After North Korea’s sinking of a South Korean frigate, Cheonan, and shelling of Yeonpyeong Island in 2010, inter-Korean relations did not improve much in 2011.

There was limited official contact between the South and the North and between the US and the North to discuss the possible resumption of Six-Party Talks or food aid. Pyongyang also continued to decline the request from South Korea and the US to stop uranium enrichment before resuming the Six-Party Talks, a major stumbling block to the process. But the South Korean news agency Yonhap reported on 16 December that North Korea finally agreed to suspend enrichment activities. It was around that time that the US government indicated its decision to provide North Korea with nutritional assistance. These contacts and exchanges seemed to mark the end of acute tension between the two Koreas and between the US and North Korea.

Yet this small progress was overwhelmed a few days later by Kim Jong-il’s sudden death. The news shook the world and attracted great international attention, particularly regarding North Korea’s future under its new leader, Kim Jong-un. Unlike his father, Kim Jong-un — believed to be in his late twenties — received only two years of training before he inherited power.

The world may have to wait at least a year to ascertain the likely future stability of Kim Jong-un’s regime. There may be some short-term stability in a crucial period of power transition like this, but nobody knows whether Kim Jong-un will be able to build his own charisma and solidify his power base by successfully handling the many challenges which face North Korea. These issues include poor economic performance, international isolation, food shortages and changing perceptions of ordinary residents due to an ever-increasing inflow of information from the outside world. Both South Korea and the US delivered a carefully prepared message of condolence to North Korea in the hope of establishing more constructive relations following Kim Jong-il’s death. Predictably, China was the first country to express strong political support for the new leader.

The year 2011 was also an important period of change in domestic politics. South Korean voters sent a strong message of dissatisfaction to politicians from both the ruling and the opposition parties. Though South Korea’s economy performed relatively well compared to other countries in the West, many middle- and lower-class Koreans began to feel the negative impact of widening economic polarisation, convinced that the successful economic performance of big businesses had nothing to do with their own lives. Voters became frustrated by the government’s inability to handle problems such as youth unemployment due to jobless growth, an increasingly poor welfare system for low-income groups and the weakening of small- and medium-size enterprises — not to mention the opposition’s inability to offer viable alternatives.

A political backlash against the Lee government’s pursuit of neo-liberal economic policies could clearly be felt in the recent mayoral election in Seoul, held on 26 October. For the first time in history, a civic activist, Park Won-soon, defeated the ruling-party candidate and was elected as mayor.

Another political surprise for most Koreans in 2011 was the sudden appearance of a medical doctor-turned-software businessman, Ahn Chul-soo, as a very popular political figure. His influence was so substantial that the announcement of his support for Park Won-soon boosted Park’s popularity greatly and helped bring him the election victory. Nobody knows yet whether Ahn, currently a dean at Seoul National University, will run for presidency in 2012. But the phenomenon indicates how much Korean voters are dissatisfied with the political establishment.

Despite the political backlash, South Korea does not seem to have an alternative strategy to the utilisation of economic globalisation to underwrite domestic growth. For example, after a few years of delay and heated political debate in both countries, the US Congress finally ratified the Korea–US FTA in October, with the South Korean National Assembly following suit in November. Conclusion of this FTA has significant implications — not only economically, but also politically. This may be why the Chinese government, too, has been eager to conclude an FTA with South Korea in recent years.

In conclusion, the year 2011 marked an important watershed in inter-Korean relations, domestic Korean politics and Korea’s external economic strategy, but many risks and surprises still appear on the horizon.

Yoon Young-kwan is Director at the Center for International Studies, Seoul National University, and served as Minister of Foreign Affairs and Trade for the Republic of Korea from 2003–04.

This article is part of a special feature: 2011 in review and the year ahead.

1. Russia-North Korea: Denuclearisation of the Korean peninsula
2. Military spending and the arms race on the Korean Peninsula
3. Blow-out in inter-Korean relations

At the moment of his accession to power, Kim Jong-il inherited the devastating impact of the collapse of the Soviet Union, the subsequent trade shock to North Korea’s economic output, the onset of the worst famine in modern history, and a humanitarian crisis that required a direct appeal to the outside world for help.

By the late 1990’s, he was forced to accept the realities of dependence on international aid, the rise of farmers markets as a grassroots response to the famine, and the introduction of capitalist notions such as ‘profits’ in the Constitution itself. Kim even briefly entertained the notion of establishing relationships with the International Monetary Fund, World Bank, and Asian Development Bank, attracted by the prospects for international finance, but balking at requirements for transparency, conditionality, and rules-based relations. Throughout his leadership tenure he only half-heartedly and grudgingly accepted the growing role for markets in the North’s economy and maintained a deep ambivalence to the prospect of economic empowerment of the North Korean people. His desire to maintain highly-centralised control over all aspects of North Korean society was sharply at odds with the decentralisation of information and decision-making needed for a market economy to replace a failed socialist economic management system. As a result, economic policy in the Kim Jong-il era was more shaped by events and forces for change than used as a tool to guide a managed process for national development.

Experiments in economic reforms were not accompanied by policies or the institution-building that would have been needed for recreating the economic success stories of China and Vietnam. Rather, the guiding light of economic policy for Kim Jong-il was mobilising resources for his purse from both domestic and foreign sources.  He was quite creative in devising ways to achieve this, such as demands for ‘loyalty’ payments, structuring of foreign exchange earning activities to send the cash to the top, negotiating with foreigners to get goodies for concessions, and pursuing illegal and internationally-sanctioned revenue-raising ventures.  At the end of the day, the North Korean economy under Kim Jong-il remains highly vulnerable to shortages of food, energy, and foreign exchange, with pressures for transformation of the economic system coming from both internal and external dynamics of change at work in North Korea.

Looking ahead, the key question is not whether there will be changes in economic policy but whether changes will be in the direction of building a market economy or governed by a new dynamic of competition for resources among contending parties for power.  The more the new regime leans towards the Worker’s Party, the more likely it will follow Chinese supported policies of developing a market economy under the guidance of the Party and gradually shift to funding defence needs from a centralised budget rather than the military having its own economic organs such as trading companies and banks that service them. The more the regime tilts towards the military, the more likely that competition for resources will trump incentives for pursuing systemic change.

