Tag Archive | "WMD"

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.

Posted in Inter-Korean, North Korea, slider, South KoreaComments (0)

2018 in Review: When Donald Met Jong-un

By Troy Stangarone

If 2017 was the year of “fire and fury,” 2018 saw the United States and North Korea turn from the rhetoric of war to diplomacy as U.S. President Donald Trump met North Korean Chairman Kim Jong-un at the first ever U.S.-North Korea summit in Singapore.

If 2018 was the year the diplomacy on the Korean Peninsula, it was also a year of frustrations as the United States and North Korea have been unable to make progress on agreeing to a path towards the dismantlement of North Korea’s nuclear weapon and missile programs, or in taking steps to build the new relationship promised in Singapore. With U.S.-North Korea relations stalled, North-South relations have been unable to move forward at the pace hoped for despite more extensive agreements on inter-Korean cooperation.

While North Korea dominated the headlines in 2018, the past year began with South Korea’s successful hosting of the Winter Olympics. It saw the United States and South Korea agree to revise the U.S.-Korea FTA (KORUS), but South Korea also become caught in the United States trade war with China. The United States and South Korea also failed to reach an agreement on burden sharing.

On the domestic front, the Moon Jae-in administration implemented a series of new policies to advance an income lead approach to economic growth, but so far has yet to see the results hoped for from its reforms.

As we take our annual look back at the events that helped to shape the Korean peninsula during the past year, it is also an opportunity to review the events we highlighted on The Peninsula in our annual 10 Issues to Watch for on The Korean Peninsula in 2018 blog and the events we didn’t see coming.

Looking back, we largely touched on what would be the key issues on the Korean peninsula in 2018, but we missed on the sudden shift to summit diplomacy on the Korean Peninsula and what in one poll has been identified as the top news story in the United States in 2018 – the summit meeting between Trump and Kim. Here are the issues we identified:

  1. Could War Break Out on the Korean Peninsula?

Coming into 2017, tensions between the United States and North Korea had been growing. Pyongyang’s December 2017 inter-continental ballistic missile (ICBM) test demonstrated it had the ability to reach anywhere in the continental United States, even if it had not yet completely mastered ICBMs. Despite the increasing threat of war, we were largely right in our analysis when we said that “war can, and most likely will, be avoided as long as cooler heads in Washington and Pyongyang prevail.” What we largely didn’t foresee is that war would be avoided not just because “cooler heads” would prevail, but that would lead to a year of North Korean summits with South Korea, China, and the United States.

  1. The Advancement of North Korea’s Nuclear and Missile Programs

With the movement towards dialogue between the United States and North Korea, our prediction that North Korea would continue to test missiles fell flat. For all of 2018, North Korea refrained from conducting missile tests to either demonstrate new capabilities or to express its displeasure at the progress of talks with the United States. At the same time, there is every indication that our second prediction was correct. Kim Jong-un pledged in his 2018 New Year’s Address that North Korea would continue to expand its supply of missiles and fissile material and has yet to shut down its nuclear facilities at Yongbyon or its missile production facilities.

  1. The Impact of Sanctions on North Korea

On the surface, sanctions have worked. Exports to China, North Korea’s primary trading partner have fallen to under $200 million through November. At the same time, despite sanctions causing declines in exports to China and other countries, there are signs that the markets are remarkably stable. In data published by DailyNK, the exchange rate and the price of commodities in markets have been fairly stable. Contrast this with Iran, where the U.S. withdraw has caused the Iranian Rial to drop in value. While the North Korean economy is not in a good position, the effect of sanctions seems to be less than many would have expected.

  1. The 2018 Winter Olympics

By all measures the 2018 Winter Olympics in Pyeongchang were a success. South Korea finished tied for sixth for the most medals won, and concerns about attendance were ultimately relieved as the organizers came within their goal of selling 90 percent of the tickets. Most importantly, North Korea took part in the games easing concerns that it could disrupt the festivities and its participation helped to jump start a year of diplomacy.

  1. Special Measures Agreement/Burden Sharing

The United States and South Korea have yet to conclude discussions on a new Special Measures Agreement to determine how much South Korea will contribute to the non-personnel costs of U.S. troops in South Korea. While the failure to conclude an agreement has not yet affected the alliance, the current agreement expires at the end of 2018. Indications are that the talks are stalled over an insistence by the Trump administration that South Korea raise its contribution to burden sharing by potentially twice as much as South Korea was previously contributing.

  1. U.S.-Korea Trade Policy

The United States and South Korea were able to quickly reach an agreement on modest adjustments to the KORUS FTA. With the National Assembly having approved the changes and the U.S. trade deficit with Korea continuing to decline, the concerns around the KORUS FTA have begun to dissipate.

However, the KORUS FTA was not the only trade issue in the U.S.-Korea economic relationship. As we noted last year, the U.S. used a Section 232 national security investigation to push South Korea into agreeing to a quota on its steel exports to the United States equal to 70 percent of its shipments over the last three years, and also imposed tariffs on Korean washing machines as part of a safeguard case. South Korea may not be out of the woods yet, as a decision will likely come on a Section 232 case on automobiles and automotive parts early next year. South Korea is only major automotive producer to not receive some type of assurance that it will not have tariffs imposed on its exports if automotive imports are found to have national security implications.

  1. Will China’s Economic Pressure on South Korea Over THAAD End?

As we foresaw at the beginning of the year, China’s pressure over the decision to deploy THAAD has moderated rather than disappeared. Despite South Korea and China agreeing in October of 2017 to normalize economic relations, Lotte is in the process of closing its Lotte Mart stores in China, and the effects on tourism can still be felt. Based on the latest data from the Korea Tourism Organization, a bit more than 400,000 Chinese tourists traveled to South Korea in November. This is up from just under 300,000 at the same point last year. However, despite the increase in Chinese tourism in November, it is still below its pre-THAAD highs. All told, the South Korean economy has lost more than $13 billion from the decline in Chinese tourism alone.

  1. Moon Jae-in’s Promised Economic Reforms

The Moon administration continued to implement its income lead growth policies in 2018 taking steps to shorten the work week and raising the minimum wage for the second year in a row. However, the results have been mixed, especially with slowing job growth in August and September. South Korea also saw estimates for its GDP growth in 2018 and 2019 revised down. Some of this revision is due to external factors, but declines in investment and job growth are also weighing on the economy. The new year will be an important period for determining whether the current challenges are due more to the markets adjusting to the new policies or whether the policies themselves will need to be adjusted.

  1. South Korean Local Elections

The ruling Minjoo Party won a resounding victory in the 2018 local elections. The party won 14 of the 17 mayoral and gubernatorial posts up for grabs, as well as 11 of 12 by-elections for the National Assembly. Seoul Mayor Park Won-soon also won a third term as mayor.

  1. Hallyu’s Ongoing Rollercoaster Will Continue

The growth of K-pop around the globe was one of the major stories in 2018, even being highlighted by the BBC as BTS became the first Korean group to enter the UK Top 40 and land in the top spot of the iTunes album chart in 60 countries. Despite still facing challenges in China as part of the fallout from THAAD, K-pop saw growth in Japan and in Latin American markets. However, the big success for K-pop came in its breakthrough in the United States. BTS had two albums reach the top of the Billboard 200 and three songs on the Billboard Hot 100. However, the success extended beyond BTS as four other Korean acts landed albums in the top 40 of the Billboard 200 and BLACKPINK saw its video Ddu-Du Ddu-Du gain the fifth most views on YouTube in a 24 hour period among all genres.

The Bonus Issue: Will There Be Constitutional Reform?

While the Moon administration pushed for a package on Constitutional reform to be concluded in time for the local elections, ultimately reform efforts stalled in the National Assembly.

