Sunday, June 29, 2008

What the Presidential Action with Regard to Sanctions on North Korea Means

On June 26, the President announced the lifting of the application of the Trading with the Enemy Act (TWEA) with respect to the Democratic People's Republic of Korea (DPRK, or North Korea), and notified Congress of his intent to rescind North Korea's designation as a State Sponsor of Terrorism (SST).
These actions were taken following North Korea's submission of a declaration of its nuclear programs, which will now be subject to verification.

from Fact Sheet, Office of the Spokesman, U.S. Department of State, June 26, 2008

I can show you how little I knew by telling you that I had to be reminded that the lifting the application of TWEA was “largely symbolic, as most of the TWEA-based sanctions [had been] lifted in 2000 (my emphasis).” President Clinton lifted the sanctions following the North-South Summit between Kim Jong Il and Dae-jung, and President Bush never bothered to re-impose them. Importers no longer need licenses under the TWEA but “certain imports continue to be banned under other legal authorities”.

“[R]escission of North Korea's SST status is [also] largely symbolic. Most sanctions, including those related to North Korea's detonation of a nuclear device on October 9, 2006, proliferation activities, and human rights violations, will continue on the basis of other laws and regulations.” Congress has 45 days to stop the rescission if it wishes. Most people believe that it will not.

Where North Korea’s purported uranium enrichment program and proliferation activities are concerned, the State Department fact sheet says that “[i]ssues related to the declaration, including concerns on uranium enrichment and proliferation, can be also addressed via a Monitoring Mechanism to be established under the Denuclearization Working Group. That Monitoring Mechanism is intended to ensure follow-through on all Six Party commitments.” Unless the North Korean declaration actually says that it does not currently do either of these two activities and will not do so in the future, the activities will lie beyond the verification process itself. News previous reports suggested that there would be nothing more than a side letter to Chris Hill acknowledging the fact that the U.S. side has concerns about them. National Security Advisor Stephen Hadley fudges the point, saying that “the declaration they've made, what the disclosure they made is, we're not engaged in this activity now, will not engage it in the future”. That is not reassuring unless you believe, as I am actually inclined to, that the North Korean regime does not have sufficient incentive to lie about these two issues.

With regardto the plutonium program, here’s an illuminating exchange between Mr. Hadley and a reporter on the number of plutonium bombs that North Korea has:

Q About the stockpiles. Do they acknowledge -- do they say what's in the inventory, how many bombs –

Mr. Hadley: They do. They don't say it in terms of number of bombs. That is something that is a so-called Phase Three issue that we will get to, the process by identifying and moving the plutonium out of the country, whether in bomb form or not. What they agreed to do, and what they do in the declaration, is say how many kilograms of plutonium their activities to date have produced.

So the North Korean authorities are leaving it up to the other members of the Six-Party Talks to, in Mr. Hadley’s words, “do the math” on any plutonium bombs and figure out the answer through the verification process. They have achieved strategic ambiguity, and it is clear that they aren’t going to give it up without a fight. After all, they cannot give up the nuclear program entirely without losing the United States as an existential threat, in which case their only chance for long-term survival will be to manage a transition to an authoritarian market economy along the lines of similarly natural resource-deficient China. Only China and South Korea, by making credible threats to cut off aid to North Korea, can force them in that direction against their will. However, they will not do that because they do not, for understandable reasons, want to destroy the status quo with regard to their thankless ward. Thus, it is up to the North Korean authorities to determine whether or not they can afford to take the necessary risk.

In the short run, I think that we have a virtual freeze on North Korea’s nuclear programs and a general easing of tension. What happens over long-run depends on whether or not the North Korean authorities believe that they can manage the transition to a market economy without succumbing to regime change. If they don’t, stage three of the current agreement will continue indefinitely, with North Korea haggling over each and every detail of the agreement. I am strongly inclined to believe that the latter is the case, at least under Kim Jong Il. I hope that I am wrong. Still, the continuation of a virtual freeze is to borrow Fred Kaplan’s term, better than nothing.

Fred Kaplan, of course, is writing from an American perspective. The main concern on the U.S. side is proliferation, while we in Japan worry more about the direct threat from any viable nuclear weapons North Korea may have. To repeat my earlier point, I believe that it is highly likely that the North Korean authorities will steer a course that prolongs the status quo indefinitely (although it is within the realm of possibilities that they will muster the confidence to pursue a more constructive approach), so I hold to the view that that the North Korean authorities will honor their statement on proliferation. Japan gains much less under my most-likely scenario, since the current strategic ambiguity over North Korea’s nuclear weapons program will not be diminished. Still, indefinite suspension and subsequent easing of tension cannot be ignored. Japan gains less. But then, with little to bribe North Korea—everything it has to offer is tied up in the abductees issue—it is in no condition to complain.

There is much talk, especially in Japan, about how President Bush’s decision will open the door to funds from the IMF and the World Bank and other international financing institutions. That is one thing that I do not worry about. The IMF and IFIs are not piggy banks. They will not bankroll North Korea unless it accepts some measure of disclosure and accountability—they vary from institution to institution and Robert Zellick for one no doubt will be more than happy to stretch the rules if the politics so dictate, but there are limits—that the North Korean authorities will be hard put to accept. Unless, of course, if they do decide to set off decisively on the road to a market economy—that being the unlikely, best-case scenario.

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