooperation. (Kim & Lee 2011: 34)

    The desecuritisation process of the North Korean threat began with President Kim’s pursuit of cooperation and reconciliation over deterrence. Despite North Korea’s continued belligerence and South Korea’s economic turmoil following the 1998 Asian Financial Crisis he emphasised and identified reconciliation and cooperation with North Korea as the top priority amongst his policy agendas. He removed the word ‘unification’ completely from the government’s policy towards the North replacing it with terms such as ‘constructive engagement’ sending a clear message to the North of South Korea’s good intentions and of its goal of peaceful coexistence with the North rather than the confrontational notion of unification. In March 1998, he also announced the principle of separating economics from politics fostering inter-Korean trade in a classic liberalist manoeuvre in attempting to foster interdependence through trade. With the North-South summit in 2000, the South Korean political environment also changed dynamically fuelled with the rising of nationalism and unification euphoria rampant throughout the country. Thus the political environment of South Korea changed with the garnering of popular support and consensus for the desecuritisation of the North Korean relationship, effectively desecuritising and deprioritising ‘national security’ with popular domestic consensus. But the euphoria and optimism for peace and security through Kantian means was short lived with the lack of reciprocity from the North. Thus whilst South Korea set aside its own national security in pursuit of a peaceful solution, North Korea has continued to pursue its own national security interests to maximise their own national security. (Howe, 2009: 205-211)

    Thus the warmth that so suddenly appeared in inter-Korean relations turned out to be a false spring beginning with North Korea’s admission to its covert nuclear weapons program to US Assistant Secretary of State James Kelly in October 2002 which went on for years in violation against the 1994 Agreed Framework (Kim & Lee 2011: 32). But even with such tangible matters at hand against the North, rising anti-US sentiment amongst the public due to a series of incidents involving the US Forces Korea, especially in regards to the deaths of two South Korean high school girls by a US armoured vehicle during a military exercise and the subsequent US military courts dismissal of charges laid against the soldiers responsible led to the election of another liberalist progressive president Roh Moo Hyun, firmly cementing the desecuritisation of relations with North Korea until the election of the next conservative president which represented the change in public perception on North Korea. The hardline policy of the incumbent conservative leadership reflects the public’s discontent over North Korea’s continued belligerence and provocations. But still many support the liberalist agenda in regards to the North Korean threat, proposing methods to produce perpetual peace on the peninsula through engagement and rapprochement rather than prioritising national security.

    Out of the three policy options available for South Korea in regards to North Korea, liberalists support the option of engagement over the other two options of containment and disengagement (Chun, 2008: 662). Thus the ‘sunshine policy’ of engagement and rapprochement has been pursued by the two previous consecutive liberal leaderships which have led to the current increased insecurity on the peninsula. This policy of engagement has many weaknesses in dealing with the North. This policy does not provide sufficient leverage to force the North to pay for the costs of their belligerence or brinksmanship. This failure on the North’s side for reciprocity has directly led to the election of the current hard lining government and the resecuritisation of the North Korean threat. Since the fundamental goal of former president Kim Dae Jung’s engagement policy was to avoid a second Korean war, it can be clearly seen from the current situation with a nuclear armed North Korea as an ever increasing security threat for the South that this policy of engagement has failed in obtaining security. It is obviously visible that for a policy of engagement to be effective reciprocity is a must and it has been clearly demonstrated that throughout South Korea’s rapprochement with the North there has been a clear lack of reciprocity. Even during South Korea’s unconditional engagement with the North, it has continued in its acts of belligerence through submarine infiltrations, naval skirmishes, and most importantly with its nuclear bomb testings. With the onset of the conservative government in South Korea these belligerences have turned into open hostilities with the recent sinking of the naval ship ‘Cheonan’ in March 2010 and the shelling of Yeonpyeong Island in November 2010 (Campbell, 2011: 120). With both Korea’s believing that neither side wants a war this has lead to increased brinksmanship from both sides. Thus South Korea should disregard the security concerns of North Korea and alternative views on security and focus on its own national security to protect its own citizens and state. A classic example of South Korea’s deterioration of its own national security in pursuit of Kantian peace was when North Korea spent the funds gained from Hyundai’s mountain resort tour operations to purchase 40 Mig-21 fighter jets from Kazakhstan in 1999 (Kim & Lee 2011: 44). Also with North Korea’s implementation of strategies to fissure South Korean society this has led to the deterioration of US-South Korea relations during the period of liberalist regimes undermining the fundamental core realist guarantor of South Korean national security of US protection (Bae, 2010: 340). During the Roh Moo Hyun administration the return of operational control of South Korean military troops in time of war has been negotiated to return to South Korea in 2015 and a reduction of US troops from 37,000 to 28,000 along with military hardware has occurred all to the strategic benefit of North Korea (Bae, 2010: 340). Even the once hopeful South Korean public has now turned sour in regards to the policy of engagement with the North, prodding the government to prioritise their own national security first and foremost (Campbell, 2011: 123).

