A Peaceful Geoeconomic Approach

A Peaceful Geoeconomic Approach

Shepherd Iverson

In a book Henry Kissinger hopes will remind policymakers of the importance of geoeconomic tools, and retired General David Patraeus asserts “should be require reading for all presidential candidates and their foreign policy advisors,” former Ambassador Robert Blackwell and Jennifer Harris’s War by Other Means: Geoeconomics and Statecraft (2016) is both a strong indictment of current US foreign policy and a prescient recommendation of what must change. Blackwell and Harris contend the Vietnam War pushed geoeconomics off the policy stage, and then as now, the US too often reaches for the gun instead of the purse. Citing the influential Johns Hopkins foreign policy professor Michael Mandelbaum, Blackwell and Harris assert that since the quest for power is competitive and zero-sum, while the quest for wealth is positive-sum and unlimited, we should de-emphasize conventional power politics in favor of geoeconomic statecraft.

With this objective in mind, I have designed a model to peacefully relieve the Kim regime of power while creating positive-sum economic and security benefits for all concerned interests. This model is predicated on the assumption that economic instruments can advance geopolitical goals and that the provision of incentives is the best and perhaps the only peaceful solution to nuclear proliferation in North Korea. This strategic geoeconomic approach expands the set of policy options at a time when it is painfully obvious conventional policies are not working.


Although there have been differences, US and South Korean policies toward North Korea have been correspondingly schizophrenic. Inconsistent policies of accommodation, containment, coercion, engagement, and isolation has led to twenty-plus years of frustration and resulted in strategic deception, retaliatory brinkmanship, and the perpetual impasse of Six-Party Talks—dormant since 2008. In Seoul a decade of hopeful engagement (1998-2007) was disrupted by the neoconservative tactics of the Bush Administration and eventually by a change of faces in the Blue House—Korea’s Presidential Palace.

Hardliner policies of the Lee Myung-bak Administration angered Pyongyang elites and after several deadly naval skirmishes in preceding years, with North Korea incurring the most losses, in May 2010 a North Korean torpedo sunk a South Korean Navy ship, killing 46 seamen, and in November North Korea fired 170 artillery shells and rockets onto Yeonpyeong Island, killing four more people. Wisely refraining from knee-jerk retaliation and escalating the situation, Seoul nevertheless was compelled to level sanctions against Pyongyang. This forced the Kim regime to look to Beijing as a new source for trade and capital. This was a reactive period, not a time for policy innovation or the proactive management of relationships. Many Korean citizens hoped this would change with a new administration. However, President Park Geun-hye’s cautious initiatives failed to improve inter-Korean relations, and after the Kim regime vacated President Obama’s 2012 Leap Day agreement, diplomatic engagement was discontinued.

President Park is now in the final lame duck days of her presidency and the US has a new commander-in-chief. Campaign remarks and a growing consensus suggest strategic patience will be abandoned and more pressure will be imposed on China to resolve this increasingly dangerous security situation. East Asia expert Jonathan Pollack observes: “By sharpening the choices confronting Beijing, Washington shows it believes that equivocation or indecision by China is no longer acceptable.” Before introducing my geoeconomic model, let us consider evidence that supports the prevailing opinion that China could do more, and its obvious reluctance.


Conventional wisdom is that China prefers a divided peninsula in order to preserve a fraternally allied communist authoritarian state as a buffer between itself and the democratic South. While this rationale was reasonable thirty years ago, it is not today. With over two million men in boots and 2,000 fighter aircraft, it is understood no modern army would push toward Beijing over land through Korea, and after unification, THADD and a US military presence becomes unnecessary. Continue reading “A Peaceful Geoeconomic Approach”

North Korea’s Overseas Trading Networks

A 2016 Asan Institute study of North Korea’s overseas trading networks using corporate and tax registries in East Asian countries was able to identify 562 ships, companies, and individuals that are within one degree of separation from North Korean entities. In one example a Chinese trading conglomerate had conducted over $500 million in business with North Korea in the past five years. It is asserted in the report:

North Korea’s external economy has increasingly assumed the characteristics of a hybrid network of licit and illicit components. These networks have grown adept at hiding their illicit activities within licit systems of global trade, finance, and transportation. They use a variety of schemes to disguise beneficial ownership, including using flags of convenience for ships, establishing shell and front companies to register their holdings, fabricating manifest and financial documents, and using multiple layers of intermediaries to conduct business. The net result, as UN Panel Expert Katsuhisa Furukawa has noted, is that various legitimate companies, including multi-national banks, shipping companies, and air carriers, are likely to be inadvertently facilitating North Korean illicit activity. (1)

These overseas resource and capital lifelines to the Kim regime are vulnerable to primary and secondary sanctions mandated under UN Resolution 2270. However, the detection and enforcement of illegal activities will be difficult without Chinese compliance and oversight, which to this point has been virtually nonexistent.

(1) Quoted from “In China’s Shaddow: Exposing North Korean Overseas Networks”, The Asan Institute for Policy Studies, (August 2016); also see “Note by the President of the Security Council”, United Nations Security Council, (February 23, 2015), http://www.ncnk.org/resources/publications/DPRK_Panel_of_Experts_2015.pdf; and K. Furukawa, “The Sanctions Regime of UN Security Council Resolutions 1718 (2006), 1874 (2009), 2087 (2013) and 2094 (2013)”, (April 20, 2015), https://csis.org/files/attachments/150406_FurukawaPresentation.pdf.