North Korean Economy Watch

Joong Ang Daily
Gary Samore
8/6/2007

China’s biggest concern seems to be that the February agreement signals an American surrender to North Korean nuclear weapons.

On a recent trip to Beijing, I was able to meet with senior Chinese officials and experts to discuss recent developments on the Korean Peninsula since the Feb. 13, 2007 six-party nuclear agreement.

What I learned surprised me.

As I expected, the Chinese are genuinely pleased the Bush administration has shifted its policy toward North Korea, dropping demands for complete and immediate disarmament and retreating from confrontation and the goal of regime change. From Beijing’s standpoint, the February agreement averted a crisis on the Korean Peninsula and established a framework for negotiating additional disarmament steps through the six-party talks. Beyond the nuclear issue, the Chinese support the establishment of a regional peace and stability mechanism for Northeast Asia built around the six-party talks.

Aside from these expected positive views, however, I learned China also has some reservations and concerns about recent events on the peninsula.

Before the February agreement, China was the central player in the six-party nuclear negotiations. Much to Beijing’s anger, Pyongyang went ahead with its nuclear tests in the face of Chinese protests, undercutting the perception that China could control North Korea’s behavior. Now that the United States and North Korea have developed a direct line of communication, and the United States and South Korea have patched up their relations, China is no longer at the center of the action. Although Beijing will continue to host the talks, China is feeling sidelined.

As a result, my Chinese hosts emphasized the importance of China and the United States working together to guard against efforts by North Korea to play one big power against the other. For example, the Chinese suggested Washington and Beijing should engage in informal contingency planning to respond to possible political instability on the peninsula, although Chinese experts said they do not believe that the house of Kim Jong-il is in immediate danger of collapse.

Adding to Chinese unease is the reappearance of Russia on the scene. China preferred that the Banco Delta Asia issue be resolved by the U.S. Treasury reversing itself and giving the Macao bank a clean bill of health, which would allow it to survive and continue to service North Korea’s financial needs, as a number of other Chinese banks already do. Instead, the Russian government stepped in, making available a Russian bank to transfer the $25 million from a U.S. Federal Bank to North Korea. In Beijing’s view, Moscow’s willingness to broker the financial deal looks suspiciously like a broader Russian attempt to reassert influence in Northeast Asia. And ― Chinese experts were quick to point out ― Pyongyang would welcome an opportunity to give Russia a bigger role, reducing North Korea’s dependence on China.

Aside from these political maneuvers and machinations, China’s biggest concern seems to be that the February agreement signals an American surrender to North Korean nuclear weapons.

Having complained for years that the Bush administration was demanding too much, the Chinese now say they fear Washington is secretly prepared to accept North Korea as a nuclear-weapons state. Pointing to the example of India, one senior Chinese official complained that the U.S. nonproliferation policy is weak and inconsistent: “Washington strongly opposes proliferation before a nuclear test, but once a test has been conducted, the U.S. accepts the country as a nuclear power.”

Another Chinese official bitterly complained that Beijing committed to work with the United States after the 1998 Indian nuclear tests, but the United States betrayed China, recognizing India as a nuclear power and even encouraging India to develop its nuclear strike capabilities against China itself. If the United States recognizes and accepts North Korea as a nuclear power, the Chinese fear it will inevitably provide a pretext for Japan ― and then South Korea ― to go nuclear, creating additional nuclear-armed rivals on China’s borders. Additional proliferation in Northeast Asia might even extend to Taiwan, which could dramatically complicate Beijing’s hopes to achieve national unification.

In response to these Chinese concerns, I explained that India and North Korea are not comparable cases. India is a democracy, a major country and a rising economic power, that shares many interests with the United States. North Korea is none of these things. Moreover, the United States does not want to see Japan and South Korea develop nuclear weapons. America’s strategic presence in Asia is based in part on its role as a security guarantor, including its nuclear umbrella for Japan and South Korea. If Tokyo and Seoul decide to develop nuclear weapons, they would have less need of U.S. protection, and Washington’s influence in Asia would diminish.

Moreover, while Washington may benefit from political rivalries and suspicions among the Asian powers, it does not want to see a nuclear arms race that could destabilize the region and damage U.S. economic and political interests. Finally, if nuclear weapons spread in Asia, they would severely damage the international nonproliferation regime, perhaps leading to the collapse of the nuclear Nonproliferation Treaty.

For all these reasons, Chinese fears and suspicions that the United States is about to formally accept North Korean nuclear weapons are not accurate. Nonetheless, my Chinese hosts are right in one respect: The Bush administration’s policies have helped create a nuclear-armed North Korea, which cannot be easily undone. As one Chinese expert said, “Bush has let the nuclear tiger out of its cage.”

As much as we hope the six-party talks will make further progress toward disarmament, most experts think North Korea will be very reluctant to give up its nuclear weapons until it feels completely secure and free from the threat of U.S. hostility. This is not likely to happen anytime soon. Pyongyang has already indicated it will demand a treaty to end the Korean War, full normalization of diplomatic relations with Washington, the lifting of U.S. economic sanctions and substantial economic assistance ― including nuclear energy assistance ― before it gives up its nuclear deterrent.

So whether we like it or not, we probably have no choice but to manage the threat from a nuclear-armed North Korea for the time being. It may be years before disarmament can be achieved. In the meantime, we must work to reduce the risk that North Korea will use or transfer nuclear weapons or that additional countries in the region will feel compelled to develop their own nuclear weapons for defense.

While recognizing this reality, the United States and other countries must continue to insist on the ultimate objective of complete North Korean nuclear disarmament. We must resist North Korea’s demands that it be treated like India, as a nuclear power that receives full political and economic benefits from the international community. Eliminating North Korea’s nuclear weapons will be difficult, but we must be patient and persistent.