While there may be an inclination to perpetuate the patronage practices of the elites by the Kim family, it is not likely that loyalties will transfer simply to the new leadership through such patronage alone. New incentives for supporting the regime will need to be pursued.  Key metrics of such changes will be in: 1) the ownership and transferability rights of assets; 2) the restructuring of the financial system including banking supervision, monetary-management policies, and development of the tax system and public expenditure policies to accommodate a market economy; 3) the support for decentralisation of economic decision-making and empowerment of traders and entrepreneurs; 4) the willingness to follow rules-based international practices in commerce and finance; and 5) the legal reforms to protect rights of parties in a market economy. This is a tall order, but one that might lead to a new dawn for North Korea.

Bradley O. Babson is a consultant on Asian affairs with a focus on Korea and Northeast Asia economic cooperation. He is retired from a career at the World Bank, with a concentration in East Asia. In the early 1990s he worked on the opening up of Vietnam and was the first World Bank Resident Representative in Hanoi.

This article first appeared here in 38 North.

1. Kim Jong Il’s death: continuity plus opportunity to engage
2. Kim Jong-il dead: apocalypse now or a new dawn?
3. Kim Jong-nam and the question of North Korea’s leadership stability

The Ulan-Ude summit on 24 August 2011 highlighted Russia and North Korea’s commitment to overcoming the Korean Peninsula nuclear problem — and they must be credited with considerable success.

Kim Jong-il confirmed that North Korea is ready to return to the Six-Party Talks without any preconditions, and both leaders agreed to advance with the construction of a gas pipeline linking Russia and South Korea via North Korea.

This year, Russia — like China in the recent past — confirmed its opposition to the DPRK’s complete isolation. This includes excessively broad interpretations of UN Security Council sanctions against the country. Russia considers that, whatever the circumstances, sanctions should not hurt the civilian sector of the economy. And this view, combined with Russia’s own national interests aimed at integration into the East Asian regional cooperation process, led Moscow to expand cooperation with North Korea in a number of ways.

But some reactions to the warming of relations between Russia and the DPRK were far from positive. The agreement to launch joint Russia-North Korea search and rescue naval exercises in 2012 appears to be the only component of the massive package of bilateral agreements to draw observers’ attention. Washington, Tokyo, and Seoul each seem to have forgotten that their key objective — to bring North Korea back to the negotiating table — was accomplished through Russian diplomacy, and that now is an opportune moment to contribute to this recovery.

Instead, the US Department of State expressed concern over Russia’s contacts with North Korea in military affairs, stressing that they should not obscure the message sent by the international community: that Pyongyang’s military programs are a problem and that it should return to the Six-Party Talks.

Policy analysts went even further and interpreted Moscow’s openness to joint semi-military exercises with North Korea as a step toward a new Cold War in Northeast Asia, or an attempt to neutralise US, ROK and Japanese influence on the Korean Peninsula. These comments are full of out-dated preconditions that are aimed at gauging exactly how serious North Korea is about returning to the negotiating process. But during the inter-Korean Foreign Ministry-level consultations held in Beijing on 21 September 2011, the ROK’s representatives failed to budge from an inflexible approach to resuming the talks, and no progress was made there either.

It seems that Western analysts are deliberately ignoring the fact that the planned Russia-North Korea naval exercises are a small-scale effort of a purely humanitarian nature with no armaments involved. Compare this to the exercises continually carried out by US and ROK armed forces, often in direct proximity to North Korea’s borders. In this context, it is difficult to understand why the former is a threat to stability across the Korean Peninsula and the latter — the markedly militant games of much greater proportions played by the US and ROK which culminated in inter-Korean clashes last year — is a contribution to stability.

It is also unfortunate that certain circles in Japan and South Korea are ready to denounce the gas pipeline construction plan that was discussed in Ulan-Ude. ROK President Lee Myung-bak’s positive approach to the gas pipeline changed drastically to a more negative position immediately after a meeting in Washington on 6 October 2011 — a striking and disappointing outcome. It is both unfair and paradoxical to criticise the project, which is clearly aimed at strengthening multilateral economic cooperation, as somehow undermining this same objective.

A question arises about the West’s real priorities in the course of analysing its response to the Ulan-Ude summit. Engagement and dialogue are traditionally considered the optimal strategy if non-proliferation is the key objective — whereas attempts to isolate the opponent, add pressure and struggle for dominance suggest regime change is more likely the end goal.

The West’s reaction to the Ulan-Ude summit shows that its stated commitment to non-proliferation and its actual intentions are worlds apart, and that a hidden agenda built around regime change in the DPRK still exists. If this is the case, any initiatives aimed at helping Pyongyang — for example, those which invite it into negotiations or multilateral economic projects — are going to meet with resentment in the West. Only time will tell how long the unrealistic hopes for regime collapse in North Korea will continue to cast a shadow over the inter-Korean settlement.

Alexander Vorontsov is Head of the Korean and Mongolian Studies Department at the Institute of Oriental Studies, Russian Academy of Sciences.

1. Russia-North Korea: Denuclearisation of the Korean peninsula
2. Russia and the DPRK: cooperation in Ulan-Ude
3. Russia-North Korea trade

On 24 August, North Korea’s leader, Kim Jong-il, met with President Medvedev during a highly-anticipated visit to Russia.

And it would seem that the meeting in Ulan-Ude may have generated positive changes for security and economic development on the Korean Peninsula — and even the rest of Northeast Asia.

Moscow aims to use its economic relations with Asia to enhance economic development and comprehensive security in the Russian Far East. Russia is well placed to contribute toward multilateral security and economic cooperation in Northeast Asia: it is the only country in the region possessing diversified energy resources sufficient to sustain both domestic growth and have considerable export potential.

But most Russian proposals to sell oil, gas and electricity to its neighbours cannot be implemented until issues concerning security on the Korean Peninsula are resolved. Moscow believes this would be greatly facilitated by providing the DPRK with adequate security guarantees and facilitating its socio-economic development in exchange for its renunciation of a military-orientated nuclear program.

