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Strategic Cooperation: Turning the Tide in North Korea

As is usually true with U.S. presidential elections, the United States is fast approaching a critical policy juncture on a number of pressing issues. In Northeast Asia, the issue of how to deal with North Korea arguably takes the lead. Within a span of a year, the nation is on the precipice of attaining a credible strategic nuclear deterrent—a hallmark of Kim Jong Un’s byungjin policy.

For the first time ever, North Korea conducted two nuclear tests within a year. It has achieved this along with largely successful testing on its space launch vehicle (SLV), Musudan missile platform, as well as its KN-11 submarine launch ballistic missile (SLBM). Hence, we are left with an unpalatable reality: North Korea’s momentum is undeniable, even in spite of punitive actions levied against it. And worse, the U.S. and South Korean policies on North Korea are failing.

The focus of this discussion is to advocate alternative policy options, namely, a practical policy on North Korea’s nuclear and missile program and the resumption of substantive economic cooperation. A moratorium on additional nuclear and missile development is one such option that could pave the road for economic cooperation. While this objective would be short of a full dismantling of North Korea’s nuclear program, it is still consistent with the goal of long-term denuclearization. I discuss this first and then explain how economic cooperation is ultimately in the best interest of all parties even if it requires some difficult initial concessions.

Halting, not reversing nuclear and missile development

For the United States and the international community, UN Security Council Resolution (UNSCR) 2270 and a host of other restrictions, have done little to slow North Korea, at least in the short term. For at the heart of these punitive measures is a core assumption that denuclearization is the path to normalization—an assumption that no longer appears tenable. North Korea has rejected calls for denuclearization on the basis that a credible nuclear deterrent is necessary for national security. Far from resolving the nuclear issue, Washington and Seoul’s insistence on denuclearization has only emboldened North Korea and precipitated unprecedented growth in its nuclear and missile program.

The solution for now may lie in the so-called “three noes,” a term-coined by Siegfried Hecker. The policy advocates “no more, no better, and no more proliferation” of nuclear weapons. They crux of the policy is that North Korea can keep what weapons it currently possesses thus satisfying its fundamental interest of retaining the means to self-defense. Compared with the option of complete denuclearization, this policy approach is far more pragmatic.

Special economic zones (SEZ) as the path forward

Upon addressing the nuclear issue in the short-term with a moratorium on testing and development, Seoul and Washington can pivot towards inter-Korean economic cooperation at a minimum. SEZs are the primary channel for tackling the issue, but given the apparently anemic rate of development across North Korea’s SEZs, the level of investments will be significant. To illustrate, consider the Rason SEZ which, in theory, should be a prime location for foreign investment given its fortuitous geography. Rason abuts both the Chinese and Russian border and features an ice-free port with access to the Pacific.


The story of the Rason SEZ is a tragic one that reflects the general state of SEZs elsewhere in the north. One visitor explains: “Here, North Korea is what it could be without major reforms or effort: more open, more human, more approachable, more honest, and obviously very much more interested in business cooperation with the outside world. No insulating rubber sphere anymore for foreigners…North Korea opens up, and nobody cares.”

Ruediger is correct. Apart from a few select foreign investments—most notably from China, Singapore and Hong Kong—nobody cares. Moreover,with the dramatic increase in the number of SEZs in North Korea, indifference has only multiplied. Although in principle, SEZs provide foreign investors access to low-cost labor and resources in a free market enclave separate from the rest of North Korea, investors are wary of doing business there. Political instability, a reluctance to associate with an international pariah, and poor infrastructure are the primary obstacles. However, not all SEZs have struggled.

The now-shuttered Kaesong Industrial Complex represented the pinnacle of North-South economic cooperation. In fact, it was the single largest source of inter-Korean cooperation with total trade valued at $3.14 billion in October 2015. But with the two Koreas locked in a bitter state of political and economic incommunicado, this sole bright spot no longer exists. Sadly, in retrospect, the decision to close Kaesong may have been a hasty and inconsequential one. After all, North Korea simply accelerated its nuclear and missile testing and achieved some key milestones.

