Tag Archive | "sanctions"

Flooding and COVID and Sanctions! Oh My! Are These Problems Behind Changes in the DPRK News Format?

By Robert R. King

From July 25 to August 26 Kim Jong-un convened three high-level meetings of the Worker’s Party Politburo—an unusual display of urgency by the North Korean leader.  Only four such meetings were held in the previous six months of this year.

The problems Kim and North Korea are facing seem to be particularly daunting.  Flooding from monsoon rains and two typhoons have drenched North Korea in the last five weeks.  The Monsoon rains of early August caused landslides and floods which damaged 100,000 acres of farmland (151 sq. miles), some 16,000 households were affected, and the reported death toll was 22.  As that disaster ended Typhoon Bavi (No. 8 in North Korea’s typhoon numbering system), struck western North Korea on August 26.  On Kim Jong-un’s inspection tour following Bavi, he announced that there was minimal damage—flooded fields, damaged corn and beanstalks, washed out roads and damaged power lines, but not as bad as it might have been.  (It was a category 1 hurricane equivalent when it made landfall.)  But on top of the serious monsoon rains, it was certainly not welcomed.  The first week of September things got worse, typhoon Maysak (No. 9) hammered the Korean Peninsula, producing additional heavy rains in the North. Wonsan on North Korea’s southeast coast faced a deluge of over 5 inches of rain (132 mm) in only three hours.  Kim Jong-un was there a few days later inspecting the damage, apparently including “dozens of casualties.”  Again in the search for scapegoats, he fired the provincial party leader in the hardest hit area and ordered twelve thousand core party members to join the recovery effort and promised “grave punishment” of local officials.  The problems may not be over yet, however, as another typhoon (Haishen—Typhoon No. 10) is headed up the Korean Peninsula with another round of heavy rains.

Then, of course there is the plague—the COVID-19 virus.  North Korean officials continue to claim that the country is totally COVID-free, but little testing and government policy to cover up any cases that might have occurred may well be the explanation.  The extent of official concern is reflected in the harsh effort to quarantine immediately any individuals with potential cases of the virus.  The “re-defection” of a North Korean defector who illegally fled to South Korea but three years later illegally crossed the border returning to the North led to the total quarantine of the city of Kaesong which lasted over a month.  The scope and zeal of the enforced quarantine in Kaesong indicates the intensity of the North Korean effort to deal with the COVID pandemic.  The poorly-funded and under-staffed medical infrastructure in the North is heavily dependent on World Health Organization programs and non-government humanitarian assistance to deal with many of its most troubling medical problems.  If the COVID pandemic gets out of control, the consequences in the North could be massive and tragic.

The third challenge currently facing the North is the impact of economic sanctions imposed by the United Nations Security Council to halt Pyongyang’s nuclear weapons and missile programs which are seen as a threat to international peace and security.  Those sanctions have the support of China and Russia, as well as the United States and other Security Council member countries, and all UN member countries are obligated to follow them.  The COVID pandemic has heightened the impact of the sanctions.  Because of the concern for the spread of the pandemic, North Korea has tightened its border with China to prevent illegal border crossing and illegal importation of goods because of the fear that this will bring the dreaded virus into the North. Though, some state sanctioned smuggling is still allowed. Earlier when the border with China was more porous, sanctioned goods from China were illegally smuggled into the North and that eased the economic impact of UN sanctions.  Now that the border on both sides is more tightly guarded to prevent the spread of COVID-19, the sanctions are much more effective.

In a Party Central Committee session held in mid-August, the North Korean leadership confirmed that plans to improve the national economy have been “seriously delayed” by “severe internal and external situations and unexpected manifold challenges.”  A party congress has been scheduled for January to deal with the consequences of the flooding, the pandemic and the economic consequences of the sanctions.  Party congresses are infrequent events and they have taken place in the past only when there was some urgent need.  That last Congress held in 2016 confirmed the succession of Kim Jong-un, and the Congress before that was held 26 years earlier.

Media Coverage of Typhoon Bavi Showed Major Changes

As Pyongyang has attempted to deal with these increasingly complex challenges, a particularly significant change in the format of media reporting (particularly television) took place.  As Typhoon Bavi approached North Korea’s west coast, the principal official Korean Central Television (KCTV) channel took the unprecedented action of broadcasting through the night.  Martyn Williams with the Stimson Center notes that this was the first time KCTV broadcast around the clock for a full uninterrupted 24 hours.

The standard KCTV schedule begins in the afternoon and ends in the late evening, and follows a rigid predictable schedule.  Broadcasting begins with the national anthem, followed by hymns of praise to Kim Il-sung and Kim Jong-il.  The presenter then gives the program schedule.  Any news relating to Kim Jong-un comes next followed by other news and then entertainment programming.  On Thursday, August 26, as Typhoon Bavi approached the North Korean coast, even before the program schedule was given, a report from the weather service gave information about the impending landfall of the typhoon.

The other unusual change in television programming that day was on-the-scene reporting on the typhoon.  North Korean TV seldom broadcasts live reports from journalists in the field.  On August 26 several weather updates were broadcast from a reporter at the State Hydro-Meteorological Administration and other live reports were broadcast with journalists sheltering under umbrellas and standing in front of damaged buildings and uprooted trees.  Previously the format for North Korea’s main television news program has been a mature woman in a traditional hanbok (the traditional Korean dress for formal occasions) with the image of Mount Paektu in the background.

The Kim family has paid particular attention to managing the media, and there is every reason to believe that this noteworthy change in television format was done at the direction of Kim Jong-un.  It is not clear whether this was a “one-off” format change, or whether this is a new inclusion of journalists reporting on the spot will be used again in similar unusual circumstances, which would bring North Korean media more in line with other international news media practice.  The day immediately after the unusual programming began in connection with Typhoon Bavi, Korean television reverted to the standard format, apparently with no comment about the dramatic change in the look and feel of the news reports the previous day.  Just a few days later, however, when typhoon Maysak dumped heavy rains on Wonsan, local television again aired live footage of damage.

Why the Change?

North Korean leaders are acutely aware of the technology and programming practices of news media elsewhere in the world because foreign radio and some television broadcasts do reach the North.  It is illegal for North Koreans to watch any foreign news or entertainment—even the brotherly Korean-language broadcasts in China which can be heard and seen in North Korean areas near the Chinese border.  North Koreans want information from beyond their border, and they access foreign broadcasts and other foreign media even though it is difficult to get and carries a significant risk of punishment if North Koreans are caught viewing or listening to foreign media.

Along the border with China, North Koreans can watch Chinese Television in the Korean language.  These broadcasts are produced for the Korean-speaking population in China, so they are not specifically directed at the North, but Chinese television is better technically and programmatically than North Korean media.  Furthermore, South Korean media, including popular K-pop and soap opera entertainment, is available in the North on the black market on USB drives.

With this competition from more attractive programming from abroad, the Kim government is anxious to make its domestic news and entertainment media better.  It is in competition with illegal foreign media.  If the official approved media is technically better and programming is more interesting, keeping viewers focused on approved North Korean media is much easier.  The official media is not the only game in town, and competition is pushing North Korean television to be better.

A second reason the media may be shifting its programming is to highlight the external forces that are making life more difficult in North Korea.  With flooding, the COVID pandemic, and economic sanctions it is much more difficult for Kim Jong-un to create the “heaven on earth” that North Korea’s ideology promises.

