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Bilateral relations

Easing tensions on the Korean Peninsula

North and South Korea recently agreed to reopen a jointly operated industrial park that has been closed for months. Experts view this as a positive sign after a spring that saw the neighbors threatening war.

"This agreement is not an end but only a beginning." This is how South Korea's chief negotiator Kim Ki-woong described the deal his country made with North Korea on reopening the shuttered Kaesong industrial park. Six previous meetings had foundered. But the seventh and "last" rounds of talks on Wednesday, August 14, proved to be the decisive one, bringing about a five-point deal where both sides agreed to resume normal operations in Kaesong after inspecting the shuttered South Korean factories housed in the complex. However, the agreement did not specify when the complex would resume operation.

A general view of North Korea's Kaesong industrial complex from Kaesong Industrial District Management Committee on August 14, 2013 in Kaesong, North Korea. (Photo by Lee Seung-Hwan-Korea Pool/Getty Images)

123 South Korean firms are located in the industrial complex in Kaesong

Eric Ballbach, Asia expert at the Institute for Korean Studies at the Freie Universität Berlin, is not surprised by the latest development. He says that ever since the crisis began in April nobody was interested in permanently shutting down the zone. "Kaesong has become too important for both sides. It is a major source of hard currency for the North, bringing an estimated 93 million US dollars a year," Ballbach told DW. But he also pointed out that the industrial park had a "highly political" meaning.

A new beginning?

Established just north of the border in 2004, Kaesong is seen as the last remaining symbol of inter-Korean cooperation. But Pyongyang, angered at a joint South Korea-US military drill, withdrew all of its 53,000 workers from the jointly operated zone, effectively shutting it down.

Now delegates from both sides pledged that the complex would not be closed again, a key South Korean demand. "A joint committee will be in charge of making potential closures of the site more difficult," said Ballbach. He is of the opinion that the most important aspect of the agreement is to avoid that Kaesong once again becomes a "political pawn."

South Korean President Park Geun-hye appears to be pleased with the agreement. In a speech marking the end of Japanese colonial rule over the Korean peninsula, Park said the deal would start "a new inter-Korean relationship marked by co-existence." She also called for the resumption of a family reunion program with North Korea which had been suspended in 2010.

South Korean President Park Geun-Hye delivers a speech duirng a ceremony marking the 68th anniversary of the liberation from the Japan's 1910-45 colonial rule, in Seoul on August 15, 2013. (Photo: AFP)

Park's 'trust-building' approach towards North Korea seems to be working

Park's 'trust-building policy'

The latest developments also suggest that Park's policy towards North Korea is working. The president has vowed a tough response to any North Korean provocations but has also supported a policy meant to build trust and encourage dialogue with Pyongyang.

According to Daniel Pinkston, Korea expert at the Seoul-based International Crisis Group, South Korea's first female president has been sending a clear signal to Pyongyang ever since she took office in February. Her message: "If you cooperate, then we will too. But if you refuse and behave aggressively, then the South will react likewise."

The agreement to reopen Kaesong puts Park in a better position to both expand and implement her policies towards North Korea, said Ballbach. "In order to do this, Park needed a starting point. So far, she has only been dealing with crisis management."

Luring foreign investment

A total of 123 South Korean firms are located in Kaesong. In the latest agreement, North Korea also accepted the South's proposal to "internationalize" the park with efforts to attract foreign investors.

But the idea is not new. According to Ballbach, a promotion of foreign investment has been planned since the complex initially opened. "Kaesong's development was organized in three steps, the last of which is the internationalization of the park. But we are still on step one which was only designed for South Korean firms."

If companies from China or the West were to go to Kaesong, it would be much more difficult to shut down the complex. This could, to some extent, guarantee an unimpeded production flow. "It's one thing to close an industrial park made up of 123 South Korean firms, but its another to stop a project where other international companies are involved," Ballbach explained.

Joint military drill

The true value of the recent agreement will soon be put to the test. On Monday, August 19, South Korea and the US will conduct their annual joint military exercises.

Marines of the U.S. Marine Corps, based in Japan's Okinawa, take part in a practice for a U.S.-South Korea joint landing operation drill in Pohang, about 370 km (230 miles) southeast of Seoul, April 25, 2013. (Photo: Reuters)

The US-South Korean military drill could to raise tensions with Pyongyang

50,000 South Korean and 30,000 US soldiers are set to practice a North Korean invasion scenario.

The North traditionally feels provoked by the drills which it describes as an "extreme threat." However, "since the Kaesong agreement was reached no word has been spoken about the subject," said Ballbach. It therefore remains unclear how Pyongyang will react to joint exercises this time around.

Do you think US-South Korean military exercises will jeopardize the reopening of Kaesong? Join the discussion!