Tag Archive | "security"

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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Emerging 5G industry in South Korea amid the U.S.-China Trade Conflict

By Hyoshin Kim and Junsoo Kweon

5G offers faster data speeds than current mobile networks and could transform the global economy through fields like Internet of Things (IoT) and self-driving cars. This network is also critical to a nation’s military capabilities. It can share huge volumes of data across vast distances, allowing governments to track missile launches and transmit real-time drone footage.

Given the security implications of the 5G industry, the U.S. government is concerned with China’s rising dominance in this sector. The Chinese company Huawei is already a leading global information and technology provider. It is also active in South Korea’s telecommunications market. As the U.S. government monitors Huawei, the company’s presence as a 5G vendor in South Korea has created a dilemma.

The Trump Administration has warned allies that Huawei is an untrusted 5G vendor. This is because China’s National Intelligence Law requires all people and entities within China to abide by the decisions of China’s communist government. If the Chinese government wanted some information from Huawei’s networks, all it has to do is ask.

To make the situation worse, The Washington Post reported that Huawei conducted “secret operations to build North Korea’s wireless network”. The company’s history of operating in countries like Iran further intensifies concerns around Huawei’s intentions to become the principal provider of 5G technology to East Asia.

Despite these concerns, South Korea continues to accept Huawei contracts. Huawei’s price-competitiveness has attracted significant attention in the race to develop regional 5G network infrastructure. One of the three mobile phone service providers, LG Uplus, in South Korea has partnered with Huawei to build its 5G network. Meanwhile, the Japanese government decided to ban Huawei, pushing back on any official contracts with Huawei in its telecommunications network.

The U.S. government insists that the risk of information leaking to China through Huawei’s 5G networks could endanger the U.S. alliance with South Korea and Japan. Randall Schriver, the Assistant Secretary of Defense for Asian and Pacific Security Affairs, said “The United States doesn’t want to see a situation arise where we don’t have confidence in sharing sensitive information with our ally and information being safeguarded.”

South Korea, in particular, is caught in between China and the United States. China is geographically closer to South Korea and makes up a larger share of its foreign trade. China accounts for 26.8% of South Korea’s exports. Leveraging this economic clout, the Chinese government is pushing South Korea to continue trading with Huawei.

In response, South Korea has been actively developing its own 5G industry that can compete with Huawei. In June, the government of South Korea launched a 5G plus strategic committee to establish a long-term plan to enhance the Korean companies’ share in the 5G telecommunication equipment market. Furthermore, Korea is actively looking to cooperate with ASEAN markets on 5G network buildout, providing an avenue for Korean technology companies to scale-up its 5G capacity.

With the government’s support, Samsung is expanding its 5G business. Already the world’s biggest supplier of smartphones and computer chips, Samsung plans to utilize its existing infrastructure to give it a competitive edge over Huawei in 2020. In addition, Samsung is a leader in the semiconductor industry, which provides core components for 5G base stations and transmitters. As Samsung develops smaller and faster semiconductors, its 5G wireless technology is also anticipated to improve.

Samsung is also positioning to be a possible partner of the United States. Claude Barfield, a scholar at the American Enterprise Institute, argued “It is not clear if Huawei’s two current competitors — Sweden’s Ericsson and Finland’s Nokia — will be able to match Huawei’s prodigious resources. Samsung could develop into a potent third option over the next several years.” As South Korea looks to bolster its own tech infrastructure while balancing its security needs, it is worth paying greater attention to South Korea’s 5G network.

Hyoshin Kim is an Asan Fellow and an intern at the Korea Economic Institute of America. Junsoo Kweon is an Asan Fellow and intern at the Heritage Foundation. The views expressed here are the authors’ own.

Photo from Kārlis Dambrāns’ photostream on flickr Creative Commons. 

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National Defense Prioritized over K-pop

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • Last week, the Minister of Culture announced that K-pop stars would not receive exemptions from military service.
  • The decision comes in the midst of a movement by the Military Manpower Administration and the Ministry of National Defense to reduce the total number of exemptions permitted.
  • This reduction is a response to South Korea’s rapidly shrinking population of young men eligible for conscription.

Implications: The Korean government has invested a substantial amount of money into K-pop as a major global commodity, but demographic challenges are forcing the country to choose between exports and national defense. While K-pop fans may criticize the government, the decision was likely a difficult one. K-pop generates both revenue and soft power capital for the country; therefore, curbing these band members’ ability to perform undercuts national interest in these areas. However, this is just one of many tough decisions that Korea will likely face in the future as population decline limits the country’s ability to meet its national defense needs.

Context: The ruling did grant some leeway for the K-pop industry. The ministry is planning to lessen the international travel restrictions placed on men over the age of 25 that have yet to complete their military service. These restrictions currently cause problems for stars who are hoping to go on tour overseas. Additionally, the ministry announced that those athletes and artists who have received exemptions from their service will be required to make a greater social contribution to the country.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

Photo from Wikipedia.