Beyond the events that we expected, here is a look at some of the unexpected events that helped to shape 2018:

  1. When Donald Met Jong-un

Prior to 2018 no sitting U.S. president had met with the leader of North Korea. That changed in 2018 as U.S. President Donald Trump altered the normal protocol of only meeting a foreign leader, especially one such as Kim Jong-un, until after a series of deliverables have been agreed to by both sides. The summit in Singapore produced an outline for moving relations forward, but there has been virtually no progress in talks with North Korea, despite the United States canceling military exercises with North Korea. In spite of the lack of progress, Trump has professed his goodwill for Kim saying “And then we fell in love, OK? No, really, he wrote me beautiful letters, and they’re great letters. We fell in love.”

  1. Perceptions of Kim Jong-un in South Korea Improved – A Lot

If meeting a sitting U.S. president was an historic moment, it was preceded by Kim Jong-un being the first North Korean leader to cross into South Korea, even if only to the South Korean side of the DMZ. Your author was in Seoul at the time watching Kim cross the demarcation line live on his cell phone in a taxi to the National Assembly. What struck me at the time was lack of coordination on the North Korean side as the delegation walked to the DMZ and the lighthearted nature of Kim Jong-un as he invited South Korean President Moon Jae-in to briefly visit North Korea before their meeting.

Kim’s visit made an impression on South Koreans as well. Prior to the April Summit Kim had an approval rating in South Korea of 10 percent, though that rose to 31 percent after the summit. More impressive, after the summit a new poll found that 78 percent of South Koreans saw Kim as trustworthy. A degree of goodwill remains as 60 percent of South Korea would have welcomed Kim to Seoul had he come in December as expected.

  1. Inter-Korean Relations

In addition to the April summit, Kim and Moon held two additional summit meetings – a second summit in the DMZ and Moon’s visit to Pyongyang. These summits resulted in the Panmunjom and Pyongyang Declarations which laid out steps to improve inter-Korean relations. While sanctions related to North Korea’s weapons programs have prevented significant movement on inter-Korea relations, the two Korea’s did take steps to advance relations in 2018. In addition to the summit meetings, the two Koreas held the first family reunion since 2015, took steps to reduce military tensions and implement a new military agreement in the DMZ, and conducted a joint survey and groundbreaking ceremony for a project to reconnect the railways on the Korean Peninsula.

  1. North Korea’s Cyber Activities

North Korean has become one of the world’s most active cyber powers and despite the diplomacy with the United States and South Korea, Pyongyang kept up its activities in 2018. According to Group-IB, since the beginning of 2017 approximately two-thirds of the theft of cryptocurrency has been by North Korea, netting the regime $571 million. It also used the Pyeongchang Olympics and summit meetings with Kim Jong-un as potential bait for phishing attacks.

  1. The U.S.-China Trade War

In a globalized world where countries are part of supply chains, tariffs are an imprecise tool and South Korea found itself one the countries most exposed to a trade war between the United States and China. More than 40 percent of South Korea’s GDP is accounted for by exports, while China and the United States are South Korea’s top two trading partners, respectively. For most of 2018, South Korea had managed the conflict fairly well by increasing exports to China and resolving the issues around the KORUS FTA. However, in the year’s last quarter South Korea began to see declining demand for its top export to China, semiconductors, while overall sales of automobiles began to decline significantly in China – signs that the effects of the trade war are beginning to set in.

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

Image created by Juni Kim is the Program Manager and Executive Assistant at KEI.

Posted in Inter-Korean, North Korea, slider, South KoreaComments (0)

Dismantling North Korea’s Nuclear Program is Also About Dismantling Its Supply Network

By Troy Stangarone

In announcing that the June 12 summit in Singapore with Kim Jong-un is back on, President Donald Trump suggested that he was no longer looking for a process where the dismantlement of North Korea’s nuclear and missile programs would happen rapidly. Instead, he conceded to North Korea’s position that it should be a process, saying that “Wouldn’t it be wonderful if we walked out and everything was settled all of a sudden from sitting down for a couple of hours? No, I don’t see that happening. But I see over a period of time. And frankly, I said, ‘Take your time.’”

With estimates that it could take upwards of 15 years to dismantle North Korea’s weapons programs and facilities, a slower process may be prudent. Dismantling North Korea’s nuclear program will be highly technical and tedious work. Dismantling North Korea’s nuclear weapons and missile programs, however, is not only about dismantling North Korea’s facilities, but also about dismantling the networks behind the programs. True complete, verifiable, and irreversible dismantlement of North Korea’s nuclear and missile programs will be extremely difficult to achieve, but each step that makes the quick reconstitution of North Korea’s nuclear program more difficult moves the process closer to being irreversible.

As part of any dismantlement program the United States will push for North Korea to return to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), as well as to sign onto the NPT’s Additional Protocol.  Under the Additional Protocol North Korea will need to provide a declaration detailing the constituent components of its nuclear program and its nuclear materials to the International Atomic Energy Agency. Even if North Korea resists signing up for the Additional Protocol, a thorough description of its nuclear programs will be necessary to verify and dismantle North Korea’s nuclear program.

While a detailed declaration on the locations, facilities, processes, and materials of North Korea’s nuclear program will be critical for its dismantlement, ensuring that North Korea will not be able to easily reconstitute its program in the future will require a deeper knowledge of North Korea’s program. As North Korea’s nuclear program has developed, Pyongyang has learned how to domestically produce some of the required components. However, as the UN Panel of Experts investigation into Unha-3 launch in December 2012 demonstrated, North Korea needs to foreign source parts as well as produce them domestically for its weapons programs. Gaining greater insight into what parts North Korea has mastered production of and which ones it still needs to source from abroad will help in monitoring the program’s dismantlement and preventing relapses.

A detailed declaration on the supply networks utilized and the shell companies created to facilitate this trade would assist in dismantling North Korea’s supply network. While North Korea may be reluctant to give up these sources and details on its programs, working with the international community to unravel the networks behind its programs would go a long way to demonstrating that it is serious about dismantling its weapons programs and will be a key component if the international community is to attempt to make North Korea’s dismantlement irreversible.

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 of the agreement on the application of comprehensive safeguards between the IAEA and North Korea signed on 30 January 1992. Image from the IAEA Imagebank’s photostream on flickr Creative Commons.

Posted in North Korea, sliderComments (0)

North Korea Test Moratorium Not as Significant as It Seems

By Troy Stangarone

In what is being hailed as a significant step by the United States and South Korea, North Korea has announced that it has suspended missile tests and will shut down its nuclear test site. While seemingly an important step towards denuclearization, the move by North Korea only affirms prior statements by the regime.

Shortly after conducting its third intercontinental ballistic missile (ICBM) test and in Kim Jong-un’s New Years Day Address, North Korea had suggested that it had concluded testing for its nuclear program. Since North Korea’s third ICBM test, it is now in the midst of one of the longest pauses in tests under Kim Jong-un. While there are still questions regarding the development of North Korea’s ICBMs, it is this pause that made the upcoming talks between Kim Jong-un and President Trump possible.

However, in light of its earlier announcements, North Korea’s pause in testing was an easy concession to the United States and South Korea, and the announcement of an end to testing is not as significant as it may seem. Any further tests on the part of North Korea would have either been an acknowledgement that it had not actually completed its tests, or would be intended as a clear provocation designed to raise tensions.

In addition, there were already concerns about the geological stability of North Korea’s nuclear test site at Punggye-ri. Since the last nuclear test there have been further signs of instability.

This is not the first time that North Korea has made a largely symbolic gesture in relations to its nuclear program. During the Six Party Talks, North Korea made the dramatic gesture of blowing up the cooling towers at the Yongbyon nuclear power plant to demonstrate its commitment to denuclearization. Those talks ended up failing over North Korea’s refusal to agree to verification procedures. In this case, resuming use of its nuclear test site will be significantly easier than restoring the cooling systems at Yongbyon should North Korea decide to change course.

