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For North Korea, Economic and Strategic Significance in Kaesong Closing

April 3, 2013 at 12:00 AM EST
Why did North Korea close the Kaesong industrial complex when it actually relies on that income? Gwen Ifill talks to Jack Pritchard, former U.S. special envoy for North Korea negotiations, about how a combination of "compounding events" makes current tensions with North Korea potentially more significant than past dustups.
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GWEN IFILL: For more on the escalating border tensions, we turn to former Ambassador Jack Pritchard, who has been involved with Korean peace negotiations for both Presidents George W. Bush and Bill Clinton.

Welcome.

CHARLES JACK PRITCHARD, Former U.S. Special Envoy for Negotiations with North Korea: Thanks very much.

GWEN IFILL: Is the pressure shifting from military to economic now?

CHARLES JACK PRITCHARD: Not as much.

But this is an unsettling development when you think about how important the Kaesong industrial complex is to the North Koreans. It’s a source of hard currency for them. And so shooting themselves in the foot for a longer period of time means they’re going to be missing out on kind of the golden goose here.

GWEN IFILL: We saw South Korean businesspeople saying it could be a bad effect for them as well because of the supply chain that feeds Kaesong.

CHARLES JACK PRITCHARD: Yes.

To put in the context, the Kaesong industrial complex produces about $500 million dollars of merchandise each year, watches, shoes, clothes, things of that nature. It’s a drop in the bucket when you take a look at the overall South Korean economy, but for those 123 companies and the supply chains that are associated with it, it is a big deal for them.

GWEN IFILL: And, symbolically, this was the fruit of the sunshine policy, this idea which the North and South, the previous presidents of the North and South, could actually agree on something. Is that dead now?

CHARLES JACK PRITCHARD: I don’t think it’s dead, but we have got to watch it very closely.

As you rightly say, this was the product of the summit, the first summit between North and South in 2000, Kim Dae-jung and Kim Jong Il, and opened in 2004 and has been operating for about nine years now.

GWEN IFILL: So, is this provocation or pot-stirring, or both?

CHARLES JACK PRITCHARD: Well, there’s the interesting question.

If it were not for a precedent that was set in 2010 with the sinking of the Cheonan, the ship, South Korean ship, by the North Koreans and the artillery firing on the Yeonpyeong Island later in that year, you would say conventional wisdom says this will pass. There will be a return to normalcy.

But that precedent suggests that you must watch what’s going on. Will it turn worse?

GWEN IFILL: Now, this park, this particular complex, has been kind of a pawn in the geopolitical chess game before. It didn’t have any lasting effect, or did it?

CHARLES JACK PRITCHARD: No, it didn’t. About four years ago, the North Koreans did what they’re doing now, and they restricted access to South Korean workers.

Strangely enough, in 2010 with the sinking of the ship and the artillery firing, nothing happened at the Kaesong industrial complex. So now we’re back to saying, you know, what’s going on, how long will that last, what’s the impact and the political significance?

GWEN IFILL: Should anybody watching this be worried that, for instance, South Korean workers who now aren’t being allowed to cross the border to go home could be treated as hostages?

CHARLES JACK PRITCHARD: Well, that was a concern four years ago, but so far what we’re seeing today is the North Koreans restricting access in, but allowing South Koreans out. So right now, there’s not a hint of a hostage situation, but it’s something the South Koreans watch very carefully.

GWEN IFILL: Maybe in intra-Peninsula politics, this is a way of testing the new leader of South Korea?

CHARLES JACK PRITCHARD: Well, it’s interesting because, as you know, the South Koreans have a new president, Park Geun-hye, has been in office about five weeks so far.

So there’s a little bit of a testing, but it’s unusual, in the sense that the North Koreans hated the previous president, hard-line, and saw in the election of Madam Park the potential of a partner. But they’re not operating as though that’s their intent.

GWEN IFILL: Jay Carney, the president’s press secretary, was asked about this today on Air Force One and he said this is part of a familiar pattern.

You have been following this pattern for some years. Does it feel different to you?

CHARLES JACK PRITCHARD: Well, as I say, the only difference is that precedent of almost three years ago.

Were it not for that, it would be a very familiar pattern. But you cannot assume that it will follow previous events and end up with a reduction of tensions and a return to normalcy.

GWEN IFILL: It doesn’t feel more dangerous to you?

CHARLES JACK PRITCHARD: Slightly more dangerous because you have a compounding of events that have taken place since December with the launch of a successful missile by North Korea, their nuclear test in February, the U.N. Security Council’s sanctions.

It’s come at a time where U.S. and South Korean annual exercises are taking place. So there are a lot of things that are making this slightly different and potentially more dangerous than we have seen in the past.

GWEN IFILL: At the very least, it seems like the rhetoric is more heated. Is China the solution? Is there a back-channel way to calm all this down?

CHARLES JACK PRITCHARD: Well, we certainly hope so.

We saw news reporting today that the Chinese vice minister has spoken separately to the U.S. ambassador, the North Korean ambassador and South Korean ambassador. That’s a good sign. There needs to be a pathway off of this rhetoric by North Koreas, and hopefully the Chinese can provide some effort in this regard.

GWEN IFILL: Ambassador Jack Pritchard, thank you so much.

CHARLES JACK PRITCHARD: My pleasure. Thank you.