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SHIM Jae Hoon

Free Electricity Won't Save Kaesong Complex

SHIM Jae Hoon

Mar. 21, 2005

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Seoul's aid policy on North Korea is taking a potentially risky course. Starting from March 16, it is supplying 15,000 kilowatts of electric power to a North Korean industrial complex outside the border city of Kaesong . It's an extraordinary step, given that the two sides are still technically at war, and the democratic South is willingly providing what could be a militarily-useful power resource to a hostile regime avowedly developing nuclear weapons. It contradicts the South's rationale of spending an equivalent of 4% of its gross domestic product each year for defense against a potential invasion from the North.

The government claims this is an overblown argument because power supply is intended for running factories inside Kaesong industrial park invested by South Korean companies. In the past, however, policymakers had desisted from approving this project for fear of military implications this move has. Today, concern over the security on the Korean peninsula has grown worse, with North Korea refusing to return to the six-party talks in Beijing to dismantle its nuclear program in exchange for aid and recognition.

Giving electric power at this stage indirectly undermines the effort by the United States and Japan , certainly also by the South, to pressure the North to give up the nuclear option. If Seoul steps out of this line now, it will mislead the North's Kim Jong Il into believing he can break up the US-led diplomatic coalition. As long as Seoul keeps providing aid, why should he feel compelled to negotiate?

In pursuing this controversial policy, the Roh Moo Hyun administration clings to a naive view that Kim can be persuaded to give up the nuclear program in exchange for aid and recognition. President Roh insists that the best way to achieve rapprochement is to use economic aid, and help the North avert a regime implosion. This, according to his officials, is cheaper than the cost of absorbing the North after its complete collapse. They cite the example of West Gerrmany's staggering cost of absorbing East Germany in 1990.

But North Korea is not an East Germany by any stretch of imagination. If and when it does fall from internal unrests, the ruthless Stalinist dictatorship in Pyongyang is more likely to follow the bloody course of Romania's collapse under Ceaucescu. But in the depth of its economic and political disaster, the North has passed the point of salvation through aid from the South. This is demonstrated by the fact that Kim let close to 10% of his 23 million population die of hunger in the famine of 1995 to 2000.

The best the South can do under the circumstance is to use its aid leverage to dissuade Kim from moving ahead on his nuclear weapons program. Seoul's economic assistance will move like a goal post dependent on the North's concession. For the time being, economic aid should consist only of food and humanitarian articles like medicine and farming implements. Free electric power is the last thing Seoul should provide, as it allows the North to divert its own power resources for military purpose. Nor will it save Kaesong industrial complex from the present state of neglect. The industrial park, located 70km north of Seoul , is situated well inside the North Korean territory bristling with watch towers and artillery emplacements. That's why the 90,000-square-meter site has just three South Korean companies under operation, despite the North's cheap wage of US$57.5 a month.

The military tension in the area is the foremost concern of businessmen who have been asked to invest at the site. They are repelled by the sight of Stalinist system controlling every aspect of life of North Korean people. In Kaesong , factory managers and technicians from Seoul must operate under tight security regulations banning contacts with Northern workers. No South Korean newspapers or radio are allowed within the premises of factory; no after-work socializing is permitted. Local workers come to and leave work in groups. Such is the level of regimentation.

That's not the only inconvenience: equipments and raw materials required at the industrial complex must be brought from the South and pass through tight security checks at the border points. As seen by a long line of trucks waiting for clearance, it's the world's last place to do a thriving business.

Trust is a rare commodity there, and investors fear that the North can switch back to a militant line anytime, wreaking havoc with their business. Indeed, a lot of South Koreans still remember the bad old days of doing business with the North, especially in electric power. Until 1948, it was the industrialized North that was supplying power to the mostly agricultural South. In May that year, however, the Soviet-backed regime cut off the power supply after failing to stop the UN-supervised free elections from taking place across South Korea . That one-sided move halted factories in the South, blacked out homes and schools. That incident still evokes bitterness here, cementing the belief that the South will do business with the North, only at its peril.

It's now the South that can use its power resources to influence policy decisions in Pyongyang . The South produces eight times more electric power than the North's 7.8 million kilowatts. It must use this leverage wisely, though, only as a means of extracting concessions in reducing tension. In reality, however, Kim Jong Il is cynically turning his resources to building nuclear weapons while leaving the job of feeding his people to South Korea , Japan , China and other countries. Now Seoul is offering him electric power to run the factories it has built to save Kim's economy from collapse. It makes us wonder which side is winning in this strange war.

Shim Jae Hoon is a Seoul-based columnist and political commentator. The views expressed are his own and do not represent the views of the publications that carry his columns.
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