The announcement also does not does not commit North Korea to denuclearization or to abandon the other significant plan Kim Jong-un laid out in his New Year’s Day Address – to expand North Korea’s stockpile of nuclear weapons and ballistic missiles. In advance of the summits, it would have been more impressive if Kim Jong-un had offered to suspend uranium enrichment or missile production during the upcoming talks, though these steps would also be unverifiable without intrusive inspections.

The announcement does, however, fit into North Korea’s outreach that began at the beginning of 2018 when it announced that it would take place in the PyeongChang Olympics. North Korea may be making a strategic decision eventually to dismantle its nuclear program, but the recent announcement on a suspension of testing and the closing of its nuclear test site should be viewed more as a public relations move than a real step towards denuclearization.

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. Image from Wikimedia Commons.

Posted in North Korea, sliderComments (0)

North Korea Must Address Nuclear Safety and Security as it Discusses Curbing its Nuclear Weapons Program

By Casey Robinson

Under diplomatic and economic pressure, North Korea has ceased weapons tests and has expressed a willingness to denuclearize. In meetings with South Korea, North Korean officials stated that North Korea has no need for nuclear weapons if its security is guaranteed. However, due to lingering distrust and resentment, the denuclearization of North Korea, as well as scaling back U.S. forces in South Korea, is unlikely to occur in the short-term. Consequently, North Korea’s reliability in denuclearizing will continue to be in question. Nonetheless, the North Korean government does have options to boost international confidence and reduce regional tensions in the short-term. One option that North Korea could pursue is address and enhance nuclear safety and security. A nuclear attack is not the only thing that the international community is concerned about. It is also concerned of the international consequences of a nuclear catastrophe or nuclear material landing in the wrong hands due to the North Korean government’s negligence.

Less than a week prior to its first test on October 11, 2006, the North Korean Foreign Ministry stated that it would conduct nuclear tests safely as well as prohibit the first-use and transfer of nuclear weapons. However, despite this statement, there are concerns about North Korea’s handling of its nuclear weapons program. Matt Korda, a researcher in the Department of War Studies at King’s College, expressed his concerns regarding North Korea’s safety culture. He has pointed to a video of Kim Jong-un smoking near a liquid-fueled missile and a report that 200 workers were killed in a tunnel collapse after the sixth nuclear test. Yet, Korda’s major concern is if a nuclear catastrophe occurred, North Korea would likely not ask for international assistance to address the issue. Consequently, nuclear safety in North Korea is a considerable international concern.

In addition, due to increasing concerns about terrorist groups using nuclear weapons or dirty bombs, there has been fear that North Korea would sell nuclear weapons or material to terrorist organizations. The primary argument for this is that the cash-strapped North Korean government has a history of engaging in illicit dealing and selling weapons to terrorist groups. Graham Allision, former dean of the Harvard Kennedy School, has argued for years that North Korea is capable and willing to sell nuclear weapons or materials to terrorist groups. Last year, Allision pointed to North Korea’s dealings with Syria as a precedent that North Korea will go as far as sell to terrorist organizations.

Accordingly, North Korea may benefit greatly if it were to immediately address nuclear safety and security concerns. The United States and South Korea have stated that they will not provide sanctions relief without North Korea first denuclearizing. However, not all governments share the same interests as the United States and South Korea. For example, China, which has historically shown more concern about destabilization and has a reputation of not abiding by sanctions against North Korea, would likely respond well if concerns about a nuclear catastrophe occurring south of its Northwest border decreased. The United States would likely push China to continue to pressure North Korea. However, with greater concerns about the collapse of Pyongyang, China may choose to provide North Korea with sanctions relief as long as its concerns in nuclear safety and security are addressed.

There are many concerns about the reliability of North Korea performing nuclear safety and security functions reliably. North Korea has a history of not abiding by its agreements and is too secretive to allow international scientists to assist it in improving nuclear safety and security functions. However, as Korda points out, nuclear safety (and as I would argue nuclear security) is a sincere interest of North Korea. If a severe nuclear accident were to occur, North Korea’s regime stability would be at risk. In addition, if it was proven that thousands to millions of people perished due to terrorists obtaining North Korean nuclear weapons or materials, the international reaction about North Korea would likely not be pleasant for the Kim regime. Accordingly, permitting foreign scientists in to improve nuclear safety and security functions would be in the best interest of North Korea.

North Korea has recently shown sincerity in denuclearizing, but, as a rational regime, it is unlikely to immediately denuclearize due to security concerns. However, what it can do is commit itself to improving nuclear safety and security functions within the country, which would boost confidence that it is a responsible power. Doing so may help encourage governments to provide it with sanctions relief, but would also decrease incentive to blame it for a terrorist nuclear catastrophe. While the ultimate goal should be denuclearization of the peninsula, these small steps would help enormously in moving North Korea in the right direction.

Casey Robinson is a Ph.D. candidate at Waseda University. His research interests include the DPRK, U.S. foreign policy, and international development. The views expressed here are the author’s alone.

Image from Nicolas Raymond’s photostream on flickr Creative Commons.

Posted in North Korea, sliderComments (0)

The Cheeseburger Summit: What Trump Could Say to Kim

By William B. Brown

Everything else has been tried, and failed, so why not have Kim Jong-un and Donald Trump meet face-to-face? I’ve advocated for it for more than a year now, and it looks like it might happen. Many details need to be worked out but, given it is a North Korean request, coming on the heels of Kim’s willingness to meet President Moon Jae-in next month in the middle of the DMZ, and his apparent new willingness to talk nuclear issues while refraining from testing, there is no reason not to say yes. Even better, the meetings are being brokered by Seoul, so allied coordination problems have been lessened. Expectations, difficult in this time of media frenzy, need to be kept under control, and, as Trump might say, a great outcome might be in the works or it might be just a quick stop at the Burger King, with more threats forthcoming. Despite the naysayers, we must give it a try.

Why is Kim venturing his offer now? My impression is he is feeling very strong pressure from China’s virtual embargo on North Korea’s exports, only since November.  And what he must see as a gradual ratcheting down of needed imports, even petroleum. This an enormous economic hit of a sort the country has never had to deal with on this scale. And it comes at a point where dollarization, the use of foreign currency, usually U.S. dollars, to replace the domestic currency, already is moving ahead rapidly, sapping Pyongyang of the one power all governments want to have, the issuance of currency. We need to take advantage quickly, while China is giving us the chance, and use it cleverly to get what we want out of the nuclear program and systemic reform. It’s not so impossible if you realize everyone, even young Kim, can benefit.

So, what is Trump going to tell Mr. Kim? Here is my suggestion. As you can imagine, I focus on economics since, in following North Korea since 1976, I am convinced its broken socialist system is the root of all of its problems with itself, with the world, and of course with the United States.

Trump could say to Kim, “In your message you indicated that to climb down from this nuclear path you need to have assurances that the U.S. is not your mortal enemy.  This makes great sense, and I congratulate your scientists and military industry for their hard work in achieving some success in building what some might call impossible, a deterrent against a superpower. So, let’s work on that piece of the problem, nothing else. If we can solve that we can solve everything.

This is what I propose. Explanations and fine tuning can occur in a committee we will set up today to begin work on the problem.

Our side:

1.      We will mentor your accession to the World Trade Organization, starting a long process that will enable the U.S. to have normal or even preferential trade with your country, and all the investment prospects that will come with that. This is far more important than sanctions relief and will make your economy better integrate with ours. The best security assurance you can have is profitable U.S. investments in Pyongyang, even perhaps, a Trump hotel.

 2.      We will advocate your membership in the ILO, a body to which all other UN members subscribe and which allows healthy, not parasitic employment, investment and trade conditions.