According to the Russian President’s official website, over the course of the Ulan-Ude meeting the two leaders discussed bilateral ties in security, politics and economics; regional contacts in trade and the humanitarian sphere; and a full spectrum of security issues on the Korean Peninsula. Medvedev’s Press Secretary, Natalia Timakova, also revealed that Kim expressed readiness to resume the Six-Party Talks without preconditions and, through further negotiations, to decree a moratorium on tests of nuclear armaments and production of nuclear materials. Taking this pledge into account, Medvedev was enthusiastic in announcing that both leaders agreed to form a special commission to develop greater Russia-DPRK cooperation. This would encompass a trilateral project between Russia, North and South Korea, aimed at building a gas pipeline from Russia to South Korea, through DPRK territory.

The meeting was also politically symbolic. Kim’s last official visit took place in 2002. In the following nine years Kim made numerous visits to China, but not to Russia, revealing frustration with Moscow’s attempts to improve relations with key Western countries. But this year, Moscow and Pyongyang showed readiness to strengthen ties — especially the DPRK, which wants to demonstrate to Beijing that China is not its only partner in Northeast Asia.

Also of symbolic value was the agreement to diversify various aspects of bilateral military cooperation, as the two countries decided to commence joint search and rescue exercises in the East Sea by the end of this year. In a sense this is nothing new: the Russian Pacific Fleet regularly conducts annual standard, small-scale joint search and rescue exercises with naval vessels from Japan, the US and other countries. But Pyongyang has consistently protested against the US and South Korea conducting naval exercises close to DPRK borders. North Korea will no longer be excluded from regional joint military exercises, and strengthening the bilateral Moscow-Pyongyang relationship will also help to improve the regional balance of power. Still, Moscow declined Pyongyang’s proposal to arrange a full-size bilateral naval exercise, as well as the sale of Russian armaments to the DPRK.

Significantly, Medvedev demonstrated that Moscow truly supported Pyongyang’s moves to restart the Six-Party Talks. For Russia, North Korea’s eventual denuclearisation is a sensitive issue: in unfavourable wind conditions, for example, radioactive clouds produced by DPRK nuclear tests could quite easily reach Vladivostok. And if anything were to go wrong in the military relationship between the DPRK and ROK, large North Korean refugee flows could cross the Russian border.

Russia also proposed several critically important measures for the provision of energy resources and economic assistance to the DPRK. First, the two leaders discussed terms for cancelling the largest portion of the DPRK’s US$11 billion debt to Russia. Second, from August through to September 2011, Russia supplied North Korea with 50,000 tons of wheat as part of a humanitarian assistance program. Third, Russia declared its readiness to start construction of a gas pipeline to the ROK and to secure a portion of this gas supply for the DPRK — if Pyongyang stops its dangerous activities in the nuclear sphere.

Improved cooperation should ultimately have a positive impact on regional security, meaning that such developments as discussed at the Ulan-Ude meeting could significantly improve the prospects for future negotiations with the DPRK.

Sergei Sevastianov is Director at the International Studies Center, Vladivostok State University of Economics and Service. This article is adapted from one published here by the Jeju Peace Institute under the title ‘Ulan-Ude Summit and Northeast Asia’s Security Perspective’.

1. Russia-North Korea: Denuclearisation of the Korean peninsula
2. Russia and the North Korean knot
3. The West’s reaction to Russia−North Korea summit

President Lee Myung-bak’s October trip to the US represents an ostensible high point in the US-ROK alliance.

But there are cracks in the relationship, primarily on the American side.

Despite Lee’s speech before Congress, Americans know little about Korea compared to allies like Canada, Britain, or Israel. Americans usually see Korea’s geopolitics through the prism of North Korea and the ‘axis of evil’. The Tea Party movement especially takes a rigidly ideological and neoconservative view of South Korea as the ‘frontline of freedom,’ yet Sarah Palin notoriously needed to be taught why there are two Koreas. But ideological commitment is not in-depth public knowledge or cultural interest.

This ideologically-driven connection with the US should be of concern to South Koreans. The US is flirting with national insolvency, and this will dramatically impact all its alliances — especially with the very exposed ROK. The US is now borrowing 40 cents of every dollar it spends; the deficit is US$1.5 trillion (160 per cent of South Korea’s entire GDP); the debt is almost US$10 trillion; the IMF predicts America’s debt-to-GDP ratio will exceed 100 per cent by the end of the decade; and integrated US national security spending tops US$1.2 trillion, 25 per cent of the budget and 7 per cent of GDP. These are mind-boggling figures that all but mandate some manner of US retrenchment from its current global footprint.

Unless the US citizenry is willing to accept a noticeably lower standard of living, including major cuts in social welfare programs, then the burden of fixing America’s finances will include defence cuts. ‘Empire’ is very expensive, and soon American voters will be forced to choose between it and the welfare state — between guns and butter. Ron Paul is already voicing this issue in the Republican primary.

The recent Libyan conflict should be instructive of war in the age of austerity and budget constraints. US public opinion was hesitant for yet another conflict, so Obama provided only air support and deferred leadership to NATO. And consider what Robert Gates said before he left office: ‘any future defence secretary who recommends sending a big US army into Asia or Africa again should have his head examined’.

So America is unlikely to fight large land wars for awhile. This is especially pertinent to the Koreans, as North Korea is a far more capable opponent than Gaddafi or the Taliban. If the US were to suffer from another financial crisis akin to 2008, it is quite possible that Washington could only provide air power in the event of a war on the Korean Peninsula. Or, what if China, which funds so much of US borrowing now, suddenly pulls the plug as US involvement in a war on its border deepens?

Finally, a hard truth for South Koreans is that they need the US a lot more than the US needs them — which means that the resolutely un-discussed relative decline of US power is the real story behind Lee’s visit to Washington.

