Australian eggs for a Korean 'basket case'?
By Leonid A Petrov
In March, before leaving for a 17-day trip to the United States, Europe and
China, Prime Minister Kevin Rudd declared his foreign policy philosophy.
"The truth is that Australia's voice has been too quiet for too long across the
various councils of the world," he told the Australian National University's
East Asia Forum. "That is why during the course of the next three years, the
world will see an increasingly activist Australian international policy in
areas where we believe we may be able to make a positive difference."
Rudd assured the audience that the new Australian government is
committed to the principle of "creative middle-power diplomacy" as the best
means of enhancing Australia's national interests.
The 12 years of Howard government rule (1995-2007) were characterized by
one-sided conservative foreign policy. Australian liberals readily accepted
from American neo-conservatives a doctrine of global military pre-emption and
armed democratic enlargement. The Australian Labor Party, victorious at last
year's federal elections in November 2007, now proudly states that its foreign
policy platform is based on the three pillars - alliance with the US, active
membership of the UN, and comprehensive engagement with Asia - that manifest
realism, liberal internationalism, and regionalism.
Given this new approach, will Australia consider more active approach in
helping troubled nations in the Asia-Pacific region?
Soaring prices for food staples, especially for rice which have tripled over
the past year, create concerns about the stability in one of the poorest
nations in Northeast Asia. The reports coming out of North Korea suggest the
country faces a new famine. The worst food shortage in years is coming at a
time when the North's worsening relations with South Korea reduce the chances
of the North acquiring aid.
The fall in grain production around the world and rising international grain
prices have also put international food donors into a difficult situation. Last
month the World Food Program warned that North Korea would need massive food
aid in the coming months to avert widespread hunger caused by severe floods,
economic sanctions and ineffective diplomacy.
At the moment, Australia has minimal relations with North Korea. While
maintaining formal diplomatic links it has little plans to open an embassy in
Pyongyang. Since North Korea conducted a nuclear test in October 2006,
Australian entry visas have not been issued for North Korean citizens and North
Korean ships have been banned from Australian ports. Most bilateral cooperation
with the country has been put on hold by the Australian side "until the
nuclear-weapon crisis is resolved". The closure of the North's embassy in
Canberra in January seems to be a logical continuation of this freeze in
relations.
There is no discussion on the future of Australia-North Korea relations in the
media. Reports and brochures on collaboration with North Korea produced by the
Australian government reflect a pessimistic posture. Issues related to the
prospects of bilateral economic and cultural cooperation are outshone by the
saga of North Korean nuclear programs, chilling stories of human rights
violations, and alleged criminal activities in which the North Korean
government is routinely implicated. An overwhelming majority of Australians
(86%) have negative views of North Korea's influence in the world. Media
publications and video reports, particularly those made in the style of gonzo
journalism, only add to the existing negativity and bias.
Certainly, the North is not an ordinary state and its social order is unique in
the world. To deal with North Korea successfully, we must remember and
understand the Cold War history and its consequences for the region. The
reality of the inter-Korean conflict must be taken into account whenever we try
to engage North Korea in dialogue or cooperation. Sensibility and understanding
in dealing with Korea and Koreans are as important as the first-hand knowledge
of their country, language and culture. Sadly, the former government's
preoccupation with pragmatism and striving for globalization gave no chance for
Australian-North Korea relations to develop into anything more significant -
North Korea was dismissed as a basket case.
The North Korean economy is currently experiencing a stage where the mechanisms
of the centrally planned system are not working properly any more but the
market-oriented system has not yet been built. To some degree, the North Korean
leadership is trying to emulate the South Korean model of export-based
development, where a strong, dictatorial government aims for the increase of
industrial productivity at any cost.
But the main obstacle for this scenario is the lingering taboo on capitalist
forms of proprietorship in the North. Politically, the country remains closed
and extremely sensitive to foreign and domestic criticism. This is not a
democratic way of development but it guarantees stability and precludes any
possibility of labor unrest in the period of high growth.
North Korea is an industrialized (43%) nation, with moderately developed (33%)
service sector and a small (23%) agricultural sector, which was badly affected
by human mistakes, natural disasters compounded by the energy crisis and
foreign trade sanctions. In July 2002, a series of measures to liberalize the
national economy were undertaken but no steps were made toward privatization of
the means of production or real estate. Although all businesses and enterprises
in North Korea are still treated as government-owned and collectively run,
these days they receive unprecedented freedom in managing the production and
sales. Profitability is the motto in today's North Korea.
Any prospect for foreign investment coming into the North Korean economy
immediately opens doors to the high echelons of power. Since industrial
production in the North was halted more than 10 years ago and the import
capability has been extremely limited, North Korea now has a huge appetite for
goods and services.