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Debate around South Korea’s Role in the Alliance Splits along Partisan Lines

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • South Korea looks to assume wartime operational control (OPCON) from the United States by 2022.
  • A survey conducted by the ASAN Institute in February revealed that 40% of South Koreans supported the planned transfer, while 32% advocated postponement and 11 called for the plan to be eliminated altogether.
  • A group of retired deputy commanders from the Combined Forces Command (CFC) urged the Moon administration to postpone these changes until after North Korea’s denuclearization.

Implications: A long-established progressive-conservative flashpoint, South Korea’s assumption of OPCON continues to divide people along partisan lines despite growing criticism of U.S. government’s North Korea policy by people on all political spectrums. The conservatives’ strong support for the status quo is partly rooted in the fear that the U.S.-Korea military alliance may begin to unravel if Seoul regains OPCON. This aversion to potential abandonment outweighs conservatives’ growing dissatisfaction with Trump’s policies towards the Korean Peninsula, particularly his amicable posture towards Kim Jong-un. This also overcomes bipartisan misgivings around the Trump administration’s demand for more money to host U.S. troops in South Korea. The opinion of CFC deputy commanders will further embolden conservative opposition to President Moon’s current push to accelerate OPCON transfer.

Context: Domestic politics aside, South Korea still faces several barriers before it can secure OPCON. First, the South Korean military must pass a test to validate its capabilities. Second, the two countries must conclude negotiations on the role of the United Nations Command post-OPCON transfer. In recent months, these talks have reached a significant impasse. As such, the timeline of OPCON transfer may be delayed despite the Moon administration’s plans.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

Picture from UNC – CFC – USFK flickr account

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Seoul Looks for a Tune that Resonates with Trump on Burden-Sharing

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • In a tweet, Donald Trump announced that South Korea had “agreed to pay substantially more money to the United States in order to defend itself from North Korea.”
  • South Korean Ministry of Foreign Affairs underscored that it was “inappropriate” to comment on a foreign leader’s Twitter post, but emphasized that negotiations for the defense cost-sharing have not yet started.
  • During his visit to Seoul in July, National Security Advisor John Bolton asked for $5 billion in annual payments from South Korea for hosting U.S. troops – this would mean South Korea paying over $4 billion more than what it is contributing today.

Implications: The South Korean government believes that it can coax the U.S. government into accepting a lower amount than what John Bolton demanded by offering concessions in other areas. ROK officials are reportedly discussing the deployment of naval units to the Strait of Hormuz to demonstrate South Korea’s role in advancing Washington’s geopolitical interests outside the Asia-Pacific region. In addition, Seoul may increase its acquisition of U.S. military hardware to convey the country’s contributions to the American arms industry. With an eye on messaging the importance of the bilateral security relationship more aggressively among U.S. policymakers, the Blue House will also dispatch a new ambassador to the United States.

These actions stem from South Korea’s belief that Washington is making an aggressive opening bid in a discussion that is negotiable. Some Korean newspapers have rationalized the controversial tweet as a tactic described in the 1987 business advice book “The Art of the Deal,” which is credited to Trump. This view may have been further bolstered by the fact that Bolton’s $5 billion demand does not comply with the U.S. administration’s own proposal for allies to pay “Cost Plus 50.” However, KEI Fellow Kyle Ferrier believes that the White House may be more recalcitrant in its position, as evidenced by Bolton’s similar demand to Tokyo that Japan increase its burden-sharing contributions fivefold.

Context: South Korea’s tactical maneuvers are animated by its recent negotiations with the U.S. government. When Donald Trump raised issue with the Korea-U.S. Free Trade Agreement, South Korean negotiators were able to steer the U.S. government away from significant revisions by making small concessions in the steel and auto sectors. Similarly, in last year’s negotiations with Washington on burden-sharing, Seoul avoided the initial U.S. demand for a 100-200% increase in monetary contributions through arms acquisition and other measures. It is unclear whether this strategy will continue to have mileage in upcoming burden-sharing discussions.

Korea View was edited by Yong Kwon with the help of Yusong Cha, Stephen Eun, Taehwa Hong, and Hyoshin Kim.

Picture courtesy of the White House

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What U.S.-Iran Tensions Mean for South Korea

By Troy Stangarone

Last week two oil tankers were attacked in the Gulf of Oman. The attack comes after four tankers were attacked in the Persian Gulf in May. While the United States has argued that Iran is behind the most recent attacks, the growing confrontation between the United States and Iran has deeper implications for South Korea.

As a country without substantial domestic energy resources, South Korea is highly dependent upon foreign imports for its energy supplies whether it be oil and natural gas, coal, or the nuclear fuel to run its nuclear power plants.

South Korea uses petroleum and other liquid based fuels for 44 percent of its energy consumption, including for fuel for transportation, power generation, and its petrochemical sector. Liquefied Natural Gas (LNG) accounts for another 14 percent of South Korea’s energy consumption and is used in power generation, transportation, and other sectors.