Unlike the US, South Korea exists within a particularly difficult geopolitical context. It is surrounded by large neighbours who have occasionally bullied it, and bordered by an unpredictable rogue tyranny. Given that weak, encircled countries as diverse as Poland, Paraguay, and Zaire have seen themselves plundered and divided in the past, the US alliance is a good way for South Korea to get some leverage in its tight space. But this will fade, not just as American power recedes from Asia under massive budgetary pressure, but because Seoul is no longer central to Washington’s security. The Cold War is over. Today, a North Korean defeat of South Korea, while a local tragedy, would not dramatically impact American security. This ‘asymmetric dependence’ is the reason behind Lee’s visit, Korea’s willingness to go to Iraq, and Koreans’ astonishing interest in English and the US. While the American public does in fact obsess over Israeli security, small as it is (and far more US congressmen have visited Israel than South Korea), the ROK alliance has weaker, more ideological and less tribal roots in US public  opinion.

None of this means the alliance will break soon, but the strong elite consensus for its existence should not be mistaken for a deep American popular commitment (p 6 here). America’s political and financial dysfunction will soon force a painful reprioritisation of US foreign policy. Commitments like Germany, Iraq, Afghanistan, South Korea and others will be scrutinised, and no amount of Korean-American friendship will undo a US$10 trillion debt.

Robert E. Kelly is Assistant Professor of International Relations at the Department of Political Science and Diplomacy, Pusan National University. More of his work can be found at his website, Asian Security Blog.

1. South Korea: Disappointed expectations but hopes head north
2. A Korea-Japan alliance?
3. Korea inter pares? – South Korea on the global stage

In March this year, US Senate Foreign Relations Chairman John Kerry chaired a hearing on US policy toward North Korea.

After testimony from government and NGO witnesses, Kerry observed, ‘Based on [widely differing testimonials], I get the sense that we are misinterpreting what our interests are, vis-à-vis [North Korea] and how they view us. And if we are, how useful are six party talks?’ Kerry remains alone among US policy leaders in questioning official descriptions of US interests on Korea.

Those interests remain the subject of profound confusion among government officials, policy specialists and the media. In public debate in the US, the goals of policy are generally described as denuclearisation, containment or regime change. Governments profess to be working toward denuclearisation while having internally decided it to be too tough and substitute for it containment, which relies on far less diplomacy and overall effort. The US interest in protecting or advancing the human rights of the North Korean public is loudly proclaimed, particularly by elected officials, but policy inputs are not designed to make any difference in this area. Meanwhile the policy of engagement begun in earnest by the US in 1994 — and given a critical boost by South Korea in 1998 — is criticized as having been ‘unconditional’ and having no better impact on North Koreans or on regional security than the current containment approach, neither of which is supported by the record.

Mainstream narratives often lack clarity or accuracy. The most glaring omission from official US statements or mainstream analysis is the recognition that a narrow focus on just the nuclear and WMD programs is neither appropriate nor practical. This is one of the clear lessons from the largely successful, coordinated and multilateral engagement of 1994 to 2000. Here, there was recognition that economic development must be at the centre of a successful denuclearisation effort. Agreements made during that period specifically leveraged investments to ensure that large-scale development would be preceded by a measured dismantlement of the DPRK nuclear and missile programs.

The cost of containment, coercion and regime-change efforts have also been absent from political discussion. The cost to US interests in these areas have been extremely high, while the costs to South Korean interests have been arguably far higher. The Six Party Talks framework, while promoted as a better route to denuclearisation, has had the effect of both empowering China as chairman and institutionalising the Chinese preference for slow or static diplomacy. The leverage gained by the Korean Peninsula Energy Development Organisation (KEDO) in political, economic and strategic investments has been squandered. If the policy reversals of 2001 in the US and 2008 in the ROK were meant to have any impact on the DPRK nuclear threat, they have been a dismal failure by any measure. The fruits of North Korea’s plutonium program have been used to set off two explosions, and a newly enlarged uranium program now undermines global denuclearisation efforts. Long range missiles have been tested and are presumably being perfected. The human-rights conditions of large sections of the North Korean public have deteriorated.

Critical decisions taken in the first weeks of the Obama administration continue to haunt both policy and process regarding Korea. The Bush administration’s abrupt reversal of strategic and political understandings with North and South Korea in March 2001 has led to peninsular and regional instability and the emergence of North Korea as a nascent nuclear state. In February 2008 South Korea’s newly elected President Lee Myung Bak similarly reversed a decade of broad-based initiatives toward North Korea and aligned ROK policy with the most hard line elements within the Bush administration. Nevertheless, Obama administration statements since 2009 consistently reveal failures to review the diplomatic record. Due to this policy incoherence, three challenges stand in the way of progress.

First, the ability of senior security and diplomatic officials to recalibrate policy and capture some of the US interests at stake is severely constrained by 30 months of bold, implausible statements from the President, cabinet members and various senior officials. The drumbeat of such statements has continued while US interests were described in progressively counterproductive and unrealistic language such as ‘buy the same horse twice’, ‘go down the same road’, and ‘strategic patience’. This language has mainly served to avoid the questions at hand and shift blame for the impasse onto the DPRK and China. Certainly there is blame to be shared, particularly on the part of the North Koreans. But it is clear from the diplomatic history that only US efforts can make the critical difference in shaping the North’s options.

Second, US diplomatic partners in the region have little reason to believe that Washington can sustain any engagement on these issues given the past decade of inconsistent diplomacy. The same can be said for views of the Seoul government. Extreme swings not only in policy but in fundamental strategic understandings, international agreements and political commitments by the United States in 2001 and South Korea in 2008 have created doubt as to the allies’ ability to assess interests or pursue strategic goals.

Third, the widely differing timelines and political needs between the authoritarian and democratic actors needs to be acknowledged. Time is not on the side of either the United States or South Korea. Both the North’s WMD capabilities and the conditions of the DPRK population are cause for action. There are good reasons for the United States to be particularly impatient and proactive, neither of which ensures a weaker negotiating hand. The DPRK and China do not have the kind of political pressures felt by the US and ROK presidents, though they have others. A post-Kim Jong-Il leadership in the North is unlikely to be as confident, flexible, cohesive or invested in improved US-DPRK relations as is the current group. The North’s increasing reliance on China has eroded the leverage of South Korea in ways that will make North-South reconciliation more difficult.

