Submission from Dr Tat Yan Kong, Senior
Lecturer in Politics, School of Oriental and African Studies,
University of London
NORTH KOREA'S NUCLEAR CAPACITY AND THE PATH
1.1 The North Korean nuclear crisis dates
back to the 1993, when IAEA inspections concluded that weapons
grade plutonium had been extracted from spent fuel at North Korea's
nuclear facility at Yongbyon. Failure of on-off negotiations between
North Korea and the US resulted in a tense stand-off. Military
conflict was averted in July 1994 through the conclusion of a
deal between the two sides. Formalized as the Geneva Framework
Agreement (GFA) of October 1994, the deal provided for energy
assistance to North Korea (oil and the eventual supply of two
light water nuclear reactors) in exchange for the disablement
and eventual dismantling of existing nuclear facilities at Yongbyon
and other locations.
1.2 By the end of 2002, the GFA had collapsed.
The ostensible trigger was the alleged confirmation of a uranium-based
nuclear programme by North Korean negotiators to their US counterparts
in October 2002. This prompted US cessation of the supply of oil
(500,000 tons annually) to North Korea. Food aid and support for
the light water reactors were also suspended. In response to US
sanctions and UN condemnation, North Korea expelled IAEA inspectors
and restarted its Yongbyon reactor (including the reprocessing
of 800 spent fuel rods) and declared its right to possess nuclear
1.3 Even without the alleged October 2002
disclosures, the GFA was problematic given the loopholes of the
agreement (especially over disclosure and verification), slow
implementation of the light water project, and North Korean attempts
to extract further concessions (eg by ballistic missile testing
in 1998). The most decisive factor of all, however, was the ideological
hostility towards North Korea by the new George W. Bush administration.
In the post-September 11 climate, compromise with a nuclear-proliferating,
anti-democratic state like North Korea (that had been linked to
terrorism) was unacceptable to the neo-conservative Bush administration.
1.4 To resolve the crisis, both North Korea
and the US agreed to participate in the Chinese-sponsored six-party
talks (North Korea, US, China, South Korea, Russia, Japan) which
begun in Beijing in August 2003. After four rounds lasting two
years, an agreement of principle was signed in September 2005.
The agreed declaration contained the following provisions:
North Korean will denuclearize on
a verifiable basis.
US will refrain from attacking North
US will refrain from reintroduction
of nuclear weapons to South Korea.
North Korea had the right to use
civil nuclear energy.
North Korea and US and Japan should
seek to normalize diplomatic relations.
North Korea will receive energy assistance
from the five powers.
Implementation was to be based on the principle of
"commitment for commitment, action for action".
1.5 The September Agreement soon ran into
difficulties, especially over the modalities of implementation.
For example, North Korea insisted on the delivery of a light water
reactor (a process that would take years) before any denuclearization.
In the same month, the US treasury imposed sanctions on Banco
Delta Asia, a Macau-based banks allegedly involved with North
Korean counterfeiting, resulting in the freezing of $25 million
of North Korean funds. The six-party process was halted and the
situation deteriorated in 2006 as North Korea conducted a series
of missile tests on 4 July and tested a nuclear weapon on 9 October.
While the US was unable to secure support for comprehensive sanctions
against North Korea, the tests did not go unpunished. South Korea
suspended fertilizer and food aid for one year in response to
the July missile tests, while China reduced its aid (by two-thirds)
and supported the UN (Resolution 1718) condemnation of the nuclear
test and sent a high level envoy to North Korea.
2. THE FEBRUARY
Against the background of international isolation,
and economic pressure from its principal aid providers, North
Korea returned to the six-party talks in December 2006. Under
Congressional pressure to re-engage and in the absence of progress
in the Middle East, the Bush administration decided to re-focus
its efforts on settling the North Korea issue. Progress was surprisingly
quick, and agreement was reached at the six-party talks in February
2007. The February Agreement is divided into two phases.
2.1 Phase 1 provisions:
North Korea will freeze its nuclear
installations at Yongbyon and invite back the IAEA inspectors.
North Korea will discuss with the
six parties its nuclear programmes, including plutonium extracted
from the operation of its Yongbyon reactor.
North Korea and the US will begin
bilateral talks aimed at establishing full diplomatic relations.
The US will begin the process of removing North Korea from its
list of terror-sponsoring states, and advance the dismantling
of economic sanctions under the Trading with the Enemy Act.
North Korea and Japan will start
bilateral talks aimed at resolving "outstanding issues".