That is particularly difficult because the Kim family leaders are played up in laudatory propaganda as superhuman miracle workers, and Kim Jong-un is certainly part of that mythology.  In December 2017, for example, national video broadcasts show Kim high on Mount Paektu, North Korea’s sacred mountain which plays an important role in the mythology of the Korean people.  In the video, the 9,000 foot mountain was swathed in snow, wind and cold.  In the words of the official film of the event, it suddenly became a “marvelous scene with glee at the reappearance of its great master.”  The mountain showed “fine weather unprecedented” in December.  The KCNA report on Kim’s climb up the mountain said, “His eyes reflected the strong beams of the gifted great person seeing in the majestic spirit of Mount Paektu the appearance of a powerful socialist nation which dynamically advances full of vigor without vacillation at any raving dirty wind on the planet.”

The problem of boasting about supernatural powers is that when things get tough, people may expect the Supreme Leader magically to solve the country’s problems.  It may well be that with flooding, the COVID pandemic, and sanctions to deal with, the leader is using greater honesty in the media to downplay his supernatural powers.  By showing on-the-spot news reports of the impact of the flooding and typhoons, it gives the North Korean people a better sense of the reality and significance of the problems the country is facing.  This may ease expectations for the chief miracle worker.

Further indications that the Leader is concerned about the seriousness of the problems is the fact that the head of the government, Prime Minister, Kim Jae-ryong, was fired at the Politburo meeting on August 13.  The Prime Minister is focused primarily on management of the economy, and his replacement was an obvious indication of dissatisfaction about the economic problems facing the country.  The prime minister was a convenient scapegoat.  Another villain to blame was found in Wonsan after Typhoon Maysak dropped heavy rain on the southeast—the local party leader was fired.

Kim Jong-un announced at the August 13th Politburo meeting that North Korea would not accept flood or COVID pandemic assistance.  Fears that foreign aid workers might bring COVID virus infection was behind the rejection.  Another reason for this strong statement of North Korea’s self-reliance, however, might be that for the sake of appearances it is better preemptively to reject assistance when such help may not be given if it were requested.  South Korea is one of the few possible donors for the North.  The Moon Jae-in government appears to be interested in aid as a way to improve the strained North-South relationship.  On the other hand, the South has been treated poorly by Pyongyang for the last several months, including the overly dramatic blowing-up of the North-South liaison office in Kaesong just a few weeks ago.  There is little chance the United States would offer aid, the World Health Organization is inundated with requests for COVID help from many of the poorest countries in the world, and the pandemic-induced economic downturn throughout the world makes this a very difficult time to be seeking help.

Robert R. King is a Non-Resident Fellow at the Korea Economic Institute of America.  He is former U.S. Special Envoy for North Korea Human Rights.  The views expressed here are his own.

Photo from Wikimedia Commons.  

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North Korea and the COVID Crisis: The Sanctions Angle

By Stephan Haggard

Humanitarian disasters in closed, authoritarian regimes pose particular challenges to the international community. Government actions can exacerbate or even create crises; this was certainly true of the great famine of the early 1990s. Yet the victims of the regime’s choices are innocents, including overstretched but dedicated doctors and health care workers. If the sanctions regime is impeding an outside humanitarian response, it needs to be adjusted–and quickly. There is evidence—outlined below—that sanctions exemptions are being granted to multilateral institutions and NGOS with greater speed. But by sheer proximity, China and South Korea are best positioned to play a role, and should exploit the discretion they are being given to act.

Where do things currently stand with respect to COVID-19 in North Korea? (The best English-language aggregator is NKPro’s, which includes a thorough timeline). There can be little question that the government moved quickly to close the border and initiate quarantine protocols on those entering or returning to the country. These restrictions began on January 21 with tourism (overwhelmingly Chinese and an important source of foreign exchange that did not fall under multilateral sanction) and within a week, the border had been closed almost altogether. The one land port of entry that remained open—across the bridge linking Dandong and Sinuiju—got snarled in the border closure and quarantine protocols on both sides, although trade resumed in April.

By the fourth week of January, state media were openly addressing the issue domestically as well and Rodong Sinmun covered domestic quarantines in several provinces as early as March 1. Yet transparency remains an issue. To date, the regime has still not announced the presence of any cases in the country, even though underground sources were reporting deaths from COVID-like symptoms across a number of provinces in early March.

As elsewhere, COVID-19 has both an economic and medical dimension. As a result of the sanctions regime, North Korea is almost completely dependent on China for external sources of supply. Although sanctions evasion is rampant, the country has almost certainly faced an external shock as a result of the border closure. Close analysis of food prices through the first week of March by Benjamin Silberstein at 38North detected an uptick that could reflect both scarcity and panic buying. Prices remain elevated in more recent data (March 20).

More damaging is the fact that the multilateral sanctions regime—while formally permitting exemptions—has proven highly cumbersome to navigate. Product bans have swept up a variety of products that are crucial both to public health generally and to management of COVID-19 in particular. A major concern is the way financial sanctions have impeded the aid effort. The UN and prominent NGOs have repeatedly complained about the difficulty of funding their North Korean operations because of banks’ skittishness in transferring funds to North Korean entities. They have been forced to resort to cash transactions as a result.

The American response to the potential humanitarian crisis in North Korea has been mixed, but broadly reasonable. In contrast to the famine era, North Korea quietly sent out feelers for aid quite early. In mid-February, the State Department issued a sober statement offering support. On March 19, Secretary Pompeo reiterated that offer—and on the Hannity show on Fox News no less—and the President himself reportedly sent one of his personal missives on the issue. But American officials—including Secretary of State Pompeo—as well as outside commenters, have also insisted that sanctions pressure should not be taken off, and North Korea has predictably bristled that aid could be a Trojan horse.

What is said may be less important than what is being done, however; Keith Luse at the National Committee on North Korea has the most granular coverage. As he notes, there has been a lot of high-level communication on the issue of adjusting sanctions in the COVID era: in the UN Secretary-General’s letter to the G20; in the High Commissioner for Human Rights statement and in a joint letter by seven countries—led by China and Russia–to the UN. The latter is rightly seen as a move in the global propaganda war, as Washington, Beijing and Moscow seek to jockey for position in the COVID-19 blame game.

However, we looked closely at the 11 requests for multilateral sanctions exemption through the so-called 1718 committee since December; the information can be found here. We calculated the number of days it took for the committee to issue exemptions to applicants. For those requests made in December and January, the average time for approval was 22 days. For those made in February and March, the time fell to 7 days. Those applying can request that their appeals not be made public, and the committee may not report rejections. Sources with knowledge of the process have told me that the 1718 committee now operates with the intent of three-day turnaround on COVID-19 exemption requests.

These actions are inferior to a wider sectoral review of whether the dual-use net is being cast too widely.  Nonetheless, it is clear that exemptions are being granted more swiftly and that the U.S.—given its effective veto power—is allowing COVID-related aid to get through.

Sanctions have a role in getting North Korea back to the table. But President Trump—despite his letters to Kim Jong-un—signaled even before the COVID crisis that he did not anticipate a major initiative on the nuclear question prior to the election. Kim Jong-un has shown his pique by resuming missile tests in 2019, and even into the COVID era. Yet that should be seen as a sign of weakness not strength, including possible domestic pushback to Kim Jong-un’s policy failures with the United States. The Trump administration has been right to play down the actual risks.