If the current exploratory talks are to go beyond incremental and insufficient gestures, the discussions first between the United States and South Korea, then with China and North Korea, must become more strategic and focus on the overlapping interests of the countries participating in the Six Party Talks.

The more urgent political needs of the United States and South Korea can be met as long as sufficient imagination, planning and leadership are brought to bear on North Korea and China. The kind of robust engagement that will produce results will have a loud chorus of critics in both Seoul and Washington. Yet the case for the current counterproductive posture has always been extremely fragile, and built largely on myths, misunderstandings, and overwrought fears. A government that can perceive its interests and produce a practical plan for action can certainly make a strong argument for that plan. This is true in both the Blue House and the White House, where even small gains from productive diplomacy would stand up well against critics in the political realm.

Stephen Costello is an independent analyst and consultant. He was formerly director of the Korea Program at the Atlantic Council, director of the Kim Dae Jung Peace Foundation USA and Vice President of Gowran International.

This article draws in part on an earlier essay by the author, available here at 38 North.

1. North Korea – the US still caught between speaking with the enemy and listening to allies
2. A more effective US policy on North Korea
3. Russia-North Korea: Denuclearisation of the Korean peninsula

After three and a half years of a hard line with nothing to show for it except worsened inter-Korea relations, Lee Myung-bak is at long last executing a U-turn. Not openly and without fanfare of course; but the signs are clear.

In a speech in New York on 20 September, Lee sounded a note both old and new. As ever he stressed denuclearisation, but in a way which suggests this may no longer be a first step and precondition for progress.

Lee stated ‘The most important thing … is to remove threats to peace on the Korean Peninsula through denuclearisation and to build mutual trust between the South and the North … A unified Korea will pose no threat to any countries [but will] contribute greatly to world peace. I think my role during the remainder of my term is to lay the groundwork for that day to come’.

In another sign on 30 August Lee Myung-bak replaced his long-serving hard-line unification minister Hyun In-taek.

Throughout his term Lee has had the bad habit of choosing cronies for plum jobs, and his new unification minister, Yu Woo-ik, is no exception. A geography professor, originally famous as the originator of Lee’s bizarre campaign pledge to build a nationwide canal network, Yu served as Lee’s chief of staff, and more recently as ROK ambassador in China. In that capacity he had contacts with North Korea, which he reportedly kept up even after leaving his post in May. One wonders in what capacity he did so, as this is illegal under the National Security Law. The Lee administration has come down hard on other private citizens who have put out feelers to Pyongyang.

No sooner nominated, Yu uttered the F word which is emerging as code for the policy volte-face now under way: promising to ‘ponder whether there is the need for flexibility in areas necessary for the practical development of inter-Korean relations’. Another new appointee, Kim Tae-woo, also used the F word after taking the helm in August at the Korean Institute for National Unification (KINU), the main government think-tank on the North. On 30 August Kim told the semi-official newsagency Yonhap that ‘it is important for the government to show more flexibility without undermining its principles’.

Such flexibility was soon apparent in deed as well as word, though in a small way so far. Hong Joon-pyo, the chairman of the conservative ruling Grand National Party (GNP), visited the Kaesong Industrial Complex (KIC), just north of the Demilitarised Zone (DMZ), on 30 September. With about 123 Southern (mostly small) firms employing some 47,000 Northern workers, this is the only inter-Korean joint venture still operating.

Hong — a maverick backbencher, whose election in July was a rebuff to Lee Myung-bak — is among those pushing for a change of line on the North. It was he who on August 28 bluntly told the President, over breakfast, that Hyun In-taek had to go.

Hong’s trip across the border contrasts with the situation just a month ago. On August 26 the Ministry of Unification (MOU) refused a request by a National Assembly special committee on inter-Korean affairs to visit the KIC; even though Southern SMEs operating there had requested the visit, to plead their case for financial leniency given the problems they face. 40 such firms wrote to MOU on 31 August requesting deferral of debt repayments because chilly inter-Korean relations have adversely impacted their businesses. They might get short shrift now, but conversely may hope to thrive in the emerging thaw.

Even before Hong’s trip was announced, there were indications of a new approach in Seoul towards the KIC. That it has survived at all is a small miracle. In the past the North has from time to time harassed it with border and other restrictions. As for the South, some wanted to close it after last year’s two Northern attacks; fearing Pyongyang might use the hundreds of South Koreans working there as hostages (this has not in fact happened). Lee Myung-bak has kept it open but restricted its expansion; the original plan was for it to grow much larger.

On 20 September MOU said the South government will revive plans, on hold since last year, to spend US$21 million to build a fire station and emergency medical centre in the KIC. To have delayed this of all things was crass and self-defeating. As the JoongAng Ilbo reported, currently there is only a makeshift fire-fighting room in a dormitory for Southern managers. Yet two-thirds of the ROK firms in the zone work in sectors like chemicals or textiles which are vulnerable to fire. The new fire station, and a medical centre with ten beds and as many doctors and nurses — generous staffing indeed — are both due for completion and opening in 2012.

In addition, on 25 September Yonhap reported that the ROK is considering repairing recent flood damage affecting roads to the KIC from the adjacent eponymous Kaesong city along which the 47,000 Northern workers commute.

With regard to multilateral cooperation too, South Korea is showing its change of tack toward the North.

Rhetoric regarding the trilateral pipeline from Russia remains positive. Widespread power cuts across the South on 15 September caused a surge of alarm and anger, prompting the minister responsible to resign a fortnight later. Such concerns help explain the enthusiasm in Seoul for the idea of a gas pipeline from Russia, even though the fact that it would cross North Korea creates other vulnerabilities.

In New York on 23 September President Lee was asked about the pipeline project. He called it ‘win-win for everyone involved … I do not consider this a far-fetched dream’; adding that ‘good progress’ is being made in talks between Russia and North Korea. It remains to be seen at what point such talks become three-way.

Various North–South meetings — including two meetings between the two Koreas’ nuclear envoys in July (on the sidelines of the ASEAN Regional Forum in Bali) and in September (at Beijing’s Chang An Club) — also point to the possibility that the long-stalled nuclear Six Party Talks — they last met in 2008 — may yet rise from the dead in the coming months.

