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Disarming North Korea
Foreign Policy editor and Beltway insider David Rothkopf complains about “dumb-downed smart people” in Washington, and claims there is an “institutionalized aversion to creativity.” Indeed, conventional US North Korea policy remains stuck in the muck and mire of Cold War causation, without nuance, imagination, or reasonably substantiated expectations of positive-sum outcomes. The fatalistic diplomatic doctrine is: “There are no good options.” This can and must change.
After North Korea’s quadruple missile launch in March, nonproliferation analyst Jeffrey Lewis has convincingly argued that Pyongyang is “preparing for a nuclear first strike” on US and allied military installations in the Asia-Pacific. Experts predict that sometime during the Trump presidency North Korea will be able to deliver a nuclear-tipped ICBM to the United States homeland. Past US presidents have drawn a red line, claiming they would not allow a nuclear North Korea; however none has been successful in undermining this danger or in dissuading China from supporting the Kim regime. After eight years of strategic patience there is a growing consensus that something must be done in a hurry and that China must be compelled to cooperate. East Asia analyst and scholar Jonathan Pollack observes: “By sharpening the choices confronting Beijing, Washington shows it believes that equivocation or indecision by China is no longer acceptable.”
As a US Aircraft carrier strike force moves toward Korean waters, Chinese President and communist Party general secretary Xi Jinping and North Korea’s Kim Jong-un must feel uneasy about an unconventional US president with a conservative populist mandate, as Donald Trump has already made China’s trade surplus a political issue, and as Beijing quietly continues to prop up a regime in North Korea that is developing nuclear weapons it threatens to use against the United States. Some analysts claim that a soft US policy toward China has failed. Princeton political scientist and former US national security official Aaron Friedberg asserts, “China is not an ally, nor is it a trusted friend…[it] has interests and objectives that are at times in direct opposition to America’s.” With several million manufacturing jobs lost to alleged unfair trade with China, and North Korea in the final stages of developing a nuclear-tipped ICBM, Washington may seek a grand bargain with Beijing to rebalance US-China trade and denuclearize North Korea.
As the preponderant economic and military power in the world today, the United States has considerable ability to achieve both objectives. As a debt-ridden, export and energy dependent, low-middle income rising power with a vastly inferior blue-water Navy, Beijing has incentive to compromise and cooperate with Washington. However, avoiding unnecessary conflict may require unconventional means of deploying US power over China and North Korea.
In a book Henry Kissinger hopes will convince policymakers to reassess geoeconomic tools, in War by Other Means Ambassador Robert Blackwell and Jennifer Harris critique conventional US foreign policy and present a prescient prescription for 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 ideas introduced by the influential Johns Hopkins foreign policy professor Michael Mandelbaum, Blackwell and Harris assert, “Understanding geoeconomics requires appreciating deeply embedded differences in the operating assumptions of geopolitics and economics. The logic of geopolitics is traditionally zero-sum, while the logic of economics is traditionally positive-sum.” They conclude that US policy should de-emphasize zero-sum conventional power politics in favor of positive-sum geoeconomic statecraft.
To achieve this objective, I have designed a model to peacefully denuclearize North Korea while creating economic and security benefits for concerned stakeholders—including China. In this essay I will introduce a pragmatic platform for positive-sum private and multilateral cooperation that expands the set of options at a time when it is painfully obvious conventional strategies derived from institutional think tanks and policy professionals are not working, and sentiment is growing for more drastic actions.
However, before introducing this proactive geoeconomic approach, let us review evidence that supports the prevailing opinion that China could do more to stop North Korea, and possible reasons for its reluctance.
China’s Reluctance to Stop North Korea
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 US allied (and occupied) democratic South Korea. While perhaps a valid concern for a more insecure generation, there is little rationale for this today. In addition to the borderless diffusion of news and information via digital communications and the Internet, with over two million men in boots and 2,000 fighter aircraft, no modern army would dare push toward Beijing over land through Korea, and after unification, the presence of anti-ballistic missile systems (THADD) and the US military are unnecessary. Let me suggest another reason that has largely escaped critical analysis.
Since the chorus of disapproval in China following North Korea’s February 2013 nuclear test, prevailing consensus is that Beijing has distanced itself from Pyongyang. It is frequently cited that Chinese President Xi has yet to meet with Kim Jong-un and has warned the Kim regime to stop provocations. Although there is circumstantial evidence for estrangement this does not discredit an alternative hypothesis that China is feigning displeasure to disguise its real intent. Analysts who presume acrimony fail to identify the silent surrogate role North Korea plays in promoting Communist China’s historical anti-imperialist anti-Western foreign policy through the transfer of technical knowledge and advanced weaponry. An incomplete flow chart of the chain of interlinking proxy relationships (including Russia’s role) and weapon transfers between anti-Western authoritarian states and non-state terrorist/resistance groups is represented in the figure below:
Anti-Western International Weapons Supply Chain (ask and I can email it to you)
This chain of strategic relationships destabilize the Middle East, challenge US interests in the Persian Gulf, and defy the post-World War II liberal international order. China policy expert Denny Roy points out that an increasingly dangerous “anti-U.S. Iran diverts U.S. resources away from East Asia and attention away from China.” A history of Chinese weapon exports to the greater Middle East and current North Korean weapon exports through Chinese ports to Syria and Iran (arming Hezbollah and Hamas) suggests collusion. According to newly released records obtained under the Freedom of Information Act, China exported nuclear materials to the Middle East in the early 1980s. Declassified CIA reports reveal that Chinese entities have been key suppliers of nuclear and missile-related technology to Pakistan and missile-related technology to Iran.