South Korea’s dependence on imports for energy is also a dependence on the Middle East for imports of petroleum. In 2018, 72.9 percent of South Korea’s crude petroleum imports by value came from inside the Strait of Hormuz. South Korea’s purchases of LNG tend to be more diversified, about 45 percent are also from the Middle East.

With imports from Iran in 2018 beginning to decline from the resumption of U.S. sanctions, to increasing imports from the United States, Russia, and few others outside of the Middle East, South Korea’s imports from the region 2018 were down from 82 percent in 2017.

The significance of the Strait of Hormuz, and South Korea’s dependence on suppliers inside it, is that it is the narrow passage way which divides the Persian Gulf and the Gulf of Oman. This is a critical transit point for global energy exports as 30 percent of the world’s oil exports come from the Middle East. It also boarders Iran, which has threatened to close if the U.S. tries to block Iran’s access to the strait. Iran has also threatened to close the strait in the past.

If Iran attempted to close the Strait of Hormuz, it would have significant implications for South Korea.

South Korea’s dependence on the region for such a significant amount of its energy consumption makes it susceptible to the current tensions in the Middle East in terms of price and supply. After an initial spike in the price of Dubai crude, the benchmark for South Korean oil imports from the Middle East, after the most recent attack on oil tankers markets seem to have calmed. However, some analysts have suggested that prices of Brent crude, the benchmark for the United States, could rise to $100 a barrel from its current price of around $62 today[1].

The prospect for the current tensions between the United States and Iran to grow into a wider conflict will only be one factor on global energy prices. With the current U.S.-China trade tensions dampening global growth, demand for petroleum could decline and act as a counter weight on prices to U.S.-Iran tensions.

If current tensions between the United States and Iran were to escalate to a wider conflict, the supply of oil on global markets would play an important role in maintaining prices, but with the U.S. also trying to cut off Venezuelan oil exports global oil markets could be tighter than expected.

The ability of the United States to build a coalition to protect ships transiting near Iranian territory would also play a factor in the availability of supply and the stability of price. If the United States was unable to build a coalition to defend oil and LNG shipments from the Middle East, South Korea could find itself facing both rising energy prices and an energy shortage if supplies from the Middle East were disrupted.

In the short-term there is little that South Korea can do to insulate itself from instability in the region, but that also means it has a significant interest in the United States and Iran avoiding a wider conflict in the dispute over Iran’s nuclear program. Over time continuing to diversify its supply and moving more towards renewable energy would help to reduce South Korea’s susceptibility to the unpredictability of the Middle East.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the authors alone.

Graphics by Juni Kim, Program Officer at the Korea Economic Institute of America.

Photo from the Official U.S. Navy Page’s photostream on flickr Creative Commons.

[1] Dubai crude tends to be more expensive than Brent crude, but most of the analysis is done in Brent crude prices.

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10 Issues to Watch for on the Korean Peninsula in 2019

By Mark Tokola, Phil Eskeland, Troy Stangarone, Kyle Ferrier, Juni Kim, Yong Kwon, and Sang Kim

2018 was a year of dramatic change on the Korean Peninsula. The prospect of war that seemed to growth with each North Korean nuclear or missile test receded as North Korea, the United States, and South Korea moved towards diplomacy which culminated in the historic summit meeting between U.S. President Donald Trump and North Korean Chairman Kim Jong-un in Singapore.

While the move towards diplomacy with North Korea was the top story of 2018, the year also saw South Korea successfully host the 2018 Winter Olympics, South Korean President Moon Jae-in move more directly towards implementing his income lead growth strategy, and K-pop take another significant step towards breaking out in the United States.

As we move into 2019, some of the big questions facing the Korean Peninsula will center around whether real progress can be made with North Korea now that we are beyond the initial stages of diplomacy and what that means for inter-Korean relations. Other key issues for 2019 will be how the U.S.-China trade war plays out and the implications for South Korea, as well as whether income lead growth will be able to overcome some of the initial implementation challenges it has faced.

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 ahead:

Whether a Peace Process Can Develop

It is generally believed that the denuclearization of North Korea will be accompanied by a “peace process” (or peace regime, or peace declaration, or end-of-war declaration – there are many terms being tossed around) but what this would actually mean or whether it would come before or after an agreement on denuclearization is unclear.  The “peace process” may come in pieces.  There is nothing to prevent North and South Korea from declaring on their own that peace has come to the peninsula.  Similarly, the United States and North Korea could issue a joint statement saying that have no hostile intent towards one another.  If such statements can promote denuclearization or decrease tensions, well and good.  The devilish details would be in what concrete steps if any would accompany a declaration of peace.

2019 may well see announcements of peace on the Korean Peninsula.  It would seem like an irresistible flourish to mark Kim Jong-un’s visit to Seoul, or to give an appearance of progress for a second Trump-Kim Summit.  But, watch for the details.  Would a declaration of peace be accompanied by a road map towards denuclearization? A normalization of relations with liaison offices being established in Washington and Pyongyang?  A more wide-ranging commitment by North Korea to restrain its belligerent behavior beyond denuclearization, such as in cyber or other weapons systems?  Would there be a move towards formally ending the Korean War by winding up the armistice? Thinking through what a peace process would mean reveals that there are big issues beyond denuclearization.