Overall, Lee Myung-bak’s volte-face prompts two thoughts. If the Northern pipeline is such a good idea, then why on taking office in 2008 did he decide not to proceed with several equally win-win planned North-South projects — joint mining, shipbuilding, fisheries and more — which his predecessor Roh Moo-hyun had signed up to just months before in October 2007?

Second, there is no guarantee that the North will reciprocate, or soon. Mistrust of Lee runs deep in Pyongyang. Rather than prop up a leader seen as hostile, who even on his home turf is becoming a lame duck, Kim Jong-il may elect to wait for South Korea’s next president — Lee is not allowed a second term — who will be elected in December 2012. For Lee this may be a case of too little, too late.

Aidan Foster-Carter is honorary senior research fellow in sociology and modern Korea at Leeds University, and a freelance consultant, writer and broadcaster on Korean affairs.

A longer version of this article first appeared at, and is used with the kind permission of, NewNations.com.

1. Obama’s North Korea policy and the June 15 South-North Joint Declaration
2. North Korea: Showing off nukes, shelling the south
3. North Korea’s minerals sector: China’s gain, South Korea’s loss

A declassified 1978 CIA report related to nuclear proliferation during the Park Chung-hee era shows that, far from making South Korea more secure, Park’s toying with the nuclear option made him an unpredictable and even dangerous client who needed restraint in the eyes of US policy makers.

The ROK’s nuclear ambitions, especially in the post-1975 period, resulted in the US threatening to rupture the security alliance if the ROK did not stop its nuclear intransigence.

Given the current public debate in Seoul about reintroducing US nuclear weapons or trying again to go it alone, there are lessons to be learned from Park Chung-hee’s failed proliferation strategy in the 1972–1978 period. The CIA’s report is not merely of historical interest. It provides important historical lessons on debates related to how to respond to the North Korean nuclear breakout, and whether South Korea should respond in kind.

First, it shows that even as an authoritarian military dictatorship, it was impossible for South Korea to conduct a clandestine nuclear weapons program without the US quickly realising. Under conditions of democracy and high levels of openness of trade, migration and information, a clandestine program is even less possible today.

Second, as the CIA report shows, Park’s strategy failed in two ways. Not only did South Korea gain little actual nuclear weapons technology; Park’s threats also undermined trust and confidence with American officials who quickly realised that his program was fundamentally inconsistent with American global and regional interests.

Similarly today, South Korea proliferating nuclear weapons would lead to alliance stress and possible rupture with the US, international sanctions, diplomatic setbacks, trade losses, possible follow-on effects on Japan’s non-nuclear commitments, extraordinarily dangerous nuclear threat exchanges with North Korea, and possible targeting of South Korean cities by China and Russia, none of which are presumably what nuclear advocates hope to realise by going nuclear, or threatening to do so. Rather, this rhetoric appears to the international community to be irresponsible posturing and demeaning to South Korea’s dignity as a proud non-nuclear weapons state that will host the Global Nuclear Summit in March 2012. It certainly undermines South Korea’s efforts to renew and amend the US–ROK nuclear cooperation agreement in 2014.

In the mid-seventies, as the CIA pointed out, the US not only had military leverage over the South due to its troop presence and arms sales, but was also the main financier of South Korea’s reactor program. In the same way today, commercial realities are intertwined with strategic concerns because South Korean proliferation would lead to loss of uranium supplies to its nuclear reactors from countries such as Australia and Canada, and from enrichment suppliers such as the US and others in the Nuclear Suppliers Group.

Third, the outcome of the military crisis of August 1976, in the midst of an active American debate about withdrawal of troops and nuclear weapons from South Korea, suggests that the massive mobilisation of conventional force is what mattered when push came to shove with the North, not the relatively incredible threat of nuclear attack.

The same lesson applies now that the North has obtained nuclear arms. What matters at the DMZ is the ability of South Korea and the allies, in particular the US, to respond to North Korean military aggression. Whether the retaliation for a North Korean attack is nuclear or conventional from the allies, the North Koreans know that they will lose. Today, the South’s superior conventional forces backed by American forces almost certainly suffice to deter North Korean attack, whether nuclear or conventional.

A related lesson is one on the state of the US–ROK alliance. An important factor in Park backing off his proliferation program was the creation of the ROK–US Combined Forces Command in 1978, of which the commander had both wartime and peacetime operational control over South Korean forces. Such an arrangement ensured that the US military would become automatically involved in a war in Korea at the outset. The tripwire mechanism was a reassuring fact for Park. Institutional integration and relationships matter in the alliance, and nuclear weapons tend to create stress rather than alliance convergence. This is as true today as it was when the CIA wrote its report.

Fourth, the CIA report concludes that unilateral withdrawal could lead to the resumption of South Korea’s nuclear weapons program. In fact, the withdrawal at the time was reversed, and the eventual unilateral withdrawal in 1991–92 that left US conventional forces in place and augmented them with increasing lethal non-nuclear technologies, did not lead to war, nor to South Korean proliferation. Indeed, it arguably prepared the way for engagement of the North in a way that slowed their proliferation by a decade, and led to its utter isolation in its current nuclear-armed posture.

South Korean proliferation today would make it far more difficult to negotiate the denuclearisation of North Korea — already a task that will likely take many years to achieve. An inter-Korean nuclear arms race arising from South Korean nuclear armament could be permanent, if it did not end in a nuclear war first. It would be an unstable relationship tending always toward mutual probable destruction. Nothing could justify the North’s program more than a South Korean breakout, and it would almost certainly lead to a new Cold War in the region not only with the North, but with China, thereby increasing South Korean and Japanese insecurity.

The continuing perception of nuclear threat by the North when nuclear weapons have been removed from the Peninsula and the region for nearly two decades indicates the depth of North Korean distrust and fear of the US and the degree to which American statements of intent are taken seriously in the North. This fact suggests that the mere threat of nuclear retaliation by the US, even with its weapons recessed a great distance from the Peninsula, suffices for purposes of communicating American intention to the North Koreans.

