Tuesday, October 24, 2006

Cartoon: Unilaterally


Wednesday, October 18, 2006

Who Can Stop North Korea Now?

WITH the possible exception of South Africa, no country that has tested an atomic bomb has given its nuclear weapons up. So no matter what the world now does to punish North Korea for its underground test on October 8th, Kim Jong Il's hermit kingdom is likely to hang grimly on to its bomb. If you are the paranoid dictator of a friendless state that is still technically at war with both South Korea and the United States, a nuclear arsenal is your ultimate insurance policy.
To say this is not to say that North Korea should go unpunished. On the contrary, it must be punished even if the punishment is unlikely to change its ways. That is because other would-be nuclear proliferators, with Iran to the fore, are now watching to see whether it is really as easy as Mr Kim has made it look to go nuclear in defiance not only of the dire warnings of the United States and the United Nations but also of powerful neighbours such as Russia and China.

In New York the UN Security Council denounced the North Korean test. George Bush refuses to take any option off the table, implying a readiness to react with military force. Yet America has few military options. Even without nuclear weapons, Mr Kim in effect holds the South Korean capital, Seoul, hostage: his conventional rockets and artillery could rapidly flatten much of the city, killing tens of thousands. And although the Americans could bomb the North's reactors, they do not seem to know where the regime hides its fissile materials and any bombs it has made from them.

Hopes of applying tough new pressure on Mr Kim therefore rest mainly on China. The Chinese could, if they wished, starve North Korea's people and switch off its lights. They are also very angry. Having denounced Mr Kim's “brazen” disregard of world opinion, China went on to speak for the first time of the need for (“appropriate”) punitive action (see article). But Mr Kim, for all his megalomania and paranoia, is a shrewd tactician. He has evidently made a bet with himself that for all their huffing and puffing the Chinese will not in the end want to blow his regime down. And he may be right.

A strategy of sanctions has two weaknesses. One is that Mr Kim, who has already presided nonchalantly over mass starvation inside his country, cares little about the suffering of his own people; he knows that China knows it could cut off his fuel and food and still not force him to give up his bomb. The other is that really harsh sanctions might bring about the sudden collapse of his regime. And however angry China may be about Mr Kim's bomb, it has so far sadly seemed much more anxious to ensure that his regime does not collapse.

Why so? The main threat a North Korean bomb poses to China is indirect: it might persuade Japan to arm itself with nuclear weapons too, though Japan rules this out for now. By contrast, both China and South Korea would face immediate consequences if Mr Kim's regime imploded. Fine if an orderly coup installed a more pliant government, or if (the blithe hope underpinning the South's “sunshine policy”) the North could be guided gradually towards political openness and economic sanity. But a sudden collapse could be highly unpredictable and perhaps violent, spilling millions of desperate refugees into both China and South Korea and lumbering both with the vast, unwanted expense of rescue or reunification.

In 2002 Mr Bush lumped Iraq, North Korea and Iran together in an “axis of evil” and said he would stop them acquiring nuclear weapons. He implied that regime change in Iraq might be followed by regime change in North Korea and Iran. Now one says it has the bomb and the other is ignoring Security Council orders to stop enriching uranium. The anti-proliferation policy Mr Bush put at the forefront of his foreign policy has been a colossal failure. Is there any way to turn it round?

Not if the big powers follow Mr Kim's script. He plainly expects them to wax briefly indignant but then shrug their shoulders and learn to live with his bomb, just as they live with those of Israel, India and Pakistan. Mr Kim says it was America's threats that made him seek a deterrent. Some will cite this as proof that a policy of sanctions is self-defeating.

But this is a misunderstanding. Since Iraq, Mr Bush has tried to build coalitions against proliferation. China took the lead in the six-country talks on North Korea; Britain, France and Germany took the lead on Iran. The trouble is that when persuasion has failed the other big powers have refused to apply pressure. China is set on protecting Mr Kim, and both China and Russia are pathetically reluctant to clamp even mild sanctions on a rising, energy-rich power such as Iran.

If the world is to prevent the spread of nuclear weapons, the Russians and Chinese will have to give up some serious interests in order to cause real pain to proliferators. Good relations with Iran are worth sacrificing for the bigger aim of preventing a chain reaction of proliferation across the Middle East. As for Mr Kim, the moment has come for his neighbours to see the folly of paying for short-term stability by propping up a dictator who has slipped dangerously out of control, and whose nuclear delinquency threatens to spark a much wider nuclear arms race in Asia. That would be in nobody's interest. Both China and South Korea ought now to follow Japan and back tough sanctions even if these do topple the regime. It will fall one day anyway, and this is the time to prepare.

America may need to make sacrifices too. It was not Mr Bush who sent North Korea and Iran on their nuclear trajectories: both started their programmes decades ago. But such regimes need to believe that they can desist and still be safe. Tough sanctions must therefore be coupled with clearer incentives. Mr Bush has already told both governments he has no desire to remove them. If they need stronger guarantees he should give them—in return for a verifiable end to their weapons programmes. It will not be easy for a president who wanted to spread democracy to do this. But that, in an imperfect world, may be the price of preventing dictators from controlling the weapons that could kill millions.



