North Korean Economy Watch

Choson Ilbo
Yun Duk-min
3/19/2007

It was set off by a nuclear test. The Bush administration, which insisted it could not reward a wrong and wouldn’t conduct bilateral negotiations with North Korea, made a U-turn and promised the North political and economic compensation in bilateral talks. North Korea’s response has been equally astonishing. North Korean Vice Foreign Minister Kim Kye-kwan recently had a long meeting with former U.S. secretary of state Henry Kissinger. What he said sounds unbelievable. Expressing a deep interest in improving U.S.-China relations, he asked if the U.S. has “strategic interests” in North Korea and added, “The Korean Peninsula has been invaded by foreign powers like China and Japan. Strategic relations with the U.S. will be of help to North Korea and regional stability.”

The U.S.-China rapprochement early in the 1970s involved two factors. The U.S. wanted to use China’s strategic value to check the Soviet Union’s expansion, so it broke close relations with Taiwan in exchange for diplomatic relations with China. By the same token, it seems that North Korea is now willing to cooperate with the strategic U.S. interest of restraining China.

North Korea will inwardly have been concerned about its deepening economic reliance on China and increasing Chinese influence on its domestic affairs. In view of the rumors that China could be attempting a change in the North Korean leadership in the wake of the North’s nuclear test, the North may be trying to check the attempt by drawing in the U.S. As the U.S. abandoned Taiwan for the sake of diplomatic ties with China, North Korea may attempt to isolate and restrain South Korea through strategic relations with the U.S.

Kim Kye-gwan’s remarks suggest that the North intends to check South Korea and China by drawing in the U.S. Why does North Korea, after saying it only developed nuclear weapons because of the U.S., now embrace Washington to restrain the South and China? Having introduced a capitalist system in the 1970s, China is emerging as a serious threat to the North Korean regime. What’s more, Beijing in the wake of the collapse of the Berlin Wall forsook Pyongyang and established diplomatic ties with Seoul. South Korea’s rapid economic growth and democratization posed a threat of unification by absorption. In order to avoid either absorption by the South or becoming a Chinese satellite, Pyongyang needed two approaches; nuclear armament and establishment of strategic relations with Washington.

A close review of the 17-year process of negotiations on the North’s nuclear weapons development program clearly reveals North Korea’s intent. The only counterpart in negotiations was the U.S. But unlike the Clinton administration, which negotiated with North Korea directly, the Bush administration, with its top priority on the creation of a new order in the Middle East, had practically left the issue to China. Two aircraft carrier fleets are deployed in seas near Iran, but none came anywhere near the Korean Peninsula when North Korea test-fired missiles and tested a nuclear device. Thanks to its nuclear test, North Korea has now managed to bypass China and secure direct negotiations with the U.S.

Secondly, the North pledges to pose no threat to the U.S. if the latter tacitly approves its limited nuclear armament. It can relinquish long-range missiles capable of attacking America and will never transfer nuclear weapons or materials to third parties or terrorists, the North says. Thirdly, Pyongyang says it can recognize the U.S. forces on Korea. Already in 1991, the senior North Korean leader Kim Yong-sun, deceased in 2003, told high-ranking U.S. officials that North Korea could be a U.S. ally and recognize the USFK. Pyongyang has now only added its willingness to cooperate with Washington’s China strategy.

North Korea’s attempts failed so far because the North wanted both — strategic relations with the U.S. and nuclear armament. Without the premise of resolving the North Korean nuclear crisis, the U.S. could hardly accommodate that. But North Korea’s willingness to cooperate in restraining China must be a very interesting development for the U.S. Rumors are afoot that the U.S. may give tacit consent to the North’s nuclear armament. If the nuclear problem is shelved, it is possible for the U.S. to accommodate North Korea’s demands.

We are at a crucial juncture with denuclearization of the Korean Peninsula. While the North endeavors to build a survival framework through nuclear armament and the help of foreign powers, we are bogged down in domestic bickering as to who will benefit more from a possible inter-Korean summit and a peace agreement. We must recognize that our principle of not tolerating any nuclear weapons on the peninsula could prevent a U.S.-North Korea compromise that would be unfavorable to us. North Korea, too, should realize quickly that the survival of its regime and the happiness of its people depend on its relations not with the U.S. but with South Korea, which accounts for two-thirds of the peninsula’s population and 99 percent of its economic strength.