Finally, the CIA’s report shows that the threat of nuclear proliferation and nuclear war in Korea has deep roots, and cannot be overcome unilaterally on either side. Great powers have restrained both Koreas at different times, the US blocking the South during the seventies, the former Soviet Union inducing the North to join the Nuclear Non-Proliferation Treaty in the eighties, and China, the US and Russia all slowing the North’s breakout from 1991 until today. To us, it is remarkable that during periods of inter-Korean and US–DPRK improved relations, dialogue and engagement have led to progress in the attempts to stop the North from gaining more nuclear weapons capacities.

The opposite is also true — the North accelerated its proliferation activity during the height of the Cold War when Reagan confronted the former Soviet Union in this region, and again, when President George W. Bush downgraded and degraded relations with Pyongyang. The lesson for politicians and strategists today is obvious.

Peter Hayes is Professor of International Relations, Global Studies School, Royal Melbourne Institute of Technology and Director, Nautilus Institute in San Francisco and of Nautilus at RMIT.

Chung-in Moon is Professor at the Department of Political Science, Yonsei University.

Longer versions of this article first appeared in Global Asia here and at the Nautilus Institute here.

1. More on Japan, America and the bomb
2. Military spending and the arms race on the Korean Peninsula
3. Rethinking the bomb

August found Kim Jong-il on the road again. Travelling only in his trademark armoured train, due to a fear of flying, restricts his choice of destinations considerably.

His previous three trips had all been to China, so it was time for a change. On August 20 Kim’s train crossed the border at Khasan into Russia.

Such a trip had been anticipated earlier. Given Pyongyang’s abiding goal of being beholden to no single benefactor, one would expect it to seek to balance and mitigate its new dependence on Beijing. Russia is an obvious candidate to play off against China, as Kim Il-sung skilfully did during the Sino-Soviet dispute from the 1960s onwards. There was a rumour that Kim Jong-il would meet Russian president Dmitry Medvedev when the latter visited Vladivostok at the end of June.

A June visit to Vladivostok did not materialize. Whatever the reason, for Vladivostok in late June read Ulan Ude in late August.

While Kim’s visit was as ever described as unofficial, the usual bizarre pretence that it was not happening until it was all over and he was safely home, was dropped. KCNA reported his entering Russia promptly on August 20.

On August 21 Kim Jong-il visited the largest dam in the Far East region, the Bureya hydropower plant. This caused a frisson in Seoul. Bureya produces more electricity than can be used locally, and Russia would like to sell the surplus to Korea — North and South. For Kim to visit this site is thus significant.

On August 24-25 KCNA released a thick file of reports, including an account of an outing on Lake Baikal on August 23. This stressed how Kim was following in the path of his father Kim Il-sung half a century earlier.

But where was Kim the day before his Baikal cruise? There seems to be no report of what he got up to on August 22. By some accounts he may have visited Skovorodino: the starting point of a 1,000 km oil pipeline to China and Russia’s Pacific coast. Whether he did or not, energy pipelines were certainly on Russia’s agenda.

As anticipated, Kim Jong-il’s summit with Medvedev was held in the rather exotic locale of Ulan Ude, capital of the Buriat Republic. The Buriats are a Mongol people. On his journey home, Kim would later pass through inner Mongolia in China. For completeness he should also at some point visit Mongolia proper. But not this time, for Lee Myung-bak was one step ahead on his own simultaneous if rather brisker inner Asian odyssey — Lee travels by plane, like normal people — which saw him in Mongolia’s capital, Ulaanbaatar during August 20-22, followed by visits to Uzbekistan and Kazakhstan. Lee returned home on August 26, the day before Kim, having wrapped up energy-related deals in all three countries worth a total of some US$12 billion.

For all the excited persiflage in which North Korea wrapped Kim’s talks with Medvedev, it is unclear how much they accomplished. There was no formal concluding communiqué, let alone any substantive new treaty or detailed economic agreements. However, two agenda items stand out.

First, Kim reiterated the current DPRK stance of alleged willingness to return to the nuclear Six Party Talks (6PT), stalled since 2008, without preconditions. That may sound good, but it cut no ice in Seoul, Washington or Tokyo, all of whom do have a precondition: that in the wake of last year’s two Northern attacks on South Korea, not to mention getting nowhere much at a snail’s pace during the six long years (2003-08) when the 6PT did meet, this time Pyongyang really has to offer something new, different and substantial to show that it is sincere and means business. (Typically, while Russian reports mentioned a supposed DPRK offer of a moratorium on nuclear and missile tests, KCNA said nothing about this.) Yet the US does need to discuss and curb the DPRK’s uranium enrichment program. And however unfairly, to say you have no preconditions makes you sound the reasonable party. Hence South Korea and its allies will continue to mull what kind of engagement with North Korea is feasible; not least for fear of losing out as Kim cozies up to China and now Russia.

The second key agenda item involved energy and infrastructure cooperation, which for Seoul presents a new twist. KCNA was perfunctory in its report:

‘The talks discussed a series of agenda items on boosting the economic and cooperative relations in various fields including the issue of energy including gas and the issue of linking railways and reached a common understanding of them. It was decided at the talks to organize and operate working groups to put the above-said issues into practice and the two countries agreed to continue cooperating with each other in this direction’.

Yet to be fair, KCNA also reported Medvedev’s amplification of this in his banquet speech:

‘Cooperation among Russia, the DPRK and the Republic of Korea in carrying out the grand plans in the fields of infrastructure and power has a great prospect. I am convinced that to realize this cooperation would be beneficial to all our three countries and have a positive impact on providing a favorable environment for dialogue and confidence-building between the DPRK and the ROK’.

‘It is our common task to put an end to the confrontation between the north and the south that has lasted for more than half a century, I think’.

For KCNA thus to use South Korea’s official name — Republic of Korea, or ROK — is almost unheard of. It usually says ‘south Korea’ (note the lower case s), or as often as not ‘puppet clique’ and similar insults. Nothing in DPRK media happens by chance, so at the very least this suggests that Kim Jong-il is entertaining the idea — or dangling bait for the South to bite.

