‘Neither Peace Nor War’: Who Benefits From the Current Situation on the Korean Peninsula

Relations between the two Koreas have entered a phase of cooperation and reconciliation but history shows that it may be followed by another period of confrontation, Valdai Club expert Georgy Toloraya writes. Russia is primarily interested in peace and stability and a settlement of the crisis on the Korean Peninsula because this will allow it to use the advantages of the international division of labour in this region.

In 2018, the situation on the Korean Peninsula suddenly changed for the better. This happened after Kim Jong-un took advantage of America’s concern over his ballistic missiles. This is why his latest breakthrough proposal on dialogue with the US was suddenly accepted. Naturally, the then new South Korean administration of Moon Jae-in played a tangible role in the process by actively facilitating this contact and vigorously developing inter-Korean relations and projects.

Is denuclearization of the Korean Peninsula achievable?

The goals proclaimed by the sides are difficult to achieve and sometimes even utopian. This is particularly true of the “big deal” between the US and the Democratic People’s Republic of Korea (DPRK), that is, denuclearization in exchange for “security guarantees.”

Security guarantees from the US are hard even to imagine, considering its political system and the alternation of administrations. Moreover, the US has not given up and is unlikely to give up its strategic goal dictated by the interests of the geopolitical struggle in Eastern Asia. China is the main opponent in this respect. Russia is less of an opponent, while the DPRK is an annoying buffer in the way of US movement to the borders of these countries. Moreover, North Korea’s “nuclear thorn in the flesh” deters the US forces in the Far East. Therefore, the ultimate goal of the US is the unification of Korea under the aegis of South Korea, which implies North Korea’s disappearance as a state. Apparently, even a reformed democratic DPRK will hardly suit the US establishment that has persuaded itself over decades that North Korea is the devil incarnate and embodies all evils that are completely at variance with the very ideological paradigm of the American way of life.

The DPRK is unlikely to persuade the US of its ability to follow Vietnam’s road and become a US partner if not an ally against China although such a chance does exist and I think President Donald Trump is guided by it in his active personal work with Kim Jong-un.

North Korea’s complete denuclearization cannot be achieved either because from the perspective of the US, it implies the destruction of biological and chemical weapons as well. Such complete disarmament of the DPRK is only possible if it is backed by an entirely new system of security guarantees and the disappearance not only of any direct military threat but also of the new hybrid war methods, including colour revolutions and information warfare, which are dangerous to the regime.

Therefore, the most of what can be achieved, in my view, is compelling North Korea to reduce its nuclear potential to a minimum and stopping its build-up by closing down a number of programs on developing ICBMs and producing weapon-grade fissionable materials. But Pyongyang should retain a certain necessary nuclear reserve. An ideal option is an “Israeli status” for North Korea that would declare that it has no nuclear weapons, whereas other countries, though aware that it has a certain “contingency reserve,” would confirm that they cannot dispute this assertion for lack of relevant data. However, the US is unlikely to settle for this.

Sooner or later, the pendulum of tensions will swing back and we will see yet another escalation on the Korean Peninsula. Possibly this will be triggered by domestic political events in South Korea or the US itself. Conceivably, Trump would benefit more from muscle-flexing in East Asia for his re-election than from a diplomatic success. If so, tensions may surge in 2020. Moon Jae-in, “lame duck,” will also be in a much weaker position by the time. A threat from the conservative opposition may compel him at some point to play up to the anti-North Korean attitudes that are fairly strong in South Korea. Although the dialogue is continuing, at present the chances for its extension into the future, at least until the US elections, and for an exacerbation of tensions are approximately equal.

Reforms and sanctions

From the moment of his advent to power, Kim Jong Un made it fairly clear that, while preserving the look of “our version of socialism” in the DPRK, he is ready to fill it with a new content, that is, focus on domestic economic development rather than the preservation of dogmas. This course was officially approved at the Third Plenary Meeting of the Central Committee of the Workers’ Party of Korea in April 2018. It was confirmed that the main goal of the DPRK was to develop the economy because the task of strengthening the defence capability had already been achieved owing to the creation of a nuclear potential, the “state nuclear deterrent.”

