Identifier
Created
Classification
Origin
09SEOUL815
2009-05-21 08:01:00
UNCLASSIFIED
Embassy Seoul
Cable title:
GROWING FRUSTRATION BY KIC COMPANIES, BUT NO SIGNS
how-toVZCZCXYZ0000 OO RUEHWEB DE RUEHUL #0815/01 1410801 ZNR UUUUU ZZH O 210801Z MAY 09 FM AMEMBASSY SEOUL TO RUEHC/SECSTATE WASHDC IMMEDIATE 4412 INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 5913 RUEHMO/AMEMBASSY MOSCOW PRIORITY 9745 RUEHKO/AMEMBASSY TOKYO PRIORITY 6002 RUEHSH/AMCONSUL SHENYANG PRIORITY 4419 RHMFISS/COMUSKOREA J5 SEOUL KOR PRIORITY RUACAAA/COMUSKOREA INTEL SEOUL KOR PRIORITY RHMFISS/COMUSFK SEOUL KOR PRIORITY RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
UNCLAS SEOUL 000815
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL ECON KS KN
SUBJECT: GROWING FRUSTRATION BY KIC COMPANIES, BUT NO SIGNS
OF WAY FORWARD
UNCLAS SEOUL 000815
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL ECON KS KN
SUBJECT: GROWING FRUSTRATION BY KIC COMPANIES, BUT NO SIGNS
OF WAY FORWARD
1. (SBU) SUMMARY: On May 19, Representative Kwon Young-seh
(GNP) hosted a forum at the National Assembly to discuss the
current situation at the Kaesong Industrial Complex (KIC).
Speakers and discussants included MOU Director General for
KIC Project Bureau Kim Young-tak, former head of the Korea
Land Corporation Kim Eun-jong, Vice Chair of the Corporate
Council of KIC Yoo Chang-keun, and other experts from
academia. The two-hour session included a desperate plea
from the KIC CEOs who called for President Lee's involvement
in "saving KIC" and suggestions from experts for a need to
build dormitories, among other steps, to address the broader
inter-Korean framework in the KIC. MOU remained firm on the
ROK citizen's safety as top priority and left "no room for
negotiation." Other law makers, journalists, and KIC
managers also attended. END SUMMARY.
--------------
MOU: No Room For Negotiation
--------------
2. (SBU) As the ROKG point man for the KIC, MOU
Director-General Kim Young-tak emphasized the ROKG's
inability to overlook the detainee case. Kim said that the
ROKG view remained unchanged: there was "no room for
negotiation" in regard to the South Korean detainee; the rest
of the KIC agenda would have to be solved through dialogue,
with perseverance.
3. (SBU) Recalling the 22-minute KIC meeting between the two
Koreas on April 21 which he attended, Kim said that the
ROKG's top three priorities were: 1) guaranteed employee
safety; 2) guaranteed freedom of access, crossing and
communication; and 3) increase in number of North Korean
workers from outside of Kaesong area, as 40,000 out of 50,000
eligible workforce in Kaesong City are already employed by
the KIC and more than 100,000 North Korean workers are needed
once construction is complete. The most recent ROKG attempt
to meet with the DPRK was made on May 18, to which the North
did not respond. On May 15, North Korea sent a message
threatening to close the KIC, if the ROKG continued to
disrespect the spirit of the June 2000 Joint Statement, and
announcing that existing contracts were void.
4. (SBU) Mr. Yu, a Hyundai Asan employee, has been detained
by the North since March 30, or 53 days. According to Kim,
Yu's detainment is a clear violation of the KIC Agreement,
Chapter 10, Articles 2 and 4, which calls for the two Koreas'
cooperation in solving any KIC problems and guarantees the
accused basic rights.
--------------
North Wants Dorms, not KIC Closure
--------------
5. (SBU) North Korean Studies University professor Yang
Moon-soo interpreted current DPRK behavior as an expression
of frustration over slow progress in the promised expansion.
The present KIC problems, according to Yang, stemmed not from
KIC itself, which North Korean wanted to expand more rapidly,
but from the South's anti-reconciliatory behavior such as
cancellation of food and fertilizer assistance and refusal to
build dormitories to allow an increased number of North
Korean workers. North Koreans saw the construction of
dormitories as an important symbol for KIC expansion and ROKG
commitment. According to Yang, now may not be the right time
to show this commitment, but "no action means slowly killing
the KIC," which would lead to the end of inter-Korean
relations. "The ball is in South Korea's court," Yang said.