With nuclear negotiations in any case stalled out, the appropriate policy for the United States is not to promise aid directly, but to continue to waive those sanctions that are needed for any relief effort. China, the humanitarian community and particularly South Korea should take the lead. South Korea has now authorized its first, small-scale private aid effort. Giving President Moon Jae-scope for maneuver on the humanitarian front is superior to opening commercial ventures, like the Kaesong Industrial Complex, that provide cash directly to the regime. It is overly hopeful to see this as an opening that will have wider effects, and as noted the North Koreans are wary. But as Secretary Pompeo himself said in his Fox interview, “it’s the right thing to do in a time of crisis.”

Stephan Haggard is a Non-Resident Fellow at the Korea Economic Institute and the Lawrence and Sallye Krause Professor of Korea-Pacific Studies, Director of the Korea-Pacific Program and distinguished professor of political science at the School of Global Policy and Strategy University of California San Diego. The views expressed here are the author’s alone.

Photo from Norway UN (New York)’s photostream on flickr Creative Commons.

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North Korean Coal Smuggling, Still Profitable

By Troy Stangarone

According to a recently leaked UN 1718 Committee report, North Korea exported 3.7 million metric tons of coal in the first eight months for 2019 despite UN sanctions prohibiting North Korean coal exports. Earning the regime $370 million, these exports help explain how Pyongyang has been able to finance its trade deficit. Moreover, it potentially disproves the widely-held assumption that North Korea’s smuggling activities are untenable in the long-term because of the added costs.

The UN estimates suggest that illicit exports of North Korean coal increased by nearly 300 percent by value and volume from May through August compared to the first four months of the year.

The UN has not released full year data, but if North Korean exports of coal in the four months of 2019 merely declined to the average of the prior eight months that would suggest that North Korea potentially earned an additional $185 million from coal exports for a potential total of $550 million for the full year. It would also suggest that North Korea may have exceeded the cap on value initially placed on Pyongyang’s coal exports in 2017 before the full ban was put in place.

The report values North Korean coal exports at approximately $100 a metric ton, which is in line with the value placed on illicit North Korean coal exports in the 1718 Committee’s previously released report which estimated that North Korea had exported 930,000 metric tons in the first four months of 2019.

Traditionally North Korea has earned less from its coal exports to China per metric ton than exporters such as Australia, which is China’s largest source of imported coal. At $100 per metric ton, however, it suggests that North Korea is not taking a significant discount on its coal exports from the sanctions.

Even prior to sanctions, North Korea received less per metric ton than countries such as Australia. In 2016, the last year before sanctions were placed on North Korean coal exports, Australian coal exports averaged $79 per metric ton while North Korean coal exports to China averaged a little under $53 per metric ton.

Full year trade data by commodity for 2019 is not yet publically available from China or Australia. However, in 2018, exports of Australian coal to China averaged $130 per metric ton. If 2019 prices are ultimately similar, that would suggest that dollar per metric ton spread between Australian coal and North Korean coal has largely remained the same, while the percentage price that North Korea receives relative to Australian coal has actually improved from 67 percent to 77 percent.

With UN sanction on a range of North Korean exports in addition to coal, there has been a significant decline in North Korean exports. In the case of China, North Korea’s largest trading partner, exports declined from $1.7 billion in 2017 to $215 million in 2019 as a wider range of sanctions were implemented, while imports only declined from $3.3 billion to $2.6 billion over the same period.

If confirmed, this would help explain how North Korea has been able to maintain a relatively high level of imports from China despite its official export earnings having declined so precipitously. One theory has been that North Korea was spending down its foreign reserves to cover its trade deficit with China. However, if UN estimates are correct, North Korea’s trade deficit can be partially explained by the revenue generated from Pyongyang’s illicit exports of coal exports.

Troy Stangarone is the Senior Director and Fellow at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Graphics by Juni Kim, Senior Manager for Operations and Technology, Korea Economic Institute of America.

Photo from Kentucky Photo File’s photostream on flickr Creative Commons.

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10 Issues to Watch for on the Korean Peninsula in 2020

By Kyle Ferrier, Sang Kim, Yong Kwon, and Troy Stangarone

After the U.S.-North Korea summit in Singapore, 2019 was supposed to be the year that the United States and North Korea worked out a deal to begin dismantling its nuclear weapons and ballistic missile programs. It was not to be. The talks fell apart at the Hanoi summit, dashing hopes for increased inter-Korean cooperation, and the process never got back on track.

The breakdown of U.S.-North Korea talks, however, wasn’t the only major relationship to face trouble in 2019. South Korea’s relations with Japan hit a low point as Tokyo surprised everyone by placing national security restrictions on three key chemicals for the production of semiconductors, threatening South Korea’s most important export industry.

South Korea’s economy also took a hit. The trade tensions with Japan, in combination with the U.S.-China trade war, already slowing exports of semiconductors, and slowing global growth, resulted in South Korea’s lowest level of GDP growth since the Global Financial Crisis.

As we look forward to the rest of 2020, there will be significant focus on developments with North Korea and South Korea’s relationship with Japan. Political change could be in the offing as well, as elections are set for the National Assembly and the presidency in the United States. But domestic issues dealing with the elderly and South Korea’s declining fertility rate will also be in focus.

With that in mind, here are 10 issues related to North Korea, South Korean politics, and U.S.-Korea relations to follow that will have an impact on the Korean peninsula in the year to come:

Efforts to Denuclearize North Korea

Despite realizing the first ever U.S.-North Korea summit meeting in 2018, talks between the United States and North Korea largely came to a halt last year. The question for 2019 is what comes next in U.S.-North Korea relations. With Pyongyang announcing that it no longer feels bound by its prior pledges not to conduct nuclear weapons or ballistic missile tests, there are concerns that the Korean Peninsula may return to the “fire and fury” period of 2017.  Alternatively, North Korea could attempt to return to talks with the United States and to strike a deal prior to the 2020 presidential election. However, the North Korean leadership likely recognize that any attempts to negotiate deal could be undone by a change in administrations in the United States.

More likely, North Korea will continue to increase its stockpile of weapons and engage in efforts to advance its weapons technology, while avoiding the types of tests that might force the international community to tighten the sanctions on its economy. In the absence of a provocative test by North Korea, another issue to watch will be how well the sanctions regime will hold. Russia and China have already signaled that they may have a waning patience for sanctions.

Reaching an Agreement on U.S.-Korea Military Burden Sharing

Contentious negotiations between Seoul and Washington on a new Special Measures Agreement (SMA) – determining how much South Korea contributes to hosting U.S. military forces – have unsurprisingly lapsed their December 31 deadline. The Trump administration’s call for Seoul to increase its 1.02 trillion won contribution by 400% caused a stir among South Koreans in the second half of last year. The sheer size of the proposed jump seemed to suggest that the U.S. underappreciated their country’s support for the alliance and led many to question the nature of the relationship. Talks are set to resume this month, but it’s unclear in what direction they are heading. In late December the South Korean newspaper Chosun Ilbo reported Washington’s asking price had dropped to only a 10-20% increase, which U.S. officials later denied.