The North Koreans attribute their economic difficulties to three main factors:
natural disasters; the disappearance of the Communist Bloc markets; and,
Western economic sanctions. Against this background, the Australian Government
has identified the main economic priorities for North Korea as: bilateral and
multilateral aid to maintain food supplies; and, massive capital injections for
infrastructure development and to restart a collapsed industry sector. From
1996 to the present, Australia's food aid and humanitarian assistance to North
Korea has totaled more than A$$64 million, (US$$59 million) most of which was
channeled through multilateral agencies.
These days, trade with North Korea is impeded by Australia's self-imposed
embargo and sanctions introduced in accordance with the Security Council in
Resolution 1718 punishing the North for its 2006 nuclear test. The Ban on
Supply of Luxury Goods to North Korea prohibits Australian exporters from
supplying the North and its representatives with most essential consumer goods.
The list of prohibited items includes wine and spirits, tobacco products, rock
lobsters, abalone, mollusks and oysters, automobiles and other vehicles to
transport people, all cosmetics, furs, jewelry, drinking glasses, all works of
art, fountain pens, watches and clocks, carpets, leather travel goods, apparel
and clothing accessories, consumer electronics, electronic entertainment and
software, photographic equipment, and sports equipment.
Everything that is not mentioned in this comprehensive list can be exported to
North Korea but in recent years Australia-North Korea bilateral trade has been
minuscule. Australian exports to North Korea consisted of occasional shipments
of inorganic chemical elements before completely ceasing in 2007. Import
figures vacillated between A$6 and $11million in 2007 and were made up of
chemical elements for use in electronics, copper, civil engineering equipment,
household equipment, hydrocarbons and derivatives, textile yarns and fabrics,
iron, steel, and chemicals. North Korea ranked a modest 125th in the order of
Australia's trading partners.
One of Pyongyang's major goals, following the removal of internationally
imposed sanctions, remains long-term collaboration with foreign mining
companies to modernize existing mines and to find and extract undeveloped
mineral resources, with payment in minerals. The Australian mining industry
might benefit from some of these opportunities later, when sanctions are lifted
and if anything is left by more expeditious competitors.
Outstanding external debts, failed counter-trade deals with Australia, and the
lack of market-based commercial experience and capacities in North Korea meant
that conventional trade and commerce was likely to prove quite challenging. The
Australian Chamber of Commerce and Industry warns "North Korea's severe
shortage of hard currency ostensibly rules out conventional forms of
international trade, while its past failure to honor barter-trade deals
effectively rules out this form of commercial engagement. North Korea is a
marketplace best suited for the commercial adventurer and frontiersman who
thrives on the challenges of high-risk markets."
The recent hike in the price of rice is already hurting Asia's poorest. Among
them are the North Koreans who heavily rely on international food aid and are
going to be hit most. "It will have a negative impact on the living standards
and also affect their nutrition. Such a situation may lead to social unrest and
therefore safety nets addressing the immediate needs of the poorest are
needed," warned Japanese Finance Minister Fukushiro Nukaga who attended the
41st annual meeting of the Asian Development Bank (ADB)on May 3 in Spain. The
ADB has already announced that it will provide soft loans to help Asian
countries subsidize the price of food staples for the poor. In 2008 and 2009 it
will also provide $2 billion in loans to finance agriculture infrastructure
projects aimed at boosting farm output in the region.
What position on help to North Korea will Australia, a prominent member of the
Asian Development Bank and a major grain exporter, take? Australia's North
Korean policy has for too long been copying the US policy and has finally
reached the same dead end. Driven to this by the previous government, it now
needs urgent attention and adjustment. If neglected, Australia risks losing
many lucrative opportunities still available for our exporters and investors.
Replete with these prospects, relations between Australia and North Korea need
a new footing.
As projected by Rudd, "There is an appetite across the country to restore the
balance and to return to the mainstream traditions of Australian foreign
policy. This means a return to the three pillars of our foreign policy: the US
alliance, our membership of the UN and a continued policy of comprehensive
engagement with Asia." The new government in Canberra, together with the new
administrations in Seoul and Washington, can cement the foundation for a new
balanced relationship in East Asia.
Differences in political views and economic systems must not divide but should
rather enhance the value of partnership and help complement each other's
strengths. By intensifying diplomatic ties, expanding economic cooperation and
providing humanitarian aid both countries can make a significant contribution
to the peaceful resolution of the Korean nuclear problem and prepare the basis
for durable peace and prosperity in the region.
Leonid A Petrov, PhD, is a research associate, Division of Pacific and
Asian History, Research School of Pacific and Asian Studies, Australian
National University.
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