Meanwhile, Kim Jong-un actually chose to shut his eyes to changes in domestic economic life, which began way back in the 1990s with the “marketization from below.” Pushed to the verge of starvation, North Koreans somehow had to survive by engaging in in shuttle trade and small businesses. They were reselling goods and trading on the market, which led to the emergence of a class of proprietors and private ownership in the DPRK by the beginning of Kim’s rule.

Without acknowledging this state of affairs officially, Kim Jong-un nevertheless decided to carry out systemic reforms in agriculture (collective “family contract”) and the industrial sector, with industrial enterprises actually being given full economic independence. Multi-sectoral economic conglomerates have flourished. These primarily cater to external markets and are supervised by different bureaucratic groups inside ministries, agencies, the secret services, the military and other organizations in the DPRK. But on the face of it, they retain their status as government-owned entities.

There are some signs that these “reforms from below” have already reached their ceiling in the presence of the economic sanctions. In his speech at the first session of the 14th Supreme People’s Assembly on April 13 of this year, Kim Jong-un actually set forth an economic strategy focusing on import substitution and an effort to create an “independent economy” based on self-reliance. In fact, the country has to survive under emergency conditions that took shape as a result of North Korea’s growing economic isolation due to sanctions. Obviously, the de facto economic blockade of the DPRK does not facilitate marketization because it severely limits opportunities for external exchanges, profitable business and private initiative in general. A certain shift in emphasis after what was in practice a toughening of the economic war against the DPRK is inevitable. The personnel changes carried out in April may also point to this conclusion.

In theory, North Korea can, of course, expect the coming of what Trump called its “bright future” because it can use its competitive advantages in the international division of labour based on state capitalism or mixed economy. In so doing, it can borrow from the experience of China and Vietnam and also South Korea, and enrich it with its own features.

North Korea’s advantages are not limited to its considerable natural resources. It has a fairly educated, literate population that can perform not only labour-intensive work but also skilled jobs for low pay. This is especially so in new technology areas, including IT. North Korea has accumulated substantial scientific potential during the implementation of its nuclear and missile programs. Therefore, it does not particularly need external resources to promote and consolidate its positions in the IT market.

Tales about North Korean hackers may be quite an exaggeration, but it is clear that North Korea has considerable personnel potential for software development and advances in the context of the fourth industrial revolution. North Korea is capable of using this potential on the outside either legally (if this is allowed) or illegally (cryptocurrency transactions, hacker attacks on financial institutions, banks, corporations of “hostile countries,” etc.). Modern IT can bring hefty dividends to North Korea and it has been chosen as a priority in upgrading the scientific level of the North Korean economy.

Another relative advantage is a transit potential that may turn the DPRK into a bridge between the rapidly developing Asia and Europe.

The DPRK could quickly achieve economic growth even without opening the economy, which would be dangerous for its social system. However, this would only be possible if sanctions were lifted or greatly reduced, and this is not likely for the time being.

Why neither the North nor the South really want unification

Relations between the two Koreas have entered a phase of cooperation and reconciliation but history shows that it may be followed by another period of confrontation. South Korean society is about fifty-fifty in its attitude to cooperating or deterring North Korea. Importantly, the North Korean factor is less and less relevant for new generations in South Korea: they do not perceive North Koreans as brothers and are not willing to feed and support these “poor relatives.”

If the current government of Moon Jae-in is replaced with a conservative successor in 2022, relations may roll back and joint programs will be curtailed, especially considering the low efficiency of all measures undertaken by the current president during his time in office. There is no progress due to economic sanctions, while Moon Jae-in’s diplomatic role of a mediator between the US and North Korea can only be appreciated in the case of a diplomatic breakthrough, but this prospect is fairly remote for the time being.

Ideally, the co-existence of the two Koreas based on respect for each other’s sovereignty and the maintenance of broad economic exchanges seems to be the most realistic option in long run. That said, having preserved its political independence, the DPRK would become an economic appendage to South Korea, but this prospect would fully suit it.

It is hardly possible to speak about the unification of Korea as a realistic prospect at this stage, although not a single Korean will accept this assessment. Neither the North nor the South needs reunification right now. History shows that it is not at all necessary even for groups with a common history and ethnic background to unite in a single state. Apparently, co-existence of the two Koreas is the best option because both national elites are in no way interested in losing part of their powers to supranational bodies. This kind of arrangement may last for a fairly long time. At some historical moment, after the arrival of a new generation, a rapprochement of the two states is possible (in a similar form to the Union State of Russia and Belarus) but for the time being this is idle speculation.

