National Security

Rocket Backstage

Behind the scenes of North Korea's nuclear deliberations.

In its second attempt this year, North Korea has put a satellite into orbit. Pyongyang described it as a "great turn in developing the country's science, technology, and economy by fully exercising the independent right to use space for peaceful purposes." That "right" is limited by resolutions of the U.N. Security Council, which worries that North Korea may be using its space program as a front for ballistic missile development.

Only a few weeks ago I had the rare opportunity to engage in nuclear talks with the Korean People's Army at their guest house in Pyongyang. Needless to say, I was ignorant of the fact that the men sitting opposite me may have been contemplating, or even planning, this week's rocket launch.

Throughout our stay, my colleagues from the Royal United Services Institute and I were introduced to the endless contradictions that North Korea offers. One minute we were whisked off to see the now missing "imperialist spy ship" USS Pueblo, the next we were strolling through "Little Manhattan" en route to meetings with officials from the Ministry of Foreign Affairs, the Korean Worker's Party, and the army.

All repeated their conviction that the "hostile policy" of the United States drives Pyongyang's need for nuclear weapons and ballistic missiles. Joint military exercises being hosted in South Korea, they said, were provocative, and "frequent clouds make rainfall." But if military exercises are a "cloud," a rocket launch is certainly one, too.

As part of the Six-Party Talks, China, Japan, Russia, South Korea, and the United States have been trying to talk North Korea out of its nuclear weapons and ballistic missile program. Two of Pyongyang's interlocutors, China and the United States, have recently elected new leaders, and another two are about to -- Japan on December 16, and South Korea on December 19. Along with the anniversary of the death of Kim Jong Il, all four electoral contests have been cited as potential motivations for the timing of North Korea's satellite launch.

Our meetings suggest that Pyongyang may be most interested in using its successful launch to exploit the South Korean polls. While in Pyongyang, we asked each of our interlocutors a straightforward question: how might the U.S. and South Korean elections affect bilateral relations with Pyongyang? Despite the colorful language North Koreans ordinarily use to describe Washington, all the answers focused on the South Korean polls.

But why try to influence the South Koreans, whom they see as mere "puppets" of the United States? It is possible that North Korea has silently, but correctly recognized that the United States is unlikely to go against the preferences of the South Korean government. If South Korea wants to have a dialogue with the North, Washington would be hard pressed to object.

By now, South Korea's presidential candidates have made it clear that the days of Lee Myung-Bak's heavy-handed approach towards North Korea are over. Both Park Geun-hye of the ruling conservative party and opposition candidate Moon Jae-In have stated their willingness to re-engage Pyongyang. Admittedly, Park takes a more cautious stance towards negotiations with North Korea than her opponent, and the rocket launch could shift some votes her way. But despite the North's provocation, both candidates have built an election platform of re-engagement, and will likely stick to it.

Knowing this, the immediate pre-election period is the best opportunity for North Korea to get one over its neighbor. While candidates squabble south of the 38th parallel, a satellite launch north of it demonstrated Pyongyang's leadership stability and strength when both were in question. Seoul's irritation will be further exacerbated by the fact that the country has been beaten in the race to put a satellite into orbit. South Korea has had to solicit the help of Japan, and repeatedly postpone its more recent launch attempts. By contrast, North Korea has done it quickly and in the face of sanctions. 

Our meetings also shed light on the potential implications within North Korea of putting a satellite into space. Two actors will benefit directly. The first is Kim Jong Un, a young leader not yet fully settled in a political culture that values seniority and strength. His purges of the top rungs of the army have installed officers loyal to him despite his age. A demonstration of technical and military capability further consolidates his hold on power.

The second, the Korean People's Army, may be as uneasy as its master. In his first public speech, Kim Jong Un pledged that North Koreans will never have to "tighten their belts" again. In North Korea, even loose talk of shifting priorities can make the extremely conservative army skittish.

We were repeatedly told that North Korea's military-first policy will in no way be jeopardized by Kim Jong Un's increased focus on public welfare. Their protestations seemed overwrought, and indicated a deep unease over the future of the military's decades-old preeminent position. However, a demonstration of the Respected General's desire to advance the country's space and missile capabilities may put the army's minds at ease.