6. (SBU) Yim Eul-chul, Kyungnam University professor, former
reporter and a close observer of KIC since its inception,
suggested solving current KIC issues by addressing a bigger
inter-Korean framework; first by providing fertilizer and
food aid to win the North's confidence, and second, by
negotiating wages and land lease fees through dialogue. Yim
did not believe North Korea's April 21 request for wage and
land lease increase stemmed from the North's greed for
profit. In reality, North Korea suffered a great deal from
the Lee administration's decision to cut off aid last year
and a slight increase in wage would partially help the
difficult situation. Yim said the biggest problem between
the two Koreas is lack of communication, not KIC. Once the
"big picture" (aid) is solved, the rest (wages and Yu's case)
would be easily addressed, Yim said.
7. (SBU) Turning to the detainee case, Yim believed that
North Korean treatment of Hyundai Asan employee Yu, a
representative of a South Korean company with a long history
of a friendly working relationship with North Korea, would be
humane. Yim argued that the current ROKG handling of Mr. Yu
-- number one agenda item and precondition for future
meetings -- was counterproductive to Yu's fate.
-------------- ---
KIC Companies Vow to Remain Even After Closure
-------------- ---
8. (SBU) Companies blamed the ROKG, not the DPRK, for the
current state of KIC and believed the construction of
dormitories would send a positive message to the North. Vice
Chair of the Corporate Council of KIC and CEO of S.J. Tech
Co., Ltd. Yoo Chang-geun described the current situation as a
"grave South-South problem, not a North-South problem."
Expressing frustrations with the ROKG which continues to
solicit "endless patience" from the companies without
offering a way forward, Yoo demanded President Lee's
immediate attention to the KIC situation. Yoo said he could
not understand how his government could allow inter-Korean
relations to deteriorate to this extent because of one ROK
citizen, when in fact over 1,000 ROK citizens' livelihood
depended on KIC's operation. In case of KIC closure, Yoo and
other CEOs operating in the KIC, said that they were prepared
to "send workers home and remain (themselves) in the KIC."
9. (SBU) Rep. Kwon (GNP) cautioned against "a quick fix" for
the current situation and over-emphasis on dormitory
construction. Kwon said border difficulties also occurred
between former East and West Germany and called for a
careful, comprehensive approach to the current KIC challenge.
--------------
KIC May 2009 Stats
--------------
10. (SBU) As of May 2009, 106 factories (63 textile; 22
machinery/ metal; 11 electronics; 7 chemical; 2 food; 1
timber/ paper) are operational in the KIC and 28 are under
construction, scheduled to be completed by end of 2009.
40,134 North Korean workers (84 percent female in 20s and
30s) are employed by the KIC. In 2005 and 2006, the ROKG
subsidized 50 percent of the companies' costs at KIC, but the
sizable subsidy was replaced by optional "insurance," which
the companies had to purchase independently, in 2006.
STANTON
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL ECON KS KN
SUBJECT: GROWING FRUSTRATION BY KIC COMPANIES, BUT NO SIGNS
OF WAY FORWARD
1. (SBU) SUMMARY: On May 19, Representative Kwon Young-seh
(GNP) hosted a forum at the National Assembly to discuss the
current situation at the Kaesong Industrial Complex (KIC).
Speakers and discussants included MOU Director General for
KIC Project Bureau Kim Young-tak, former head of the Korea
Land Corporation Kim Eun-jong, Vice Chair of the Corporate
Council of KIC Yoo Chang-keun, and other experts from
academia. The two-hour session included a desperate plea
from the KIC CEOs who called for President Lee's involvement
in "saving KIC" and suggestions from experts for a need to
build dormitories, among other steps, to address the broader
inter-Korean framework in the KIC. MOU remained firm on the
ROK citizen's safety as top priority and left "no room for
negotiation." Other law makers, journalists, and KIC
managers also attended. END SUMMARY.
--------------
MOU: No Room For Negotiation
--------------
2. (SBU) As the ROKG point man for the KIC, MOU
Director-General Kim Young-tak emphasized the ROKG's
inability to overlook the detainee case. Kim said that the
ROKG view remained unchanged: there was "no room for
negotiation" in regard to the South Korean detainee; the rest
of the KIC agenda would have to be solved through dialogue,
with perseverance.