The US will resolve the issue of
sanctions against Banco Delta Asia (within 30 days of the agreement).
North Korea will receive 50,000 tons
of heavy oil.
2.2 Phase 2 provisions:
North Korea will declare all its
nuclear programmes and disable all nuclear facilities.
North Korea will receive one million
tons of heavy fuel oil (including the initial shipment of 50,000
2.3 North Korea received its frozen funds
in Banco Delta Asia in June 2007. In July, IAEA inspectors returned
to Yongbyon and confirmed that the nuclear installations were
shut down. South Korea delivered 50,000 tons of heavy oil to North
Korea. High-level US-North Korean in September opened the way
for the arrival of US technicians to Yongbyon. A 31 December 2007
deadline for declaration of North Korean programmes was ostensibly
agreed. After initial progress, the 31 December deadline was not
adhered to. The US demanded that North Korea complete disablement
of Yongbyon and provide a full account of past and existing nuclear
activities. North Korea responded by insisting that it had declared
all its programmes and called on the US to comply with its obligations
on energy aid, economic sanctions and the terrorism blacklist.
The current impasse (as of April 2008) is not
surprising from the past history of denuclearization agreements
with North Korea. Apart from the intrinsic problems of the February
Agreement arising from the mechanics of denuclearization, and
the sequencing of concessions (who gives up what, how much, and
when?), the recent leadership change in South Korea and the impending
one in the US present additional complicating factors.
3.1 Predictably, "denuclearization"
is difficult to implement given the absence of trust and divergence
of understanding between the US and North Korea. Implementation
of the principle of denuclearization is likely to be subject to
disagreements over full disclosure of the extent of North Korea's
nuclear capacity, the meaning of "denuclearization"
verification, and the reciprocal concessions that North Korea
3.1.1 To denuclearize, North Korea first
needs to give a full account of its capacities and that account
needs to be acceptable to the other parties. Full disclosure of
North Korea's nuclear programme includes not only the amount of
weapons grade plutonium extracted from the 8,000 spent fuel rods
after the reopening of the Yongbyon plant in 2003, but also the
total amount of plutonium accumulated (since the opening of the
Yongbyon plant in 1985), the number of nuclear weapons it possesses,
and the any programmes outside of Yongbyon. All of these issues
are problematic as the US estimates are likely to diverge from
those given by North Korea. For example, the US claims that there
is a nuclear programme based on highly enriched uranium, a claim
denied by North Korea.
3.1.2 What does "denuclearization"
mean? The US insists on the "disablement" of nuclear
facilities to the extent that operation cannot easily be restarted.
Does "denuclearization" apply to the capacity to make
nuclear weapons or to North Korean possession of any nuclear capability,
including civil? Here the North Koreans have indicated that they
expect to have to be supplied with light water reactors (LWRs)
as compensation for the closure of their existing reactors (the
1994 GFA also committed to providing North Korea with LWRs).
3.1.3 The verification regime under the February
Agreement is limited. The role of the IAEA is confined to monitoring
the freezing of the Yongbyon facility. The September 2007 discussions
allowed for the arrival of US technicians at Yongbyon. Thus the
system of inspection and verification for any installations beyond
Yongbyon will need to be negotiated with the North Koreans (who
deny the existence of such facilities). Even if agreement can
be reached on the existence of nuclear facilities, the mode of
verification is likely to be contentious given North Korea's history
of opposition to intrusive inspection.
3.1.4 What reciprocal concessions do the
North Koreans expect? The February Agreement commits the other
signatories to the provision of heavy oil (one million tons),
US removal of North Korea from the terror blacklist and the ending
of US economic sanctions. Statements from North Korea, however,
point to expectations for more extensive concessions as the price
for full denuclearization. These include oil shipments beyond
the specified amount, the (longstanding) demand for the construction
of LWRs, and the concomitant reduction of US military forces on
the Korean peninsula. Even if these demands could be agreed in
principle, their implementation will extend the denuclearization
schedule for an indefinite period into the future. There is also
strong US (and South Korean) expectation that aid and diplomatic
normalization will also be accompanied by conventional force reduction
on the North Korean side.