 3.      Our Federal Reserve will step in with a partnership to help the Chosen (central) Bank create a solid won currency, with requisite hard currency reserves. As it did with South Korea in 1963, we would invite the Bank of Japan to help and likely add the People’s Bank of China and Bank of Korea. But we will take the lead, as we did in Seoul, a move that began the transformation of the South Korean economy. Given the volume of foreign currency already in use in your economy, a currency board mechanism might be best, in which your money trades as solidly as the Hong Kong dollar. Combined with your hard working and smart people, it is hard to imagine better economic security for your country.

 4.      With progress in denuclearization talks, and actions, on both sides, we will ask the UN Security Council to gradually remove sanctions on your exports, as would we. Sanctions on imports, except military or nuclear related, can come off very quickly as we expect you need the petroleum, and funds to buy grain and fertilizer, even as we speak.

 5.      Food relief can begin to occur quickly, although on terms that reward private growth of farm output in your country and improved distribution. We are concerned that too much commodity aid may have stunted your agricultural sector and harmed your economy. We made that mistake in South Korea in the 1950s but corrected it in the 1960s to great success and we think we can help a great deal in removing malnutrition and the threat of starvation.

 6.      We have noticed your new interest in tourism, which we agree has great potential and is likely a great comparative advantage of your country. But your treatment of tourists, including visiting Americans, has been deplorable. Let’s makes some agreements here that will make safe tourism possible and, at the earliest point, I will propose creation of an official U.S. tourism office in Pyongyang, along with a liaison office and ultimately an Embassy.

 7.      If requested, we will help your government stabilize its budget, affording large pay increases for state employees in a smaller state and military sector. The key, as we see it, is to liquidate some of the state’s huge assets–it effectively owns the whole country–and burdens, offering them to private North Korean investors and perhaps a few foreigners, who will make much better use of them. Profits from assets sales, and from ongoing taxes, easily can fund the state’s welfare, investment, and military requirements.  This privatization is China’s great and surprising success.  Again, it is something you already are doing half-way, but as disinterested outsiders we can provide unbiased support for an equitable process. This we did in Japan, following WWII, in South Korea before and after the Korean War, and in Taiwan, all to great positive effect.

 8.      The U.S. will stop any aggressive exercises in South Korea, or provocative military movements, once we are convinced your country has no threats on us or our allies in the region. Over time, successful change in your relations with the region and the world can make our forces in South Korea redundant, and we can withdraw as regional security relationships allow.

      We ask, insist, that your side:

1.      Begin economic reforms that unify your price and wage system according to WTO rules. Unified prices are the first important step in improving the productivity of your very extensive labor, capital and natural resources. We ask for these since they will help your economy grow and they will enable our companies to trade with yours on a competitive basis. Otherwise, we must continue the very high tariffs that we employ against all non-market economies, which now only include North Korea and Cuba.

 2.      As the WTO and ILO will require, change your wage system so that all workers are paid directly, not through an agency that does not necessarily operate in their best interests. This is the rule of the ILO and is employed everywhere in the world except North Korea. And even in your country, many, perhaps most workers are now paid directly, a huge benefit that needs to include everyone. We have noticed revitalization in some parts of the North Korean economy due to what we think is the success of pilot wage projects you initiated soon after you took power; this ongoing change is what we think is working and needs to be expanded to everyone.

 3.      Elimination of the 19th century, archaic “guilt by association” criminal system and an end to political camps. This will be a difficult transition but there are many NGOs who will help the process.  Some emigration may be needed. But with the above reforms, your country will need every spare worker it can find and former inmates, and the land and resources (coal) of the camps, can be very effectively employed to everyone’s benefit.

 4.      Progress on the nuclear issue sufficient to reduce or eliminate trade sanctions, will require a continued halt in testing and a new process laid out that will convince us you are taking down your fissile material programs, both plutonium and HEU, or converting them to purely civilian activities and that you are on a path to eliminating the weapons you now have. The IAEA will have to come back in to work with you on that. Export of low enriched uranium, plutonium rods, and uranium ore to South Korea, explored some years ago but not fulfilled, should be reconsidered, along with viable employment for your highly skilled workers in civilian industry.  Your ballistic missile program also must stop, although some cooperation might be arranged to allow and develop your space program. And, with sanctions ultimately removed, the larger issue of your fixed price system must be addressed, as in the WTO negotiations and reform as laid out above, to put your country on normal trade status with everyone. Otherwise removal of sanctions alone will ultimately prove dissatisfying, as they have before.

 5.      And, of course, your country should agree with South Korea to never attack each other and that unification, desired by all parties, and especially by the U.S., will occur only in a peaceful matter over time. Both of you can begin adjusting your force structures accordingly, as well as can the United States.   We think that economic integration, as in an EU type process, offers the best avenue for this to occur and we think the program we have outlined will do just that.

Believe me, there is no better way for us to guarantee the external and internal security of your country.

William Brown is an Adjunct Professor at the Georgetown University School of Foreign Service and a Non-Resident Fellow at the Korea Economic Institute of America. He is retired from the federal government. The views expressed here are the author’s alone.

Image created by Jenna Gibson, Director of Communications at the Korea Economic Institute of America, with images from Gage Skidmore and Prachatai’s photostreams on flickr Creative Commons.

Posted in North Korea, sliderComments (0)

10 Issues to Watch for on the Korean Peninsula in 2018

By Mark Tokola, Phil Eskeland, Troy Stangarone, Jenna Gibson, Kyle Ferrier, Sang Kim, and Juni Kim

As we look ahead to what might occur in 2018 we should also consider how key events from 2017 will continue to shape the year ahead. In 2017, there was significant change on the Korean Peninsula. South Korea underwent political change as the Constitutional Court approved the impeachment of conservative President Park Geun-hye, opening the door to early presidential elections in May and the election of progressive Moon Jae-in. North Korea made significant advancements in its nuclear and missile programs, with both North and South Korea beginning to adjust to the changes brought by U.S. President Donald Trump.

After a year of growing tensions on the Korean Peninsula from North Korea’s nuclear and missile advances and concerns over war between the United States and North Korea, one of the key questions for 2018 will be whether the crisis will fester or will there be an opportunity to reduce tensions? There will also be significant focus on the impact of sanctions on the North Korean economy and whether they can change Kim Jong-un’s calculus.

However, 2018 will not only be about North Korea. In February, South Korea will welcome the world to PyeongChang for the 2018 Winter Olympics. While the Games will be a celebration in South Korea, there is also hope that they will help to reduce tensions on the Korean Peninsula.

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:

Could War Break Out on the Korean Peninsula?

With the leaders of North Korea and the United States fighting over nuclear buttons, it is hard to imagine a more precarious situation on the Korean Peninsula going into 2018. But war can, and most likely will, be avoided as long as cooler heads in Washington and Pyongyang prevail.

Security and international relations experts have long debated whether Kim Jong-un is a rational actor and if a nuclear North Korea obeys the same rules of deterrence that kept full-scale conflict at bay during the Cold War. Many firmly believe that North Korea can indeed be deterred, and that preventative military action is unnecessary and dangerous.

The key will be to keep communication and coordination between Seoul and Washington tight. Allowing North Korea or China (or even unrelated issues like the Korea-U.S. Free Trade Agreement renegotiations) to drive a wedge between the two allies could provide enough confusion and uncertainty to allow a miscalculation to get out of hand.

The Impact of Sanctions on North Korea

One of the key issues for 2018 will be the impact of sanctions on the North Korean economy. Much of the international strategy for dealing with North Korea’s nuclear weapons and missile programs so far has been built around the strategy of using increasing economic pressure to bring North Korea to the negotiation table.