The conditions of a new SMA could have significant implications for the alliance, though there are still many unanswered questions. Other than the amount, the other significant aspect to follow is duration. If the U.S. again pushes for a one-year deal – rather than the multi-year agreements that both sides usually agreed to prior to the Trump administration – it could be a big gamble for South Korea given the U.S. presidential election in November. Since Trump himself is by all accounts driving the U.S. position, if he were to lose his re-election campaign then his Democratic opponent would be much less likely to pursue such a hardline stance. However, should Seoul and Washington strike a one-year deal and Trump wins in November, the new SMA talks could be even more of a challenge to the alliance than they have been recently.

Revitalizing the South Korean Economy

The South Korean economy is in the doldrums. GDP is expected to have only grown by 2 percent last year, the lowest since the wake of the global financial crisis in 2009. Even if the government were to hit its 2.4 percent growth target – which many see as too ambitious – it would mark the first time since at least 1954 that the country recorded back-to-back years of lower than 2.5 percent growth.

Getting the economy back on track is among President Moon’s highest priorities for this year. Though the administration’s “income-led” growth policies have produced limited results so far, the Blue House will amplify its efforts this year with new plans for infrastructure, job creation, and social spending. But, the question still remains whether these initiatives will be enough to reinvigorate the economy. Moon’s detractors continue to argue his policies still don’t do enough to account for business interests and are therefore destined to fail. What will likely have a much greater impact on the direction of the South Korean economy this year, however, are major developments abroad. Increased demand for semiconductors and a resolution between Beijing and Washington on trade issues could be a boon for the economy, just as much as further uncertainty could act as a drag.

The Course of South Korea’s Relations with Japan

Last year saw relations between South Korea and Japan hit one of their lowest points since the normalization of relations in 1965. In response to a South Korean Supreme Court’s decision in 2018 that Japanese companies were liable for their use of forced labor during the Second World War, Japan decided in July to place national security restrictions on three key chemicals for the production of semiconductors and later to remove South Korea from its “white list” of trusted exported partners. South Korea responded by removing Japan from its “white list” of trading partners and announcing that it would not renew its military intelligence sharing agreement with Japan – though that has been delayed for the moment.  Despite lower level meetings and a meeting between President Moon and Prime Minister Abe Shinzo in late December, South Korea and Japan have been unable to resolve their disputes. The question for 2020 is whether the two sides will be able to find a resolution to their economic and historical disputes that would allow them to improve relations, or whether this could become the new normal.

Can 5G Help Improve the Prospects of South Korea’s Semiconductor Industry?

With Samsung and SK Hynix two of the world’s dominant producers of memory chips, along with the U.S. based Micron, South Korea was well placed to take advantage of the growing demand for memory chips in recent years. In 2017 and 2018, a surge in demand in the semiconductor industry helped to turn memory chips into South Korea’s top export item, accounting for nearly 14 percent of exports in 2018 and up from just 5 percent in 2014. However, the super cycle began coming to an end in the second half of 2018 and sales continued to decline throughout 2019.  The prospects of recovery have been clouded over the last year by Japan’s new export restrictions and the U.S.-China trade war. They have also been hindered by the slower rollout of 5G around the world due to U.S. efforts to convince countries not to use Huawei for their 5G infrastructure. However, there is hope that as 5G comes online in more markets demand for new 5G capable phones, along with the continued growth in data centers, will help to boost the prospects for South Korea’s most important industry.

How the U.S. Presidential Elections Could Impact Policy

Although taking place outside the Korean Peninsula, the U.S. presidential election in November will have a significant impact on the Korean Peninsula. The election of Donald Trump in 2016 brought about a significant shift in how the United States manages its alliances with countries such as South Korea and its policy towards North Korea. The shape of U.S. policy on issues related to burden sharing, trade, and North Korea will likely all depend on whether Trump is able to win reelection. Those policies could all shift if the Democratic nominee or another Republican were to win the White House in 2020 if Trump were removed from office.

Legislative Election in April will likely Shape the Platforms and Outlook of Korea’s Major Parties

In addition to the U.S. presidential election in November, South Korea will hold a critical election in April for all 300 seats in the country’s unicameral legislature. This election will serve as a litmus test for the public’s confidence in the incumbent administration’s direction and determine President Moon Jae-in’s ability to advance policies during his remaining time in office. Taking a broader view, the election is historic because new faces representing new constituents will take their seats in the next legislative session. The National Assembly’s recent decision to lower the voting age from 19 to 18 will bring 530,000 potential new constituents to the polling booth in April. It is unclear yet how this will impact support for either conservative or progressive parties – but this will no doubt impact the platforms of respective parties looking to win the support of this new cohort. This perhaps partly influenced the leading parties’ decision to retire prominent legislators who had long been the face of the political establishment. Examples include former ruling party legislator and presidential chief of staff Im Jong-Seok and former opposition leader Kim Moo-sung. The upcoming general election, therefore, acts as a beginning of a new period for the increasingly assertive National Assembly.

Can South Korea Improve Its Fertility Rate

South Korea faces a demographic crisis. South Koreans are living longer and South Koreans born a decade from now are expected to have among the longest lifespans of any group of people in the world. However, the question facing South Korea is how many children will be born when the country attains this public health success? In 2018, South Korea had a total fertility rate of 0.98, a historic low, and the final data for 2019 is expected to be even lower. Through September of last year, births were down 8.9 percent from 2018. It will take time and significant social change to return to anything close to the number of births that would allow Korea to reach the replacement rate of 2.1, but the key to watch in 2020 is whether South Korea is able to introduce measures to reverse the current trend and return to a total fertility rate of at least 1.0. The odds are likely stacked against it.

Will the Government Comprehensibly Tackle Elderly Poverty?

President Moon Jae-in pledged to improve the social safety net upon his election in 2017. Since then, the South Korean government’s efforts to assist underemployed youths, curb the financial burdens of childcare, and raise the minimum wage have received the most attention from economists and the media. This can be attributed to the expectation that these policies will have the most impact on South Korea’s human capital resources and industrial productivity in the years ahead.

However, the country’s biggest social welfare crisis is elderly poverty. 2017 data from the Organization for Economic Co-operation and Development (OECD) revealed that 43.8 percent of South Koreans over the age of 65 live in relative poverty (defined as earning 50 percent or less of median household income) – well above the average of 12.5 percent for OECD member countries. This is more than any other country in the 34-country community. While the government does distribute a basic pension to elderly who are in the bottom quintile of income earners, the policy (covering around 35 percent of seniors) provides an insufficient amount to those who qualify and leaves those who do not qualify in a precarious economic position.

Moreover, with the future tax base falling alongside declining birth rates, the National Assembly Budget Office noted that reserves of the National Pension Service will reach zero in 2054.

In response to the crisis, President Moon has pledged to increase the basic pension by nearly 50 percent and double the number of job openings for older workers. However, the challenge is not simply a financial one – reports suggest that many elderly also suffer from loneliness and associated mental health issues. This has manifested in several social challenges, including growing crime rate among elderly and the highest elderly suicide rate among OECD countries. Therefore, resolving the elderly poverty crisis will require a more in-depth solution that incorporates community participation and increased public funding.