In 2011 a U.N. Panel of Experts report was blocked by Beijing in the Security Council because it contained incriminating details that Iran and North Korea exchanged missile technology using Air Koryo and Iran Air, involving transshipment through China. Before the JCPOA agreement was finalized, Beijing repeatedly opposed UN sanctions against Tehran, vetoed sanctions against the Bashar al-Assad regime, and stymied possible P5+1 action in Syria. Beginning in 2009 the Obama Administration imposed sanctions 16 different times on Chinese entities for weapons proliferation, including after 445 North Korean-made graphite cylinders used in ballistic missiles were seized in 2012 from a Chinese cargo ship bound for Syria. In February 2014 the US Defense Intelligence Agency Director testified before the Senate Armed Services Committee that Syria’s liquid-propellant missile program depends on equipment and assistance primarily from North Korea.
These intelligence discoveries, plus Beijing’s lackluster response to Pyongyang’s nuclear and ballistic missile tests and its failure eliminate munitions transshipments and enforce UN sanctions, suggest that China’s support for North Korea may not be a benign legacy of the Cold War, but part of a larger geopolitical strategy. After establishing Pakistan as a nuclear power on one flank, China may prefer a surrogate ally with nuclear muscle on its other flank. If at any time in the future China challenged the US in the Asia-Pacific, it might be valuable to have an ally that is able to nuke America’s major military bases in the region.
While China may currently lack resolve to stop North Korea, evidence it could prevent its nuclear proliferation would create a strategic opening for geoeconomic diplomacy.
Can China Stop North Korea?
Taking the CCP at its word that it disapproves of North Korea’s nuclear missile program, most institutional analysts also presume Beijing cannot stop it. However, evidence of substantial economic leverage suggests otherwise. According to a US Congressional research report, in addition to over one billion dollars in direct aid, Beijing purchases 90 percent of North Korea’s commercial exports, provides 80 percent of its consumer goods, 90 percent of its energy, over $100 million in UN banned luxury goods, and enough food to feed over a million people per year. However, the most profit is derived from the trade itself, which despite Beijing’s alleged discomfort with Pyongyang’s provocations, has quietly increased four fold since North Korea’s first nuclear test in 2006, as shown in the graph below.
China-North Korea Trade 2006-2015 (ask and I can email it to you)
Source: Korea Trade-Investment Promotion Agency (KOTRA)
Although there are indications of a recent reversal, this dramatic increase in trade since 2006 is undeniable evidence of China’s support for North Korea and at least tacit approval of its nuclear weapons program. As Beijing props up the Kim regime without bringing attention to itself—or anyone losing face—it may undervalue exports by at least one-third—a strategic discount—while the bulk of North Korea’s exports of mineral products and textiles—utilizing work camp labor—may return a 90 percent profit. The structural trade deficit (highlighted above) with China is effectively foreign aid since it is inconceivable it will ever be paid back, as with the $10 billion Russian debt that was forgiven in 2012 after decades in arrears. Given these assumptions, from available data Chinese trade and aid is responsible for direct and in kind fungible profits that paid for more than three-quarters of North Korea’s $6 billion 2015 military budget.
Beijing’s words do not comport with its actions. Despite benign policy pronouncements, China is underwriting the stability of the Kim regime and paying for a large portion of its nuclear weapons program. Indeed, if China were to abide by UN sanctions and suspend support—even if food aid was maintained at humanitarian levels—without luxury goods for elites, oil for the military, and essential commodities for its people, it is improbable the Kim regime would last long. American Enterprise Institute economist Nicholas Eberstadt describes North Korea as more dependent on aid than the poorest countries in Africa. According to the highest ranking émigré and a senior member of the Korean Workers Party: “Without Chinese capital goods, it would be impossible for the North Korean government to operate, and ordinary people would not be able to carry on with their daily lives.”
Under such conditions, leaders of surrogate states need not like their overseers in order to do as expected when money—or its equivalent—is on the table, especially if they have no one else to turn to and when these activities are consistent with their geopolitical designs. The degree of animus or friendship between Beijing and the Kim regime is immaterial to this client-proxy relationship, which would dissolve if North Korea’s nuclear missile program, and missile exports and nuclear technology transfers to the Middle East were unacceptable to China’s larger strategic objectives. Indeed, Beijing would surely withhold support if Pyongyang started selling weapons to Xinjiang rebels or to the Dali Lama.