Tuesday, October 17, 2006

Defector: Kim's ouster would stop nukes

Associated Press Writer
October 17, 2006

The man once considered the mentor of North Korean leader Kim Jong Il said Tuesday that the reclusive country's nuclear weapons program cannot be stopped unless the strongman is ousted.
But Kim's total grip on the communist society makes that only a remote possibility, Hwang Jang Yop, the highest-ranking North Korean government official ever to defect to South Korea, told The Associated Press.

The 83-year-old Hwang, wearing a lapel badge in the shape of the South Korean national flag, is also skeptical that United Nations sanctions imposed on the North for a nuclear test explosion will hurt Kim's rule.

"I don't think his grip on power will be significantly weakened," Hwang said, adding that South Korea continues to give aid to North Korea, while other countries, most notably China and Russia, are opposed to the idea of pressuring the North.

Hwang, who seldom gives interviews, made his surprising defection in 1997 when he and an aide took refuge in the South Korean embassy in Beijing while on a visit to the Chinese capital. At the time, he was a longtime member of the North's elite, serving as secretary of the ruling Workers' Party.

He had been close to the country's founder, Kim Il Sung, the father of Kim Jong Il, and is often described as the younger Kim's former mentor. Hwang is also widely seen as the intellectual architect of the North's "juche" philosophy of self sufficiency.

After intense negotiations between China and South Korea, Hwang eventually left Beijing for the Philippines, where he stayed briefly before making his way to Seoul.

Now under police protection 24 hours a day to prevent any North Korean attempt on his life, Hwang said the six-nation talks aimed at ending the North's nuclear weapons program will not resolve the crisis.

He said South Korea, the U.S., China, Russia and Japan should not bargain with the North. They should instead isolate the regime, he said, calling it an "international criminal organization and the enemy of democracy."

The North's nuclear test last week was not Kim's last card and the North Korean leader could still test fire more missiles like he did in July and even mount nuclear warheads on them, Hwang said.

"It is nonsense to urge the North to abandon its nuclear weapons with Kim in place," he said.
Hwang said China is key to bringing an end to Kim's regime.

China is the last remaining ally and main aid donor to its impoverished neighbor, but their relations have been strained by Beijing's support of the U.N. resolution. Still, Beijing succeeded in blocking an even tougher one pushed by the U.S. and Japan.

"No Chinese officials like the North Korean leader, but they keep him in power," Hwang said, adding that Kim's regime serves Beijing's interests by helping keep U.S. influence in the region at bay.

Hwang said the best-case scenario would be if the North pursued economic openness and reform in trying to rebuild its dismal economy, which he said would likely lead eventually to Kim's overthrow and naturally resolve the nuclear dispute.

But Hwang doubts that will happen. "Kim Jong Il actually fears Chinese-style economic reform and openness coming to North Korea," he said.


What can we do next in North Korea?

October 17, 2006

The Sunday Orlando Sentinel had two thoughtful and pleasantly nonpartisan articles in the op-ed page titled "A Closer Look: North Korea & Nukes." Both pieces were careful to look at the failures from both the current and past administrations in curtailing nuclear proliferation in general and stopping North Korea in particular. But neither offered next steps for the United States. I offer three.

There is a Chinese proverb that says simply, "To take no action is an action." No responsible American political voice is advocating doing nothing in response to North Korea's apparent nuclear test. While North Korea poses little direct military threat to the United States for many years, the likelihood that it would share the nuclear secret with rogue states and even more scary non-states like al-Qaeda means doing nothing cannot even be considered. "Hope is not a strategy," I like to remind my students.

Step 1. Remind China that as a growing economic superpower -- and global political superpower wannabe -- it must take the lead on dealing with North Korea, just as superpowers have always taken the lead in cleaning up their own backyards. The British were the masters of gunboat diplomacy. The United States has the Monroe Doctrine. Now the Chinese must de-nuke North Korea or risk:

- a newly-elected nationalist government in Japan building nuclear weapons;

- a South Korea faced with declining U.S. troops levels going nuclear;

- possibly even a nuclear Taiwan building a theater-sized weapon that could easily be the foundation for a world war if China were to try to forcibly retake the island.

China can make Kim Jong Il disappear and replace him with a general willing to negotiate the peaceful reunification of the two Koreas. In exchange, the United States would promise to remove all troops from a unified Korea so as to eliminate completely China's concern of U.S. troops on what is now its common border with North Korea. If we must, the United States should go further to entice the Chinese to do the right thing. Nothing should be off the table, including continued U.S. support of Taiwan. Old Cold War alliances mean nothing in a post-9-11 world faced with nuclear Islamic terrorists trained by the North Koreans, who already sell scud missiles to anyone with the cash to buy them.

Step 2: Maintain the six-party talks condition. This is not a bilateral issue between us and the North Koreans. We also need the Chinese, Russians, Japanese and South Koreans at the table. Put partisanship aside and stop blaming President Bush for refusing to talk to North Korea. Those partisan voices are the same ones screaming that we acted too unilaterally in Iraq. This is not an "American problem," and North Korea needs to understand that.

