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South Korea’s Economic Engagement toward North Korea
Author: Lee Sangkeun, Moon Chung-in
Region: Asia
Theme: Economics
Published October 6, 2016
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On February 10, 2016, the South Korean government announced the closure of the Gaeseong Industrial Complex, a symbol of its engagement policy and inter-Korean rapprochement. The move was part of its proactive, unilateral sanctions against North Korea’s fourth nuclear test in January and rocket launch in February.1 Pyongyang reciprocated by expelling South Korean personnel working in the industrial complex and declaring it a military control zone.2 Although the May 24, 2010 measure following the sinking of the Cheonan naval vessel significantly restricted inter-Korea exchanges and cooperation, the Seoul government spared the Gaeseong complex. With its closure, however, inter-Korean economic relations came to a complete halt, and no immediate signs of revival of Seoul’s economic engagement with the North can be detected. This chapter aims at understanding the rise and decline of this engagement with North Korea by comparing the progressive decade of Kim Dae-jung (KDJ) and Roh Moo-hyun (RMH) with the conservative era of Lee Myung-bak (LMB) and Park Geun-hye (PGH). It also looks to the future of inter-Korean relations by examining three plausible scenarios of economic engagement. Section one presents a brief overview of the genesis of Seoul’s economic engagement strategy in the early 1990s, section two examines this engagement during the progressive decade (1998-2007), and section three analyzes that of the conservative era (2008-2015). They are followed by a discussion of three possible outlooks on the future of Seoul’s economic engagement with Pyongyang.

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