Breaking With the Past
As shown, China has considerably more leverage over North Korea than most analysts presume. The effectiveness of economic sanctions is seriously compromised while Beijing underwrites Kim’s survival. However, enlisting China’s cooperation may not be as prohibitive as observers might think. Dartmouth political scientist Jennifer Lind points out that when China and North Korea originally formed an alliance both countries were weak, resentful, isolated, and the target of Cold War containment by the US and its allies. China has since moved beyond this state of affairs, has joined multilateral institutions, and now depends on the international system as the world’s largest trader. Although its North Korea policy remains anchored to the past, influential factions in the PLA and the CCP regard the Kim regime as a threat to regional stability.
In a September 2014 article, published in the China state journal, World Knowledge, Renmin university international relations expert Li Wei describes North Korea as inappropriate as a “strategic ally” because it does not conform to the general criteria of a “strategic hub country” that supports Chinese political, diplomatic and security goals. Party elites are uneasy about an unruly state on their border that may provoke a US military response or prompt regional nuclear proliferation. These security concerns, plus President Trump’s fair trade alarm, put Beijing in double jeopardy. Indeed, Richard Haass at the Council on Foreign Relations notes: “China needs years and more likely decades of relative stability in the region so that it can continue to address its many domestic challenges. North Korea is a threat to such stability.”
Although hardliner traditionalists still prevail over a new generation of policy pragmatists, their authority is not unlimited, and Beijing is not immune to its own populist pressures. China may not renew this relationship indefinitely, as it is forced to accept more important concerns that loom on the horizon. Since the Mao era, Chinese leaders have exhibited an admirable faculty for reform in response to changing real-world circumstances. As relations between the US and North Korea deteriorate and the geopolitical calculus changes, the geoeconomic model outlined below may be China’s golden opportunity to resolve this eroding security dilemma before it loses control over the situation.
Sixty-five years ago when its frontline value was beyond reproach, North Korea was a protected pawn in the chess match of great power rivalry. However, now that it has invited danger into the region for China, it may be sacrificed for a larger strategic vision. However, there is always danger that since the PLA is the dominant ground force in Asia, China’s notion of mutual strategic reassurance may include its own territorial designs and sequestration in Korea, as is already evident in the littoral waters of the Asia-Pacific. In a nuclear age we must seek to avoid such kinetic solutions.
As the Trump administration conducts a less institutionally constrained and more personal approach to foreign affairs (as in Russia), it may abandon conventional Cold War geopolitics and stress a more accountable geoeconomic statecraft. Strategic trade and security deals can be shaped and reshaped in this enlarged negotiating environment. Indeed, in a world of massive capital flows, unequal abundance, structural stagnation, and global satellite communication, where expanding trade and creating jobs is as important to political survival as free access to well endowed consumer markets, it is likely that over the course of the twenty-first century a more pragmatic modernization of foreign policy will involve a greater emphasis on geoeconomic statecraft to solve political disputes and promote and defend national interests. The following plan to disarm North Korea was designed as a bridge to this future.
Creating Geoeconomic Incentives
What if there was a way to reunify Korea and stop nuclear proliferation without inciting fear or administering punishment, but instead, by promising personal rewards? Novel approaches often seem untenable until they are fully understood. Therefore, I ask readers to be open-minded and suspend judgment until they comprehend the interacting details of this model.
To begin, imagine you control a multi-billion dollar capital fund and North Korea is a poorly run underperforming corporation that is controlled by an incompetent board of directors—the Kim family and a small number of ultra-elites—who will not negotiate a deal. In this regressive situation it is logical to offer shareholders—political and military elites, government managers and bureaucrats, and the general population—a higher price for their shares to convince them to overrule their board of directors. This is the plan in a nutshell.
This incentive model for disarming North Korea presumes that if the causes of conflict and war can sometimes be reduced to competition over money and control over the land, people, and the resources that produce it, then it might be possible to pay in advance to prevent it. After more than a quarter century of failed conventional policies in North Korea, a geoeconomic strategy that injects the persuasive power of personalized money into the diplomatic process may be necessary in order to overcome institutional inertia, autocratic intransigence, and path dependencies that too often terminate in conflict. My central assumption is that in social settings, where almost everything is for sale, there must be some level of security assurance and personal financial incentive that will impose insurmountable domestic pressure on the Kim regime to acquiesce to South Korean political control.