Step 3: The United States must actively and vigorously continue the development of a missile-defense system. No, such a system will not stop North Korean fissile material from being smuggled into our country by terrorists. But it will defend us against a North Korean ballistic strike that will be a threat in two to five years. Let's not let the fact that missile defense will never be perfect deter us in deploying and constantly improving such a tool.

There is another Chinese proverb that says, "If you don't change the path you are on, you are likely to end up where you are heading." We cannot do nothing and change paths.

Allen H. Kupetz is the executive-in-residence at Rollins College Crummer Graduate School of Business and served in the U.S. Embassy in Seoul from 1992-96. He publishes a blog on Korean issues at www.koreality.com


Monday, October 16, 2006

Over the years, missed chances on North Korea

By Siobhan Gorman
Balitmore Sun reporter
October 12, 2006

Amid the burgeoning debate and partisan finger-pointing over North Korea's nuclear weapons program, former national security officials say that missed opportunities over the past three administrations - Republican and Democratic - could have ended or significantly stunted Pyongyang's effort.

"It doesn't mean it's our fault, but it means we have missed opportunities to head it off," said Jon Wolfsthal, who was an Energy Department monitor at North Korea's Yongbyon nuclear complex during the Clinton administration.

President Bush defended his administration's diplomatic efforts to contain North Korea's nuclear effort, countering Democrats' charges that his policy had failed and arguing that President Bill Clinton's strategy "did not work. "Bush's remarks yesterday were gentler than those Tuesday by Sen. John McCain, an Arizona Republican, who called Clinton's approach to North Korea "a failure."

Within an hour of Bush's Rose Garden news conference, Democrats countered via conference call."It is not a time for partisan finger-pointing," said Wendy Sherman, who was Clinton's adviser on North Korea. "We quite understand why some in the Republican Party have decided to lash out at the Democrats," she said, describing Clinton's policy as "very tough, constructive engagement."

After World War II, development of an atomic bomb spelled survival for then-leader Kim Il Sung. His son and successor, Kim Jong Il, sees the "nuclear scepter" as crucial to keeping his family in power, Wolfsthal said.

In the 1950s and 1960s, North Korea entered into nuclear cooperation agreements with the Soviet Union and built a research center in Yongbyon, 60 miles north of the capital, Pyongyang.

In 1965, the Soviet Union gave North Korea its first research reactor, and Pyongyang built a modest unit that became operational in 1986.

As it watched the developments, the U.S. government pressed Moscow to coax North Korea to join the Nuclear Non-Proliferation Treaty, which would subject it to international inspections. North Korea ratified the treaty in 1985, but a squabble over paperwork delayed implementation of safeguards and inspections until 1992.

In 1989, the Yongbyon reactor was taken off-line for about 100 days, and U.S. intelligence officials believe that the North Koreans separated out plutonium for reprocessing. Estimates vary, but many experts believe North Korea obtained enough plutonium at that point to make one or two bombs.

"We didn't do anything," said Wolfsthal. "History is going to show that was a tremendous turning point."Had the United States acted, he said, North Korea could have been required to suspend nuclear activity or put it under international safeguards.At the time, there was considerable debate within the first Bush administration over whether to act, Wolfsthal said, but the White House ultimately rejected calls for action.The next opportunity came five years later.

In 1993, North Korea refused to allow the International Atomic Energy Agency to conduct special inspections of some of its facilities and threatened to withdraw from the treaty.

Tensions escalated, and in 1994, Clinton began making contingency plans for a possible military strike on the Yongbyon facility, said Matthew Bunn, who worked on nuclear security issues in the Clinton White House.The secretary of defense went to China to alert leaders to U.S. plans. Clinton sent bombers to Guam, said Bunn, now a nuclear security specialist at Harvard University.

But those plans were set aside when former President Jimmy Carter flew to North Korea in June 1994, Bunn said. The talks led to an agreement signed in Switzerland that October.

Under the deal, North Korea agreed to halt its nuclear program and the United States said it would help replace North Korea's reactors with light-water power plants. The countries also agreed to move toward normalizing political and economic relations."Both sides failed to fulfill their obligations," Bunn said.Toward the end of the Clinton administration, the United States came close to reaching an agreement to halt North Korea's development of ballistic missiles, said Mark Fitzpatrick, a former assistant secretary of state for nonproliferation in the Bush administration, who left last year.

Meanwhile, North Korea began acquiring centrifuge equipment to enrich uranium from Pakistani nuclear scientist Abdul Qadeer Khan, which violated the 1994 agreement at least in spirit, Fitzpatrick said.

Nuclear bombs can be made with plutonium or highly enriched uranium. U.S. intelligence agencies reached consensus in 2002 that North Korea was trying to enrich uranium.The third turning point, former officials said, was Bush's famous "axis of evil" declaration in his 2002 State of the Union address.The speech gave North Korea strong reason to be concerned about its security, and it "couldn't deal with Bush," Fitzpatrick said. "By then, North Korea probably already had a weapon," he said, "but maybe they would have been willing to keep it on ice or trade it away for a comprehensive peace settlement with the United States.

"In October 2002, James A. Kelly, U.S. assistant secretary of state for East Asia, confronted North Korea with the knowledge that it had been developing the means to enrich uranium. That resulted in the dissolution of the 1994 agreement and allowed North Korea to restart its plutonium program, quadrupling its plutonium stockpile, Fitzpatrick said.