Will the United States Lift Sanctions on North Korea?

In his New Year’s Day address, Kim Jong-un called for the United States to lift sanctions if it wants the process of dismantling North Korea’s nuclear weapons to go forward. In the past, the Trump administration has said that North Korea would have to dismantle or substantially dismantle its weapons programs before sanctions relief would be possible. With progress with North Korea stalled, one of the key questions for the Trump administration will be whether it sticks to its stance or accommodates North Korea’s push for sanctions relief.

If the Trump administration decided to move forward on sanctions relief there are four general ways it could look to pursue to move the talks forward and demonstrate good faith. The first area would be to support inter-Korean engagement. Here the administration could support further sanctions waivers to allow inter-Korean economic projects to advance. At the United Nations, the administration could support removing one or more specific sanctions that have been placed on North Korea. Another, more likely option at the UN, would be for the administration to pursue time-limited waivers of sanctions that are contingent on progress by North Korea in dismantling its nuclear programs. The final option would be for the administration to waive one or more specific U.S. sanctions where it has the authority to provide a national interest waiver.

Burden Sharing and the U.S.-Korea Military Relationship

As part of his professed “America First” values, U.S. President Donald Trump has repeatedly criticized South Korea, and other U.S. allies, for what he views as an unfair defense burden to America for stationing U.S. troops. The U.S. has maintained a military presence in South Korea since the Korean War in the 1950s and South Korea currently hosts 28,500 American troops, the third largest number of troops stationed in a foreign country after Japan and Germany. Ten rounds of negotiations occurred throughout 2018 between U.S. and South Korean officials to renew the Special Measures Agreement, a 2014 burden sharing deal that is set to expire at the end of 2018. The latest round failed to reach a deal over demands from the U.S. for South Korea to greatly increase its contribution and has prompted fresh concerns over the U.S.’s commitment to the alliance. Without a new deal in place, Korean workers at U.S. military bases in South Korea are in danger of being put on leave in the New Year. If left unresolved, the ongoing debate over cost-sharing could greatly hinder future U.S.-ROK relations.

The Future of THAAD in South Korea

China’s protest of the deployment of Terminal High Altitude Area Defense (THAAD) batteries, which were provided by the U.S. military, in South Korea in 2017 led to a political and economic row between the two countries. A resulting Chinese ban on tourism to South Korea and South Korean goods eventually gave way to an agreement late last year to normalize trade relations. Although trade and tourism numbers have started to rebound in 2018 after dramatic decreases in 2017, negative repercussions still remain, though the exact cost of the sanctions are hard to definitively quantify South Korea has likely lost more than $13 billion from the decline in tourism alone. In particular, the Korean conglomerate Lotte, which provided the land for THAAD deployment, has suffered from the after-effects of China’s sanctions with its stores in China shuttering due to lost business.

For 2019, it will be worth watching if the numbers continue to recover and how South Korean businesses adapt to the potential risks of dealing with a volatile Chinese market. For Lotte’s part, the company has actively courted Southeast Asian markets to make up for Chinese losses. It will also be worth watching if THAAD becomes part of talks with North Korea or the expected results of a South Korean environmental impact study affect its deployment.

U.S.-Korea Trade Relations – Section 232 Investigation

The past year has seen great progress in ameliorating initial uncertainties:  exports of U.S. goods and services to Korea increased 10 percent; the bilateral trade deficit declined by 43 percent; and agreements were reached and ratified to modify the Korea-U.S. Free Trade Agreement (KORUS FTA) and to limit Korean steel exports to the United States.

Nonetheless, there is still one looming threat – the possible imposition of U.S. tariffs as high as 25 percent on imported motor vehicles and parts from South Korea.  The Commerce Department has until February 17, 2019, to release the results of its Section 232 investigation into the national security implications of imported autos and parts.  If the report concludes that these products are a threat to U.S. national security, the President has until May 17, 2019, to make a final decision on tariffs.  However, because Korea and the U.S. concluded their negotiations on KORUS and steel two months before the Commerce Department launched this investigation, other major auto producers – Canada, Mexico, Japan, and the European Union – received reprieves or waivers on higher tariffs during their trade talks with the United States.  No decision has yet been made to exempt South Korea from higher tariffs even though Korea imposes zero tariffs on motor vehicles imported from the United States; the revisions to KORUS made several changes benefiting U.S. automakers, including a 20-year extension of the 25 percent U.S. tariff on imported pick-up trucks; and the value of U.S. imports of motor vehicles and parts from Korea has steadily declined since 2015.  Imposing a 25 percent tariff on imported cars and parts would also add approximately 10 percent to the production cost of Korean name-plated cars assembled in Georgia and Alabama, making their vehicles less affordable to the American public, resulting in a significant reduction in employment at both their manufacturing facilities and their dealerships.

