South Korea is becoming increasingly
marginalized in Northeast Asian policymaking
because of the collapse of inter-Korean talks and
its growing estrangement from the United States,
Japan and China.
Washington and Tokyo have
regained the initiative and will be able to push a
harder line against Pyongyang, while Seoul's
engagement policy faces dwindling domestic
support. The deterioration of relations with
Washington is fueling rumors of additional
drawdowns in US troop levels, which could cause
public and market trepidation over a perceived
degradation in Washington's commitment to South
Korea's defense.
Chinese and Russian
acquiescence to stronger language in
United Nations Resolution
1695 than first indicated left South Korea nearly
as isolated as Pyongyang. Seoul had expected China
and Russia to toe the line against US and Japanese
advocacy for restrictions on North Korea's missile
and nuclear programs.
The revelation that
the Bank of China froze North Korean assets in
2005 to combat Pyongyang's counterfeiting and
money-laundering activities contrasts sharply with
Seoul's intransigence against criticizing North
Korea's illicit activities. South Korean
legislator Park Jin, citing US government sources,
revealed on July 24 that the Bank of China had
frozen North Korean accounts last year in response
to pressure by the administration of US President
George W Bush.
The US had identified last
September eight North Korean firms engaged in
proliferating weapons of mass destruction (WMD)
and three Chinese banks, including the Bank of
China - the country's second-largest state-owned
financial institution - as under investigation for
money-laundering North Korean illicit activities.
The Macau-based Banco Delta Asia's ensuing freeze
on North Korean assets was well publicized at the
time, but the Bank of China's action was not known
until the South Korean disclosure. Had the bank
not taken action, it could have faced US
retribution. The Proliferation Security Initiative
and the Patriot Act allow the US Treasury to seize
US-based assets if a foreign company or bank is
determined to be involved in WMD trade or
money-laundering.
China's acquiescence to
US requests for action against North Korea's
illegal activities, even as it publicly criticized
Washington's efforts as counterproductive to
resolving the six-party talks, reflects Beijing's
conflicted policy toward North Korea. China seeks
to induce Pyongyang to abandon its nuclear-weapons
programs, but has been reticent to risk actions
that could trigger escalatory North Korean
behavior or regime instability.
China will
continue to resist expansive US and Japanese
economic sanctions against North Korea, asserting
that UN Resolution 1695 applies only to missile
and nuclear-weapons activities and does not
provide for levying or enforcing sanctions. China
will be more willing to constrain North Korean
proliferation or illicit activities than in the
past, but will likely limit its involvement to
targeted action against specific entities in
response to direct US requests.
The US and
Japan have regained the upper hand in policy
toward North Korea and will use the UN resolution
to leverage additional nations to adopt stronger
policies against Pyongyang. The US and Japan will
implement additional punitive measures against
North Korea, but likely have not yet determined
their final form, pending internal deliberations
and discussions with allies.
US assistant
secretary of state Christopher Hill was
deliberately vague in congressional testimony on
July 20, merely alluding to a "new package of
economic and other sanctions". Stuart Levey, the
under secretary of the Treasury for terrorism and
financial intelligence, discussed potential
options with Asian counterparts in mid-July. The
US will likely pass the North Korea
Non-proliferation Act this month and may reimpose
sanctions that were lifted in 1999 as a reward to
Pyongyang for its announced missile-launch
moratorium.
Japan is still considering a
range of sanctions, including additional
restrictions on trade as well as amending the
Foreign Exchange and Foreign Trade Law, to allow
greater monitoring of the export of items that
could be diverted to WMD or missile programs.
Stronger Japanese legislation, including sanctions
against foreign firms abetting North Korean
illicit activities, may wait until the
legislature's fall session. North Korea's growing
isolation will exacerbate famine conditions and
could trigger follow-on missile or nuclear tests.
The collapse of the July 11-13
inter-Korean ministerial meeting and Pyongyang's
cancellation of resumed North-South rail service
in May will constrain South Korean President Roh
Moo-hyun's ability to push the engagement policy
or facilitate a resumption of six-party talks.