To achieve this result I have designed a plan for the institution of a seven year $52.5 billion Reunification Investment Fund—with private underwriting—that would offer personal financial incentives for North Koreans to unify with their wealthy relatives to the South. As in the final days of the Soviet Union, the efficacy of this model is enhanced by the word-of-mouth rumor currently spreading across North Korean social networks that the outside world is a better place to live. People are ready for change; this fund is a platform to unleash and manage it. The bold arrows below represent the essential strategic elements of this Reunification Investment Fund:
Reunification Investment Fund Financial Flow Chart (ask and I can email it to you)
* The Bank of Korea may act as the lender of last resort
In this scenario, the South Korean government would offer resources awards and private sector contracts for infrastructural improvements and portions of future markets, industries, and business enterprises worth trillions of dollars in profitable assets, including open markets in telecommunications, transportation, building materials, and automotive products, ownership or licensing agreements for control over mines, seaports, and tourist attractions, and exclusive construction contracts for a gas pipeline, railroads, tar roads, energy generation, and a multitude of necessary projects.
In exchange for these resource awards and government assurances, business investors would be required to endow this fund to pay an annual $4.2 billion golden parachute for seven-years to North Korea political and military elites, to compensate for their loss of power and position. Since it is impractical to expect democratically elected officials to agree to pay large amounts of public money to North Korean elites, these payments must come from private sources, for whom the prospect of enormous business profits make this a wise investment. And there is no risk since money is not deposited into private bank accounts until after reunification and the formal transfer of political and military power.
Because of a desperate and isolated history, few realize that lucrative business opportunities abound in the hermit kingdom. North Korea ranks 10th among all nations in mineral reserves; valued at $6-10 trillion. A multi-billion dollar pipeline must be built from Russia to supply the industrial and population centers of Korea with an estimated $3 billion in natural gas per year. Railroads must be rebuilt. One estimate is that goods shipped over a Eurasian Express train system would reach European markets in one-third the time it takes for transportation by ship via the Suez Canal. Japan would likely ship commodity exports to Europe by train through the port at Busan. Unification would also stimulate exports through the northernmost ice-free Pacific port in Rason, just a few miles from landlocked China and bordering the resource rich Russian Far East. Roads must be tarred, cars imported; only 3 percent of the roads are paved and the North has only 50 thousand private cars compared to 18 million in the South. Inexpensive labor will be available for at least a generation, as commodity markets spring up. Tourism is another unexploited multi-billion dollar industry, where control over specific attractions may be turned over to private enterprise in return for contributions to the fund.
After decades of globalization profits and unprecedented QE, the world is awash in money. Business tycoons, transnational corporations, and institutional investors have surplus capital and are looking for opportunities. East Asian private equity firms currently hold more than $100 billion in “unspent cash” and are having difficulty finding profitable investment opportunities, as the global economy has lost momentum. This fund offers a safe investment vehicle that will result in large private profits. The Bank of Korea or international banks (IMF, ADB, and AIIB) may provide infrastructural investments and financial guarantees—as the lender of last resort—since there is little risk a unified Korean economy will not prosper, and the BOK will profit the most.
International business, banking, and multilateral underwriting, with G-20 leadership, will impart confidence by indemnifying this fund with broad assurances from the global community. In today’s multilayered global balance of power, private interests often serve as a unifying force in the competitive nation-state system of world governance. This plan is predicated on the simple assumption that geopolitics may sometimes be more effectively managed through positive-sum geoeconomic incentives acting on the personal and cultural level.
Culture Unifying Incentives
After more than a generation of economic stagnation and fending for themselves following the dismantling of the free public food distribution system in the early 1990s, almost everyone in North Korea has abandoned Leninist ideology and is aware of and envious of South Korea’s remarkable prosperity. The steady diffusion of news and information across the semi-permeable Chinese border has changed the cognitive landscape in North Korea, as a market-motivated underground word-of-mouth information highway challenges the state’s meta-narrative and monopoly on information. Rumors of the inordinately better life in the South have saturated cultural impressions and created a new social context for political change that has not existed before.
After decades of silent transformation the mere existence of this fund sitting in escrow ready to pay out vast sums may catalyze overwhelming support for reunification at all levels of North Korean society. The promise of $29.4 billion to elites—$4.2 billion times 7 years—can win a lot of hearts and minds. The top ten power elite families would receive $30 million each, while the top thousand would get more than $5 million; 11,000 upper elites—including all generals—will be offered at least $1 million; more than 50,000 mid-level political elites and military officers will receive $100,000 to $500,000, while the incomes of 300,000 families in Pyongyang will increase many fold if Korea were to unify.
This provision of money is compensation for loss of status and income. On the surface, these payments may seem unethical, possibly even immoral, but most of the elites who will benefit are merely innocent inheritors of their fathers’ ill-begotten estate (position and power) and were not complicit in its original acquisition or in the malevolence that followed. We do not punish the descendants of slaveholders or the children of thieves and murderers. Their only guilt is the origin of their birth. Indeed, this payment would amount to a bailout for the misdeeds of their ancestors—without moral hazard.