Compounding the issue is the frustration that President Trump expressed on November 28th regarding the recent announcement of the closure of four GM plants in the U.S. that make auto parts and smaller vehicles.  The President tweeted, “the countries that send us cars have taken advantage of the U.S. for decades,” reflecting a fundamental worldview that he has believed for over 30 years.  Trump added, “if we [imposed a 25 percent tariff on] cars coming in, many more cars would be built here.”  Because Korea still exports some cars to the U.S. that compete against GM, the threat of a higher tariff could be used to pressure Korean car manufacturers to move even more production to the United States.  President Trump also desires that Korea pay much more to continue stationing U.S. troops on the Korean peninsula.  He could use the threat of higher car tariffs as another pressure point on South Korea.  Unless Korea is granted an exemption on the auto tariffs, much of the goodwill in the bilateral trade relationship that has been generated over the past year will quickly dissipate because it will be perceived as bad faith in terms of moving the goalposts in bilateral trade negotiations.

The U.S.-China Trade Conflict

On the surface, tension in U.S.-China trade relations does not appear to affect South Korea too much because South Korea’s economy is more aligned with the United States.  However, because China is now Korea’s largest trading partner, South Korea could be caught in the undertow of the churn in U.S.-China friction.  Some Korean brand consumer electronic products are assembled in China and subsequently exported to the United States, which now has to be re-thought in light of the threat of U.S. tariffs as high as 25 percent on Chinese exports.  Other products assembled in China also contain significant Korean content.  For example, the screen on the new Apple iPhone XS is made by either Samsung or LG.  The Korean stock market frequently gyrates at any movement in U.S.-China trade talks – up when negotiations progress and down when discussions stall.  The two sides have given themselves until March 1, 2019, to conclude a successful agreement.

However, many of the irritants in the U.S.-China trade relationship are deep and foundational problems to the Chinese economy and most likely cannot be cured in less than three months.  If an agreement is reached that just makes marginal changes on the edges, such as a commitment by China to purchase more U.S. products or lowering the tariff on imported autos, then the U.S., and by extension, Korea, will continue to face long-term economic challenges from China.  If the U.S. acts in concert with other nations that have similar concerns about unfair and trade-illegal Chinese practices, then multilateral action can spark necessary reform to China’s economy.  However, if the talks break down and the U.S. continues to act alone by imposing more and more tariffs irrespective of how it affects constituencies in the U.S. or other nations like Korea, China will ironically gain the moral high ground as the defender of free trade and unnecessarily delay the market-oriented changes the free world needs to see take place in China.

U.S.-Korea Cooperation in the Indo-Pacific

The “Free and Open Indo-Pacific Strategy,” first introduced over a year ago, now underlies Washington’s approach to the region. South Korea has yet to officially join the strategy nor is it likely to in 2019 due to concerns in Seoul that it could be interpreted as “containing” China or even forcing its hand to choose between Beijing and Washington. However, the overlapping goals between the Indo-Pacific Strategy and the Moon administration’s “New Southern Policy” provide new opportunities for both the U.S. and South Korea to work together beyond the Peninsula.

Both visions focus on increasing engagement with South and Southeast Asia on many of the same key issues based on the same core values, albeit in different ways. The clearest means to bridge the two is through infrastructure projects. The U.S. is looking to mobilize large, high-standard loans and the quality and cooperative nature of South Korean loans, Seoul’s efforts to direct more development assistance to ASEAN countries and India, and the competitiveness of Korean firms in building modern infrastructure make South Korea an ideal partner in achieving this goal. In 2019, look for Seoul and Washington to cooperate on infrastructure projects in the region as well as highlight their joint efforts.

Improving the Environment in South Korea

Although air pollution arose as an issue during the 2017 presidential election, leading candidates at the time focused largely on expanding dialogue with China and remained quiet on domestic sources of this public health threat. The issue returned with a vengeance this past November when extreme levels of ultrafine dust forced Seoul to restrict the number of vehicles on the road and construction. This comes at a particularly awkward time for the Moon administration, which responded to public concerns following the 2011 Fukushima Daiichi disaster by promising to phase out nuclear power in Korea.

Absent nuclear power, cleaner energy could be drawn from natural gas, which South Korea has been importing in increasing amount – particularly from the United States. However, this exposes Korea to geopolitical issues and market volatility. The Moon government is also making a big push to increase renewable energy capacity.

At this juncture, South Korea may consider looking to Taiwan – voters there rejected the phase-out policy in a referendum this year. With nuclear energy satisfying both clean air and energy security, this issue is poised to be revisited by both the government and the public in 2019.

South Korea’s Income Lead Growth/Job Creation

The state of the economy remains the biggest source of concern for South Koreans. After taking several months to get up and running, the first full year of the Moon administration’s income-led growth agenda has fallen short of its ambitious goals. Responding to his falling approval rating in light of underwhelming initial results that have increasingly become a major issue of public debate, President Moon has devoted more government resources to his economic agenda this year. However, the key question for 2019 is will this be enough to win back public support and reinvigorate the economy?