How YouTube Shapes Media Consumption in South Korea

In 2019, South Koreans spent more time on YouTube than any other mobile apps.  South Koreans teens spent an average of 42 hours a month watching YouTube videos and people in 20s spent about 31 hours. It is also interesting that people in the 50s and above watch a significant amount of YouTube videos with an average of 20 hours a month, more than people in the 30s and 40s. The number of South Korean smartphone users also hit a record high in 2019, now over 91% of the population own smartphones. People now have instant access to content whenever and wherever compared to traditional cable TVs.

So what are they watching? There is a wide variety of content available for any audience across the age range, from mukbang, music videos, product reviews, kids channel, lectures, cooking, to politics and news. YouTube is not only a source of entertainment but increasingly becoming a resource for self-learning and information. It also became an attractive space where people can create their own content to share with others and even make a profits. Because of the popularity and influence of YouTube, being a YouTube creator made it to the topic 3  dream jobs for South Korean elementary schoolers, followed by athletes and teachers.

Given the wide accessibility and popularity, creating a YouTube channel has been a trending communication strategy for companies and even government agencies to send their message and expand their audience. In 2020, YouTube will continue to influence and impact how South Koreans consume online content and we will see more media content tailored toward YouTube users.

Kyle Ferrier is Fellow and Director of Academic Affairs at the Korea Economic Institute of America, Sang Kim is the Director of Public Affairs and Intern Coordinator, Yong Kwon is the Director of Communications, and Troy Stangarone Senior Director and Fellow. The views expressed here are the authors’ alone.

Image created by Juni Kim Senior Manager for Operations and Technology at the Korea Economic Institute of America. Image photos from the flickr Creative Commons photostreams of The White House, the Republic of Korea, and the U.S. Pacific Fleet.

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The China-Russia Security Council Resolution Part 1: Sanctions Relief

By Stephan Haggard and Liuya Zhang

As 2020 gets underway, it is hard to avoid the obvious: diplomacy surrounding the Korean peninsula is stuck. The core question that divides the parties is—as it has long been—a tactical one. Are North Korea and the United States willing to trade incremental moves on the nuclear issue for partial sanctions relief?

The answer to this question rests largely on choices in Pyongyang and Washington. But for the first time since the collapse of the Six Party Talks, we have a document that outlines the Chinese and Russian positions in fairly granular detail: the draft UN Security Council resolution from the two countries that was leaked to CBS News in mid-December. It is worth a closer look not because it will go anywhere; the U.S. quickly shot it down. But it suggests limits to Beijing’s tolerance for the maximum pressure campaign and offers up an alternative, or at least complementary, diplomatic approach. A key element of that approach: it would give the Moon administration more leeway; indeed, President Moon signaled early that he supported the initiative and even dispatched a high-ranking aid to make the case to Security Council members.

We analyze the draft resolution in two steps, first looking at its economic provisions and then more closely at possible Chinese motives.

The preamble puts an overly-rosy light on a bad situation by welcoming the U.S. willingness to talk, North Korean restraint with respect to nuclear and missile testing and American restraint with respect to exercises. But buried in the preamble is also the strange claim—periodically revisited by Beijing–that UN Security Council resolutions were not intended to have “adverse humanitarian consequences for the civilian population.” A concern with adverse humanitarian effects is warranted; the National Committee on North Korea has long monitored potential adverse effects of sanctions on humanitarian operations in the country. But given that targeting sanctions solely on the leadership is effectively impossible, it is not clear how sanctions would work were the Chinese injunction given a broad interpretation.

Nonetheless, this claim sets the stage for the substantive proposal that UNSC sanctions be partially rolled back. The operational component of the resolution is dedicated to a series of measures that could be undertaken “in light of the DPRK’s compliance with relevant UN Security Council resolutions.” The menu includes:

  • Granting the Moon Jae-in administration more leeway with respect to the inter-Korean rail and road projects, presumably by allowing South Korea to conduct a more extensive survey than the one conducted in late-2018 (our colleagues at Beyond Parallel have the best review of the technical issues);
  • Outlining in detail—at the four-digit HS code level—a series of industrial goods that should be granted exemptions from export controls, ranging from nails and needles, to appliances, to wider categories such as agricultural machinery and “automatic data processing machines and units thereof, such as panel computers and micro computers” (HS 8471).
  • Increasing humanitarian assistance to the DPRK and making it easier to secure humanitarian exemptions.
  • And finally, tucked away in operative paragraph 8, reference to particular provisions of four prior Security Council resolutions in which China finally agreed to the sanctioning of North Korea’s commercial exports. Interestingly, the products in question are not mentioned directly, but by reference to the relevant resolutions and their operative paragraphs. But the measures include lifting sanctions against statues (UNSC 2321 para. 29); seafood (2371, para. 9); textiles (2375, para. 16) and labor exports (2375 para. 17 and 2397 para. 8).

It was this last set of proposals that caught our attention, as sanctions against marine products, textiles and apparel constituted important hits to the ability of DPRK to earn foreign exchange. How much, exactly? The two figures below suggest the magnitude of the Chinese proposal. The first figure shows textile and seafood exports in dollar terms against total exports from 2012 through 2019; the second shows the share of those products in total exports for the same period. As can be seen, measures against these sectors—in conjunction with those against mineral exports—led to a virtual shutdown in North Korean exports to China in early 2018 (if the data are to be believed; we return to that issue below).

But what is interesting is the nature of the trade in these goods prior to that point. As can be seen, these two main product categories are trending up toward about 50% of total exports at the time they were shut down.

In the next post, we look at other economic measures that are afoot to support North Korea and possible Chinese motives for the initiative.

Stephan Haggard is a Non-Resident Fellow at the Korea Economic Institute and the Lawrence and Sallye Krause Professor of Korea-Pacific Studies, Director of the Korea-Pacific Program and distinguished professor of political science at the School of Global Policy and Strategy University of California San Diego. Liuya Zhang is a master student at the School of Global Policy and Strategy, University of California, San Diego. She received her Bachelor Degree of Arts from Fudan University and Master’s degree of International Studies from Seoul National University. The views expressed here are the authors’ alone.

Photo from Wikimedia Commons.

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America’s Adversaries and Sanctions Dead-ends

By Andray Abrahamian

Earlier this month, President Donald Trump warned Iraq’s government against expelling U.S. forces from the country. “If they do ask us to leave,” he said, “if we don’t do it in a very friendly basis, we will charge them sanctions like they’ve never seen before ever. It’ll make Iranian sanctions look somewhat tame.” While this was an idiosyncratic statement to say the least, it does highlight the United States’ over-reliance on sanctions as a foreign policy tool. When we don’t know what to do: sanctions.

With Iraq, this threat might have an impact: the Iraqi political-economy is enmeshed with the United States. Mr. Trump seeks to alter the calculation of a single debated policy issue in Baghdad, albeit a significant one. The goal is discreet, which is when sanctions have the best chance of success.

When it comes to adversaries who tend to view relations with the United States as a zero-sum conflict, it becomes trickier, especially when the United States is asking for a fundamental change in national defense and foreign policy. This brings us to both North Korea and Iran. These two countries were adversaries of the United States long before Mr. Trump was a reality TV star, much less the U.S. President. He inherited and inflamed both relationships, before creating divergent paths: dialogue (with North Korea) and pressure (with Iran). Sadly, both approaches seem to leading to dead ends. Yet sanctions targeting both Iran and the DPRK will remain.

