What game theory says about dealing with North Korea
Kim Jong-un is the only winner so far in his high-stakes nuclear showdown with the US
North Korea fired its third missile in three weeks on May 29, once again drawing protests from South Korea and Japan. Tensions have been rising in the region since the start of the year when Kim Jong-un’s regime started a series of tests, of which this is the ninth.
National leaders attending the recent G7 meeting in Italy agreed that deterring North Korea should be a top priority, according to Japanese Prime Minister Shinzo Abe, but given the reclusive nation’s belligerence, options are scarce.
One way to try to choose the best way forward is by applying game theory to the situation.
Roll of the dice
Game theory applies to conflict and cooperation within competitive situations. It posits that a cooperative outcome is possible when the game is repeated infinitely, the number of players is small and information about the game is known to all the players.
A positive outcome is when there’s reciprocalism; when there’s the option of retaliating against cheating behaviour because the game repeats infinitely. Players have little incentive to cheat if retaliation is an option. The result is cooperation.
But if the game is one-off or repeated a finite number of times, has a large number of players, and each player doesn’t know the other players’ strategy, then each will choose a “self-oriented” outcome. In this scenario, each player chooses the best solution individually rather than cooperating. The result is second-best for all.
What’s happening on the Korean peninsula is more like the latter scenario. Dealing with North Korea’s missile development and nuclear program with a pre-emptive attack would be neither easy nor desirable, and the main players will likely pursue their own self-interest.
At the heart of the issue is the fact that North Korea has announced that it intends to retaliate against any military action.
This could result in a humanitarian catastrophe as South Korea’s capital Seoul is only 60 kilometres from the border. And the 28,500 US troops based in South Korea might also bear the brunt of the North’s retaliation.
Any counter-attack by North Korea would invoke retaliation from the South, in turn, and could result in war on the Korean peninsula. Or humiliation for both the US and South Korea if they don’t react. The exact locations of North Korea’s missiles are largely unknown anyway.
A better option for constraining North Korea’s development of nuclear missiles may be to tighten current economic sanctions and impose new ones if necessary.
For this, China is pivotal. The country is North Korea’s number one trading partner. China supplies it with petroleum and imports coal, which allows North Korea to obtain foreign currency. More than 90% of the petroleum consumed in North Korea is imported from China.
North Korea’s dependence on China has increased since the UN imposed economic sanctions on the former in 2016; Japan terminated its trade relationship with the reclusive regime in 2006; and South Korea did the same on May 24, 2010.
But China has been hesitant about enforcing economic sanctions and has done so half-heartedly.
China is conflicted because it doesn’t want North Korea to have nuclear weapons as the country could then become a direct threat and provide an excuse for Japan and South Korea to develop nuclear weapons.
But it also doesn’t want the North Korean regime to collapse. This would create a refugee crisis at its border and a unified Korean peninsula would likely fall under US influence. North Korea also provides the perfect buffer for avoiding direct confrontation with the US.
Shrinking range of options
Thus far, Kim Jong-un is the only winner in this game. Apart from ongoing missile tests, his regime successfully completed its fifth nuclear test in September 2016, following others in 2006, 2009, 2013 and January 2016. This situation illustrates one of the major tensions in strategic settings: the clash between individual and group interests.
To avoid war and foster cooperation, China will need to share responsibility for a diplomatic campaign seeking a peaceful solution. Currently, it is effectively providing an umbrella for North Korea to develop nuclear weapons.
Stepping up requires China to join the US, South Korea, Japan and the United Nations to deliver a credible and strengthened deterrence to North Korea against any further nuclear development.
But this option is only becoming more complex for all involved except North Korea. As its nuclear development advances, North Korea will have less and less of an incentive to give it up, which, in turns, limits the range of action for the other side.
What game theory tells us is that self-interested individuals derive a greater payoff for opportunism. China may not want to lose its strategic partnership with North Korea or the economic benefits it derives from trade with it; under its new liberal president, South Korea may want to continue the rapprochement policy of former president Kim Dae-jung; and the US may opt for the easy path of military action.
But it’s important to remember that these are all second-best results for the players. The better choice is cooperation among the players including China. A collectively applied and consistent non-military strategy is the best option to alleviate the tension engendered by North Korea’s nuclear and missile development programs.