However, National Security Council spokesman Frederick Jones said that Bush's "axis of evil" statement did not choke off diplomatic channels."We were continuing to work with them after the speech," Jones said. He said multiple rounds of negotiations with six countries ultimately led to a Sept. 19, 2005, agreement on "principles" for North Korea to abandon its nuclear program.

After the deal was announced, North Korea and the United States clashed almost instantly over its meaning, and North Korea has walked away from the talks.Other former officials see the axis of evil statement as a different kind of turning point - one in which Bush could have backed up his words with much stronger pressure on North Korea to shut down its nuclear program but chose not to do so.

"That was a moment when there might have been an opportunity to push further," said Aaron Friedberg, a former security adviser to Vice President Dick Cheney.

Between 2002 and 2003, "the situation sort of stalled," said Friedberg, now a professor at Princeton University's Woodrow Wilson School. "We had a lot of momentum going into that because people were really concerned about our reaction coming out of 9/11."

Friedberg cited a few other examples since 2003 when the United States might have used provocations by North Korea to try to build momentum for international pressure to get North Korea to back down."

We're at one now again, and the question is, will others join us in applying some pressure?" he said. "It's harder now than it was before. It's not completely out of the question."


Saturday, October 14, 2006

Cartoon: Napoleon of the North


David Ignatius: "Principle of nuclear accountability"

"Present at the Creation" was the title Dean Acheson gave to his memoir about the founding of the post-World War II order. Now, with North Korea claiming to have tested a nuclear weapon in defiance of the international community and Iran seemingly on the way, Harvard professor Graham Allison argues that we are present at the unraveling.

The North Korean bomb test is a seismic event for the world community. It tells us that the structure created to maintain global security is failing. The five permanent members of the United Nations Security Council - the United States, Russia, China, Britain and France - all warned North Korea against taking this step. Yet the leaders in Pyongyang ignored these signals, and in the process blew open the Nuclear Nonproliferation Treaty.

The North Korean leadership, puny in everything but weapons technology, has been marching toward this moment since the 1950s. It`s unrealistic to think that, having brazened their way to detonating what they say is a nuclear bomb, the North Koreans will now give it up. The proliferation machine isn`t going to run in reverse. In that sense, the question isn`t how to repair the old architecture of nonproliferation - practically speaking, it`s a wreck - but how to build a new structure that can stop the worst threats.

What are the right cornerstones of this new security structure? I put that question to Allison, who is a national resource when it comes to questions of nuclear proliferation and deterrence. He wrote the definitive book, "Essence of Decision," on the Cuban missile crisis, the world`s closest brush with all-out nuclear war. In recent years, he has been studying the danger of nuclear terrorism, and he edited a prescient discussion of the implications of a North Korean breakout that appears in the September issue of the Annals of the American Academy of Political and Social Science.

Allison believes that the world community must now focus on what he calls "the principle of nuclear accountability." The biggest danger posed by North Korea isn`t that it would launch a nuclear missile, but that this desperately poor country would sell a bomb to al-Qaida or another terrorist group. Accountability, in Allison`s terms, means that if a bomb explodes in Manhattan that contains North Korean fissile material, the United States would act as if the strike came from North Korea itself - and retaliate accordingly, with devastating force. To make this accountability principle work, the United States needs a crash program to create the "nuclear forensics" that can identify the signature of fissile material of every potential nuclear state. Arms control expert Robert Gallucci describes this approach as "expanded deterrence" in his article in the September Annals.

President Bush seemed to be drawing this red line of accountability when he warned Monday: "The transfer of nuclear weapons or material by North Korea to states or nonstate entities would be considered a grave threat to the United States, and we would hold North Korea fully accountable for the consequences of such action."

Tough words, but are they credible? That`s why the second essential pillar of a new security regime is a restoration of deterrence. The Bush administration warned North Korea over and over that it would face severe consequences if it tested a nuclear weapon. So did China and Russia, but Kim Jong-il went ahead anyway. Iranian leaders are similarly unimpressed by Bush`s saber rattling, viewing America as a weakened nation bogged down by an unwinnable war in Iraq. To restore deterrence, the West needs to stop making threats it can`t keep. And the United States must salvage its strategic position in Iraq - either by winning, or organizing the most stable plan for withdrawal.

After the Cuban missile crisis, President Kennedy got serious about preventing nuclear war. He installed a "hotline" so the White House and the Kremlin could talk when crises arose; he negotiated the 1963 Test Ban Treaty; and he began the discussions that led to the 1968 Nonproliferation Treaty. That treaty worked adequately for almost four decades. Instead of the 20 nuclear states that Kennedy feared would exist by 1975, we had just eight, until last weekend. But the North Korean test threatens to begin what a 2004 U.N. commission warned would be "a cascade of proliferation" that could spread to Japan, South Korea, Iran, Egypt and Saudi Arabia.

We are present at the unraveling. We must "think about the unthinkable" with new urgency. The United States and its allies must begin constructing a system that can succeed where the Nonproliferation Treaty has failed. A terrorist nuclear bomb in Manhattan or Washington isn`t a thriller writer`s fantasy; it`s a probability, unless America and its allies establish new rules for nuclear accountability that are clear and credible.


