The 'Sunshine Policy' Turned to Dust... Demanding Compensation from North Korea Is Not Easy

All Land Routes Between South and North Cut Off by Gyeongui and Donghae Line Blasts
Over 180 Billion Won in Loans Invested... Assets Not Owned by South
'Unfinished' Final Cost Unconfirmed... Compensation Claims Difficult

North Korea, which had advocated the 'two-nation theory,' has ultimately severed the land routes between the South and the North. By blowing up the Gyeongui Line and Donghae Line roads, virtually all passages except for the Joint Security Area (JSA) have been cut off. Although infrastructure worth 180 billion won, funded through the 'Sunshine Policy,' was reduced to dust, it is expected to be difficult to demand compensation from North Korea.

According to the Joint Chiefs of Staff on the 16th, North Korea blew up connecting roads around the Gyeongui Line and Donghae Line around noon the previous day. Since last year, North Korea has been laying landmines near the roads and began dismantling facilities such as rails this year. After an unidentified drone recently breached Pyongyang’s air defense system, North Korea has been issuing verbal attacks daily, and boldly detonated explosives about 10 meters from the Military Demarcation Line (MDL), declaring the disconnection.

The Joint Chiefs of Staff announced that North Korea blew up a section of the inter-Korean connecting roads on the Gyeongui Line and Donghae Line on the 15th. The photo shows the scene of the Gyeongui Line road explosion captured by our military CCTV.
[Photo by Joint Chiefs of Staff]

The Gyeongui Line and Donghae Line connect the west and east of the South and North, respectively. Following the inter-Korean summit in June 2000, a ministerial-level meeting was held where both sides agreed to restore railroads and roads connecting the South and North. From 2001 to 2008, the South Korean government provided materials, equipment, and other in-kind loans. The scale amounted to 132.9 million USD, which converts to approximately 180.9 billion won at the current exchange rate. In a statement issued after North Korea’s road demolition, the Ministry of Unification emphasized that "North Korea still has the obligation to repay the loan."

Previously, the government filed a lawsuit seeking damages against North Korea for blowing up the inter-Korean joint liaison office in June 2020 under the pretext of anti-North Korean leaflets. The claim was for compensation amounting to 44.7 billion won, combining damages to the liaison office and the Kaesong Industrial Complex comprehensive support center. The government plans to consider measures to hold North Korea accountable this time as well, but the circumstances differ from before. The liaison office and other facilities destroyed then were 'South Korean assets,' whereas the roads and facilities blown up yesterday by North Korea are not South Korean assets but rather represent a concept of 'money lent.'

To demand repayment, the timing of the loan occurrence and the final amount must first be confirmed. However, in the case of the Donghae Line railroad, the North Korean section was an 'unfinished' state without connection. Although a groundbreaking ceremony was held again during the Moon Jae-in administration, there was no progress. A government official explained, "North Korea has the obligation to repay, but since construction was not completed, the loan amount was not finalized," adding, "Further review is needed."

While North Korea’s failure to repay the loan could be interpreted as damages due to default, in this case as well, the timing and amount of the loan must be confirmed before repayment notices can be issued. According to the 'Agreement on the Provision of Materials and Equipment for Inter-Korean Railroad and Road Connection Construction' signed in September 2002, the repayment period is specified as 30 years, including a 10-year grace period after the loan provision. The interest rate is 1.0% per annum.

Even if the government completes legal reviews and files repeated lawsuits against North Korea in the future, normal court proceedings are expected to be difficult. Since the defendant, the 'Democratic People's Republic of Korea,' is absent, even if the government wins, there are no proper enforcement measures to collect monetary compensation. However, the government plans to respond clearly to hold North Korea accountable for infringing on South Korean property rights and other acts.