Kumgang Update 3



We have covered the Kumgang drama as a microcosm of all things North Korean, from military-first policy through the regime’s contradictory approach to foreign investment. But the issue also has an intricate tactical side. Both Seoul and Pyonyang seem intent on maximizing each other’s discomfort over the tourist project. While in Seoul, an old friend from the Ministry of Unification clarified the state of play.

After the murder of a South Korean tourist in the summer of 2008, the Lee Myung Bak government shut down the tours and demanded three things for them to be resumed: an investigation into why and how the shooting incident happened; an apology; and assurances that it would not happen again.

North Korea responded in two steps. The first was to both expropriate public South Korean assets in the complex and to “freeze” the private assets of Hyundai Asan The public assets included the family reunification center, a tourism office, and a fire station as well as Red Cross facilities.

When the LMB government refused to back down, Pyongyang threatened to “dispose” of both the public and private assets in the zone and even passed a law in May creating a “special international tourism zone” in that permitted them to do so. Although the North Koreans hinted at getting another operator for the project, the purpose of the act was clearly tactical. When the law was announced, the North summoned Hyundai Asan to come to the mountain by June 30 for “talks” on the disposal of the assets.

After the shooting incident, North Korean authorities were unwilling—or unable—to negotiate. Suspension of the project was a substantial material loss, but South Korean demands went to the touchy subject of the military stationed in and around the complex. North Korea had envisioned negotiations with Hyundai Asan alone, but the South Korean government insisted it should be at the table. Not only did the new legislation blatantly violate a contract with a South Korean firm but government as well as private assets had been expropriated.

Perhaps reflecting the cash squeeze, the North acceded to the presence of MOU officials at the first round of negotiations that wrapped up last week. The press coverage in both South Korea and China emphasized the standoff, as the North claimed that it could not nullify either the asset seizures nor the new law creating the tourism zone.

But with public officials on the delegation, the Northern representatives sought clarification of the South’s three demands and how they might be implemented. For example, the South might not have to participate directly in the investigation of the incident as long as the North reported on the investigation. The apology and assurances could be rolled into a statement of regret and promises that it would not happen again.

But there is a poison pill in the negotiations for the LMB government. Since the South proposed the three conditions, what will it do if the North actually comes through on them? The LMB government does not appear in a mood to resume the Kumgang tours. But they may have a convenient excuse. Even if the North did respond to the South’s three demands, they would still have to publicly rescind the asset expropriation and new tourism law. The difficulty of doing that may just save the LMB government from having to engage. As always with the North Koreans, there are undoubtedly more negotiations ahead.

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