South Korea's unification minister apologizes for Kaesong closure. But is it too late?

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South Korea's unification minister apologizes for Kaesong closure. But is it too late?

Published: 06 Aug. 2025, 15:51 Updated: 06 Aug. 2025, 17:17

SEO JI-EUN
[email protected]

Audio report: written by reporters, read by AI

A view of the Kaesong Industrial Complex and the western section of the inter-Korean demilitarized zone (DMZ) as seen from Paju, Gyeonggi, on Feb. 18. [YONHAP]

[EXPLAINER]

A South Korean official issued an apology on behalf of the government for the first time to companies harmed by the 2016 shuttering of the Kaesong Industrial Complex — a joint manufacturing zone in North Korea that once stood as a symbol of inter-Korean cooperation.

Unification Minister Chung Dong-young met with representatives of Kaesong Industrial Complex tenant companies last Thursday and issued a formal apology on behalf of the government, admitting that it was the government," not North Korea, that failed to fulfill its responsibilities in the abrupt shutdown.

Unification Minister Chung Dong-young, third from right, meets with representatives of the Corporate Association of Kaesong Industrial Complex at the Government Complex Seoul on July 31. [YONHAP]

The apology by Chung, who had helped launch the Kaesong Industrial Complex during his first term as unification minister in the early 2000s, signaled the new administration’s willingness to revive inter-Korean economic projects such as the Kaesong complex.

Some critics argue that Chung's recent apology downplays North Korea’s own responsibility in the collapse of inter-Korean cooperation, including its unilateral worker withdrawals, the demolition of the inter-Korean liaison office in 2020 and suspected repurposing of South Korean-owned facilities. Some have questioned whether an apology focused solely on South Korea’s actions sends the wrong message, especially without explicit guarantees from Pyongyang.

South and North Korean officials unveil the plaque at the opening ceremony of the Inter-Korean Liaison Office inside the Kaesong Industrial Complex in September 2018, 140 days after it was agreed upon in the Panmunjom Declaration. [YONHAP]

Why was Kaesong called the last vestige of inter-Korean cooperation?

Established during the era of the “Sunshine Policy,” a policy of peaceful engagement with Pyongyang pursued by liberal governments in Seoul from 1998 to 2008, the Kaesong Industrial Complex near the inter-Korean border was once the crown jewel of inter-Korean economic cooperation.

The project was conceived in the late 1990s as a joint venture between South Korea and North Korea to combine South Korean capital and technology with the North’s land and labor.

An agreement between the South's Hyundai Asan and the North's Asia-Pacific Peace Committee in 2000 paved the way, and ground was broken at Kaesong — just north of the demilitarized zone (DMZ) — in 2003.

Operations began in mid-2004 with a handful of pilot firms, and the complex soon grew into a bustling industrial park.

By early 2016, 124 South Korean companies were operating in Kaesong, employing approximately 53,000 North Korean workers who commuted from the nearby city. Factories in Kaesong produced textiles, clothing, electronic components, machinery and other labor-intensive goods for export.

Beyond its economic role, Kaesong became a powerful symbol of inter-Korean rapprochement: a place where South Korean managers and North Korean workers collaborated daily, even when political tensions rose.

Chung also has a personal connection to Kaesong’s legacy.

Unification Minister Chung Dong-young, second from right, speaks with a North Korean worker during a visit to a South Korean shoe manufacturer inside the Kaesong Industrial Complex on July 20, 2007. [JOINT PRESS CORPS]

During a previous stint as unification minister from 2004 to 2005, Chung led the launch of the Kaesong project. He attended the opening ceremonies of the first factories and championed the complex as a pillar of then-President Roh Moo-hyun’s engagement policy.

Now, with Chung finding himself again at the helm of the Unification Ministry 20 years later, this time trying to resuscitate the very project he helped birth.

The Inter-Korean Liaison Office in Kaesong, North Korea, explodes on June 16, 2020, in an image provided by the state media Korean Central News Agency. [YONHAP]

How was peace's "blood vessel" cut off?

The Kaesong Industrial Complex weathered political storms before, including a five-month suspension in 2013 at the height of an inter-Korean crisis, but it always managed to reopen. That is, until 2016.

Amid escalating tensions over North Korea’s weapons programs, South Korea’s then-President Park Geun-hye ordered all operations at Kaesong to halt on Feb. 10, 2016, shortly after North Korea conducted its fourth nuclear test and a long-range rocket launch. Seoul declared it would no longer allow the North to “use [South Korean] investment to fund its nuclear and missile development” and pulled out of the joint park as a punitive measure.

North Korea responded in kind the very next day.

Pyongyang expelled all remaining South Korean managers and personnel — some 280 people at the time — and froze South Korean assets and equipment in the zone.

The South cut off power and water supply to the complex, bringing production and the last major channel of inter-Korean interaction to an abrupt standstill.

Kaesong business representatives attempt to deliver rice and daily necessities to the North on April 16, 2013, but are denied entry. [KANG JUNG-HYUN]

In Chung’s words on Thursday, closing Kaesong was like cutting off “the blood vessel of peace” on the Korean Peninsula. The minister lamented that if the complex had remained open, “the situation on the Korean Peninsula would not be like this” today.

“The dream of the Kaesong Industrial Complex was once frustrated,” he added, “but I hope we can begin walking again, together with business leaders, to revive that dream and make it a reality.”

Business owners welcomed the gesture, noting its significance after years of seeking acknowledgment of their plight.