As designated by the thin arrows in the financial flow chart shown above, the masses outside Pyongyang should also be awarded financial benefits. This will help jump-start the new economy and ensure social stability. Non-taxpayer derived investment capital may come from South Korea’s half-trillion dollar sovereign wealth and foreign reserve assets, QE, helicopter money, or from the presumptive peace dividend. Post-unification investments in infrastructure from Korean government bonds ($300 billion has been proposed), international banks, and the B-20 (the investment arm of the G-20) may amount to more than a trillion dollars over the next decade, creating millions of productive jobs and securing the democratic transition.
Little is known about the sentiments of the Pyongyang poor, who comprise about two million people living in close quarters, just a stone’s throw from the guarded compounds of the power elite. Few have refrigerators and even fewer own washing machines; electricity and water are intermittent. They live along dirt roads in brick-and-clay huts without toilets, heat their homes with charcoal, and bathe infrequently in public cold-water showers—even in the bitter cold of winter. Promises of food security, modern health and dental care for their children, property ownership, a regularly functioning water and energy infrastructure, high-speed international communication links, and thousands of dollars deposited into their personal bank accounts each year for seven years may spread unification fever and many may take to the streets.
However, if safe from international retribution, the Kim regime may acquiesce long before the social situation devolves into a state of general chaos and insurrection. Although Kim Jong-un receives no money, that personal safety is more precious than power would give him little choice but to accept this offer. He may be granted immunity from criminal prosecution, allowed to keep a portion of his fortune, and promised freedom to live and travel anywhere in the world. Nothing is gained by his vilification or punishment, while promising safety and security to Kim and his family may prevent bloodshed.
Or if Kim is unwilling to acquiesce, motivated by the $20-30 million promised to the 200 most prominent families, elites may take matters into their own hands. Or a coup d’état may be sponsored by well-compensated political and military elites. In either event, violent overthrow or peaceful acquiescence—and with or without Chinese assistance—the transfer of power to South Korea would disarm a nuclear threat and end more than half a century of abject tyranny.
China’s Decision: Competition or Cooperation?
China must make a decision. Analysts agree Beijing has been more assertive and confrontational since the 2007-9 global financial crisis. Former US Treasury Secretary Hank Paulson observed a “newfound sense of confidence, verging on triumphalism, among many of the Chinese I saw and spoke with.” Princeton political scientist and former deputy assistant secretary of State Thomas
Christensen refers to China’s geopolitical behavior as “offensive diplomacy.” However, it is unlikely this irrational exuberance can be sustained because China’s trade surplus with the West, support for North Korea, and competition with the US each contain fatal contradictions Beijing cannot resolve with raw power. The CCP must weigh the cost of zero-sum security competition against and benefits of a new partnership and potential strategic condominium with the US. This fund offers Beijing a face-saving opportunity to rethink its policies and form a collaborative alliance with the US based on the principles of the nuclear nonproliferation treaty.
If not initially, once this fund gains critical momentum, China may have little choice but to cooperate, since its alternatives are foreboding. In one scenario, if security competition led to conflict and a western trade embargo, along with losing 40 percent of its foreign exports, already heavily leveraged Chinese corporations would fail, property markets—that hold its largest store of household wealth—would collapse, and $2.2 trillion in direct foreign investment would evaporate, as an unsuccessful stampede to withdraw a portion of the $15 trillion in household and consumer deposits from under-capitalized state banks would result in financial meltdown and panic across China. Even China’s considerable foreign reserves could not prevent this implosion, as its 35-year economic miracle would come to a screeching halt. Geopolitical specialist Peter Zeihan remarks, “Should American trade access be revoked it would be as if China suffered from an equivalent of three American Great Recessions all at once.”
While there may be political instability in China, citizens in America would rally behind the President and the US would mobilize its military from around the globe. The US would be less affected than one might expect after exaggerated reports of Chimerican interdependence. It may suffer a temporary stock market collapse, inflation at Walmart, and shortages of select electronic and machine products, but enjoy trade balance and employment gains as commodities once shipped from China are manufactured at home. Few realize that the US economy is more self-contained and less integrated in the Bretton Woods system than almost all other nations. The US is the world’s largest and most efficient manufacturer, producing 75 percent of what it consumes, and now all of its energy needs. Galina Hale and Bart Hobijn at the Federal Reserve Bank in San Francisco calculated that goods and services from China account for only 3 percent of US personal consumption expenditures. David Dollar at Brookings notes: “Only 1 percent of the stock of US direct investment abroad is in China.”
The economic contraction might be tantamount to the global financial crisis, and damage to international investors and exposed corporations will be severe, but temporary. Americans and Europeans have healthy public support systems and can adjust to slow-downs, shortages, and price hikes, while most Chinese citizens cannot survive without a steady income, and would turn against a government that cannot provide then with one. After decades of rapid urbanization, massive unemployment compounded by a weak social safety net may redirect the exuberant energies of a surging lower- and middle-class nationalism against the CCP, that is already perceived as irreparably corrupt after decades of official graft and land grabbing. A reckless foreign policy that impacts livelihoods might be the last straw.