The issue now is how South Korea tackles the issue of reopening Kaesong, if it so chooses, and whether broader investment in SEZs should even occur. As mentioned earlier, a moratorium on further testing and development could be just the quid pro quo necessary for resuming operations at Kaesong. Broader investment in North Korea’s SEZs accomplishes two longer-term objectives. First, it cultivates an overriding interest in maintaining regional stability, a goal shared not only by the two Koreas, but also by the United States and China. Second, it promotes inter/intra-Korean economic growth. With sluggish economic conditions in both nations and a desire to improve competitiveness vis-à-vis China works in the interest of both Koreas.

Concerns with a new approach

Unfortunately, reviving (and significantly boosting) what is essentially the generous Sunshine Policy of the former Kim Dae Jung administration, will be a hard sell. One of the central issues stems from the fact that North Korea would benefit disproportionately from South Korean investment. In the short term, this is a valid concern. Heavy initial fixed costs, namely, investments in North Korean infrastructure may be particularly unattractive for prospective South Korean firms. In the long term, however, using North Korea’s low-cost labor can restore South Korea’s competitive edge against China. Moreover, should North Korea undergo collapse, years of extensive economic cooperation may encourage a “soft fall.”

Another concern is that North Korea will simply continue to channel profits earned through SEZs to its nuclear and missile programs. To the contrary, if a moratorium on additional nuclear and missile development is one of Pyongyang’s central concessions, the concern may be exaggerated. A final concern is that resuming economic engagement—and generous engagement at that–is to reward bad behavior. Framed differently, we are actually practicing good diplomacy. And we are rewarding cooperation, not bad behavior.

A window of opportunity

The window of opportunity for any significant shift in North Korea policy must occur after the South Korean elections in December 2017. Park Won-soon, the liberal Minjoo Party presidential frontrunner, could unseat the ruling Saenuri Party. The party’s stunning and unexpected defeat in the 2016 South Korean legislative elections signaled weakening public confidence in the conservative party’s handling of the economy. With a Minjoo Party presidential victory more likely than ever, the opportunity for a fresh set of policies on North Korea may be in the cards. One of Park’s first priorities would be to reopen not only Kaesong Industrial Complex, but also the Mt. Kumgang Special Tourist Zone—another SEZ that closed in response to rising North-South tensions. He also intimates the possibility of broader cooperation: “by combining the economy of South Korea and inexpensive labor and natural resources of North Korea, we will see a thriving boom in construction 30 years from now.”

Essentially, Park is advocating longer-term economic cooperation with North Korea, far beyond any rapprochement the current administration is willing to accept. Fortunately for Park, public opinion may be on his side. According to a 2016 As an Institute poll, South Koreans overwhelmingly support inter-Korean dialogue (75.2 percent).

Of course, no significant change in policy is possible without Washington’s concurrence. Following the November 2016 U.S. presidential election, the new president has a special opportunity to spearhead a reevaluation of policy positions on the Korean Peninsula. Unfortunately, both presidential candidates’ positions on North Korea do not appear amenable to change—at least in the run up to the election.

A chance of sunshine

For most seasoned observers on Korean affairs, the status quo falls short of jeopardizing U.S. and South Korean security interests. Nevertheless, much is left to be desired. Reducing the basic conditions for misunderstanding and crisis is not outside the grasp of the U.S. or the two Koreas. Yet coming to terms with North Korea qua nuclear state is the first and most difficult step. Whether there is any chance that the leaders of South Korea and the U.S. will take that step depends first on the outcome of the U.S. and South Korean presidential elections.

It is certainly a propitious sign that the Hillary Clinton could capture the U.S. presidency and continue from where her husband and former President left off. Under the Clinton administration, Inter-Korean cooperation and denuclearization efforts achieved unprecedented success through the late 1990s before ultimately being stymied by the Bush administration’s policy reversals.

With a new liberal Korean counterpart at the helms, a liberal U.S. administration may have the necessary support to initiate a robust policy of cooperation. Such action could be precisely what is needed to improve the status quo after squandering nearly a decade under the rubric of trustpolitik and “strategic patience.” It is time that cooperation—not nuclear and missile tests—steal headlines. The time has come to open the curtains and let the sun shine on a new set of policies built on a new and more hopeful premise.

The views expressed in this article are those of the author and do not necessarily reflect the official view of the U.S. government, Department of Defense, or the U.S. Marine Corps.