What is at stake here is twofold. Firstly, Russia and South Korea would like to link their rail systems — especially for freight. That involves crossing North Korea, as well as upgrading its decrepit and outmoded railway system, which will not come cheap. Tracks across the Demilitarized Zone (DMZ), the inter-Korean border, were rejoined in 2003 but are almost never used.

Secondly, in 2008 Lee Myung-bak and Medvedev — meeting in Moscow almost three years before the latter finally caught up with Kim Jong-il — announced with much fanfare a US$90 billion deal for Russia’s Gazprom to send gas to the ROK’s KoGas for the next thirty years. This would mean a pipeline across North Korea: an idea first floated over 20 years ago by the Hyundai group’s prescient founder, Chung Ju-yung. Yet the DPRK was not party to the Moscow announcement, which thus appeared oddly undiplomatic. It has taken another three years to bring Kim Jong-il on board — if indeed he is, as opposed to feigning interest.

For now, what is clear is Kim’s great tactical skill. He has waited to play the Russian card for maximum effect. Suddenly he has two friends again, not just one. China, through which he travelled home can hardly complain. Russia is keen on the rail and gas projects. These are also an offer which resource-poor South Korea can ill afford to refuse. Lee Myung-bak may hesitate, but Kim will not give him the pleasure anyway for two reasons: deep mistrust, and his being a lame duck. Lee’s five year term of office is drawing to a close: by early 2013 someone else will be in the Blue House. Whoever it be, they are unlikely to ‘nix’ gas from Siberia, despite the obvious risks that Pyongyang will play games, turn off the taps and so on. It is too early to be sure, but northeast Asian politics and economics alike might be entering a new era.

Aidan Foster-Carter is honorary senior research fellow in sociology and modern Korea at Leeds University, and a freelance consultant, writer and broadcaster on Korean affairs.

A longer version of this article first appeared in, and is used with the kind permission of, NewNations.com.

1. Russia-North Korea: Denuclearisation of the Korean peninsula
2. US and China playing hands over North Korea
3. Third time unlucky: Carter snubbed again on Elders’ North Korea trip

Kim Jong-il’s recent visit to Russia and his brief meeting with President Dmitry Medvedev in Ulan-Ude continue to stir interest in political circles.

This was the North Korean leader’s first trip to Russia since 2002. The fact that it was prepared in strict secrecy and little is known about its results makes it even more intriguing. The Russian president said that Kim Jong-il touched upon all the current matters: bilateral, multilateral and regional security issues, including the North Korean nuclear problem and the denuclearisation of the Korean peninsula.

North Korea is a particular and complex country which is often hard to understand. It is also Russia’s neighbour. For Russia, which is trying to become more active politically and economically in that region, the complication lies on the Korean peninsula — an issue that directly concerns its strategic interests and national security. To efficiently protect its interests and get détente back on track on the peninsula, Moscow has to maintain political dialogue and dispose of confidential channels of communication with both the South and North.

This is what Moscow is trying to achieve.

Moscow does not believe in the myth of Kim Jong-il’s ‘unpredictability’ and ‘irrationalism’. Instead, it considers the North Korean government’s recent actions to fit into a certain logic which may look quite tough and unusual in terms of a Western liberal mentality. Since the collapse of the Soviet Union, Pyongyang’s nuclear program, however it may affect the global non-proliferation regime, is the only guarantee North Korea has that it will not meet the same fate as states like Yugoslavia or Libya, which were chosen by the West as targets. To stop North Korea’s nuclear activity, the international community should try to decrease Pyongyang’s sense of acute insecurity by diplomatic means including restarting the Six-Party Talks.

It appears that the summit in Ulan-Ude is becoming an important stage of the dialogue between Moscow and Pyongyang to settle the nuclear problem in Korea, which was interrupted in late 2008. Since the beginning of the year Russia, concerned with the possible consequences arising from this situation, has taken active diplomatic efforts to find a way out of the deadlock. It was mainly thanks to Moscow that, in March, North Korea agreed to go back to the negotiating table of the Six-Party Talks without setting any preliminary conditions. Now, following the results of the summit in August, the North Korean leader announced its intention to introduce a moratorium ‘on production of nuclear materials and their tests’. But it is not clear if this is an unconditional promise, or if North Korea will make concessions only if other partners make concessions to them. Whichever it may be, Moscow’s gentle and insistent approach — which allows Pyongyang to be flexible — proves to be more efficient than the US and South Korean pressure aimed at isolation.

The interest in North Korea, which resumed during the recent summit, was triggered by the plans of the Trans-Korean gas pipeline from the Russian border to supply considerable amounts of gas (over 10 billion cubic metres annually) to South Korea. This idea is not new, but talks were stalled after the outbreak of confrontation between the two Koreas in 2010.

But this year Pyongyang and Seoul spoke almost simultaneously about their participation in the promising projects. South Korean Foreign Minister Kim Sung Hwan, who visited Moscow in early August, declared the official consent of his government. Now it seems that DmitryMedvedev and Kim Jong-il also approved the ‘deal of the century’. Of course, so far this is only a political decision and its practical implementation will require a colossal amount of work bilaterally and trilaterally.

One thing is clear: without normal cooperation between Pyongyang and Seoul there will be no progress. And only time will tell whether they are ready for cooperation. But the parties understand that a successful implementation of the projects will bring significant profits to all the participants and contribute to the stabilisation of the Korean peninsula, in which everyone is interested. This is quite encouraging. For Moscow this is also a unique chance to strengthen its presence on the peninsula and to contribute to the reconciliation of the two Koreas.

The Russian-North Korean summit, by all appearances, was quite useful. The summit showed that Russian policy on the Korean peninsula is intensively developing and has some ideas in store for the future. These two independent directions aimed at both Korean capitals are what make it sustainable and promising.

Alexander Vorontsov is Head of the Korean and Mongolian Studies Department at the Institute of Oriental Studies, Russian Academy of Sciences.

Oleg Revenko is a senior researcher at the Institute of World Economy and International Affairs, Russian Academy of Sciences.

This article first appeared here at the Strategic Culture Foundation, Moscow.

1. Russia and the North Korean knot
2. Russia-North Korea trade
3. Russia and the DPRK: cooperation in Ulan-Ude