This is the great Confucian paradox of Chinese aggressiveness and precocious military modernization. To countermand regressive security impulses we need new institutional platforms for peace and conciliation that elicit opportunities for compromise and cooperation. This fund facilitates these collaborative stabilizing objectives.
The status of the world’s most consequential bilateral relationship will reflect how Xi negotiates the China Dream and Trump how to Make America Great Again. Despite warm handshakes and glittering smiles in Palm Beach there may soon be a day of reckoning, when one nationalistic leader remarks to the other, “Sorry, nothing personal.” The office is larger than the men who inhabit it and the art of the deal will likely be decided by the science of fear, leverage, and power.
The Trump administration has made it clear that America’s patience has run out and that it will not allow the Kim regime time to develop the ability to nuke the United States. With the horror of 9/11 indelibly etched into American minds, many believe a surgical military strike now may have significantly lower risks than a nuclear-ICBM endangered future. All options are on the table; the US is prepared to act unilaterally and unpredictably—as in the April 7 cruise missile strike on a Syrian airfield. Since conventional geopolitics has failed to stop North Korea from developing weapons of mass destruction, this geoeconomic approach should be considered in lieu of another missile strike. Indeed, the extraordinary plan proposed here might be the only realistically achievable path to denuclearize Korea at this late stage without resorting to a kinetic solution.
If as realist scholars submit, that vulnerability to threats is the main driver of Chinese foreign policy, then it should seek to avoid the prospects of US military action on its doorstep and a nuclear-armed Japan. This plan gives China room to back away and save face. Mutual security concerns may compel reciprocal compromise and cooperation. China may facilitate reunification by suspending all support for Pyongyang while the US would agree to withdraw its military from mainland Korea pending unification and the removal of nuclear weapons. Both nations may diplomatically promote and financially support this fund.
If popularized in the media, business leaders and heads of state may see this is a workable plan with ubiquitous benefits to everyone with something at stake in the region. The US would get the dissolution of a grave nuclear threat, an end to the possible transfer of nuclear materials and technology to terrorists or rogue states, and a chance to reassess its geopolitical interests in a less threatening Asia-Pacific; Japan gets safety from missile attack and weapons of mass destruction, along with large new labor, export, and investment markets; Russia gets secure rail and energy profits, and year-round passage to Pacific shipping; China gets a reprieve from the possibility of regional nuclear proliferation, free-market access to Korean minerals and ports, cooperation in developing its northeast provinces, the removal of US troops from mainland Korea and an easing of great power rivalry; and South Korea gets permanent peace, trillions of dollars in mineral resources, energy security and diversification, several valuable Pacific ports, rail connection to China and continental Europe, 50 percent more people, 120 percent more territory, and according to a Goldman Sachs study, development synergies that may propel its GNP past France, Germany, and Japan in just one generation.
During the next decade another two billion people will plug into the Internet and join the global conversation. If allied in efforts to procure a greater global unity, increase technological innovation, protect our fragile planet, capture the unlimited energy of the sun, and create jobs and open new markets and possibilities around the world for this expanding and modernizing population, the United States and China—with Russia and Japan—could forge new positive-sum relationships based on economic opportunity, and partner to unify Korea and extend the Long Peace deep into the twenty-first century.
The information revolution has created modern aspirations for a better life in North Korea and the pre-conditions for political transformation that have not existed before. As the Kim regime denies its citizens a prosperous future, power elites, government officials, and average people are reaching a threshold of disaffection. However, due to the coercive security state, until a reason for hope comes along, people must wait for an angel to appear. This fund is that angel, since it provides a path to a better life, and creates an impetus for organizing hopes and dreams, and channeling thoughts and emotions into collective action.
Although nuclear proliferation and the trajectory of geopolitics seem unstoppable, we need not continue down this road leading into the abyss. Instead we may think outside the box and create novel solutions to unique contemporary geopolitical problems. Realizing the potential of this fund will require the inspired vision of business and political leaders who can bring out the best in all of us; those who perceive the big picture and understand that the ideas that move humanity forward are often initially considered crazy, disruptive, or impossible; leaders who can show us what we should want, while employing positive-sum geoeconomic incentives to get us there. If the smart power dynamics of this plan were popularized in the media and discussed on a world stage, the private sector and heads of state might be compelled to support this fund, and unification could occur within months.
To get from here to there we must transcend zero-sum geopolitics with a strategic plan that at least has some chance of positive-sum success. This Reunification Investment Fund is such a plan. As Ambassador Blackwell and Jennifer Harris astutely assert: “U.S. foreign policy must be reshaped to address a world in which economic concerns often outweigh traditional military imperatives and where geoeconomic approaches are often the surest means of advancing American national interests.” If President Trump sees this plan as a good option and takes this path, he may indeed help Make America Great Again.