The dead end is this: when targeted states believe that they must not – nay, cannot – yield to their more powerful enemy, even under damaging sanctions, they find coping mechanisms. North Korea and Iran both have become adept at smuggling their main exports. U.S. unilateral sanctions ban the sale of Iranian oil and threaten importers elsewhere with penalties if they don’t comply. UN sanctions on North Korea block the exportation of coal, seafood and other goods. Both states therefore hide their shipments, reflagging and changing the identification codes of their ships and turning off the transponders that all merchant vessels are supposed to use to allow tracking. Both countries have learned to conduct ship-to-ship transfers at sea to move products onto non-sanctioned vessels.

Iran and North Korea are both forbidden by the UN from exporting weaponry, but continue to do so. It turns out the global arms trade is a shadowy world, full of brokers willing to bend and break the rules. Both states have come to rely on a network of individual actors abroad, motivated by high profit margins for high risks, and countries whose interests are not aligned with the United States, to survive.

It’s not that sanctions don’t have costs. Smuggling is no substitution for normal exports and state coffers in both Tehran and Pyongyang are emptier than they would be without sanctions. But as resources dwindle, the core institutions of the state tend to get a bigger share of a shrinking pie as their governments double down on hardline positions. In both countries this means the military and security services. The further away you are from the heart of the system, the less there is for you.

In both Iran and North Korea, there is anecdotal evidence of medical supplies being limited and NGO relief work being hampered by sanctions. In Iran, food prices have soared under sanctions, causing hardship. In North Korea, which is a far more opaque country, it is less clear how nutrition is being impacted, but it seems likely that the most vulnerable are being harmed.

Ordinary citizens also find coping mechanisms through smuggling and informal money transfers. Money transfers in Iran, using what is called a hawala system, work like this: let’s say you wanted to buy a $5,000 Persian carpet. You’d wire the money to an “exchanger” – a hawaladar – in, say, Dubai. He’d call his counterpart in Tehran and say, “I’ve got the dollars here. You can put the equivalent into the rug merchant’s local account and tell him to send the rug.” So trade with Iran isn’t completely stopped, but ordinary businesses pay a premium: the carpet merchant has to pay for the exchanger’s services, often 3 to 5 percent in the case of Dubai. The carpet may also be sent to a third country to hide its origin.

The commissions taken by Chinese financiers for facilitating North Korea’s transactions are higher. Estimates range from 5 to 20 percent, but can increase depending on risk perception. This is, of course, for customers who show up at all, given the hassle and possibility of risking the ire of the United States. Certainly, major companies will steer clear.

What is most likely with both Iran and North Korea in 2020 is period of increased tensions and provocations. This will lead to additional sanctions by Washington, but with no clear solutions for resolving its tensions with either Iran or North Korea. Neither regime will disappear, nor relax its control over its citizens. Great Powers whose interests are not aligned with the United States will throw lifelines to these beleaguered economies and ordinary citizens will find ways to suffer through reduced economic opportunities. Continued economic pressure will further marginalize whatever voices for compromise and dialogue exist in both Tehran and Pyongyang as policymakers fall in line with hardline approaches to the United States.  The leadership in Tehran will increase support for proxy forces around the Middle East and gain influence in Iraq while leaders in Pyongyang will continue to place their limited resources into furthering their nuclear and missile programs.

In this context, continuing to “charge them sanctions” unless the target states offer concessions beyond what they can tolerate harms American interests. And of course it harms ordinary citizens whose only crime is being born in either the Islamic Republic of Iran or the Democratic People’s Republic of North Korea.

Andray Abrahamian is a Non-Resident Fellow at the Korea Economic Institute and Visiting Scholar at George Mason University Korea and Senior Adjunct Fellow at Pacific Forum. The views expressed here are the author’s alone.

Photo from Gage Skidmore’s photostream on flickr Creative Commons.

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The Report on the 5th Plenary Meeting of the 7th Central Committee Part 2: The Economic Message

By Stephan Haggard

I argued yesterday that the report of the party plenum was an attempted exercise in leverage; to hold out the threat of ongoing missile and nuclear developments—and as far as the eye can see—to extract concessions.  But the report also suggests that the regime’s frustration stems from the fact that sanctions are having material effect.

To be sure, the situation could be a lot worse. The leakiness of the sanctions regime has been a leitmotif of the best writing on the subject; particularly noteworthy are the UN’s Panel of Experts reports and high-quality open-source work by organizations like C4ADS (for example, here on luxury goods). Whether Chinese trade data can be fully trusted or not, it shows a pattern we would expect given the nature of the UNSC resolutions: that Chinese imports from North Korea have fallen a lot farther and faster than Chinese exports to North Korea. Even more than in the past, China constitutes a crucial lifeline.

But that does not mean that the sanctions are ineffectual. American analysts and news sources have been focused on the strategic elements of the plenum report rather than its long economic passages, but they are revealing. The “key tasks” it outlines are actually not on the military front. Rather, they lie in the turn toward “self-reliance” first signaled in the wake of the Hanoi breakdown at the April 2019 plenum. In the language of the report, “the key front in the offensive for frontal breakthrough today is the economic front.” The report openly acknowledges that whatever hopes the regime might have had for sanctions relief—contained in their bid at the Hanoi summit—it now believes sanctions are likely to persist for some time. If North Korea wants to show resolve, signaling a plan for dealing with the external constraints is an important place to start.

The report is replete with such messaging, even when it has the effect of underlining North Korean vulnerabilities. References to the Cabinet system have historically been tied to marginal shifts in the direction of reform. In this plenum report, the “reforms” are not liberalizing but focused on how to survive in a context of shortage. The report contains surprisingly self-critical passages with respect to economic management, noting for example “the evil practices and stagnation found in metal, chemical, power, coal, machine and building materials industrial fields, railway transport and light industrial field.” If we exempt agriculture from this litany—and mention of agricultural output in the plenum report was wildly rosy–there isn’t much of the state sector that is actually left.

Without the underlying sectoral reports, there was very little in the plenum report about what these evil practices are; rather we get the standard resort to exhortation and increasing effort. However, there are intriguing hints. When things appear to be going wrong economically, it could well be because market-oriented activity—while keeping the economy going–is also squeezing out state activity to the perceived detriment of the latter. Thus we see the announced need for “party-wide, nationwide and society-wide struggle against anti-socialist and non-socialist deeds and strengthening the work of the working people’s organizations and tightening the moral discipline throughout society.”

It will take some time for the intrepid group of personnel trackers to figure out the implications of the tail end of the report on “organizational matters.” But as would be expected given the critique of economic management, the report makes mention not only of “election” and “appointments,” but of “recalls” and “dismissals.” Whether this rises to the status of a purge is yet to be seen, but it can’t yet be ruled out.

If we take the report seriously, the regime is placing the bet it always does: external imperatives override domestic economic ones. The report in fact admits that “it is true that we urgently need external environment favorable for the economic construction.” But it is also clear that it will sacrifice—or rather, extract sacrifice—on the home front rather than capitulate.

The unspoken issue is whether such capitulation will be necessary given Chinese and Russian impatience with the stalled state of diplomatic play. Surprisingly little attention has been given to the draft UNSC resolution introduced by China in mid-December and secured by CBS news. The ideas undergirding the resolution are not new; their origins can be traced back to the unusual joint statement made by the vice foreign ministers of Russia, China and North Korea in October 2018 arguing for an adjustment in sanctions. But the new resolution is one of the first times we have seen a full blow proposal on the table from China and Russia. In addition to proposing a return to the Six Party Talks, the resolution argues not only for sanctions relief, but a lot of sanctions relief. In effect, the resolution would fundamentally dilute a number of the measures to which Xi Jinping acquiesced over the course of 2016-17; a more detailed analysis will follow in a forthcoming post.