Cartoon: Kim's Temper Tantrum


Thursday, October 12, 2006

Bilateral Diplomacy Could Still Roll Back North Korea's Nuclear Arms Effort

In a Test, a Reason to Talk

By Selig S. Harrison
Tuesday, October 10, 2006

"You have learned to live with other nuclear powers," said Vice Foreign Minister Kim Gye Gwan, North Korea's chief nuclear negotiator, leaning forward over the dinner table in Pyongyang. "So why not us? We really want to coexist with the United States peacefully, but you must learn to coexist with a North Korea that has nuclear weapons."

"That doesn't sound like you are serious when you talk about denuclearization," I replied.

"You misunderstand me," he said. "We are definitely prepared to carry out the Beijing agreement, step by step, but we won't completely and finally dismantle our nuclear weapons program until our relations with the United States are fully normalized. That will take some time, and until we reach the final target, we should find a way to coexist."

This exchange foreshadowed the North Korean test of a nuclear explosive device that has prompted demands for a naval blockade or military strikes against known North Korean nuclear facilities. But my conversations with six key North Korean leaders on a recent visit indicated that the test opens up new diplomatic opportunities and should not be viewed primarily as a military challenge.

Paradoxical as it may seem, Pyongyang staged the test as a last-ditch effort to jump-start a bilateral dialogue on the normalization of relations that the United States has so far spurned. Over and over, I was told that Pyongyang wants bilateral negotiations to set the stage for implementation of the denuclearization agreement it concluded in Beijing on Sept. 19, 2005, with the United States, China, Russia, Japan and South Korea.

Washington focuses on Article One of the accord, in which North Korea agreed to "abandon all nuclear weapons and existing nuclear programs." But what made the agreement acceptable to Pyongyang was the pledge in Article Two that the United States and North Korea would "respect each other's sovereignty, exist peacefully together and take steps to normalize relations."

In North Korean eyes, it was a flagrant violation when, four days after the agreement was signed, the United States in effect declared economic war on the Kim Jong Il regime. The Treasury Department imposed financial sanctions designed to cut off North Korean access to the international banking system, branding it a "criminal state" guilty of counterfeiting and money laundering.

The sanctions issue has given the initiative to hard-liners in Pyongyang, who can plausibly argue that the sanctions are the cutting edge of a calculated effort by dominant elements in the Bush administration to undercut the Beijing agreement, squeeze the Kim regime and eventually force its collapse.

To be sure, the United States should take action against any abuse of its currency. But the financial sanctions are not targeted solely against counterfeiting and any other illicit North Korean activity. They go much further by seeking to cut off all North Korean financial intercourse with the world. The United States has warned financial institutions everywhere, Treasury Undersecretary Stuart Levey said Aug. 23, "of the risks in holding any North Korean accounts."

Foreign businessmen and diplomats in Pyongyang told me of numerous cases in which legitimate imports of industrial equipment to make consumer goods have been blocked by the banking sanctions. This slows down the efforts of North Korean reformers to open up to the outside world and curtails economic growth. So far, the sanctions do not appear to be undermining the regime, but North Korean leaders can feel the noose tightening.

The Bush administration says that it is not pursuing a policy of "regime change," but the president did tell Bob Woodward that he would like to "topple" Kim Jong Il, according to Woodward's book "Bush at War." Recently, when a State Department official told Levey that the sanctions should distinguish between licit and illicit North Korean activity, Levey replied, "You know the president loves this stuff." Robert Joseph, John Bolton's successor as undersecretary of state for arms control, said at a recent State Department meeting that he hoped the sanctions would "put out all the lights in Pyongyang."

To advance U.S. security interests, the United States should agree to bilateral negotiations. It should press North Korea to suspend further nuclear and missile tests while negotiations on normalization proceed, freeze plutonium production and make a firm, timebound commitment to return to the six-party talks. In return, the administration should negotiate a compromise on the financial sanctions that would reopen North Korean access to the international banking system, offer large-scale energy cooperation and remove North Korea from the State Department's list of terrorist states, thus opening the way for multilateral aid from the World Bank, the International Monetary Fund and the Asian Development Bank, all of which North Korea is actively seeking to join.

Playing games with "regime change" has become much too dangerous and should now give way to a sustained diplomatic effort to roll back North Korea's nuclear weapons program while it is still in its early stages.

The writer, a former Post bureau chief in Northeast Asia, is the director of the Asia program at the Center for International Policy and the author of "Korean Endgame."


Five Keys to South Korean Prosperity in the Chinese Century

Since 1992, I’ve spoken at tradeshows and in academic settings throughout Asia and the United States about South Korea’s technological leadership in the areas of information technology and wireless communication. Until about 2000, the question I was asked most often was, “How did Korea do it?” How and why did Korea succeed when so many other countries that emerged after World War II are still so underdeveloped? More recently, the question I am asked most often is, “Given everything that is going on with the Chinese economy, does Korea still matter?” These are good questions, and the answer to the first may help underscore my positive answer to the second.

