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In an earlier post, we reported rumors that Pyongyang might seek third party operators for the Mt. Kumgang tourist project while contracting with Hyundai-Asan to funnel tourists from the South to the expropriated project. Of course, this might have been a bargaining tactic, as a South Korean official quickly suggested.
But if so the pressure has been turned up. Last Friday, the Presidium of the Supreme People’s Assembly issued a decree that establishes a new special zone in the area of Mt. Kumgang. The new decree explicitly overturns a 2002 agreement under which Hyundai would be the sole operator of the tours and have exclusive management over the 204 square-mile zone for 50 years.
The new announcement says that the DPRK will exercise “sovereignty” over the zone—an exemplary confusion between sovereignty and the rights of investors--and offers this by way of assurances:
“The DPRK will encourage free investment in the development of the special zone by corporate bodies, individuals and other economic bodies and protect by law the invested capital and properties and income and other profits to be gained through business.”
This time, we really, really, really mean it.
No investor with the wherewithal to manage a project of this size is going to step into the political and legal problems that such an investment would create; contacts in Seoul report to us that the Chinese see participation in this venture as a no-no. But it is what the new decree says about the North that is revealing: the belief that you can attract new investors while expropriating existing ones.
