The Kaesong Industrial Complex, the Moon Administration, and UNSCR 2321

May 26, 2017 10:15 AM

In the past week, newly appointed Blue House special advisor for diplomacy and security affairs Moon Chung-in (no relation to Moon Jae-in) has been in the press advocating what might be termed a “Korea First” model of reviving inter-Korea relations. Specifically, he has signaled an early re-opening of the Kaesong Industrial Complex and Mt. Kumgang tourism projects. Unification Ministry spokesman Lee Duk-haeng stated that “We plan to take a flexible look at all major issues involving North Korea as long as they do not violate the framework of international sanctions.” The closure of KIC was essential for the Park government to have any credibility when it requested the international community to sanction North Korea in the wake of the fourth nuclear test: it was untenable to ask others to impose sanctions when the government of South Korea was making direct hard currency transfers to the North Korean treasury.

KIC, as it operated in the past, with considerable South Korean government subsidy, violates two provisions of UNSCR 2321: para 32 prohibiting investment insurance and para 31 on representative offices and banking accounts.

KIC, as it operated in the past, with considerable South Korean government subsidy, violates two provisions of UNSCR 2321: para 32 prohibiting investment insurance and para 31 on representative offices and banking accounts. When I raised this point with one of President Moon’s senior advisors he was incredulous that UN commitments could put any constraint on ROK policy.

While it is theoretically possible that on paper KIC could be operated in a way consistent with UNSCR 2321 by making significant changes in past operating procedures, given the on-again, off-again history of closures of the zone undertaken by both the North Korean and South Korean governments, in reality it is inconceivable that South Korean or third country firms would re-enter the zone without investment guarantees and insurance.

We’re going to be in for a rough ride.  

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Marcus Noland Senior Research Staff

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