    There still continues conflict within South Korea between groups calling for securitisation or desecuritisation of the North Korean threat. Liberalists argue that the recent hard line policies against the North has resulted in worsening of ties and thus the current insecurity, whilst the conservatives argue that it was the liberalists policies of the past that has placed them in the current predicament. Many liberalists argue that the South Korean government has a responsibility to protect their fellow countrymen in the North as well as a stake in the pursuit of their wellbeing, thus arguing that continued engagement is necessary, even going as far as to propose legislations regarding human rights in North Korea (Kim & Lee 2011: 43). But in the current situation where before the ideals of universal security can be pushed forward, with the South Korean government’s failure to protect its own citizens from external threats coming from North Korea the need to prioritise national security first is evident. In 2010 alone with the sinking of the ‘Cheonan’ naval ship 46 young conscripted soldiers were killed and with the shelling of Yeonpyeong Island two South Korean marines and two civilians were killed, the first civilians to have been bombed on South Korean soil by North Korea since the end of the Korean war in 1953. As stated before the nation state exists first and foremost to protect its citizens from external threats in return for their deference, failing that the sovereign has failed to fulfil its end of the social contract. Thus national security must be the priority when security is considered especially in regards to policy. Of course in dealing with North Korea there are no clear cut solutions in dealing with it for it is a state like no other (Smith, 2006: 350). But with the security crisis on the Korean peninsula as a case study, albeit an extreme case, the necessity to prioritise ‘national security’ in regards to security policies has been exemplified.


    Multidimensional views on security have caused a lot of ambiguities to form in regards to security. The concept of security in its traditional sense has been challenged with new security issues having formed in the post Cold War security environment. Due to the plethora of emerging security issues being pressed forward as higher priorities in a changing security environment the classical realist notion of ‘national security’ has fallen to the wayside in pursuit of alternative forms of security. But as stated above the securitisation of non traditional security issues are only possible due to the attainment of national security first and foremost. These alternative views on security would not even be a topic of discussion if the fundamental requirement of ‘national security’ hasn’t been attained first. It has been argued that in this world of scarce resources and conflicting objectives prioritisation is necessary especially in regards to security and policies. Thus with the securitisation of new issues the core security issue of ‘national security’ loses priority and goes through a process of desecuritisation. The dangers of this scenario have been show cased with the security situation on the Korean peninsula. As a venue where conflicting groups have swayed the securitisation process, where ‘national security’ has been desecuritised in favour of alternative security issues, the resultant insecurity has been demonstrated. The liberalist leadership of South Korea which has desecuritised the previously core ‘national security’ issue of North Korea has resultantly created a security environment that threatens its own ‘national security’. As a sovereign state before it embarks on a mission to fulfil universal security, it must first and foremost provide traditional security against external threats for its own subjects first. The resultant casualties and fatalities that have ailed South Korea from North Korea’s belligerence and brinksmanship showcases an extreme example of what could happen when ‘national security’ falls to the wayside in favour of alternative notions of security. Although dealing with a state like North Korea is an extremely unique case, with this situation as a case study the necessity to prioritise the traditional realist notion of ‘national security’ when dealing with security issues has been exemplified. Thus although the dynamism of contemporary global politics will bring forth new security issues, when dealing with security ‘national security’ must be prioritised to come first and foremost for other alternative views on security can only be a topic of discussion when this core necessity has been first attained.