Moon’s income-led growth strategy is a novel approach to resolving the stubborn structural issues in the economy, but this also means it is largely unproven. The IMF and OECD support the agenda’s increased social spending, particularly given the government’s fiscal space, but these policies must also start creating jobs and bolstering growth to be sustainable. Even if the agenda is on the right path, the window to push it through may be closing. More interest rate hikes by the Federal Reserve and the prospect of worsening trade tensions between China and the U.S., both of which have already impacted the economy, could make it harder for Moon’s agenda to find more success this year.

The #MeToo Movement and Women’s Right 

Heightened advocacy for women’s rights was a global trend in 2018. In South Korea, the #MeToo movement gained momentum with women stepping forward with allegations of sexual harassment and violence against high-profile figures, including presidential-hopeful Ahn Hee-jung, poet Ko Un, and award-winning movie director Kim Ki-duk. However, advocates faced obstacles ranging from a relatively lenient legal code to deeply-entrenched social attitudes. Providing further proof of the current society’s antipathy to women’s concerns, the brave actions of women who came out publicly with testimonies of abuse – despite receiving international attention – resulted in very few prosecutions.

Korean women last year also confronted a proliferation of hidden cameras, which prompted protests demanding stronger punishment for trafficking of digital material that was filmed without consent. In response, the government has so-far announced tougher punishments for trafficking of these materials and announced plans to better police online sex crimes and remove illegal footage from the internet more swiftly. These will go hand-in-hand with broader protections such as extensions to the statute of limitations in sexual abuse cases and measures that would allow victims of harassment and abuse to report these crimes anonymously.

Notwithstanding, many advocates recognize that strengthening the legal system is a necessary but insufficient means to achieve true social change. With many women’s rights organizations now mobilized in the wake of the scandals in 2018, open debates about how cultural attitudes will be reformed will likely intensify in 2019.

Bonus Issue: Will Kim Jong-un Go to Seoul?

At their summit meeting in Pyongyang, Kim Jong-un agreed to Moon Jae-in’s proposal that he visit Seoul before 2018 ended. Kim never took that trip, but in his recent letter to Moon he expressed a desire to meet with Moon frequently in 2019 and “a strong determination to visit Seoul while watching future situation.” Whether Kim makes that trip will be one issue that many will be watching in 2019.

It is not surprising that Kim did not meet with Moon in Seoul in 2018. With progress in talks with the United States stalled and his meeting with Trump postponed until early 2019, there would have been little that Kim could have achieved in Seoul. Any trip to Seoul in 2019 will likely be dependent on how Kim’s next meeting with Trump goes and whether there is any historical progress Kim can make in Seoul. He will likely want to achieve more that than act of a North Korean leader visiting Seoul for the trip to go forward.

Beyond whether Kim will visit Seoul will be the question of how his visit is received. At the moment, Kim’s image has improved in South Korea with the current diplomacy and 60 percent of South Koreans would have supported the trip if he had taken it in December. One issue to watch from any visit will be whether it builds support for inter-Korean ties among South Koreans or causes them to reassess the current opening with North Korea?

Mark Tokola is the Vice President of the Korea Economic Institute of America, Phil Eskeland is the Executive Director of Operations and Policy, Troy Stangarone is the Senior Director for Congressional Affairs and Trade, Yong Kwon is the Director of Communications, Kyle Ferrier is the Director of Academic Affairs and Research, Sang Kim is the Director of Public Affairs and Intern Coordinator, and Juni Kim is the Program Manager and Executive Assistant. The views expressed here are the authors’ alone.

Image created by Juni Kim.

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Could a Limited Inspection Agreement Build Confidence in U.S.-North Korea Talks?

By Troy Stangarone

With talks to dismantle North Korea’s nuclear weapons and missile programs stalled, South Korean President Moon Jae-in recently sent his national security advisor, Chung Eui-young, to North Korea to prepare for the upcoming inter-Korean summit and see if Chung could jumpstart the talks.

While Kim Jong-un reaffirmed his commitment to denuclearization in his talks with Chung, he also expressed frustration.  In press remarks after his trip, Chung said that “Chairman Kim … expressed frustration over the doubt shown by some parts of the international society about his will … North Korea has been preemptively carrying out measures needed for denuclearization, and Kim said he would appreciate that such good faith is accepted with good faith.”

In light of North Korea’s track record in prior negotiations, as well as Kim Jong-un’s own failure to follow through on the Leap Day Agreement, skepticism about his sincerity is understandable. Especially, since Kim Jong-un has only expressed a willingness to dismantle his programs in private and has yet to make similar statements in public.

