The fate of the inter-Korean industrial complex in Gaeseong hung in the balance Tuesday under escalating tensions over Pyongyang’s signature brinkmanship diplomacy.

Analysts had mixed projections over the future of the nearly decade-old complex, the last remaining symbol of inter-Korean economic cooperation and reconciliation.

Some argued the now-tentative suspension of the complex could long continue given the seriousness of the current political stalemate, especially after additional provocations by the North such as a long-range missile launch.

Optimists claim Pyongyang might seek a way out of the standoff as it has recently adopted a policy line of concurrently pursuing economic development and nuclear armament, and appointed Park Bong-ju, once touted as a symbol of economic reform, as prime minister.

The complex came to a complete stop Tuesday, a day after Kim Yang-gon, a secretary of the North’s ruling Workers’ Party in charge of South Korean affairs, said his country would put its operation on hold and consider whether to close it.

Although the projections over the complex varied, analysts converged on the conclusion that the complex should be kept as the last bastion of inter-Korean cooperation, stressing both Seoul and Pyongyang would have much to lose if it were shut down.

“The North has sought to secure more hard foreign currency through diversifying trade partners, attracting more foreign investments and developing special economic zones. All this is possible through external economic cooperation,” said Chang Yong-seok, senior researcher at the Institute for Peace and Unification Studies of Seoul National University.

“In this regard, the North has built a big economic barrier on its own (by pulling out workers from the complex).”

For Seoul, it could lose a crucial means to help defuse peninsular tension and thus manage political and economic risks that concern foreign investors, Chang pointed out.

Pyongyang might seek to normalize the operation of the complex after April 15, the birthday of its national founder Kim Il-sung, or after April 30, when South Korea and the U.S. finish their annual allied Foal Eagle field exercise, observers presumed.

“I think after April 15 or April 30, the military tension here could ease up given it has always shown some (angry) responses to the allied drills each year,” said Hun Moon-young, a senior fellow at the state-run Korea Institute for National Unification.

“It might not do any serious military mobilization drills for the time being as China has apparently reduced oil support to it in the wake of its Feb. 12 nuclear test.”

Huh noted that Kim Yang-gon’s tour to the complex on Monday indicated Pyongyang left some room for dialogue with Seoul.

“Rather than sending the head of the Ministry of the North’s People’s Armed Forces to the complex and completely shutting it down right away, the North sent Kim (leaning toward diplomacy),” he said.

“Seoul should take a calm approach. It should not be rattled by the North’s behavior, recognizing the North might seek to show off its influence (through provocative moves) by fomenting some ideological conflict within the South and impacting stock markets.”

Observers said what is worrisome is that the young, inexperienced North Korean leader Kim Jong-un, surrounded by hawkish military brass, appeared to have difficulty making “rational, balanced” external policy decisions and might opt to take a path of continuous confrontations.

“I guess the interests of the military elites and Kim sort of converged at this moment when tension runs very high,” said Ahn Chan-il, director of the World North Korea Research Center.

“The military brass wants to restore its status while Kim wants to use the rising tension to project an image as a strong leader and thus strengthen the legitimacy of his rule of the military.”

The communist state’s leader had been seen trying to reduce the influence of the conservative military brass on economic issues in apparent efforts to add more flexibility in his drive to shore up the moribund economy.

Ahn added the North might not want operations of the complex to stop for too long as it is a crucial source of hard foreign currency.

More than 53,000 North Koreans had worked at the complex for a monthly average pay of $144. Through the complex, the cash-strapped country has raked in more than $90 million each year.

Huh Moon-young of KINU said Seoul should seek a comprehensive “grand strategy” to resolve the inter-Korean stalemate from an international standpoint, underscoring it should focus on how to avoid what he calls a “perfect storm.”

“We are facing a perfect storm consisting of three storms: economic, security and North Korean,” he said.

The economic storm stems from external influences such as the EU economic crisis, financial challenges facing the U.S. and Japan and a slowing economy in China, and internal ones including the worsening youth unemployment and the crumbling middle class, he explained.

For the security storm, Huh listed the increasing Sino-U.S. rivalry in the region and the long-simmering territorial conflict between China and Japan among others.

“The intensity and speed of the perfect storm heading to the peninsula are rising. Should the Gaeseong complex be shut down, the storm will approach far faster. We should devise a way to turn it into a breeze,” he said.

Huh also said that the opposition politicians’ idea of sending a special envoy to Pyongyang to defuse tension was not timely yet, stressing there should be close coordination about with the U.S. and China sending the envoy.

“Without any support from the U.S. and China, just sending an envoy would not be helpful to resolve the current stalemate. That could only give an impression that Seoul was being pushed around by the North,” he said,

By Song Sang-ho (sshluck@heraldcorp.com)