3.2 The US electoral cycle introduces an
element of uncertainty. The prospect of improved relations at
the end of the Clinton administration was halted by the new Bush
administration in 2001. Therefore North Korea is watching and
waiting for the outcome of the 2008 presidential contest (just
as it did in 2004, when the six-party process stalled). North
Korea is unlikely to commit fully to denuclearization unless it
can be sure that the guarantees made by one administration will
be maintained by its successor. North Korea is likely to be most
apprehensive about a McCain victory. Senator McCain was a critic
of the 1994 GFA and had advocated a more robust approach to "rogue
states" (including North Korea) during the 1990s. It is worth
quoting his recent comments on the subject of North Korea, which
hint at a widening of the list of concessions expected by the
North Korea's totalitarian regime and impoverished
society buck these trends [towards democracy]. It is unclear today
whether North Korea is truly committed to verifiable denuclearization
and a full accounting of all its nuclear materials and facilities,
two steps that are necessary before any lasting diplomatic agreement
can be reached. Future talks must take into account North Korea's
ballistic missile programs, its abduction of Japanese citizens,
and its support for terrorism and proliferation. (Source: Foreign
Affairs, Volume 86 (6) November/December 2007, section 3 paragraph
3, html version)
3.3 The administration of newly inaugurated
South Korean President Lee Myung-Bak has stated that it intends
to take a less indulgent attitude towards North Korea than its
predecessors. While the previous Roh administration reduced food
aid in 2006 in response to North Korean testing of missiles and
a nuclear device, it did not support US calls for comprehensive
sanctions or the forceful interdiction of North Korean shipping
under the Proliferation Security Initiative. Indeed, it maintained
and expanded key projects (notably the Mount Kumgang Tourism Project
and the Kaesong Special Economic Zone) that provide North Korea
with much needed foreign exchange. Roh's approach reflects the
belief that a generous approach towards North Korea ultimately
yields more benefit (in softening the North's attitude, promoting
the development of civil society) than either confrontation or
strict insistence on quid pro quos. By contrast, President Lee
has indicated that he will take a more conditional approach towards
North Korea meaning that economic aid will depend upon tangible
results in the areas of denuclearization, demilitarization and
human rights. Of course, President Lee's scope for manoeuvre will
also depend on the result of the forthcoming April 2008 national
Whether these complicating factors can be overcome
depends on the North Korean leadership's vision of systemic change.
A secure external environment (centred on improving relations
with the US and the opportunities for aid and investment that
flow from normalization) is a necessary but insufficient condition
for the introduction of substantive market reform in North Korea.
Equally important will be the acceptance of the principle of reform
amongst North Korean leaders. Readiness for substantive reform
will reinforce denuclearization and demilitarization. By contrast,
a leadership preference for "muddling through" will
have the opposite effect.
4.1 North Korea's leaders seek to remain
in power indefinitely and will maintain a level of social control
consistent with that objective. Any future post-Kim Jong-Il non-dynastic
leadership will also aspire to power retention using social control.
Given the status accorded to the military as part of Kim Jong-Il's
post-1994 power consolidation and as a response to the 1990s economic
crisis, it is likely that military leaders will play a leading
role in any post-Kim leadership. Successful reform will depend
on high status military leaders recognizing the priority of achieving
a successful civilian economy.
4.2 The small size of North Korea and its
weak position vis-a"-vis South Korea means that the North
Korean leadership feels more vulnerable than its counterparts
in China or Vietnam. Accordingly, its approach to economic reform
is likely to be more cautious.
4.3 Historically Kim Il-Sung and Kim Jong-Il
have been lukewarm about Chinese-style market reforms. Apart from
ideological hostility, concerns about loss of economic control
and social challenges to the regime always outweighed concerns
about productivity. However, North Korean leaders seem to have
reappraised the Chinese experience. There are grounds for expecting
North Korea to increasingly copy aspects of Chinese reform.
4.3.1 China's initial agricultural reforms
of 1978 (de-collectivization) simply sanctioned what was already
taking place at the local level in response to food shortages.
Similarly, North Korea's economic collapse of the 1990s led to
the spontaneous rise of non-state economic activities (especially
private farming, light manufacturing and primitive markets) as
the state could no longer provide employment and goods for the
desperate population. Other reforms include the 2002 wage-price
reform (to reflect scarcities more accurately), accelerated development
of special economic zones (notably Kaesong) and greater managerial
4.3.2 The impressive results of China's modernization
demonstrate to North Korean leaders a route for long term regime
survival by promoting economic growth without surrendering the
monopoly of power. This shift in attitude is reflected in Kim
Jong-Il's praise for the Chinese model (especially the special
economic zones), the dispatch of economics students to China,
and in the enticement of Chinese entrepreneurs by the North Korean
4.3.3 Over the last decade, China's influence
over the North Korean economy has greatly enhanced through its
leading role as aid provider, trade partner (from 28-43% between
2001 and 2005) and foreign investor.