Seoul's uncharacteristic resolve during the
ministerial meetings caused the North Korean
delegation to storm out. Unification Minister Lee
Jong-seok pledged that South Korea would freeze
humanitarian aid until Pyongyang returned to the
six-party talks.
However, Seoul will
likely reverse its vow to avert a potentially
destabilizing food crisis. The Roh administration
has frequently lowered the bar for North Korean
compliance and maintained deliveries during
previous provocations. Seoul provided 500,000
tonnes of food and 350,000 tonnes of fertilizer in
2005 and was expected to provide similar levels
this year.
Recent monsoons have devastated
North Korea's harvest, greatly increasing the risk
of starvation, heightened malnutrition and
outbreaks of diseases. North Korean official media
report that flooding and landslide conditions are
the worst since the early 1990s, having inflicted
"tremendous" economic loss and hundreds of deaths.
Non-government organizations (NGOs) with access to
North Korean sources report that outbreaks of
typhoid, paratyphoid, whooping cough and other
diseases have already occurred in at least three
provinces. A significant portion of the North
Korean population is severely malnourished,
increasing its susceptibility to starvation and
associated diseases. It is estimated that during
1995-97 about 1 million to 2 million North Koreans
died of starvation and starvation-related diseases
out of an overall population of 23 million.
Despite anger over North Korea's missile
tests, South Korea and China will likely augment
their food deliveries to prevent a dangerous
deterioration in North Korean conditions, but
would delay an announcement until later this year.
Both countries are fearful that a collapse of Kim
Jong-il's regime would have devastating economic
repercussions and unleash a flood of refugees and
loss of control of North Korea's nuclear programs.
Seoul's policy reversal will further strain
relations with Washington, as would any US attempt
to use the food situation to pressure Pyongyang.
Seoul and Beijing would likely rebuff any
US entreaties to use the food crisis to increase
international pressure on North Korea. Although
the US has publicly declared that humanitarian aid
is provided without preconditions, it has in the
past privately linked donations to achieving North
Korean policy objectives. The Bush administration
would see an opportunity to further isolate North
Korea since Pyongyang has become increasingly
reliant on South Korea and China, its two biggest
food donors. Without foreign aid, North Korea
faces an annual food shortfall of 1 million
tonnes. The World Food Program, the conduit for
all other international aid, was forced to
decrease its aid deliveries significantly after
international donations declined by 50% since 2002
due to donor fatigue, competing requirements, and
Pyongyang's intransigence over its nuclear
program.
North Korea will reject the World
Food Program's offer for increased aid, since it
remains contingent on stringent monitoring
measures to prevent diversion from intended
recipients. Pyongyang was able to use increased
Chinese and South Korean donations to reduce its
reliance on international donations and force NGOs
to reduce their presence in the country,
decreasing the ability of the US to use donations
as a bargaining chip.
Roh would face
strong opposition to grander proposals, however,
such as his May 9 pre-launch offer of massive
amounts of unconditional aid. But he will not be
deterred from continuing foreign-policy
initiatives to counter efforts by Washington and
Tokyo to isolate and pressure the North. Roh and
Lee have been stronger in their criticism of US
and Japanese diplomatic responses to the North
Korean missile test than to the launch itself.
Growing strains in Seoul's relationship
with Washington, combined with South Korean
demands for assumption of wartime command
authority, could lead the Bush administration to
announce further reductions in US ground troops in
Korea, possibly as early as the October bilateral
security consultative meeting.
The US is
contemplating cuts below the already-reduced,
25,000-troop level announced for 2008, including a
rumored total withdrawal of US ground forces by
2012. Defense Secretary Donald Rumsfeld and
General Burwell Bell, commander of US Forces in
Korea, have warned that the recent closure of the
Maehyangri training range to US pilots could cause
Washington to redeploy some of its military air
units off-peninsula. Previous US announcements of
troop reductions or redeployments triggered
concern by Seoul over the impact on North Korean
actions and investor drawdown in the South Korean
economy.
Bruce Klingner is the
Korea analyst for Eurasia Group, the world's
largest political-risk consultancy. The views
expressed herein are his own. His areas of
expertise are national security, political,
military and economic affairs in Korea, China and
Japan. He can be reached at
klingner@eurasiagroup.net.
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