Many of them said they would gladly return to their factories in the North if given the chance. Some of these entrepreneurs have kept their companies alive in exile — for instance, by moving production to Vietnam — but still believe that no alternative can fully replace Kaesong in terms of profitability and symbolic meaning.

Yet some critics point out that Kaesong’s symbolic value was already being undermined — not only by Seoul’s decisions but by Pyongyang’s own actions over the years.

In 2013, North Korea unilaterally withdrew its workers from the complex during a standoff, using the project as a political bargaining chip. Then in 2020, Pyongyang blew up the inter-Korean liaison office, a symbol of dialogue that had been established inside the Kaesong complex just two years earlier, in a dramatic act of protest against Seoul.

Since then, North Korea has reportedly repurposed parts of the complex for its own use, without coordination or compensation, raising concerns over property rights violations and the regime’s sincerity.

Kaesong factory owners hold a press conference on Oct. 11, 2017, after an emergency meeting in Yeouido, western Seoul, following reports of unauthorized operation of their facilities by North Korea. [KANG JUNG-HYUN]

Who was held accountable?

Following the Kaesong shutdown in 2016, affected South Korean businesses pressed the government for compensation and accountability.

In practice, the move inflicted significant economic pain on both sides.

About 124 South Korean small and midsize enterprises lost access to factories, finished goods and equipment in the North. South Korean companies suffered approximately $200 million in combined losses, with many struggling with bankruptcy or relocating factories overseas.

On the northern side, roughly 53,000 North Korean workers were suddenly jobless, and the Kim Jong-un regime lost a steady source of hard currency — Seoul had been paying about $100 million in wages annually through Kaesong. The political fallout was severe as well.

North Korean workers are seen on the factory floor at the Kaesong Industrial Complex in this file photo from September 2013. [YONHAP]

The South Korean government did provide financial aid and insurance payouts to the firms over time, totaling hundreds of billions of won, to cover some of their lost investments and inventory.

But Seoul stopped short of admitting any wrongdoing in the decision itself. The government maintained that while it sympathized with the businesses’ losses, it bore no legal liability for the shutdown. In January 2022, this view was essentially validated by South Korea’s Constitutional Court.

Still, the debate was far from settled.

Kaesong business owners intensified their calls for an apology and a policy reversal. A coalition of firms — who by then had tallied losses around 250 billion won — urged the government in 2017 to “apologize for abusing state power to suspend the complex and make utmost efforts to reopen it,” as the original rationale for the closure had been discredited, at least in their own view.

Yet no official ever publicly said “sorry” for Kaesong’s closure.

Even liberal President Moon Jae-in, who campaigned on reengagement with the North and privately sympathized with the Kaesong companies, could not restart the complex mainly due to international sanctions and lack of progress on denuclearization talks. The most Moon’s government could do was express regret that Kaesong remained closed and include its revival as a hopeful pledge in inter-Korean agreements: for example, the Pyongyang summit of September 2018 concluded with both Koreas agreeing to reopen Kaesong and Mount Kumgang tourism “when conditions allow.”

Thus, Chung’s apology last week stands out as a milestone, breaking nearly a decade of official silence on the matter.

Chung Dong-young delivers an inaugural speech at his swearing-in ceremony as South Korea’s new unification minister at the Government Complex Seoul on July 25. [YONHAP]

New tone in Seoul, new hope for Kaesong’s revival?

Chung’s apology dovetails with a broader change in tone from Seoul regarding North Korea.

Reopening Kaesong, however, is far easier said than done.

Internationally, the web of sanctions on North Korea remains a significant barrier. After Kaesong’s closure in 2016, the United Nations Security Council imposed even tighter sanctions on Pyongyang, including measures in 2017 that ban “joint ventures” with North Korea and any form of large-scale financial or material assistance that could benefit the regime’s coffers.

As a result, restarting an industrial park that would pay tens of millions of dollars in wages to North Korean workers would likely violate UN sanctions — unless explicit waivers or exemptions are granted.

The United States has likewise maintained that significant economic projects with the North are off the table until there is real progress on dismantling North Korea’s nuclear arsenal. Washington’s concern is that premature sanctions relief, such as allowing Kaesong to pump cash into Pyongyang’s economy again, could end up financing the very missiles and warheads that threaten South Korea and regional stability.

Another uncertainty is North Korea’s own position on Kaesong at this point.

In the past, Pyongyang valued the complex as a source of hard currency and a signal of North-South cooperation. It even called Kaesong the “pillar of North-South relations” in propaganda during good times.

But North Korea also repeatedly leveraged and politicized Kaesong when relations soured.

Since the Covid-19 pandemic and the collapse of North Korea-U.S. talks in 2019, North Korea has been unresponsive to South Korean outreach, and it is unclear if Kim Jong-un’s regime currently has any interest in reopening Kaesong or if it would view Seoul’s new enthusiasm with suspicion. In a statement last week, the North Korean leader's powerful sister, Kim Yo-jong, dismissed South Korea’s peace overtures as “sentimental words” and accused Seoul of “spinning a daydream,” suggesting Pyongyang may view Seoul’s renewed engagement efforts with skepticism rather than interest.

Still, the mere fact that South Korea’s leadership is talking about Kaesong in hopeful terms again — and has publicly apologized for closing it — suggests that Seoul is keen to breathe life into inter-Korean economic ties, seeing them not only as commercial ventures but as investments in peace and stability.

BY SEO JI-EUN [[email protected]]