4.4 On the other hand, the North Korean
government has also attempted to assert its control over the fledgling
private economy (over foreign exchange, over cross-border trade)
as the economic crisis has eased. It continues to stress the relevance
of state owned industries and central economic management. This
suggests that while China's experience is influential, North Korea
is also likely to learn from Vietnam and South Korea, countries
with greater affinity to North Korea in terms of size and centralist
4.4.1 The North Korean leaders may seek to
maintain a substantial but revamped state industrial sector while
inducing foreign participation in foreign exchange generating
activities (working with state agencies via special economic zones,
tourism projects, and mineral sector). This way, the state can
retain control of the lead industrial sectors, minimize the spread
of independent local entrepreneurs, keep cultural contacts with
foreigners strictly regulated, and ease its foreign exchange constraints.
Apart from employment rationalization (which will need to be severe),
foreign expertise and investment (eg from South Korean conglomerates)
will also be needed for the revamping of worthwhile state industries.
Such a reform strategy represents the "development dictatorship"
model, that it, North Korea's approximation of South Korea's centralized,
state-directed capitalism of the 1960s-80s. Such a strategy is
more consistent with North Korea's history of economic centralization
(whereas Chinese provinces enjoyed a high degree of economic autonomy).
Kim Jong-Il has also expressed admiration of the South Korean
4.4.2 North Korean leaders may be politically
too sensitive, and unwilling to risk any kind of substantive economic
reform. Instead they may seek to "muddle through" by
making the minimal adjustments necessary to maintain the current
levels of foreign exchange receipts and aid flows. Keeping the
nuclear threat alive as a bargaining counter, would be consistent
with muddling through. Such behaviour would deepen North Korea's
isolation and reinforce its dependence on nuclear diplomacy. This
is the scenario least conducive to denuclearization and least
attractive to the region as a whole. Given their desperate need
for economic regeneration (eg GDP growth in 2006 turned negative
for the first time since 1999, a grain shortfall of one million
tons by the end of 2007) to sustain power, even the most conservative
North Korean leaders are likely to be aware of the limits of muddling
through. Scenarios of a permanent gangster regime eking out a
basic existence through aid extorted by nuclear diplomacy and
the receipts of criminal activities (drug production and counterfeiting
of goods and currency) are unrealistic.
4.5 Thus the choice between substantive
reform/denuclearization versus muddling through/brinkmanship depends
in large part on the readiness of North Korea's leaders to accept
substantive reform. That readiness arises from their calculations
about internal political risks and external security. Their perceptions
about the intentions of the US will be crucial to shaping the
latter calculation. By the signals it conveys, the US will be
able to shape those perceptions in the direction of substantive
4.5.1 The US should accept the North Korean
political system as it stands and instead prioritize denuclearization
and economic reform. It should look to the social transformation
of North Korea over a long time frame driven by improved living
standards, spread of the profit motive and generational change
(ie North Korea as a slow motion replay of China or Vietnam).
This means stepping away from the moral absolutism that has dominated
much of the Bush administration (with few positive results).
4.5.2 The North Koreans will not denuclearize
until they can be sure that deals will not become hostages to
fluctuations in domestic US politics as in 2000. This raises the
wider issue of how guarantees of aid and security can be carried
across US administrations. Given the six party support of the
current agreement, it has a more binding effect than the 1994
GFA. Progress on negotiation of a separate peace regime between
the US, North Korea, China and South Korea (as called for under
the February Agreement) will offer further reassurance to North
Korea. These layers of multilateral reassurance will also make
North Korean non-compliance with denuclearization difficult.
4.5.3 The new US administration should rapidly
indicate that it is committed to the implementation of the February
Agreement. While the Middle East and Afghanistan will remain higher
priorities for US, a US policy of deliberate neglect towards North
Korea will only induce the North Koreans to force the issue back
onto the international agenda (eg through further nuclear and
missile testing, transfer of nuclear and missile technology).
4.5.4 The US fears that North Korea's real
agenda is to gain diplomatic normalization and other benefits
without full denuclearization. What tends to be overlooked is
the high value that North Korea places on developing friendly
relations with the US. Beyond immediate economic benefits, North
Korea seeks a relationship with the US in order to counter-balance
China's growing influence on the Korean peninsula. As with Vietnam,
there is potential for shared strategic interest between North
Korea and the US. The dramatic improvements in US-China relations
during the 1970s show how historical hostilities and divergence
of political values can be put aside when there is sufficient
political will motivated by shared interests.
31 March 2008