Korea today is on track to hit US$20,000 in per capita GDP by 2010, is the world leader in broadband access, and has a wireless telecommunications infrastructure that is one of the best in the world (and is 3−5 years ahead of that of the United States). It hosted the 1988 Summer Olympic Games and cohosted the 2002 World Cup. Korean women dominate the Ladies Professional Golf Association, and Korean men are striking out hitters in Major League Baseball. South Korean firms have built the three tallest skyscrapers in the world, and Korea can boast of 41 companies in the Forbes 2000. Among the almost 100 countries that became independent following World War II, none of them can come close to this list of achievements. It’s not called the “Korean economic miracle” for nothing.

But for all Korea’s economic success and the democratic system that it now enjoys, there remains a shadow on the horizon: China.

China is the most important country in Asia, and that is unlikely to change anytime soon. The United States knows this. Korea knows this. The Chinese certainly know this. But also unlikely to change anytime soon is Korea’s position as the fourth largest economy in Asia (after China, Japan, and India on a purchasing power parity basis). The threat to Korea is not solely from these goliaths, however, but from the David-like eastern Europe and still-emerging Asian countries, such as Vietnam. The Korean government can promote the country’s “talented human resources,” but, ultimately, cost will drive manufacturing venues, and Korea’s unions have made the country just as uncompetitive as U.S. and western European unions have made their manufacturing sectors.

Again, the question is not how Korea can defeat China—it can’t. The question is how Korea can stay relevant in the Chinese century and protect itself from faster growing economies. I offer here five keys to continued economic prosperity for Korea.

1. Look north, south and east—not just west.

An old expression observes that, “Just because you are paranoid doesn’t mean no one is out to get you.” Korea must be a little paranoid about China, but that can be a healthy thing. In addition to improving quality and reducing prices, competition can drive innovation and sharpen focus. Certainly Korean companies are already using Chinese manufacturing to lower costs. And China has replaced the United States as Korea’s largest foreign market. The challenge for Korea is not to lose sight of the other compass points.

Looking north, peaceful reunification with North Korea will obviously help South Korea by allowing for reduced defense expenditures, increasing investor confidence, and, in general, allocating resources (especially men aged 18−22 now faced with mandatory conscription) in areas that offer greater economic return. But North Korea can be South Korea’s China—a center for low-cost manufacturing, a market for almost everything South Korea produces, and a place in desperate need of South Korean expertise.

The Kaesong Industrial Park in North Korea has been a successful merger of South Korea’s capital and technology and the North’s land and non-unionized labor in a classic example of interdependence. A February 2006 International Herald Tribune article reports that, “Over the next year, the number of South Korean factories and North Korean workers will nearly quadruple to 39 factories and 15,000 employees.” According to the 20 March 2006 Business Week, “North Korean workers at Kaesong earn about US$50 per month, around half the average wage for unskilled workers in China and less than 10% of what South Koreans earn.” It is hard not to smile at the irony of North Korea being one of the economic saviors of South Korea.

Looking south offers Korea the chance to export knowledge to a hemisphere desperately in need of mentoring. Think of what Korean companies in the fields of banking, construction, energy, manufacturing, and telecommunications could teach people in lesser developed countries. And this is not about charity—though that could be a component. This is a for-profit business in which Korean companies promote their expertise by saying: We don’t have some theoretical approach to sustainable growth. We know what works and can train your people and companies.

Finally, looking east cannot be overlooked. The U.S. market is one of the largest in the world for Korean goods and will remain so for the foreseeable future. The U.S. security umbrella will help Korea remain competitive, even after peaceful reunification. The unique relationship the two countries share—never having been at war with each other and often fighting together in times of war (WWII, Vietnam, and Iraq), is a foundation to be maintained and could serve Korea well as a deterrent to the ever-present potential for Chinese militarism and economic bullying.

2. Accept and embrace the best global practices for financial transparency at all levels, including banking, regulations, corporate governance, and contract enforcement, including intellectual property rights (IPR). Nothing—nothing—Korea can do will give investors more confidence and provide a clearer differentiator vis-à-vis China and Vietnam.

What China cannot offer today—and shows few signs of offering any time soon—is financial transparency and IPR protection. Huawei, one of China’s largest domestic companies and quickly becoming a global brand, has faced accusations of reverse engineering and corporate espionage since the company was started in 1988. More recently, Huawei came under fire in 2004, when an employee was caught taking photographs of a rival’s circuit boards after hours at a trade show in Chicago. A Huawei official called the incidents "misunderstandings" and added that they are "all about how Westerners and Americans view China.”

Whether China’s transgressions are perception or reality, Korea is far ahead of China in terms of IPR and has significantly improved financial transparency following the 1997−1998 Asian financial crisis. Even the largest foreign firms in China enter the market with their fingers crossed. Vietnam still must climb the same learning curve that China started 10 years ago. Korea can differentiate itself by continued promotion and enforcement of proactive public and private initiatives to strengthen Korea’s laws in these areas.

3. Deal with the domestic political issues with the unions and farmers and sign a Free Trade Agreement (FTA) with the United States.

As a strong Korean currency and increased labor costs eat away at profitability and ultimately harm competitiveness vis-à-vis China, there is nothing better Korea can do to lower the landed cost of their exports to the U.S. than to sign the FTA. Vocal special interests in Korea will make this obvious step harder than it should be. But just like the rice protests prior to Korea joining the World Trade Organization, those opposition voices will be drowned out by the tangible economic gains Korea will enjoy.

