US lawmakers scrutinize North Korean economic partnership with South

Lawmakers who want to bleed North Korea dry have mounting misgivings about the South's business partnership with the rogue communist country.

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As the House Foreign Affairs Committee prepares to take up legislation to cut off Pyongyang's funding sources amid rising tensions on the peninsula, lawmakers say it's past time to consider closing the Kaesong joint industrial park. The joint economic venture between the North and South serves as a key diplomatic bridge, but it also funnels $90 million a year into the hands of Kim Jong-Un's regime.

The cash-strapped North needs the money to help fund its vast military and its nuclear weapons program. But it's the South – where 123 companies employ 53,000 low-wage North Korean workers to produce low-cost goods right across the demilitarized zone – that has been exposed to blackmail.  This past week, Pyongyang temporarily shut down the site and demanded as a condition for restarting operations that Seoul “apologize for its deeds that hurt the North's dignity” for saying the North needed the cash flow.


“We have found that the hard currency generated by Kaesong aids its nuclear weapons and missile program,” House Foreign Affairs Committee Chairman Ed Royce (R-Calif.) told The Hill. “It’s good that it’s closed.”

Royce expects to introduce legislation shortly to further isolate North Korea following its latest threat to test-launch a medium-range missile capable of reaching all of Japan and the U.S. territory of Guam. It's not clear if it will address Kaesong.

“A window of opportunity remains for the U.S. to implement targeted, aggressive sanctions that cut off the flow of hard currency that the North Korea regime so desperately needs to fund its nuclear weapons programs,” Royce said via e-mail. “In the coming weeks, I will introduce legislation to do just that.”

Rep. Steve Chabot (R-Ohio), the chairman of the committee's panel on Asia and the Pacific, said this week's brinksmanship over Kaesong confirms that it's a liability.

“Clearly, Kim is showing by his irresponsible behavior that he would put something like that at risk and try to use it as leverage or a bargaining chip in some manner,” Chabot told The Hill. “And I don't think we ought to play into that.”

Kaesong opened for business in December, 2004, as part of the so-called “Sunshine Policy” pursued by Nobel Peace Prize-winning President Kim Dae-jung to reduce tensions between the two Koreas. Any decision to terminate the agreement would have to be approved by South Korea, but Chabot said the fact that the United States guarantees the South's safety gives the country considerable leverage.

“We work closely with the South Koreans,” he said. “We've got almost 30,000 troops over there who are at risk, so I think it's something that we ought to be talking with them about.” 

Calls to shutter Kaesong are growing beyond Capitol Hill.

“This is one more part of Kim Jong Eun's plan to create a crisis to force Seoul and Washington to sue for peace by paying blackmail to Pyongyang,” The Wall Street Journal editorial board declared this week in a piece titled "Good Riddance to Kaesong." “Instead, South Korean President Park Geun-hye should seize this opportunity to declare Kaesong a misguided experiment and shut it down for good.”

Consultant Edward Luttwack followed up in a piece in Foreign Policy on Friday dubbing South Korea “the enabler.”

“It's time for this to end. The United States cannot force the North to give up its bellicosity, but surely it can force the South to renounce its perversity,” he wrote. “The price of continued U.S. protection should be the adoption of a serious defense policy, the closure of the Kaesong racket, and a complete end to cash transfers to the North, whatever the excuse. Pyongyang may still try to pick a fight, but at least this will eliminate the incentive to persist in this monstrous extortion strategy.”

The White House declined to comment. The State Department for its part raised concerns about fraying ties between the North and South.

"We refer you to the Hill," said a U.S. State Department official. "We support steps to improve inter-Korean relations."

Some lawmakers, however, say Kim's decision to temporarily close Kaesong raises concerns that he's further breaking contact with South Korea after ripping up the 1953 armistice and disconnecting a Red Cross hotline with the South.

“The fact he has closed out the industrial park, that he's severing whatever remaining connections with South Korea – this is all serious and it's hard to see how he's going to come back from this, how he's going to pull back,” Rep. Peter King (R-N.Y.), a member of the Intelligence and Homeland Security committees, told CNN this week.