In 2016, North Korea’s economy was estimated to have grown nearly 4 percent despite increasing United Nations sanctions. Estimates for 2017 won’t be out until later this year, but the UN Security Council has passed four new resolutions imposing greater sanctions on Pyongyang and one would expect economic growth to slow. North Korea is now banned from exporting coal, which was its largest export item, as well as other goods such iron and lead ore, textiles, fish and agriculture products, wood, and machinery. The sanctions have also placed greater constraints on North Korean financial transactions and require all of North Korea’s overseas laborers to be sent home in one year. The vast majority of North Korean exports have been banned and limits have been placed on oil exports to North Korea.

As a result of the sanctions, North Korean exports to China are down $573 million compared to 2016 through November of last year. Most of the decline has come towards the end of 2017 when many of the sanctions began to come into effect. Will sanctions continue to lead to a decline in North Korea’s official trade? Will North Korea be able to increasingly evade sanctions as it appears to with reports of Russian and Chinese ships transferring oil to North Korea in violation of UN sanctions? Will the sanctions begin to have a significant impact on the North Korean economy, perhaps in the form of a currency crisis, that will begin to place pressure on the regime to enter into talks on its weapons programs? The new year should give us some insight into these questions.

The Advancement of North Korea’s Nuclear and Missile Programs

North Korea displayed disturbing advancements in missile and nuclear technology in 2017, including three successful intercontinental ballistic missile (ICBM) tests and a nuclear test in September showing North Korea’s highest yield yet. Each successive ICBM test conducted by Pyongyang demonstrated greater altitude and reach, with the most recent test in November estimated to be capable of hitting anywhere within the United States.

Despite a new series of UN sanctions passed in 2017 aimed at curbing North Korea’s weapons progress, 2018 will likely see North Korea continue to test the international community and demonstrate further advances in their weapons technology. Although North Korea established its ICBM advances in the past year, North Korea has yet to display missile re-entry capability, which would be a critical part of the country’s ability to launch a potential attack. North Korea may also seek to conduct more satellite tests and submarine-launched ballistic missile (SLBM) tests to emphasize the regime’s expanded weapons capabilities, as well as expand its stockpile of missiles and warheads.

The 2018 Winter Olympics

The 2018 Pyeongchang Winter Olympics will be the second time that South Korea has hosted the Olympic Games after it held the 1988 Summer Olympics in Seoul. This will also be the first of three consecutive Olympic Games held in East Asia with the 2020 games to be held in Tokyo and the 2022 games to be held in Beijing. In regards to local hopes for Olympic glory, South Korean athletes have traditionally had a dominant presence in speed skating, and a predictive analysis by Gracenote currently estimates another strong performance in the sport with a projection for South Korea to finish sixth in the overall Gold Medal count.

Despite local enthusiasm for the Games, lagging ticket sales have been attributed to international concerns over North Korea’s provocative behavior. In a New Year’s address, North Korean leader Kim Jong-un voiced openness to North Korea’s participation in the Winter Games. In response, South Korean officials have proposed talks to discuss North Korea’s involvement next week, which if obtained would be a significant development for South Korea and its hope to reassure a worried international audience. North Korea’s participation would also be a huge political win for South Korean President Moon Jae-in, who campaigned on improving inter-Korean relations through dialogue and convinced the United States to postpone annual exercises until after the Olympics.

Special Measures Agreement/Burden Sharing

President Donald Trump recently reiterated his campaign rhetoric and long-held belief that the U.S. “defends nations that are very wealthy, and we do it for almost nothing.” In this same speech in Missouri, President Trump relayed his conversations on defense burden sharing with a “couple of countries” during his recent trip to Asia that he believes are “getting away with murder and they got to start helping us out.”

Ever since 1991, the Republic of Korea (ROK) has provided some financial support to offset the cost of stationing U.S. troops on the peninsula. In 2016, General Vincent Brooks testified before the U.S. Senate that South Korea pays approximately 50 percent of the total non-personnel costs of the U.S. troop presence on the peninsula. Under the current SMA, Korea’s annual payment (in won) increases by the rate of inflation. In preparation for the President’s November trip to Asia, the White House highlighted Camp Humphreys as a “great example of burden sharing.” In the same testimony cited above, General Brooks confirmed that South Korea has paid about 91 percent of the cost of this base relocation.

In 2018, South Korea and the United States will negotiate a renewal of the Special Measures Agreement (SMA), which is set to expire later this year, to lay out the terms of the burden sharing arrangement for the next several years. As in most negotiations, both sides start off with their most extreme position. Over time, the two sides come together to reach an agreement.  SMA negotiations will be tough with the Trump administration. However, experienced personnel in the Defense Department will continue to recognize Korea’s immense contribution to the alliance (i.e., devotes 2.7 percent of its GDP to its own defense; has military draft; has, in the past, contributed its own troops to support the U.S. in other conflicts; and purchases a significant share of its imported military equipment from the U.S.) and will not let the SMA talks undermine the U.S.-ROK alliance.

U.S.-Korea Trade Policy

President Donald Trump continued his campaign rhetoric to criticize past U.S. trade policy, including the Korea-U.S. Free Trade Agreement (KORUS FTA), as a source of job loss and economic desolation in the United States.  He was on the cusp of withdrawing from KORUS and had the paperwork prepared to sign, but was persuaded at the last moment by other senior White House aides to not take this action and instead work towards negotiating changes to the underlying agreement.

However, the impetus for renegotiating KORUS – a rising bilateral merchandise trade deficit between the U.S. and South Korea since 2011 – has dissipated over the past 18 months as the U.S. experienced a significant decrease in the bilateral trade imbalance in its favor.  While Trump Administration officials have finally recognized this fact, the goalposts have been moved to find “permanent solutions, not temporary forbearance,” to keep the U.S.-ROK trade imbalance low and possibly turn it into a surplus based on the philosophy of “free, fair, and reciprocal” trade. Nonetheless, the Trump Administration may run into its own self-imposed roadblock by not seeking major alterations to KORUS that would require changes to U.S. law, thus avoiding the need to trigger Trade Promotion Authority (TPA) and approval by Congress.

With formal negotiations set to begin on January 5th, the same day as the release of next set of U.S. trade statistics for the month of November, some of the areas under possible amendments and modifications to KORUS are changes to Investor Settlement Dispute (ISD) process; elimination of more non-tariff barriers to U.S.-made vehicles; and reforms in areas of digital trade, privacy, and financial services.  Commerce Secretary Wilbur Ross also said that he hopes the KORUS renegotiation talks will go “quickly and smoothly” and that both sides will find “ways that work for all parties.”  If this solicitous spirit imbues the negotiation teams, an agreement can be found relatively soon.  However, if talks drag out because of unrealistic demands, this could have negative ramifications for other areas of the U.S.-ROK relationship.

Lastly, there are two other trade decisions in 2018 that could negatively affect South Korea with respect to U.S. government investigations into alleged “unfair” trade practices – (1) the Commerce Department study on the national security implications of imported steel is due on January 15th, with a presidential determination within 90 days to possibly issue higher tariffs as a tool to protect the U.S. steel industry (Korea represents the third largest source of imported steel for the U.S.) and (2) the President has until February 2nd to make a decision on possibly increasing tariffs on imported large residential washing machines made by Korean-owned companies LG and Samsung to protect Whirlpool (based in Ohio) from an alleged import “surge” (even though LG and Samsung will soon be manufacturing washing machines in the U.S., employing over 1,500 workers). Decisions to increase tariffs could prove to be additional irritants in the U.S.-ROK relationship, and could mar the KORUS talks.

Will China’s Economic Pressure on South Korea Over THAAD End?