    An essay I wrote about the Korean security issues back in uni. Just in case you might find it interesting 🙂


    • It was worth a try at the time. DJ deserved the Nobel for making a real effort when we didn’t know. The only standard by which to judge these efforts was info available at the time of decision. That said, it should also be admitted now that these experiments did not really work. I’m not really sad to see Kaesong go.


  3. I couldn’t have summarized it better: a justified experiment which just happened to fail. And when the regime does collapse some day we may be surprised to hear stories about how the workers saw their experiences as eye-opening. There may also have been intelligence-gathering and sharing activities that the SK government does not openly state.

    I have the feeling that the Lee government was skeptical about Kaesong and did little to further it, and Park much more so. As little as I like the NK regime, I think there’s a hint of truth in their claim that the SK offer for talks last week wasn’t very genuine; it seemed phrased to goad the North. Park’s remarks, however off-the-cuff, asking who in their right mind would invest in Kaesong now, seem to predict that the government has little interest in revitalizing the complex, and I would expect the lights and water to go out when Pyongyang releases the seven left who are ‘retained’ (and hopefully fed). But I should be clear that I agree with Park’s moves; the complex clearly has served its purpose of showing “we-tried,” and now it hopefully signals a realization that the regime might be best hurt by hitting their cash flow.


    • Thanks. You summarize this well: a noble experiment that failed – one justified in trying at the time, but now, after 15 years of experience, is hard to defend and should be ended.

      This is why I defend the Sunshine Policy and Kim Dae Jung against conservatives who think he was naïve. That judgment reflects hindsight and is unfair based on the knowledge we had back in the 90s. In 1997/8, no one knew how NK would respond, especially as the famine had just devastated the country.

      Today though, we do know how they responded – endless cheating, lack of real movement on the crucial issue of human rights, and a clandestine nuclear program that was pursued right through the Sunshine period with zero hesitation over the obvious hypocrisy of doing so. With this information in mind, I find it hard to accept the SK left’s view that we should reach out. Why? Why get suckered again? The real way forward is to keep hammering away at China until they final give up their noxious client. When that finally happens, and NK’s finally cornered with nowhere left to turn for cash, it will, at last, collapse. Good f——- riddance…


  4. It is obviously visible that for a policy of engagement to be effective reciprocity is a must and it has been clearly demonstrated that throughout South Korea’s rapprochement with the North there has been a clear lack of reciprocity. Even during South Korea’s unconditional engagement with the North, it has continued in its acts of belligerence through submarine infiltrations, naval skirmishes, and most importantly with its nuclear bomb testings.
    online casino thailand


  5. Pingback: Modernization has Revolutionized Korean Grand Strategy | Robert Kelly — Asian Security Blog

  6. Pingback: Separating China from North Korea is Worth South Korea’s Silence on the South China Sea | Robert Kelly — Asian Security Blog

  7. Pingback: No, South Korea does Not Need Nuclear Weapons – bc They’ll Never Use Them | Robert Kelly — Asian Security Blog

  8. Pingback: Would a Chinese Cut-Off of North Korea Bring It Down? | Robert Kelly — Asian Security Blog

  9. Pingback: Tillerson is, Regrettably, Wrong. Strategic Patience is a Good Idea. And It will Happen Anyway | Robert Kelly — Asian Security Blog

  10. Pingback: Korea’s Healthily Bland Presidential Race | Robert Kelly — Asian Security Blog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s