Footnotes — sorry I don’t know how to make my blog properly reference them (haha–donations for paying a webmaster would be accepted)
David Rothkopf, National Insecurity: American Leadership in an Age of Fear (New York: PublicAffairs, 2014), p. 16.
Jeffrey Lewis, “North Korea Is Practicing for Nuclear War,” Foreign Policy, March 9, 2017.
John Schilling, Jeffrey Lewis, and David Schmerler, “A New ICBM for North Korea?,” 38 North, December 22, 2015.
Lyle Goldstein, “Time to Think Outside the Box: A Proposal to Achieve Denuclearization by Prioritizing the China-DPRK Relationship,” North Korean Review, Vol. 12, No. 1 (Spring 2016), pp. 82-100.
Jonathan D. Pollack, “Punishing Pyongyang: With new U.S. sanctions, how will China respond?,” Brookings Institution, February 2, 2016.
See Harry Harding, “Has U.S. China Policy Failed?,” The Washington Quarterly, Vol. 38, No. 3 (2015) pp. 95–122.
Aaron Friedberg, A Contest for Supremacy, China, America, and the Struggle for Mastery of Asia (New York: W.W. Norton, 2011), p. 265; and “The Future of U.S.-China Relations: Is Conflict Inevitable?,” International Security, Vol. 30, No. 2 (Fall 2005), pp. 7-45.
Robert D. Blackwill and Jennifer M. Harris, War by Other Means: Geoeconomics and Statecraft (Cambridge, MA: Harvard University Press, 2016).
Ibid., p. 24; also see Michael Mandelbaum, The Road to Global Prosperity (Princeton, N.J.: Princeton University Press, 2014); Ian Bremmer, “State Capitalism Comes of Age: The End of the Free Market?,” Foreign Affairs (May/June 2009); and Edward Luttwak, “From Geopolitics to Geo-Economics: Logic of Conflict, Grammar of Commerce,” The National Interest (1990), pp. 17-23.
For an earlier argument for this strategy, see Baldwin, David A., “The Power of Positive Sanctions,” World Politics, Vol. 24, No. 1 (October 1971): 19-38.
Shen Dengli, “Lips and Teeth: It’s time for China to get tough with North Korea,” Foreign Policy, February 13, 2013; Xie Tao, “What’s Wrong with China’s North Korean Policy,” Carnegie Endowment for International Peace, March 26, 2013; Deng Yuwen, “Should China Abandon North Korea Financial Times, February 27, 2013.
On the thesis that China has a deceptive grand strategy, see Michael Pillsbury, The Hundred-Year Marathon: China’s Strategy to Replace America as the Global Superpower (New York: Henry Holt, 2015).
Michael R. Auslin, The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region (New Haven, Conn.: Yale University Press, 2017).
See Denny Roy, Return of the Dragon: Rising China and Regional Security (New York: Columbia University Press, 2013), p. 174.
John W. Garver, China and Iran: Ancient Partners in a Post-Imperial World (Seattle, WA: University of Washington Press, 2006); and China’s Quest: The History of the Foreign Relations of the People’s Republic of China (New York: Oxford University Press, 2016).
“China May Have Helped Pakistan Nuclear Weapons Design, Newly Declassified Intelligence Indicates,” National Security Archive Electronic Briefing Book No. 423, April 23, 2013. Although significant portions of the document on Chinese technology sharing were excised, these reports represent the CIA’s first-ever declassifications of allegations that Beijing supported Islamabad’s nuclear ambitions. Also see, Paul K. Kerr and Mary Beth D. Nikitin, “Pakistan’s Nuclear Weapons: Proliferation and Security Issues,” Congressional Research Service (March 19, 2013); Thomas C. Reed and Danny B. Stillman, The Nuclear Express: A Political History of the Bomb and Its Proliferation (Minneapolis, Minnesota: Zenith Press, 2009); and Bates Gill, “Chinese Arms Exports to Iran,” Middle East Review of International Affairs, Vol. 2, No. 2 (May 1998), pp. 55-70.
Shirley A. Kan, “China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues,” Congressional Research Service, January 3, 2014.
Willem van Kemenade, “China vs. the Western Campaign for Iran Sanctions,” The Washington Quarterly, Vol. 33, No. 3 (2010), pp. 99-114.
Shirley A. Kan, “China and Proliferation of Weapons of Mass Destruction and Missiles.”
Michael Flynn, “Annual Threat Assessment,” Senate Armed Services Committee Hearing, April 18, 2013, pp. 24-25.
For a detailed essay on this subject, see Shepherd Iverson, “China’s Nuclear-Armed Proxy—North Korea: Hostile Surrogacies and Rational Security Adjustments,” North Korean Review, Vol. 12, No. 1 (Spring 2016), pp. 66-81.
Mark Manyin and Mary Beth Nikitin, “Foreign Assistance to North Korea.” Congressional Research Service, March 20, 2012.