In the summer of 2016, China began taking steps to apply economic pressure on South Korea over Seoul’s decision to deploy the U.S. Terminal High Altitude Area Defense (THAAD) system. By 2017, China was informally sanctioning South Korea’s tourism, entertainment, and auto industries, as well as Lotte directly for providing the land on which was deployed.  Altogether, the economic losses to South Korea from China’s boycott have approached $10 billion.

At the end of October, South Korea and China announced that they had agreed to normalize economic ties. While Beijing had insisted that the dispute would not truly be over until South Korea made the appropriate decision on THAAD, it looked at the time as though the two sides had agreed to disagree as China partially lifted its ban on group tours to South Korea. It was not meant to be. A little more than a month later it appears that China has re-imposed the tourism ban, and while South Korean automotive sales have improved in China it looks as though the retaliation over THAAD is set to continue into 2018. Rather than lifting its economic pressure on South Korea, look for China to moderate it over 2018 but to not completely lift its economic pressure.

Moon Jae-in’s Promised Economic Reforms 

The South Korean economy is projected to grow over 3 percent in 2018, led by recovering global trade expectations. However, the key issue to watch this year in the Korean economy is how effective the administration’s reform agenda will be in spurring domestic demand. Moon’s social and economic reform platform arguably won him the presidency and his implementation of it so far has sustained his high approval ratings. The popularity of Moon’s strategy stems from its rejection of past policies, reversing conventional economic thought by arguing job creation leads to growth.

Perhaps the most consequential advancement of the agenda thus far came was the budget passed by the National Assembly in December. The budget increased social welfare spending and created around 9,500 new public-sector jobs, both are major steps towards achieving Moon’s lofty goals.

While this new path could help to address Korea’s widening social problems and boost the domestic economy as a portion of overall GDP, it is still largely unproven. Whereas 2017 laid the groundwork for Moon’s ideas to be enacted, 2018 will be prove crucial in determining their success and sustainability. All of this could however be moot if burgeoning household debt is not reigned in.

South Korean Local Elections

South Korean domestic politics will face another bumpy road in 2018. The June 13th local election will be the Moon Jae-in Administration’s first major political event and a litmus test for Moon’s first year. It could also change the political landscape for next four years.

With Moon’s continuous high approval rate, the Democratic Party of Korea has a strong advantage over its opponents. According to the Korea Times’ New Year public opinion poll, an overwhelming majority in Seoul, Busan and Gyeonggi providence said they will support Moon and the ruling party in upcoming local election.

However, opposition parties are hoping to flip the political tide in their favor. Ahn Cheol-soo, the leader of the People’s Party and the Bareun Party leader Yoo Seun-min have been pushing for their parties’ merger to attract the votes of centrists and moderate conservatives. Whether the synergy from the merge will be strong enough to make them the main opposition party ahead of Korea’s Liberty Party is debatable.

The major race to watch out for the June election will be the Seoul mayor’s race. The incumbent, Park Won-soon, will be the first Seoul Mayor in history to run for the third term. According to DongA Ilbo survey, Park has overwhelming support over other potential candidates.

With five months left until the election, there is a plenty of time for unexpected changes.

Hallyu’s Ongoing Rollercoaster Will Continue

The last year was one of extremes for Korean pop culture overseas. Starting in 2016 and continuing throughout 2017, the market for Korean cultural content in China began to dry up amid formal and informal boycotts over THAAD. After years of Hallyu fever in China, concerts by Korean artists and endorsement contracts for Korean celebrities have become few and far between.

Meanwhile, though, boy band BTS may have achieved what was once deemed impossible – breaking into the mainstream American market. After appearances on the American Music Awards and The Ellen Show, BTS topped off the year with a performance at Dick Clark’s New Year’s Rockin’ Eve, and broke their own record for the longest run by a k-pop group song on Billboard’s Hot 100 chart.

In 2018, expect more of the same for both these phenomena. Even if China lifts some restrictions this year, Korean entertainment companies will likely be reluctant to rush back into the Chinese market. In fact, some groups with a stronghold in China such as EXO, who releases all their music in both Korean and Mandarin, have shifted toward more Japanese releases.

Meanwhile, it remains to be seen where BTS’s success in the United States will take them, and whether their popularity will open doors for more mainstream interest in other k-pop acts.

And finally one bonus issue:

Will There Be Constitutional Reform?

President Moon Jae-in has promised to reform the South Korean Constitution and intends to hold a referendum on proposed changes in conjunction with local elections in June.  The 1948 Constitution has been amended nine times, with the biggest change in 1987, when presidency was changed to a single five-year term.  A two-thirds majority in the National Assembly will be required to pass the constitutional reform bill that would then be put to the referendum.

Although there is consensus that the current Constitution grants too much power to the President, there is no agreement on how to curb the President’s powers.  Suggestions include: introducing a four-year, two-term Presidency; increasing the powers of the Prime Minister, perhaps by making the Prime Minister responsible for domestic policy while leaving foreign and security policy to the President; giving greater autonomy to regional and local governments, perhaps in the areas of education and local finance; creating a system for ballot initiatives and a recall system for National Assembly Members to strengthen “direct democracy”; and changing the system of National Assembly elections to increase the influence of smaller parties.  President Moon, formerly a human rights lawyer, has also said that he is interested in strengthening human rights provisions of the Constitution.

The first half of 2018 will see a strong push for agreement on Constitutional revisions in time for a June referendum.  If the parties cannot agree on a proposal, Constitutional reform will become an issue for the 2020 National Assembly elections.

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, Jenna Gibson 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 Jenna Gibson. Photos from William Proby and Korea Net on flickr Creative Commons, and from Wikimedia Commons.

Posted in North Korea, slider, South KoreaComments (1)

2017 in Review: A Critical Year for the Korean Peninsula

By Troy Stangarone

In 2017, much of the world’s attention turned to the Korean Peninsula. South Korean politics underwent major changes as President Park Geun-hye became the first South Korean president to be removed from office and a snap election was held in May that saw the election of Moon Jae-in. North Korea also dominated the news as Kim Jong-un followed through on his promises to test an intercontinental ballistic missile (ICBM) and has raised concerns over the prospect of military action on the Korean Peninsula as North Korea has advanced its programs more quickly than many expected.

The changes in South Korean politics and North Korea’s progress on weapons development on their own could mark 2017 as a major turning point on the peninsula. However, we also saw the United States threaten to withdraw from the KORUS FTA and China perhaps put more pressure on South Korea over THAAD than North Korea over its nuclear weapons program. As we take our annual look back at the events that helped to shape the Korean peninsula during the past year, it is also an opportunity to review the events we highlighted on The Peninsula in our annual 10 Issues to Watch For on The Korean Peninsula in 2017 blog.

Looking back, we largely touched on what would be the key issues on the Korean peninsula in 2017. Though, in the case of burden sharing we may have been a year too early and there are reasons to believe late in 2017 that our prediction on relations between South Korea and Japan while right for 2017 may be challenged in 2018. Areas where we could have done better include more of a focus on North Korea’s desire to try and complete much of its weapons testing in 2017, how nations in East Asia would react to the U.S. withdrawal from the Trans-Pacific Partnership, and the impact that the impeachment of Park Geun-hye would have on the leadership of South Korean chaebol. With that said, here’s a brief look back at the 10 issues we highlighted and what happened:

  1. Political Dynamics and the Presidential Election in South Korea

The impeachment of Park Geun-hye and the subsequent election of Moon Jae-in as president were two major events in South Korean politics in 2017. While the snap election won by Moon resulted in a victory for the leading contender rather than an upstart candidate hoping to take advantage of shifts in the South Korean political scene, it did see the rise of populism in South Korea as we have seen in much of world over the last couple of years. The difference being that populism in South Korea is being driven by the left rather than the right. While Moon’s election could have resulted in shifts in policy towards North Korea and Japan, he has largely represented continuity through his endorsement of President Trump’s policy of maximum pressure and his efforts to separate historical issues from policy more broadly with Japan. Though, he has moved to give the government a greater role in job creation in South Korea.

