This News Comment is updated on the bottom of the original article.

The United Nations Secretary General Ban-Ki Moon is expected to visit the Kaesong Industrial Complex to visit South Korean run factories and North Korean workers (Arirang News 5/19/2015). Kaesong, located about six miles north of the Demilitarized Zone, represents a rare economic venture between North and South Korea. According to the US Congressional Research Service, “The [Kaesong Industrial Complex] aims to attract South Korean companies, particularly small and medium-sized enterprises, seeking lower labor and other costs for their manufactured products as an alternative to establishing subsidiaries in China or other low-wage markets.” (4/18/2011) In exchange for providing low cost labor, the North Korean government is not only able to receive infrastructure support from South Korea but also receive US Dollars legitimately.

Given that Kaesong provides a steady stream of US Dollars, it is unlikely that North Korea would jeopardize the industrial project in the name of national pride. Even at the height of nuclear tension in 2013, it was North Korea asking South Korea to consider reopening the complex...after North Korea de facto temporarily shut the complex down a few month earlier (South China Morning Post 8/7/2015). After waves of criticisms and demands to never repeat the unilateral shutting down of the complex by South Korea, Kaesong Industrial Complex reopened (CNN 9/16/2013). Even at the most tensed times, North Korea caved in.

Kaesong Industrial Complex provides a tiny taste of capitalism for the North Korean workers as the North Korean government collects the workers’ wages.

Given years of North Korean cooperation to develop the Kaesong Industrial Complex, there is no question of North Korean government’s ideological tolerance to the capitalism in Kaesong. With limited options of attracting foreign direct investments, it is likely that North Korea’s future actions (including provocations that involve weapon firings to the sea) would be calculated such that it would not cause enough geopolitical destabilization that would jeopardize the Industrial Complex itself.

In a way, allowing the UN Secretary General to visit the Industrial Complex shows North Korea’s desire to get international legitimacy in providing low cost manufacturing options to other foreign investors.

Update: According to the BBC and other news outlets, North Korea has cancelled the UN Secretary General's visit without providing an explanation. The UN Secretary General said the cancellation was "deeply regrettable". Due to lack of information on North Korea's intention, it is difficult to provide analysis on the situation, but it is possible that some type of domestic instability resulting from an internal power change might have played a role in the cancellation (DS NETS 5/14/2015).


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