This is in spite of a recent decline in trade volume that probably reflects the slowing of the Chinese economy more than compliance with UN trade sanctions. See Andrea Berger, “The New UNSC Sanctions Resolution on North Korea: A Deep Dive Assessment,” 38 North, March 2. 2016.
Nichoals Eberstadt, “North Korea’s ‘Epic Economic Fail’ in International Perspective,” Asan Report, November 2015, p. 7.
Quoted in, “Growing Chinese Influence Worries N.Korean Officials,” The Chosunilbo, March 13, 2014.
Jennifer Lind, “Will China finally ‘bite’ North Korea?” CNN International, March 14, 2013.
Jenny Jun, “Dealing with a Sore Lip: Parsing China’s ‘Recalculation’ of North Korea Policy,” 38 North, March 29, 2013.
“Chinese state journal: N.K. inappropriate as strategic ally,” The Dong-a Ilbo, September 2, 2014; also see Stephanie Kleine-Ahlbrandt, “The Diminishing Returns of China’s North Korea Policy,” 38 North, November 28, 2012.
Richard J. Samuels and James L. Schoff, “Japan’s Nuclear Hedge: Beyond ‘Allergy’ and Breakout,” in Ashely J. Tellis, Abraham M. Denmark and Travis Tanner, eds., Asia in the Second Nuclear Age: Strategic Asia 2013-2014 (Seattle, WA: The National Bureau of Asian Research, 2013), p. 259.
Richard N. Haass, “Time to End the North Korean Threat.” The Wall Street Journal, December 23, 2014.
Bruce W. Bennett, Preparing for the Possibility of a North Korean Collapse (Santa Monica, CA.: RAND Corporation, 2013), pp. 89-90; also see James Steinberg and Michael E. O’Hanlon, Strategic Reassurance and Resolve: U.S.-China Relations in the Twenty-First Century (Princeton, N.J.: Princeton University Press, 2014), pp. 124-130; Shepherd Iverson, Stop North Korea! A Radical New Approach to Solving the North Korean Standoff (North Clarendon, Vermont: Tuttle Publishing, 2017), Chapter 6.
This thesis was originally introduced in my first book, Shepherd Iverson, One Korea: A Proposal for Peace (Jefferson, North Carolina: McFarland, 2013).
Shepherd Iverson, “The Moscow Model for Korean Unification: A Lucrative Exit Plan,” Russia in Global Affairs, Vol. 11, No. 4 (December 2013), pp. 148-159; for a description of a similar economic decline, political praxis, and social transformation, see David. M. Kotz and Fred Weir, Russia’s Path from Gorbachev to Putin: The Demise of the Soviet System and the New Russia (New York: Routledge, 2007).
Shepherd Iverson, Stop North Korea!
Garrett J. Harkins, “A Trans-Korean Natural Gas Pipeline: Feasibility Study,” Unpublished Manuscript, American University, 25 April 2011.
Quoted in Motohiro Ikeda, “Russia’s dream for Trans-Siberian line farfetched,” Nikkei Asian Review, December 17, 2013.
Rick Carew and Jake Maxwell Watts, “Private-Equity firms in Asia Keep Their Powder Dry, The Wall Street Journal, February 24, 2015.
Andrei Lankov, The Real North Korea: Life and Politics in the Failed Stalinist Utopia (New York: Oxford University Press, 2013); also see Nat Kretchun and Jane Kim, “A Quiet Opening: North Koreans in a Changing Media Environment,” InterMedia, May 2012; and, Andrei Lankov, “Dangerous era of dissent may have begun,” NK News, April 8, 2014.
For a detailed presentation of these proposed payments, see Shepherd Iverson, Stop North Korea!, Chapter 2.
See Andrei Lankov, North of the DMZ: Essays on the Daily Life in North Korea (Jefferson, North Carolina: McFarland, 2007), pp. 93-95.
Henry M. Paulson, Dealing With China: An Insider Unmasks the New Economic Superpower (New York: Hachette Book Group, 2015) p. 369. Henry is referred to in the media as Hank.
Thomas J. Christensen, The China Challenge: Shaping the Choices of a Rising Power (New York: W.W. Norton, 2015), Chapter 8.
Peter Zeihan, The Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder (New York: Grand Central Publishing, 2014), p. 314.
Galina Hale and Bart Hobijn, “The U.S. Content of “Made in China,” Federal Reserve Bank of San Francisco, August 8, 2011. According to Galina Hale (personal communication) this proportion is virtually unchanged.
David Dollar, “United States-China Two-way Direct Investment: Opportunities and Challenges,” Brookings Institution, January 2015.
Andrew J. Nathan and Andrew Scobell, China’s Search for Security (New York: Columbia University Press, 2012).
Goohoon Kwon, “A United Korea? Reassessing North Korea Risks,” Paper 188, Goldman Sachs Global Economics (September, 2009), p. 12.
Robert D. Blackwill and Jennifer M. Harris, War by Other Means, p. 226.