Two recent examples of the success of a bilateral trade agreement with the United States are Vietnam and Chile. Since the 2001 U.S.-Vietnam Bilateral Trade Agreement, Vietnam’s exports to the United States have increased more than sixfold under the deal. In terms of foreign direct investment (FDI), according to BusinessWeek, Vietnam’s jumped 41%, while China’s total actually fell slightly. China still saw commitments of $60 billion, but as a percentage of GDP, Vietnam's total was more than twice what China received last year.

Chile’s numbers are even more impressive and serve as a useful counter to Korea’s antitrade farmers. In the two-year period immediately following the start of the Chile-U.S. FTA, Chile’s exports to the United States almost doubled, according to the Central Bank of Chile. And some of the biggest export industries were fish, agriculture (grapes, avocados), and wine.

Equally important is the signal that an FTA with the United States sends to other potential Korean partners about what differentiates Korea from China and many other countries. It tells the world that Korea has addressed successfully such issues as transparency, the rule of law, corruption, and IPR.

4. Forget about competing with China and Vietnam and even eastern Europe in terms of low-cost manufacturing. Focus instead on quality using the Japanese model from the 1970s and 1980s.

Low-cost manufacturing is a race to the bottom as one emerging country after another tries to undercut each other, much like Korea did to Japan 20 years ago. It is a race that Korea can’t win and wouldn’t want to.

When I lived in Seoul from 1992 to1996, the standard joke among the expat community was that Korea was “the land of almost right.” A beautifully hand-tailored suit would have one sleeve just a little longer than the other. Certainly the country has made tremendous strides since then, but “Made in Korea” as a brand still does not evoke a feeling of quality.

The answer is to focus on quality. Korean firms will continue to migrate their manufacturing to low-wage countries. So the products built in Korea must be world class. People will pay more for quality. Americans saw the 10- to 20-year shift in perceptions of Japanese cars such that now the Lexus is arguably the best built car in the world. Hyundai seems on that path to quality, but it is a steep mountain to climb, and it gets much steeper as you get closer to the top. Quality is an attitude not yet common in most Korean companies—and it needs to be.

5. Reduce the percentage of GDP produced by the chaebol without being punitive. Small and medium-sized enterprises (SME) can be a growth engine and offset job losses as manufacturing migrates to China.

Anyone who has done business in Korea quickly sees the spirit of entrepreneurialism that permeates Korean culture. With a higher tolerance for risk and less fear (and fewer consequences) of failure than Japan, Korea should see tremendous wealth creation in the SME sector. And the Korean government sponsors or otherwise supports such organizations as the Small Business Corporation (http://www.sbc.or.kr/eng/), Small and Medium Business Administration (http://www.smba.go.kr/main/english/index.jsp), and Korean Marketplace (http://eng.bestsme.com/main/aboutus/aboutus.jsp) to help Korean firms.

As with quality, however, Korea still talks a better a SME promotion game than it plays. The Korean economy arguably has never been more dependent on chaebol than it is today. In 2003, according to the Korea Times, the four largest chaebol (Samsung, LG, Hyundai Automotive, and SK) accounted for almost a half of the nation’s total exports and 40% of the GNP. But the big four are not creating many new jobs in Korea. According to same Korea Times article, “A bigger issue is that the chaebol are focusing more on expanding operations offshore and reducing the number of local subsidiaries, which has raised concerns about reduction in employment.”

According to the 18 March 2006 issue of The Economist, “By one account, 40% of Korean SME make no operating profits, among them many “zombie” firms kept alive with government credit guarantees.” Weak firms must be allowed to fail, and direct and indirect government subsidies must focus on sectors (i.e., rather than particular companies) where Korea has a competitive advantage in the global marketplace. Korea has the intellectual muscle—both from its own universities and the students that go abroad and return—to enter and compete in many emerging technology and service sectors. ◦

Kim Jong-il’s Suicide Watch

Seoul, South Korea

HOURS after Monday’s nuclear test, President Bush issued a stern warning to North Korea — but only against the passing of nuclear technology to other states or non-state entities. The president’s declaration thus reflected a confident consensus in Washington that while Kim Jong-il may try selling his nukes, he would never dream of using them himself. Why not? The explanation was given by a former national security adviser, Donald Gregg, on Monday: “Don’t panic. Kim Jong-il’s objective is survival ... not suicide.”

The same soothing logic could be applied to President Mahmoud Ahmadinejad of Iran, but of course it won’t be. These long-term diagnoses of Mr. Kim’s psyche are a roundabout way of saying that because he is not a fundamentalist Muslim, he is unlikely to do anything really crazy.

This sort of cultural profiling, however, can get us into real danger. Japan’s emperor during World War II, Hirohito, was neither religious nor suicidal, and he led his nation into a war that no rational leader could have hoped to win. The point is relevant, because although journalists persist in calling North Korea a Stalinist state, its worldview is far closer to that of fascist Japan.