So what does this all mean? Given the upcoming South Korean election and North Korean internal wrangling, it should come as no surprise that preventative diplomacy failed to convince the North Korean regime that a missile test is not in its interests. Nevertheless, the aftermath can be managed through clever diplomacy that exploits the few changes that do appear to have taken place under the Kim Jong Un regime.

Unlike his father, the third Kim wants to improve the visibility of day-to-day relations with foreign governments, including Western ones. Kim Jong Un's public appearances are incredibly frequent, and they take him from tanning salons to major military parades. Importantly, he is eager to line the front rows of his audiences with foreign ambassadors. Scenes of the leader shaking their hands are later broadcast on TV screens in the capital.

This was the case the day we arrived in Pyongyang, and was the case for the military parades that followed the last rocket launch, in April. Foreign missions in the country are frequently sent invitations for an event an hour or so before it is set to begin. And what was clear from our discussions in Pyongyang is that the regime pays close attention to RSVPs. 

Kim Jong Un's desire for détente with foreign governments may be economically driven. The new regime has reiterated its willingness not only to adopt useful economic models from abroad, but also to enter into new agreements with foreign firms. The exodus of Chinese businesses now openly declaiming North Korea reinforces this trend. Pyongyang may be learning that warm economic relations are difficult to achieve while political ones remain so deeply frayed.

Whatever its motivation, North Korea's enthusiasm for a positive and public relationship with foreign governments creates opportunities and tools for post-launch diplomacy. A condemnatory Security Council resolution with Russian and Chinese "yes" votes rather than abstentions would be a visible and high-level starting point for communicating disapproval. News that suggests Pyongyang is losing old friends quicker than it is making new ones will not sit well with the Kim Jong Un regime.

A second tool exploits Kim Jong Un's preference for an audience composed of international "friends." Nations with missions in the country -- such as the United Kingdom, Germany, China, and Russia -- should do three things: clearly and swiftly condemn North Korea's flagrant violation of Security Council resolutions, if they haven't already; coordinate a unified approach to take face-to-face meetings with North Korean officials; and, for at least some time, reject invitations to major events that appear at their embassies. Despite their assertion that "diplomacy is not a gift," North Korean officials notice boycotts. This is a testament to the fact that sometimes the best way for managing diplomatic crises is to maintain and cautiously leverage open channels.

Discussions with high-level North Koreans can be remarkably frank, yielding insight into one of the least understood countries on Earth. "What did you think of our April satellite launch?" one official questioned. I now have an idea why he was asking.

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Democracy Lab

The Star Student

Poland is the classic market economy. But it knows that its future depends on staying close to the European Union.

The leaders of most E.U. members all too aware that European integration must move forward if it is to avoid moving backward, but are reluctant to take the plunge. Poland, by contrast, suffers no such angst. For while it weathered the E.U. recession and the euro crisis with aplomb, it's well understood that the country's long term prospects for economic convergence with its far more affluent neighbors to the west are closely tied to European integration. (The Polish Prime Minster Donald Tusk is pictured above at the Nobel Prize ceremony with German Chancellor Angela Merkel and French President Francois Holland.)

To understand where Poland wants to go, consider where it's been for the past few decades. Long gone are the days of post-communist trauma, when shock therapy transformed the centrally-planned economy to a free market model. Poland was the only country in the European Union to avoid recession altogether in 2008-2009. The economy grew by 12 percent between the third quarter of 2008 and the first quarter of 2012 -- a striking contrast to zero growth in the European Union as a whole. Polish exports did take a knock in the peak year of the crisis, falling 16 percent in 2009. But in 2010 they rebounded by 23 percent, then settled down to a healthy 12 percent growth rate in 2011.

Poland's economic stability, moreover, is recognized by the capital markets. The yield on Poland's euro-denominated 10-year government bonds is now hovering around 2.5 percent. Comparable Spanish bonds yield 5.8 percent, while Hungary is paying 7 percent.