North Korea has taken steps towards the dismantlement of its programs, such as the collapsing of North Korea’s nuclear test facility at Pyungge-ri and the dismantlement of a missile engine test facility in western North Korea. According to Chung, Kim Jong-un said that the nuclear test site is now unusable and the dismantlement of the engine test facility prevents North Korea from testing missiles. However, North Korea has not allowed inspections of those facilities, and in the case of the nuclear test facility only allowed journalists to witness its collapse. Some experts have suggested that the explosions at Pyungge-ri may not have been powerful enough to have collapsed the tunnels. The importance of the missile test site is also debatable.

During the Six Party Talks, negotiations ultimately fell apart over North Korea’s unwillingness to agree to inspection of it facilities. One way that Kim Jong-un could demonstrate his good faith would be to allow for international inspectors to visit the two dismantled sites.

To make inspections more palatable to Kim Jong-un, and to lessen concerns that the United States is asking something of North Korea without giving anything in return, one way to build trust and help reboot the talks would be to agree to an initial limited inspection agreement. During the latter part of the Cold War, the United States and Soviet Union allowed for inspections of facilities in their territory. In return for allowing inspection of the Pyungge-ri nuclear test facility and the dismantled engine test site, the United States and South Korea could offer to allow North Korea to inspect two appropriate military facilities in South Korea.

Kim Jong-un has little to lose by allowing limited inspections to advance the process, as North Korea will need to agree to more robust inspections in any denuclearization agreement. However, an unwillingness on North Korea’s part to allow inspections of facilities that have been dismantled will only allow concerns about North Korea’s true intentions to harden.

While limited inspections will not remove the skepticism that some have regarding North Korea’s intentions, they could help to build the trust that will be needed if the United States and North Korea are to successfully reach an agreement.

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

Photo from Wikimedia Commons.

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Revisiting the Korean War Armistice

By Mark Tokola

In the wake of the April 2018 inter-Korean summit in Panmunjom and the June U.S.-North Korea summit in Singapore, there is renewed talk about whether it is time to announce an end to the Korean War by means of a peace declaration, peace regime, peace treaty, or by some other means.  There is nothing to prevent either or both Koreas, the United States, and/or China from declaring peace on the peninsula, but formally resolving the July 27, 1953 Armistice raises complex legal and political questions.  It is worth revisiting the history and current status of the Armistice.

Conventionally, the purpose of any armistice is for the military commanders who are at war to sign an agreement to end hostilities.  The terms of armistices are negotiated to ensure that both sides have the confidence to lay down their weapons and to have a common understanding of the situation that will be left on the battlefield.  The later, political resolution of the causes of conflicts, reparations, and assurances of future peace are left to diplomats.

The Napoleonic wars were ended by armistice, leaving the political settlement to the Congress of Vienna.  In World War I, the November 11, 1918 armistice that ended the fighting was followed by the Paris Peace Conference.  In the case of Korea, the 1953 armistice was followed by a peace conference in Geneva that lasted from April 26 to June 15, 1954.  The conference ended in failure and was never resumed, leaving the Korean armistice in place for 65 years and counting.

The 1953 Korean Armistice took the traditional form of being signed by military commanders rather than by politicians or diplomats.  It bears two signatures, that of Lieutenant General William K. Harrison, Jr., who signed as “Senior Delegate, United Nations Command Delegation,” and that of General Nam Il as, “Korean People’s Army Senior Delegate, Delegation of the Korean People’s Army and the Chinese People’s Volunteers.” Exactly whom the two signers were representing is one of the questions regarding the armistice.

Most legal commentators agree that the United Nations Command (UNC) is not synonymous with the United Nations itself.  This was made clear at the 1954 Geneva peace conference, in which on one side of the table were the countries which contributed forces to the UNC: the United States, South Korea, Australia, Belgium, Canada, Columbia, Denmark, Ethiopia, France, Greece, Luxembourg, the Netherlands, New Zealand, Philippines, Thailand, Turkey and the United Kingdom.  South Africa was a sending state, but did not attend the Geneva conference.

Under the terms of the peace conference, the sending states represented themselves separately.  The United States, as Commander of the UNC, had a leading role but could not speak on behalf of the other UNC states without their permission.  On the other side of the table were North Korea, the Soviet Union, and China.

China’s role in the armistice is ambiguous.  On one hand, China denied official involvement in the Korean War, as seen by the Armistice being signed by a North Korean general on behalf of the Chinese People’s Volunteers.  Even the nature of the Korean War itself was disputed.  The UN characterized the conflict as a “collective action” to resist an “aggression.”  North Korea, China, and the Soviet Union argued that it was a “civil war” in which no outside forces could legally intervene.  The United Nations Security Council in 1951 identified China as an “aggressor” in the conflict, but the UNC treated the Soviet Union and China as neutrals to avoid broadening the conflict.  China went on to undercut its own legal position by arguing at the United Nations that it had intervened in the conflict in right of self-defense.

The consensus among legal commentators is that China was indisputably a belligerent in the conflict regardless of the legal niceties of whether it was the Chinese People’s Army or Chinese People’s Volunteers who were involved.  Therefore, China could have a role in ending the armistice, unless it chose not to have one.  One of the issues raised in ending the armistice is that it may be awkward for China to have to revise its historic explanation of its role in the Korean War.