Like the Japanese in the 1930’s, the North Koreans trace the origins of their race back thousands of years to a single progenitor, and claim that this pure bloodline makes them uniquely virtuous. The country’s mass games — government-choreographed spectacles with a cast of more than 100,000 — are often mistaken by foreign journalists as exercises in Stalinism. They are in fact celebrations of ethnic homogeneity. “No masses in the world,” the state-run Cheollima magazine reminded readers in 2005, “are purer and more upright than our masses.”

In state propaganda, Kim Jong-il is often linked, as Hirohito once was, to images of white horses, snow-capped mountain peaks and other symbols of racial purity. South Korea, on the other hand, is regarded as contaminated by too close contact with other races. At a recent meeting between generals from both Koreas, the North delegation’s leader condemned the South for allowing racial intermarriage. “Not a single drop of ink,” he intoned, “must be allowed to fall into the Han River.”

Naturally enough, the North Koreans’ race theory, like that of the Japanese fascists, actuates a blithe indifference to international law. A uniquely virtuous people has no reason to obey its moral inferiors, be they allies or enemies. China has now learned that despite decades of military and economic assistance it can draw on no residue of good will in dealing with Pyongyang.

Neither can the South Koreans, whom the North Koreans will revile for their ethnic treason no matter how much cash they pump northward. This utter imperviousness to gestures of friendship and conciliation bears obvious implications for the prospect of normal relations between North Korea and America.

The northern regime has so far restricted its racial propaganda to the home audience, because it wants the world to go on misperceiving it as a Stalinist state. This way we continue to pin our hopes on the kind of trust-building dialogue that worked so well with Communists in the 1980’s — and failed so disastrously with the pure-race crowd a half-century earlier.

While the North Koreans could kill a lot of people, they do not pose as great a threat to world security as imperial Japan did. Never have they shown any interest in forging an empire. All the same, the irrationality of their worldview is such that we should, at the very least, stop assuming that they would never use their own weaponry.

While Kim may not be suicidal himself, he shares Hirohito’s penchant for encouraging this quality in his people: “Defense until Death” is an increasingly popular slogan. In 2003 a colorful poster was disseminated to the foreign press showing a fat missile in flight with a suicide-readiness slogan on it: “Yankee, take a good hard look.” That isn’t bad advice.

B. R. Myers, an associate professor of North Korean studies at Korea University, is the author of “Han Sorya and North Korean Literature.”


An opposing view on the "China Solution"

China Distorts History to Prepare for North’s Collapse
By Lee Jin-woo
Staff Reporter

Andrei Lankov, a Russian-born expert on Korean affairs, said yesterday that China's recent moves to distort ancient Korean history is aimed at politically intervening in North Korea.

"The most likely explanation is that China is considering political intervention in the North,'' Dr. Andrei Lankov said at a lecture in Seoul organized by the Kwanghwamun Culture Forum, a fraternity of intellectuals. The 44-year-old scholar currently teaches East Asian and Korean history at Kookmin University.

China has stirred up controversy by publishing a series of articles claiming that the Koguryo (37 B.C.-668) and Palhae (698-926) kingdoms, which occupied the northern part of today's Korean Peninsula and the northeastern region of China, were part of ancient China.

Preparations for the collapse of North Korea have been deemed necessary and an advance into the North would require both psychological and cultural justification, at least within China itself, he said.

Lankov claimed presenting what is now North Korea as an ancient and integral part of China might create the political and psychological environment conducive to such plans.

He noted that China's first history offensive began around 2003 when Chinese activity in North Korea sharply increased.

The professor backed his idea with some statistics showing the amount of trade between the two countries tripled from $488 million in 2000 to $1,581 million in 2005.

"The strategic goals of China are influenced by its rivalry with the United States," he said.

He predicted that the "Chinese solution," which could include installation of a pro-Chinese puppet regime in Pyongyang, might be welcome by the North Korean elite, who are well aware of its own embattled situation.

Unlike the rulers of the former Soviet Union or China, the North's authorities have been unable to reinvent themselves as successful capitalist entrepreneurs.

"If the North Korean system collapses, the new Korea will be built by resident managers from South Korean conglomerates such as Samsung and LG, not by born-again communist bureaucrats," he said.

As for North Korea's proclaimed nuclear test on Monday and possible sanctions against the North's provocations, Lankov said there are very few good options available for the United States and other nations, who have vowed not to tolerate the North's possession of nuclear weapons.

In an article contributed to Tuesday's edition of the Wall Street Journal, Lankov said the options for dealing with North Korea's newly proclaimed nuclear power remain as unattractive as ever.

He said an Iraq-style invasion would not work as most South Koreans would prefer to live with the remote possibility of a North Korean nuclear strike than risk starting a war. He also said a naval blockage would not work as the majority of Pyongyang's imports and exports pass through its land borders with China and Russia.

He pointed out that the fundamental problem with using sanctions against Pyongyang is the extremely low possibility of encouraging North Korean people to agitate for change.

"A regime that sacrificed at least half a million of its citizens during the famine in the 1990s is hardly likely to care if their plight is now further worsened by sanctions. Agitators and dissenters quickly face the firing squad in the North,'' he said.


Video: Koreality comments on Fox News (11 Oct 2006)


Video: Koreality comments on Fox News (9 Oct 2006)