June 15, 2017 9:00 am JST
Peter S. Kim

Refusal to engage with North Korea risks nuclear terrorism

Rogue state's threats are designed to increase leverage with U.S. and China

North Korean leader Kim Jong Un reacts after doing a test-fire of new cruise rocket in this undated photo released by North Korea's Korean Central News Agency on May 30. © Reuters

Moon Jae-in, the newly elected president of South Korea, takes over at a time when the geopolitical risks surrounding the Korean Peninsula have never been higher. U.S. President Donald Trump has set off a chain of events by suggesting the possibility of a pre-emptive strike against North Korea. Undeterred, North Korea's young ruler Kim Jong Un has regularly tested missiles over the past month, albeit with mixed results.

This saber-rattling by Kim bears a markedly dangerous tone due to North Korea's potential development of intercontinental ballistic missiles and the unpredictability of Trump, who has not been shy of making threats of his own. Moon is a proponent of the "Sunshine Policy," which espouses embracing North Korea via dialog and diplomacy, a strategy which won the Nobel peace prize for South Korean President Kim Dae-jung in 2000.

However, the risks stemming from Moon's adoption of this approach many years after its invention are that it buys time not only for North Korea to develop ICBMs, but also for the possible leakage of nuclear technology to terrorists. The focus of the world, especially the West, is on the possibility of ICBMs eventually reaching the U.S. west coast. But a greater urgency must lie with the possibility of North Korea's nuclearization spreading to terrorist organizations.

Therefore, the focus of negotiation should be on containment rather than denuclearization. Moon must learn the lesson from the first attempt at the "Sunshine Policy" -- that North Korea will gladly feign cooperation to buy time. While engagement of any sort is critical, a clear view of Kim's ultimate endgame is required.

It is tempting to paint Kim as an erratic despot who needs to be dealt with forcefully and without compromise. But to do so would be a grave mistake. Beneath the apparent madness of Kim's actions, there is a deliberate strategy at work, with twin goals of solidifying power and securing financial security for himself and his closest allies.

To achieve his aims, Kim must secure leverage not only against the U.S. but, more importantly, China. Since the Korean War in 1950-1953, China has been the ideological partner and de facto caretaker of North Korea, sponsoring a finely balanced peace on the Korean peninsula.

However, the long-time allies have diverged sharply over the past couple of decades. While China's economy has seen unprecedented growth from the country's embrace of free trade and financial markets liberalization, North Korea remains a hermit kingdom mired in poverty, barely sustaining itself through trade with China and financial aid from Beijing.

Political leverage

Accordingly, Western governments have afforded political leverage to China while portraying North Korea as a psychotic, terrorist country not worthy of respect. As a result, after decades of languishing in China's shadow, it has become apparent to North Korea that the political and economic dividends from its ally's patronage have been withering.

North Korea has not always been as dependent on China as it is now. During the 1970s, the two Koreas were on an equal footing in terms of gross domestic product per capita. At the time, North Korea enjoyed relative prosperity because of its borders with China and the Soviet Union; both countries attempted to curry favor in Pyongyang by providing financial aid and economic cooperation.

But while South Korea roared ahead with an export-driven economic miracle, North Korea sank into oblivion when the Soviet Union's collapse forced it to become wholly reliant on China.

To Kim, nuclear capabilities represent a ticket out of China's shadow. Over the past decade, North Korea has engineered a calculated stalemate while aggressively pursuing nuclearization. Since he took over from his father Kim Jong Il in 2011 Kim's defiance against China has been growing, with recent events confirming that China no longer has firm control over North Korea.

In 2002, U.S. President George W. Bush declared North Korea part of an "axis of evil," along with Iran and Iraq, and the U.S. has attempted to rein in the country via a combination of sanctions and six-party talks, involving China, Russia and Japan as well as the two Koreas.

Such conventional economic sanctions by the West -- and even China -- will not deter Kim from pursuing his endgame. For most of its history, North Korea has regularly threatened to attack the U.S. mainland and reduce Seoul to a "sea of fire." In recent years, such bombastic threats have been accompanied by paradoxical demands for bilateral talks with the U.S.

Global voice

In 2015, Iran agreed to draw down its nuclear program in exchange for the lifting of sanctions. The forging of a similar deal with North Korea may seem far-fetched, but such a move would be consistent with the country's goal of regaining its global voice.

In Trump, Kim has an unorthodox counterpart who habitually breaks political protocol. Direct engagement -- no matter how cynical -- with the so-called leader of the free world would mark a meaningful first step in North Korea's monetization of its nuclear capabilities.

But North Korea is engaging in a dangerous game with Trump, an unpredictable leader who habitually stirs up trade and geopolitical tensions. With China implicitly conceding that its influence is waning, there is a genuine risk of military conflict for the first time since North Korea began conducting nuclear tests in 2006.

Between Trump's threats of a pre-emptive strike and Moon's "Sunshine Policy" lies China, whose stance and position remain vague. The world must coordinate its efforts to engage with North Korea urgently, not only to find an ultimate solution, but more importantly to facilitate monitoring of its activities.

The idea that North Korea's endgame is an ICBM strike targeting the U.S. is a misguided notion created from North Korea's outlandish propaganda, which is aimed at its own people, rather than at western ears. North Korea is reported to have sold nuclear technology in the past to countries including Syria and Myanmar. It was found by U.N. investigators to have offered to sell nuclear material just last year.

With the public disclosure that it is perfecting a nuclear warhead, the possibility of a terrorist organization securing an armed nuclear weapon is real. It is urgent, therefore, for the world to engage aggressively with North Korea to limit the chances of such a calamity, come what may.

Peter S. Kim is a managing director and investment strategist at Mirae Asset Daewoo. The views expressed here are his own.

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