Regarding the current status of the Korean Armistice, there is little question that it is still in effect although North Korea has occasionally stated that it no longer felt bound by it.  In 1996, the President of the United Nations Security Council made a statement endorsed by the full membership, including China and the United States, which said: “The Armistice Agreement shall remain in force until it is replaced by a new peace mechanism.”  Note that the Security Council did not call for a “peace treaty”; the term “peace mechanism” is open-ended.

Resolving the armistice has been raised now and then.  In 1994, North Korea called for talks between itself and the United States, insisting that the armistice could only be resolved by the two signatories — excluding South Korea and everyone else.  In 1996, the United States and South Korea called for four-party talks to conclude the armistice: the U.S., South Korea, North Korea, and China.

Today, countries will do as they want regarding the Korean Armistice.  There is no international tribunal that would judge whether the armistice was ended following proper procedures.  However, in the interest of long-term stability on the peninsula, it would seem worth the effort to keep in mind the role of the United Nations and the United Nations Command sending states at the 1954 Geneva Peace Conference and in the years since.  The long series of United Nations Security Council Resolutions regarding the peninsula should be concluded by a United Nations decision.  South Korea, North Korea, China, Russia, and the UNC sending states should be parties to a settlement on the peninsula.  A war that began and was fought on ambiguous terms should not also end ambiguously.

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

Photo from Morning Calm Weekly Newspaper Installation Management Command, U.S. Army’s photostream on flickr Creative Commons.

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Why Was Austria’s Intelligence Cooperation with South Korea Exposed?

By Troy Stangarone

Much more is known about North Korea’s efforts to spy on South Korea than on the South’s efforts to spy on the North. One rare peak at those efforts is the recent movie The Spy Gone North, but there may be a more interesting case of South Korean efforts to spy on its neighbor to the North taking place in Austria.

The Spy Gone North, which is based on a true story, is the tale of a South Korean army officer who infiltrates the North by pretending to be a businessman. While on a long-term mission to gain information on North Korea’s nuclear activities at Yongbyon, he ends up being caught up in the mechanizations over efforts to prevent the election of Kim Dae-jung as president in the South.

The efforts to spy on North Korea taking place in Austria are of a different nature and we only know about them as a result of information in an Austrian search warrant. In late February, police raided the main office of Austria’s domestic intelligence agency, known as the BVT. According to the warrant, one of the reasons listed was that BVT officials had worked with South Korean intelligence officials to obtain blank North Korean passports that were being printed in Austria.

As The Washington Post story on the raid notes, that while Kim Jong-un would ostensibly benefit from breaking up any intelligence cooperation between South Korea and Austria to spy on the North, the Austrian BVT’s cooperation with South Korean intelligence was likely included in the warrant to help cover up domestic meddling in Austria’s spy service. It raises troubling implications.

If the information in the warrant is correct and South Korea has been able to obtain blank North Korean passports, why are North Korean passports being printed in Austria? Even before the recent ratcheting up of sanctions on North Korea at the end of the Obama administration and under the Trump administration there were few economic ties between Austria and North Korea. The EU as a whole did $32 million in trade with North Korea in 2015 and that fell to $18 million in 2017. In 2015, Austria did a little over $1 million in trade with North Korea, mostly imports from North Korea. By 2016, the most recent Austrian data available, trade had grown to almost $3 million with exports to North Korea having grown to over $2 million. In contrast to France and Germany, two of the largest economies in the EU, Austria does little trade with North Korea, but interestingly in recent years has done more than the United Kingdom.

With few economic ties with North Korea, it is disconcerting that Austria either intentionally or unintentionally has potentially exposed South Korean intelligence operations. It is unclear why the far-right Freedom Party in Austria, which controls the Interior Ministry and is believed to be behind the raid, would want to help North Korea by potentially exposing South Korean intelligence operations. Even if this is purely part of a ruse to cover up domestic objectives, it should have been clear that the end result would be damaging by including an intelligence operation in the warrant. In doing so, Austria has raised concerns about its ability to keep secrets and credibility as an intelligence partner.

One angle that intelligence analysts will need to explore is whether Russia had any role in the outing a South Korean intelligence operation. The Freedom Party has an official cooperation agreement with Putin’s United Russia Party, and Putin recently attended the wedding of the Austrian Foreign Minister. Russia has also been one of the countries most willing to evade UN sanctions on North Korea, something which Secretary of State Mike Pompeo has recently warned against.

At a time when intelligence on North Korea’s true intentions towards dismantling its nuclear program and pursuing economic reforms could make the difference in the current opening and help the government in Seoul, and by extension Washington, know if increasing engagement will be reciprocated by Pyongyang and is genuine, this damaging leak by an Austrian state prosecutor could be a truly unfortunate intelligence loss.

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

Photo from Jogi Experience’s photostream on flickr Creative Commons.

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About The Peninsula

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.