The South Korean government opens an inter-Korean liaison office at the now-shuttered industrial complex in Kaesong, North Korea on Friday. Entrepreneurs who ran plants at the Kaesong Industrial Complex have been invited to the opening ceremony. Senior officials and executives from the Ministry of Economy and Finance, Woori Bank, Korea Electric Power Corp., KT and Korea Water Resources Corp. will also attend the event apparently intended to show the Moon Jae-in administration’s commitment to resuming inter-Korean economic cooperation and the Kaesong Industrial Complex.
Seoul’s presidential office Cheong Wa Dae has also invited heads of South Korea’s four largest business conglomerates to accompany President Moon to Pyongyang. The conglomerates are said to have concluded that they cannot turn down the offer, agonizing what contributions they can make to inter-Korean economic cooperation. Although the local business community hoped that heads of business associations and state-run companies accompany the president in consideration of international sanctions against the North, Cheong Wa Dae appears to have concluded that the involvement of top CEOs of the major conglomerates who have the authority to make investment decisions would attract Pyongyang’s attention.
The visit by CEOs of big businesses could produce positive effects that would buoy expectations of massive investments in the North as long as Pyongyang keeps its denuclearization promise. CEOs of some large corporations also joined presidential entourages during the inter-Korean summits in 2000 and 2007. However, the upcoming summit, which should focus on the North’s denuclearization, is different from the previous ones that were held like a big event with a view to advancing the inter-Korean relations. Moreover, it is questionable whether it is appropriate for the presidential office to unilaterally tell South Korea’s leading CEOs to join the visit to Pyongyang, rather than seeking their voluntary involvement.
What is the most particularly worrisome is that South Korea’s haste in implementing economic cooperation projects with the North amid international sanctions could prompt Pyongyang to make a misjudgment that it would be able to pursue economic development without denuclearizing itself. Seoul has already shipped 4.3 billion won (3.8 million U.S. dollars) worth of equipment, including steel and electronic goods, to Kaesong between June and August while preparing for the opening of the liaison office. Nevertheless, the South’s Unification Minister Cho Myoung-gyon told the National Assembly Thursday that Seoul had not requested the United Nations Security Council Sanctions Committee on North Korea to exempt the shipments from the sanctions. Asked about the United States’ consent, the minister repeatedly said that there is “no problem” because Seoul had sufficient consultations with Washington.
It should be left up to businesses’ voluntary decision to make investments in North Korea. If completion of the North’s denuclearization eliminates risks, companies will scramble to invest in the North even if the government does not push them. With the North’s denuclearization, however, pursuing inter-Korean economic cooperation and easing military tensions would go nowhere, no matter how many times the president takes entrepreneurs to meetings with Kim Jong Un.