3. (SBU) Recalling the 22-minute KIC meeting between the two
Koreas on April 21 which he attended, Kim said that the
ROKG's top three priorities were: 1) guaranteed employee
safety; 2) guaranteed freedom of access, crossing and
communication; and 3) increase in number of North Korean
workers from outside of Kaesong area, as 40,000 out of 50,000
eligible workforce in Kaesong City are already employed by
the KIC and more than 100,000 North Korean workers are needed
once construction is complete. The most recent ROKG attempt
to meet with the DPRK was made on May 18, to which the North
did not respond. On May 15, North Korea sent a message
threatening to close the KIC, if the ROKG continued to
disrespect the spirit of the June 2000 Joint Statement, and
announcing that existing contracts were void.
4. (SBU) Mr. Yu, a Hyundai Asan employee, has been detained
by the North since March 30, or 53 days. According to Kim,
Yu's detainment is a clear violation of the KIC Agreement,
Chapter 10, Articles 2 and 4, which calls for the two Koreas'
cooperation in solving any KIC problems and guarantees the
accused basic rights.
--------------
North Wants Dorms, not KIC Closure
--------------
5. (SBU) North Korean Studies University professor Yang
Moon-soo interpreted current DPRK behavior as an expression
of frustration over slow progress in the promised expansion.
The present KIC problems, according to Yang, stemmed not from
KIC itself, which North Korean wanted to expand more rapidly,
but from the South's anti-reconciliatory behavior such as
cancellation of food and fertilizer assistance and refusal to
build dormitories to allow an increased number of North
Korean workers. North Koreans saw the construction of
dormitories as an important symbol for KIC expansion and ROKG
commitment. According to Yang, now may not be the right time
to show this commitment, but "no action means slowly killing
the KIC," which would lead to the end of inter-Korean
relations. "The ball is in South Korea's court," Yang said.
6. (SBU) Yim Eul-chul, Kyungnam University professor, former
reporter and a close observer of KIC since its inception,
suggested solving current KIC issues by addressing a bigger
inter-Korean framework; first by providing fertilizer and
food aid to win the North's confidence, and second, by
negotiating wages and land lease fees through dialogue. Yim
did not believe North Korea's April 21 request for wage and
land lease increase stemmed from the North's greed for
profit. In reality, North Korea suffered a great deal from
the Lee administration's decision to cut off aid last year
and a slight increase in wage would partially help the
difficult situation. Yim said the biggest problem between
the two Koreas is lack of communication, not KIC. Once the
"big picture" (aid) is solved, the rest (wages and Yu's case)
would be easily addressed, Yim said.
7. (SBU) Turning to the detainee case, Yim believed that
North Korean treatment of Hyundai Asan employee Yu, a
representative of a South Korean company with a long history
of a friendly working relationship with North Korea, would be
humane. Yim argued that the current ROKG handling of Mr. Yu
-- number one agenda item and precondition for future
meetings -- was counterproductive to Yu's fate.
-------------- ---
KIC Companies Vow to Remain Even After Closure
-------------- ---
8. (SBU) Companies blamed the ROKG, not the DPRK, for the
current state of KIC and believed the construction of
dormitories would send a positive message to the North. Vice
Chair of the Corporate Council of KIC and CEO of S.J. Tech
Co., Ltd. Yoo Chang-geun described the current situation as a
"grave South-South problem, not a North-South problem."
Expressing frustrations with the ROKG which continues to
solicit "endless patience" from the companies without
offering a way forward, Yoo demanded President Lee's
immediate attention to the KIC situation. Yoo said he could
not understand how his government could allow inter-Korean
relations to deteriorate to this extent because of one ROK
citizen, when in fact over 1,000 ROK citizens' livelihood
depended on KIC's operation. In case of KIC closure, Yoo and
other CEOs operating in the KIC, said that they were prepared
to "send workers home and remain (themselves) in the KIC."
9. (SBU) Rep. Kwon (GNP) cautioned against "a quick fix" for
the current situation and over-emphasis on dormitory
construction. Kwon said border difficulties also occurred
between former East and West Germany and called for a
careful, comprehensive approach to the current KIC challenge.
--------------
KIC May 2009 Stats
--------------
10. (SBU) As of May 2009, 106 factories (63 textile; 22
machinery/ metal; 11 electronics; 7 chemical; 2 food; 1
timber/ paper) are operational in the KIC and 28 are under
construction, scheduled to be completed by end of 2009.
40,134 North Korean workers (84 percent female in 20s and
30s) are employed by the KIC. In 2005 and 2006, the ROKG
subsidized 50 percent of the companies' costs at KIC, but the
sizable subsidy was replaced by optional "insurance," which
the companies had to purchase independently, in 2006.
STANTON