What the interests of the external actors are

Their interests are fairly different and the peninsula is an area of intense competition between the great powers. The US is eventually interested in putting North Korea under its control, either mild or tough, by way of its occupation by South Korean forces or its involvement in the orbit of its influence. But this goal seems practically unattainable if only because China is an adamant opponent of this prospect.

It cannot be ruled out that in an event of a crisis in the DPRK or an aggression against it by hostile states, China may even occupy North Korea or part of its territory. At any rate, North Korea will be put under China’s nuclear umbrella through the formation of a pro-Chinese regime. At most, North Korea will be included in the PRC as a self-governing territory, but this is unlikely. It appears that the most rational decision for the North Korean elite in a critical near-death moment would be to sell themselves out to China and most probably in this case we would have to deal, not with a united Korea but with South Korea disappointed with its failure to resolve a national problem and a pro-China North Korea. This historical experiment would be denounced in Asia as an example of Chinese expansionism and would seriously undermine China’s positions in the region.

Naturally, Japan is highly suspicious of the idea of a united Korea. Today, it is negative not only as regards North Korea, which it perceives as its main security threat (this attitude sometimes turns into paranoia) but also to South Korea. Recently, divergences between Japan and South Korea over history have become strongly pronounced. The two nations are far from reconciliation and will hardly treat each other with genuine respect in the foreseeable future.

Russia is primarily interested in peace and stability and a settlement of the crisis on the Korean Peninsula because this will allow it to use the advantages of the international division of labour in this region. Importantly, the preservation of peace should prevail over North Korea’s denuclearization, although the development of nuclear weapons by Pyongyang is a serious challenge to the non-proliferation regime, which may undermine Russia’s position as a global actor in the future. At the same time, Russia’s concern is not as big as that of China which would face a huge existential threat from the development of new nuclear forces and the appearance of new nuclear countries in the region, such as South Korea, Japan and especially Taiwan. Therefore, Russia should play up to China as it strives to persuade North Korea to denuclearize, and take relevant measures, mostly declarative on the bilateral track. However, giving priority to denuclearization as Russia has been doing by force of inertia since the 1990s would be a major foreign policy miscalculation.

At the same time, support for the sanctions regime, let alone its toughening, does not meet Russia’s economic or strategic interests. It alienates the North Korean leaders from Russia without bringing any real dividend except for some mythical approval by the US, which cannot be either turned into money or used in any other way because differences in other areas are too pronounced. Obviously, Russia did not give enough thought to specifying the conditions of its accession to the sanctions regime in 2017. It should have negotiated more specific conditions for its participation or non-participation in this regime.

In view of North Korea’s readiness to freeze and even dismantle nuclear facilities, reduce military tensions and carry out denuclearization, it is time for Russia and China not only to urge a change in the sanctions regime, which is being predictably blocked by the US and its allies at the UN Security Council, but also take some concrete steps. It is also important to keep in mind that despite its formal support for the sanctions, China is turning a blind eye to their violation owing to its long border with the DPRK. Bilateral trade is invisible for foreign observers and experts, but it continues and even expands.

Russia does not have this opportunity and obviously we should focus on the projects where we have competitive advantages, given the North Korean leadership’s turn to Russia for support after the Hanoi summit. It could be possible to declare a moratorium on a number of sanctions and bring about some other revision, in particular on the use of North Korean workforce in the Russian Far East or the supply of prime necessities that are unrelated to the military area. The railway transit remains our major project and it is necessary to take serious measures for invigorating the Khasan-Rajin transit project by putting pressure on South Korea and other partners.

It must be realized that a hypothetical favourable breakthrough in the North Korea-US talks, the relaxation of sanctions and the settlement of the nuclear problem will bring dividends to Chinese, South Korean and American companies rather than Russia. Considering Russia’s current double-dealing policy, North Korea will hardly be willing to grant us any preferences.

Generally speaking the current “no war, no peace” situation is the most favourable one for Russia: sluggish talks continue, there are no crises, no nuclear and missile tests, no war games, no new US strategic assets in this region, etc. Under these circumstances, we must realize that this situation may only be resolved gradually and that we need to be highly flexible and cautious to achieve this. The Russia-North Korea summit is an important milestone in the consolidation of Russia’s position in the Korean settlement.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.