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Op-ed

Striking a Deal with North Korea

by Marcus Noland, Peterson Institute for International Economics

Op-ed in the Financial Times
October 22, 2002

© Financial Times


The revelation that North Korea is pursuing a nuclear weapons program in contravention of the country's international obligations has understandably alarmed the world. Yet, in the context of other recent developments, the admission may signal the country's first big strategic reorientation in half a century and, ironically, contribute to a less dangerous situation on the Korean peninsula.

Since its founding, North Korea has adhered to a doctrine of imposing its communist dogma on its southern neighbor, forcibly if need be. To that end it maintains the world's most militarized society, with the bulk of its one million-strong army deployed in an offensive posture along the demilitarized zone separating it from South Korea. More than a decade of economic decline in the north and the south's growing prosperity and alliance with the United States have rendered that dream of unification on Pyongyang's terms an anachronism.

Now the North Koreans have two basic options: to play for time, hoping that the strategic environment changes favorably; or throw in the towel, recognizing that they are on the wrong side of history, and redefine the strategic goals of the regime. In the second case, one goal could be self-enrichment. The North Korean elite's one card is its control over the levers of power. From this derives its ability to keep the lion's share of economic gains generated by the reforms announced over the past four months.

From this perspective, a certain investment in weapons of mass destruction and delivery systems capable of striking targets beyond the Korean peninsula is probably warranted to maintain double-sided deterrence. The mass deployment of conventional forces, however, is an unnecessary burden and a drag on the economy. Indeed, North Korea signalled this month that it was contemplating cutting their armed forces by as many as 500,000 soldiers.

Such demobilization can work only if the troops have somewhere to go.

North Korea has huge infrastructure needs that can be met using labor-intensive techniques. Its sectors of comparative advantage—apart from missiles—tend to be labor-intensive, too. With economic reform, demobilization could yield a huge peace dividend.

How would these developments affect the diplomatic agenda? The 1994 Agreed Framework, under which a multinational consortium led by the United States would construct two light-water nuclear reactors in return for a halt to North Korea's nuclear weapons program, is dead. Not surprisingly, the North Koreans evinced little interest in the reactor project, inasmuch as it did not meet their true needs, which comprise immediate help with energy and infrastructure, including refurbishment of their electrical grid.

There is no credible military response to this situation, but there is room for negotiation. The world wants to limit North Korea's weapons program, which requires the removal from North Korea of the spent nuclear fuel rods stored at Yongbyon. It also wants North Korea's conventional forces to withdraw from their positions in the demilitarized zone. Compliance with these demands is readily verifiable. The North Koreans, meanwhile, want assistance to meet their immediate needs and aid to defray the costs of a partial demobilization of their conventional forces and the redeployment of remaining forces.

Not all countries place the same priorities on the different aspects of this bargain. If the North Koreans are clever they may be able to drive wedges between the United States and its allies, for example by offering the South Koreans a deal on the deployed forces, or the Japanese a deal on medium- range missiles, which figure more prominently in their respective security needs than do the long-range missile and weapons-of-mass-destruction (WMD) concerns of the United States.

Nevertheless, the world could live with a bargain along these lines as long as North Korea does not export WMD or missiles. Today North Korea is an alienated state with no real stake in the status quo, not a revolutionary state seeking to overturn it. There is no question that deterrence works on the Korean peninsula. Unlike Iraq, North Korea has not committed significant aggression in 50 years, nor been linked to terrorism for 20.

Neither is it suicidal. Adoption by Pyongyang of a package of limited WMD, demobilization and redeployment of conventional forces and economic reform could amount to a fundamental strategic reorientation and a less, not more, threatening stance.


RELATED LINKS

Book: Witness to Transformation: Refugee Insights into North Korea January 2011

Peterson Perspective: North Korea's Immunity to Outside Pressure: Part I December 12, 2012

Policy Brief 10-1: The Winter of Their Discontent: Pyongyang Attacks the Market January 2010

Working Paper 10-2: Economic Crime and Punishment in North Korea March 2010

Paper: FTAs and the Future of US-Korean Trade Relations November 2009

Paper: Implementing the KORUS FTA: Key Challenges and Policy Proposals February 2008

Policy Brief 08-6: North Korea on the Precipice of Famine May 2008

Policy Brief 07-7: The Korea-US Free Trade Agreement: A Summary Assessment August 2007

Policy Brief 06-4: Negotiating the Korea–United States Free Trade Agreement June 2006

Working Paper 07-7: North Korea’s External Economic Relations August 2007

Book: Avoiding the Apocalypse: The Future of the Two Koreas June 2000

Book: Free Trade Between Korea and the United States? April 2001

Working Paper 08-4: Migration Experiences of North Korean Refugees: Survey Evidence from China March 2008