Of course, the U.S. holds a veto at the Security Council and the purpose of the resolution is not to directly sway the Trump administration, which quickly underlined that it remained committed to sanctions. But the message of the Chinese and Russian effort is not simply to get U.S. buy-in; it is to signal that patience with wide-ranging sanctions could erode even further than it already has if the current stand-off continues. After dutifully lining up behind the U.S. efforts for his entire presidency, perhaps the most interesting development over the course of December was the endorsement of these proposals by Moon Jae-in.

In sum, the report on the 5th Plenary Meeting of the 7th Central Committee is the belated Christmas gift. It promises open confrontation on the nuclear and missile front, backed by a commitment to tough out whatever additional sanctions the U.S. tries to impose. But as critics have long argued, sanctions regimes are hard to sustain. The U.S. could end up going into this fight with fewer instruments at its disposal than it thinks, unless the administration wants to ratchet up pressure on China over the issue. Given looming risks in the Middle East, not to mention continued uncertainty on the trade front with Beijing, the option of staying the course and hoping something will break does not look promising.

Stephan Haggard is the Lawrence and Sallye Krause Professor of Korea-Pacific Studies, Director of the Korea-Pacific Program and distinguished professor of political science at the University of California – San Diego.  The views expressed here are the author’s alone.

Photo from Clay-Gilliland’s photostream on flickr Creative Commons.

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The Report on the 5th Plenary Meeting of the 7th Central Committee Part 1: The Belated Christmas Gift

By Stephan Haggard

In lieu of a New Year’s speech, Kim Jong -un convened an unusual plenum of the Central Committee in December, issuing a widely-distributed Report on the meeting in its stead. What was said—and what it augurs for 2020—are considered in two parts: the bargaining with the United States, which has gotten most attention, and the economic messages—taken up tomorrow–which are equally if not more important.

The Plenums of the last two years—which appear to be augmented with personnel well beyond the Central Committee narrowly conceived–have been consequential. The April 2018 party plenary came at the beginning of the summit era, and carried a message—however equivocal—of a willingness to talk. The April 2019 plenum, by contrast, followed on the failure in Hanoi and was decidedly darker in tone. It set in train the sustained limbo—broken briefly by the handshake at the border and the Stockholm meetings–that characterized U.S.-DPRK relations for most of 2019.

Plenums are designed to outline broad policy lines that pertain to both external and internal affairs. There can be little doubt, however—given the year-end deadline given by Kim Jong-un for progress on negotiations with the U.S.—that this one was sending a foreign policy message. See it as the “Christmas gift” that Vice Minister of Foreign Affairs Ri Tae Song promised in early December.

Coming early in the work report is a long passage on the technological advances made in the country’s weapons programs, an admission—were one needed—that the regime has not been standing still. In addition to the 19 short-range missile tests, tests the Trump administration has largely shrugged off, other development activities have clearly not abated. The core message: time is not in fact on the side of the United States.

What capabilities, exactly? Two are of most central strategic significance. The first is reflected in the highly public engine test at the Sohae Satellite Launching Ground, a facility that Trump personally claimed Kim Jong-un had promised to destroy. The test is a reminder that the regime has multiple programs aimed at a credible inter-continental capability, and these have continued despite the self-declared moratorium on long-range missile tests.

The second message is that the regime remains set on securing a second-strike capability, and thus a more assured deterrent against any possible U.S. military action (however low a probability it may seem to us). The report makes mention of the fact that the U.S. maintains a preventive option, claiming disingenuously that the U.S. sees North Korea as a “target of its preemptive nuclear strike.”  This capability has been signaled through tests showing more competence with solid fuel rocketry, a long-standing objective. Solid-fuel shortens launch times, and thus increases mobility. A submarine-launched capability serves the same purpose; tests related to such a capability were undertaken just in advance of Stockholm. Even if it would seem that an SLBM capability was pretty far off, we have made that miscalculation about North Korean engineering capabilities before.

The report’s analysis of the current state of diplomatic play is virtually a mirror image of the analysis of North Korean behavior in the U.S.: that North Korean dickering is simply a pretext for developing capabilities that will get harder and harder to shut down. The North Korean interpretation, by contrast, is that the U.S. is playing the same game, “wasting time away under the signboard of dialogue and negotiations,” while at the same time keeping the sanctions regime in place.

The United States has downsized, downplayed and even canceled exercises. This has not been enough for Pyongyang, which continues to treat any drills and the shipment of “ultra-modern warfare equipment” as signs of bad faith. Yet it is also noteworthy that the report makes particular mention of the “more than ten independent sanctions measures” the U.S. has undertaken outside of the UNSC framework, a reference to secondary sanctions Treasury has imposed to reduce leakage.

The report boasts that “the world will witness a new strategic weapon to be possessed by the DPRK in the near future”; I leave speculation on what that might be to others, but given the multiple missile programs the regime is juggling simultaneously, Pyongyang’s options are surprisingly wide. The result is that bargaining is about to shift from the conference table (such as it was) to an end to the moratorium, a resumption of testing and whatever conciliatory or escalatory measures the Trump administration chooses to make.

Despite these threats, the report also leaves open a diplomatic crack. While the regime will “reliably put on constant alert the powerful nuclear deterrent capable of containing the nuclear threats from the U.S.,” it also notes that “the scope and depth of bolstering our deterrent will be properly coordinated depending on the U.S. future attitude to the DPRK.” Military threats are never distinct from diplomatic objectives; they are a complement to them. The objective: to force concessions from the United States as a precondition for a resumption of talks at any level.

To assess North Korea’s bargaining position, however, we need to consider the economic landscape. That landscape necessarily takes us into where China stands on the current state-of-play; I address that issue tomorrow.

Stephan Haggard is the Lawrence and Sallye Krause Professor of Korea-Pacific Studies, Director of the Korea-Pacific Program and distinguished professor of political science at the University of California – San Diego.  The views expressed here are the author’s alone.

Photo from the Kremlin’s website.

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The Koreas, Together Alone

By Andray Abrahamian

It is difficult to recall a moment where the two Koreas were simultaneously more isolated from the other countries of the region. What does this mean for the coming years?

For both, relations with China have been tricky in recent years. Beijing, has after all sanctioned both Koreas since 2017. When Seoul installed the American THAAD anti-missile defense system in mid-2017, Beijing sanctioned several Korean companies and sectors. This was executed informally and was thus deniable, such as the unofficial ban on group travel to South Korea: no public edict was given and news agencies only learned of it through leaks or comments by Chinese tour operators. Seoul made some commitments to Beijing in October of that year, but 2017 was difficult.

North Korea was meanwhile also subject to several rounds of UN sanctions in 2016 and 2017, as they pursued a robust schedule of nuclear and missile testing. This included punishing sectoral sanctions that covered all of the DPRK’s major exports, including laborers abroad, textiles, seafood, coal, and other extractives. China signed on to all of these, exacerbating the sense of mistrust Pyongyang has regarding its huge neighbor.