  1. The Trump Administration’s Foreign and Security Policy in East Asia

Despite campaign rhetoric that accompanied President Trump’s run to the White House, U.S. foreign and security policy towards East Asia has remained largely the same. Much of the strong rhetoric about the need for allies to contribute more to their defense has remained, but the broader U.S. policy in the early part of the Trump Administration seems to have largely remained in place. The most significant difference to date may have come in the rhetoric designed to describe the Administration’s policy. The Trump Administration has decided to move away from using the Obama Administration’s Asia Rebalance to a new Indo-Pacific strategy, but it is unclear how different the policy will be in reality. Though, we could see greater differences in 2018 as negotiations on burden sharing with South Korea will need to be completed and North Korea’s

  1. Trump Administration Asia Economic Policy

If U.S. foreign and security policy in East Asia has largely remained consistent, the same cannot be said of U.S. economic policy. Trade policy was the one area where it was clear President Trump intended to make changes. On the first day of the new Administration, President Trump followed through on his promise to withdraw from the Trans-Pacific Partnership (TPP) and shift from the use of multilateral trade agreements to bilateral trade agreements to advance U.S. interests. The Trump Administration has also pushed to renegotiate the U.S.-Korea (KORUS) FTA, which President Trump has consistently referred to as a “horrible” trade agreement and only North Korea’s nuclear test in September may have convinced the Trump Administration to renegotiate rather than withdraw from the agreement. It has also taken steps to use more U.S. trade remedies to push a harder line with China on its trade practices.

  1. North Korean Behavior in Response to a New Political Environment

Despite announcing in his New Year’s Day address that North Korea was close to conducting an ICBM test, North Korea did seem to display some hesitancy in its testing in 2017 as it adjusted to the new Trump Administration in Washington, DC and there have been indications that Pyongyang is confused by Washington’s new policies. At the same time, North Korea did not conduct as many missile tests around the U.S.-South Korean military exercise in the spring and delayed conducting its first ICBM test until July. However, by the middle of the year North Korea seems to have determined that the new Administration would not be a break on its behavior and proceeded to conduct missile tests at roughly the same rate as in 2016.

  1. Will North Korea be a Trump Administration Priority?

It was clear before the Trump Administration came into office that dealing with North Korea would be a foreign policy priority, but less so where it would rank in terms of priorities, especially given candidate Trump’s focus on China. However, addressing North Korea’s nuclear program has become the Trump Administration’s top foreign policy priority because of both the maturity of North Korea’s weapons programs and the growing threat they represent to the U.S. homeland and the region. As a result, President Trump has lessened economic priorities that he campaigned on, such as addressing trade with China, and offered Beijing a better deal on trade if it helped the United States deal with North Korea.

  1. Are Sanctions Working?

This was one of the key questions for 2017 and will remain a top issue in 2018. Are sanctions working on North Korea? Sanctions have taken a toll as exports to China have fallen by $410 million through October compared to the same period in 2016 and some countries have begun completely cutting off trade, but they have created no discernable change in North Korea’s testing or willingness to return to talks. However, concerns we had at this time last year that there may be a turn away from sanctions have not yet come to pass. While some of the presidential candidates in South Korea had expressed a desire to reverse course on sanctions with North Korea, Pyongyang’s continued missile test and hydrogen bomb test have closed any avenue for engagement and a lessening of sanctions, easing those concerns. Though, there has been an increasing consideration of the use of military force in the United States to solve the North Korean nuclear issue.

  1. Special Measures Agreement/Burden Sharing 

Because of the focus on this issue by candidate-Trump we had an expectation that it could come to the fore in 2017. Asides from the occasional rhetorical flash, it didn’t. However, in 2018 the United States and South Korea will need to conclude a new Special Measures Agreement to determine the level of burden sharing in the alliance. This may just be an issue deferred.

  1. Will RCEP Be Finalized in 2017?

One of the expectations for 2017 was that if President Trump followed through on his pledge to withdraw from the TPP, it would help spur the Regional Comprehensive Economic Partnership (RCEP) to conclusion and help to provide China with a platform for supplanting the United States’ leadership in East Asia on economic issues. While China has sought to supplant the United States on trade, RCEP remains unconcluded and rather than withering the TPP is very much alive. The remaining members under Japanese and Australian leadership have sought to conclude the agreement and leave open the door to a U.S. return in the future. The regional response to the United States on trade has not played out how one would have expected.

  1. Will the Korean Wave Continue?

The Korean Wave, or Hallyu, continued to grow in 2017 despite Chinese retaliation over THAAD. China is a key market for Hallyu content and products. As a result of THAAD, China prohibited the streaming of new K-dramas and banned group tours to South Korea where Chinese tourists purchase large amounts of Hallyu related products such as K-beauty. Both of these actions cut into profits from Hallyu, but there was also significant growth of K-beauty product exports to China as Chinese customers sought to make up for the loss of purchases from their trips to Seoul. While China’s measures have clearly cut into Hallyu, it has seen increasing success outside of China. One of the biggest new hits on U.S. TV, The Good Doctor, is the export of a South Korean drama and the growing enthusiasm for Hallyu can be seen at KCONs around the world as well as in the American TV debut of boy band BTS, who will be ringing in the new year in Times Square along with the world’s biggest artists. While China’s THAAD retaliation clearly represented a challenge to Hallyu, it continues to thrive.

  1. Relations Between South Korea and Japan

The relationship between South Korea and Japan has developed largely as we expected. The 2015 agreement regarding the Comfort Women remains unpopular in South Korea and President Moon has said the South Korea could not “emotionally” accept the agreement. However, in contrast to the Park Administration the Moon Administration has worked to separate historical issues from other issues in the relationship. Shortly after his election President Moon spoke with Prime Minister Abe about North Korea and the two have met in a summit meeting during APEC and the trilateral meeting with President Trump on the sidelines of the UN General Assembly. While the growing threat from North Korea, along with President Moon’s reluctance to date to call for the Comfort Women deal to be revised or scrapped, has likely helped to maintain ties, a South Korean commission recently concluded that the agreement did not adequately take into account the views of the Comfort Women and could challenge this balance in the new year.

Beyond the events that we expected, here is a look at some of the unexpected events that helped to shape 2017:

  1. North Korea’s Nuclear Successes

After a series of Musudan missile failures in 2016, few would have expected the progress shown by North Korea in 2017. However, 2017 saw Pyongyang make significant progress as it introduced the Hwasong 14 and 15 models for its three successful ICBM tests. Also, more than a year after claiming the successful test of a hydrogen device, North Korea successfully conducted it first test of a hydrogen bomb. While North Korea’s successes to-date may not quite complete their tests as Kim Jong-un indicated, they have brought North Korea significantly closer to being able to strike the U.S. homeland than many would have thought possible in 2017.

  1. How Sanctions on North Korea have Changed

Prior UN sanctions on North Korea were designed to prevent North Korea from acquiring the technology that it needed to advance its nuclear weapons and missile development, but that began to change in 2017. While UN sanctions in 2016 began to move in this direction with caps on the export of coal, sanctions in 2017 prohibited the export of most of North Korea’s minerals, textiles, fish, and basic items such as wood products. They also began to cut into North Korea’s earnings from the export of labor to foreign countries by requiring that all workers return to North Korea in the next year and prohibiting future work contracts. In essence, the sanctions on North Korea have moved from a stage of punishment and deterrence to one of coercion.

