Gaeseong Industrial Complex (GIC) is an industrial complex in Gaeseong, North Korea, which is developed jointly by the two Koreas: South Korea supplies the corporations and capital equipments, and North Korea supplies the workers and the land. Every day, hundreds of South Korean workers--usually middle- and senior-managers--enter and exit North Korea to oversee the operations at the GIC.
As a part of its attempt to raise the tension in the region, North Korea has forbidden South Korean managerial workers from entering North Korea for the last six days. (South Korean workers who were at the GIC, however, were allowed to return home.) Yesterday, North Korea announced that it will shut down the GIC and withdraw all of its workers. Shutting down the GIC is probably the highest level of threat that North Korea may issue, short of actually attacking South Korea. This is because since its founding in 2005, the GIC never closed--not in the face of, for example, the shelling of Yeonpyeong-do in which North Korea actually attacked South Korean territory and killed four people.
Here is a collection of all relevant charts regarding the GIC, created by South Korea's Ministry of Unification. GIC hosts 123 corporations, which manufactured $460 million's worth of products in 2012. It employs over 53,000 North Korean laborers. Last year, nearly 246 vehicles crossed the Armistice Line from South Korea to North Korea every day to deliver supplies to the GIC.
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Is the shutdown of Gaeseong such a big deal? There's South Korean governmental insurance, so companies that are in Gaeseong right now will be reimbursed for their losses. It's not like anyone is going to see lots of businesses go out of business, or thousands of South Korean workers jobless and unemployed.
ReplyDeleteThe insurance money is paid out of an inter-korean cooperation fund, so money that was going to NK will now be used to pay the insurance instead. It's not as if the ROK gov't is going to take a huge financial hit because of this.
@FarFromKorea:
ReplyDeleteI do believe you're missing the point TK and others are trying to make. From a purely economic standpoint, you may be correct in stating that it's not such a big deal (at least not for the South Korean side). It's not about the money though. The GIC is not a money maker. It's the proverbial canary in the political coal mine. NK is just threatening to close Gaesong, but if it should actually close, consider that a very significant escalation in NK-SK tensions.
One friendly amendment: GIC is a money maker. It is definitely profitable. But of course, you are correct on the larger point--it is not about the money.
Delete@TK:
ReplyDeleteYes, thank you. That was poor phrasing on my part. Didn't mean to imply that the GIC was unprofitable, just that it's main purpose is not as a money maker (from the SK end, at least).
That makes a lot more sense. I disagree, though - at least if it's shut down for only a few days. (A permanent closure would be a very different story.)
DeleteBut, the GIC is a huge money maker for DPRK and is probably one of their most legit sources of money that funds their war machine. How long can they really let it be shut down before they realize that they need more money to build more warheads??
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