Since then, Kim Jong-un and Xi Jinping have managed to have five (five!) summits and clearly some sort of cooperative agreement has been put in place, even if the details are unknown. Still, after years of tensions, bilateral relations remain tense. North Koreans have distrusted the Chinese for decades and more than generally assumed by many observers. A handful of summits hasn’t erased this. Moreover, the huge increase in Chinese tourism to North Korea  – something of an economic lifeline that has developed in the past year – has to give Kim Jong-un pause: he saw how Beijing choked off tourism to the other Korea. (It has also happened with Taiwan and Palau, to varying degrees.)

The quixotic leadership of Donald Trump has opened new opportunities and created new challenges for both Koreas, also. He has heaped pressure on South Korea through forcing a renegotiation of the 2012 Korea-US Free Trade Agreement, while slapping tariffs on some exports. This year, he has demanded a five-fold increase in the cost that Seoul pays for stationing U.S. troops in Korea.

Meanwhile, from the North Korean perspective, Trump has failed to come up with a new kind of solution to the post-Hanoi doldrums, even though Pyongyang’s own decision-making bears much responsibility for the lack of progress this year. Still, it seems as if Kim Jong-un has concluded that Trump has gone from wanting a deal to being disinterested. If the door to dialogue is currently barely open, Kim’s suggestion that he will go “a new way” in 2020 will probably see it slammed shut.

Japan is more irrelevant to North Korea than ever. Once the DPRK’s largest trading partner, interactions are now minimal. Shinzo Abe is the only leader in the region not to have had a summit with Kim Jong-un, so little is there to discuss, apparently.

Following South Korea’s 2018 Supreme Court order that two Japanese companies must compensate 14 forced labor victims for unpaid work during World War II and the Moon Administration’s dissolution of a foundation for “comfort women” under a 2015 agreement, Japan started a trade war. By taking South Korea off a trading white list, Tokyo threatened inputs into Korea’s semiconductor industry. South Korea responded with a consumer boycott and its own whitelist removal.

Crucially, Seoul also announced it was leaving GSOMIA, an intelligence sharing agreement brokered by Washington. Seoul has just postponed that decision after U.S. pressure in the past few weeks. This must also feel to Seoul as if it has less sway with the Americans than Tokyo has.

As for Russia, it will continue to take a backseat in the region. Moscow will not be a decisive economic or political player for either Korea.

This is a moment for extreme uncertainty for both Pyongyang and Seoul. If President Trump is in power another five years, one suspects Seoul might be inclined to pursue greater autonomy and move further from the United States. Yet rushing into the arms of China is hardly appealing. Rapprochement with Japan in the coming years seems unlikely: the South Korean body-politic is moving towards a fundamental reshaping of Japan-Korea relations, moving beyond the 1965 treaty that has hitherto defined bilateral ties.

For North Korea, whatever arrangement they have with China will allow for continued survival, but absent a breakthrough with the United States, economic growth will be limited. Major Chinese companies will stay away from North Korea so long as secondary sanctions risks remain. Russian investment and trade will remain small.

Inter-Korean relations will also deteriorate: even if Seoul’s trust in and dependence on the United States for security is gradually reduced, domestic politics and the structure of inter-Korean competition will remain huge fetters on how much the two Koreas could turn to each other. In the near term, Moon’s outreach will appear invalidated in domestic politics.

The extent to which uncertainty in Northeast Asia persists is partly related to how long Trump is in office, though not entirely. Regardless, both Koreas will find themselves navigating waters even more lonely and ambiguous than ever.

Andray Abrahamian is a Non-Resident Fellow at the Korea Economic Institute and Visiting Scholar at George Mason University Korea and Senior Adjunct Fellow at Pacific Forum. The views expressed here are the author’s alone.

Photo from the Republic of Korea’s photostream on flickr Creative Commons.

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Missile Testing – What is North Korea Signaling and to Whom?

By Mark Tokola

On Thursday, July 25, North Korea launched two, (reportedly) short-range, missiles into the sea west of Japanese waters. News reports say that they traveled to distances of 430 and 690 kilometers, and flew low, no higher than 50 kilometers in altitude. Some analysts believe that the projectiles were part of North Korea’s newly-developed KN-23 arsenal, a short-range ballistic missile that resembles Russian-designed Iskander system. The weapon was also tested in May ahead of President Trump and Kim Jong-un’s meeting at the Demilitarized Zone on June 30.

Although these missiles do not have the same range as the ICBMs that North Korea tested in 2017, the KN-23 is sophisticated. The KN-23 reportedly can change direction and its low trajectory can help evade missile defense systems.  It apparently is designed to strike with accuracy. They may not threaten the U.S. homeland, but they certainly threaten South Korea and Japan.

What is North Korea signaling with this test, if anything?* In retrospect, North Korean missile testing in 2017 seemed to have adhered more to a weapons development and engineering timetable than to any diplomatic maneuvering or special anniversaries. They tested when they were ready to test. North Korea’s stepped-up testing schedule enabled Kim Jong-un to announce in his 2018 New Year’s speech that the program had been completed.

However, diplomacy has come to the fore in 2018 and 2019 and it seems more probable that North Korea’s May 9 and July 25 missile tests were intended to message something to someone. It also may not be coincidental that these missile test came just days after photographs were released of Kim Jong-un standing next to a new North Korean submarine under construction. It is just not clear what the message is, or to whom it is directed.

American commentators tend to assume that the North Korean missile tests were a message to the United States, perhaps to urge a resumption of negotiations or to increase North Korean leverage for the talks to come. Conversely, it could be argued that the missile tests are intended to message the opposite, that North Korea does not mind if its behavior leads to a delayed resumption of talks. They may want to show that sanctions are not having that much effect and time is on their side.

There are several possible interpretations of the message. Might it be directed towards South Korea rather than towards the United States? “The U.S. dismisses short-range missiles as unimportant but they can hit you. You should deal with us.” Or the message may be meant for Japan. “Our missiles tests are aimed in your direction for a reason. Ease up on your hardline policies towards us, or else.” Or maybe China? “You want stability in Northeast Asia? Then get the U.S. to make a serious offer to ease sanctions.” Kim Jong-un’s missile test messaging might even be directed towards his hardline domestic constituency. “You can stop worrying about diplomacy leading to North Korean weakness.  Support me.  We’re developing new and deadly North Korean weapons.” Or it could be some combination of the above.

There is no way to be sure what North Korea is signaling. Pyongyang may be frustrated that we are not interpreting their signals correctly and are not responding to them as they would wish. What the United States can do is to interpret the possible signals in ways that advance U.S. and South Korean interests.  If we want talks to resume, we should not interpret the missile tests in ways that would derail them. Whatever the intended message is, U.S. and South Korea policymakers should see the short-range missile tests and think: “Note to self: North Korean nuclear weapons and long-range missiles are not the only threats North Korea poses.”

What does North Korea mean by the tests?  When movie mogul Samuel Goldwyn was asked about messages conveyed in movies, he reportedly said: “If you want to send a message, use Western Union.”  It would be helpful if North Korea would be more explicit about its wants and what it is offering.


*The day after this was posted, Kim Jong-un made a public statement that the missile test was meant as a warning to South Korea to stop joint military exercises with the U.S. and to stop modernizing its military forces.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Picture from Korea Central News Agency

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The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.