  1. The Impact of Scandal on the Chaebol Leadership

The impeachment of Park Geun-hye has also had a significant impact on the leadership of South Korea’s chaebol who became embroiled in the scandal, but also left mixed signals. When the scandal first broke there was hopes that the history of the South Korean legal system going light on the heads of chaebol would have changed. Lee Jae-yong, the head of Samsung, was found guilty of giving bribes to Choi Soon-sil in the Park scandal and now faces 12 years in prison. However, there are now indications that may not be the case. Many of the key figures of the family behind Lotte were also convicted in the scandal, but given suspended prison sentences. The Lotte case indicates that the change many hoped for may not be the case and next year we will learn whether Lee Jae-yong’s sentence is also reduced and suspended or if he is faces jailtime.

  1. China’s Retaliation Over THAAD

China never formally sanctioned South Korea over the deployment of THAAD, but it took steps related to Hallyu, tourism, Lotte, and other areas in an effort to pressure the South Korean government to reverse its decision over THAAD. While there seemed to be an agreement to return to normal, China has only partially reversed its economic pressure over THAAD and indicated that it will only completely do so once the missile defense system has been reversed. However, through October, the economic costs to South Korea from the deployment of THAAD are likely over $9 billion, while North Korea has only seen its exports to China decline by $410 million.

  1. The Assassination of Kim Jong-nam

While not taking place directly on the Korean Peninsula, the assassination of Kim Jong-un’s older half brother Kim Jong-nam in Malaysia was one of the year’s most surprising events. Not only did North Korea take out a potential rival to Kim Jong-un on foreign soil, but it did so using VX nerve gas raising concerns about North Korea’s potential use of chemical and biological agents in addition to its nuclear weapons and missile programs.

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

Posted in North Korea, slider, South KoreaComments (0)

North Korean ICBM Tests

By Juni Kim

On November 29th, North Korea conducted yet another intercontinental ballistic missile (ICBM) test after two tests earlier this year in July. Launched at a nearly vertical test trajectory, the Hwasong-15 missile reached nearly 2,800 miles above the earth’s surface and flew for over 50 minutes. The Union of Concerned Scientists estimated that the newly tested missile could travel 8,100 miles if launched at a normal trajectory, which is in range of the entire United States. The test demonstrates the continuing trend of North Korea’s rapidly advancing, and deeply troubling, missile technology.

Including the most recent missile test, North Korea has now conducted three successful ICBM tests with significant gains in missile range for each successive test. All three tests were also conducted this year. Below is a brief overview of each test and the U.S reaction following the tests.

July 4 Test

While most Americans were preparing for Independence Day festivities, North Korea launched the Hwasong-14 missile on July 4th, the first successful ICBM test the rogue nation has conducted. The missile peaked at a height of 1,740 miles and flew over 580 miles into the East Sea. Analysts surmised that the missile could reach Alaska if launched at a normal trajectory, but not the continental United States.

U.S. Ambassador the U.N. Nikki Haley called the test a “clear and sharp military escalation” and called on China to properly enforce UN sanctions on North Korea. Similarly, U.S. President Donald Trump tweeted, “So much for China working with us – but we had to give it a try!”

July 28 Test

Less than a month after the first ICBM test, North Korea conducted another Hwasong-14 missile test. The missile exceeded the range of the previous test, and landed in the East Sea after peaking at 2,300 miles. The projected standard trajectory was estimated to be able to reach much of the continental United States including the entire West Coast. North Korean state media stated that the test was meant to be a “stern warning” to the United States by Kim Jong-un.

On August 5th, the United Nations Security Council passed UNSCR 2371, a resolution designed to further tighten sanctions on North Korea in retaliation for both July ICBM tests. President Trump on August 8th warned North Korea that they would be met with “fire and fury” if the regime continued its provocations.

November 29 Test

Following the two Hwasong-14 tests in July, North Korea demonstrated the capabilities of its Hwasong-15 ICBM this past Tuesday. The range of the missile eclipsed the previous two missile tests and reached a top altitude of 2,780 miles. The projected standard trajectory of 8,100 miles would cover the entire continental United States.

During an emergency meeting at the UN on Wednesday, Ambassador Nikki Haley stated, “The dictator of North Korea made a choice yesterday that brings the world closer to war, nor farther from it.” Additionally, President Trump avowed “additional major sanctions” on North Korea after tweeting that he spoke with Chinese President Xi Jinping yesterday morning.

Juni Kim is the Program Manager and Executive Assistant at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.

Photo from Prachatai’s photostream on flickr Creative Commons.

Posted in North Korea, sliderComments (1)

Why North Korea’s Latest ICBM Test Isn’t that Surprising

By Troy Stangarone

After conducting a series of missile tests in the summer and late fall, including its first two intercontinental ballistic missile (ICBM) tests, North Korea went 75 days without a missile test. In some corners there had been hope that North Korea’s pause indicated an openness for talks, but that prospect was always tempered by the knowledge that Pyongyang tends to scale back tests in the fourth quarter. Now that North Korea has tested the new Hwaseong-15, it is clear that North Korea had not paused its tests in the hopes of opening talks with the United States, but that should not come as a surprise.

There was little reason to believe that North Korea had halted its tests in the hopes of opening the door to dialogue. If North Korea was open to talks over its nuclear program, it would be in a much stronger bargaining position if its ICBMs were capable of hitting all of the United States rather than only having the ability to hit South Korea, Japan and Guam. Additionally, more than a month into the pause in its tests a North Korean official indicated that Pyongyang would not negotiate with the United States prior to achieving the ability for its ICBMs to reach the eastern coast of the United States.

While it is the case that there have been fewer North Korean missile tests in 4th quarter, there have been changes in the patterns since Kim Jong-un came into power. Testing under Kim Jong-un has been significantly more robust than under either Kim Il-sung or Kim Jong-il.

Since Kim Jong-un succeeded his father, North Korea has conducted 70 missile launches. These include a range of ballistic missiles, but also other types including anti-ship cruise missiles. There were relatively few tests during Kim Jong-un’s first two years in power. In 2014, the number of tests increased to 15, but only one of these tests was a medium range ballistic missile. This began to change in 2015, but only by 2016 had Pyongyang significantly shifted from short range tests to medium range and longer ballistic missile tests. If anti-ship and short-range ballistic missiles are excluded and the focus is only on the medium, intermediate, submarine launch ballistic missiles, and ICBMs, nearly 19 percent of North Korea’s missile tests longer than short range ballistic missiles have taken place in 4th quarter.

Now that North Korea has declared itself a nuclear state, the question is what comes next? While North Korea has declared success and demonstrated an ability to reach the eastern coast of the United States, we should not expect the tests to necessarily end. It is still unclear if they have mastered reentry and it is unclear if the most recent test used a lighter dummy warhead which would have expanded the ICBM’s range. So, there may still be technical details for North Korea to work out.

Additionally, while North Korea previously indicated that it would only talk with the United States once it had developed an ICBM capable of reaching the eastern U.S., neither the United States nor North Korea may want to move into talks quickly. The United States will likely want to allow sanctions to have additional time to apply pressure on North Korea, while North Korea may not want to enter talks quickly to avoid the perception that its weapons programs are negotiable.

For the moment, we should expect relatively quick passage of new enhanced sanctions at the United Nations and potentially increased efforts to enforce the reduction of North Korean trade. However, we also shouldn’t be surprised if in December or early next year North Korea conducts another test and we remain further off from negotiations. North Korea likely still has technical issues to resolve and may be looking to increase tensions on the Korean Peninsula. Recall that 30 years ago on November 29, 2017 North Korea blew up a Korean Air flight midair as a warning against those who would participate in the 1998 Summer Olympic Games in Seoul. Whether as part of North Korean efforts to conclude their weapons programs or an effort to create anxiety in the run-up to the 2018 Winter Olympic Games in PyeongCheong the international community should expect continued provocations from North Korea.

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 U.S. Pacific Command’s photostream on flickr Creative Commons.

Posted in North Korea, sliderComments (0)

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.