Poland's bright record is due to several factors -- chief among them are good governance, the structure of its economy and pure luck. Poland developed enviable macroeconomic tools long (and the will to use them well) long before they proved essential. A ceiling on public debt was written into the constitution adopted in 1997. Meanwhile, post-communist reforms left the economy with efficient bank supervision and a relatively flexible labor market.

Arguably most important, when the crisis hit, Polish authorities came up with the appropriate level of fiscal stimulus to cushion the shock without leaving a legacy of waste or inflation. Outlays on planned infrastructure projects (co-funded by the European Union) were frontloaded to offset falling demand from recession-hobbled trade partners.

As for the second factor -- the structure of the economy -- Poland is fortunate to have a relatively large internal market with a well-developed ecology of small and medium-sized enterprises that reduce the economy's dependence on exports. Moreover, the Polish labor force is highly mobile (some two million Poles work elsewhere in Europe), which reduced cyclic pressure on local markets. Finally, Polish exporters have proved remarkably adaptable: While sales to the eurozone grew by a modest nine percent in 2011 (a reflection of eurozone fiscal austerity), exports to Russia, Ukraine and other post-soviet republics jumped by 18 percent.

Then there's the aforementioned element of luck: As an outsider to the eurozone, Poland was able to buffer the impact of external events through sharp depreciation of its currency in 2009. There was an element of luck, too, in the fact that Poles did not indulge in the consumption credit bubble that left most Europeans overleveraged and deeply in debt when the bubble burst in 2008.

A variety of obstacles still threaten Poland's march toward economic convergence (its per capita income in purchasing power terms is still just 60 percent of the E.U. average). The obvious threat is the ongoing euro crisis. A eurozone break-up that led to a deep recession in Europe would almost certainly echo through the Polish economy. About one-quarter of Poland's exports go to Germany and another fifth end up in France, Italy and the Netherlands combined.

Consider, too, that Poland must walk a narrow line between fiscal austerity (needed to retain the confidence of global lenders) and maintenance of adequate demand to sustain growth and employment (joblessness is chronically in double digits). For the moment, the emphasis is on the former: The huge budget deficits of 2009 (8 percent of GDP) and 2010 (7 percent) were brought below 5 percent in 2011 and will run about 3.4 percent in 2012.

While Poland's policymakers must continually adapt to the changing political and economic environment, Polish policy toward Europe is firmly rooted in a handful of formal goals: openness, competitiveness and solidarity.

It seeks openness and competitiveness -- here meaning a level playing field in the European Union for Polish enterprise, the free movement of capital, and liberal immigration policy, as well as an open door with respect to both E.U. enlargement and trade with non-members. By the same token, it favors a light regulatory regime and low taxes as a means to increase productivity and hasten convergence with northern Europe.

As for the third principle, having benefitted from many E.U. policies aimed at narrowing differences in living standards and productivity -- among them, the Common Agriculture Policy and subsidies for infrastructure -- Poland has strongly opposed initiatives that would undermine the principle of solidarity as the cornerstone of the integration process. Poland's leaders rightly suspect that a "two-speed Europe" would consign a non-euro country with a relatively low per capita income to the second tier of integration in the continent. But the goal of solidarity, it's worth noting, does not only apply to policies aimed at redistribution; it is at the heart of Poland's commitment to collective European defense and a common European foreign policy.

In the near term, joining the euro currency would be risky (like the countries on the eurozone's southern periphery, Poland would be vulnerable to speculative attacks) and unpopular (a majority of Poles strongly oppose accession, which is not surprising in light of the trials of Greece, Spain and Portugal). But in spite of the fundamental coordination problems exposed by the ongoing euro crisis, Poland wants to join the common currency area in the medium-term. This is based in part on geopolitical considerations, but also on economic logic: Poland's private sector needs the access to capital and low transactions cost that only a single currency can assure.

Meanwhile, Poland must deal with the difficulties of influencing the European integration process while being outside of the eurozone. This explains why Poland signed the fiscal austerity pact pressed on the European Union by core eurozone countries. Poland expects to meet all the Maastricht macroeconomic criteria for eurozone membership by 2016. That should be not be much of a reach, as the country already meets the criteria for price stability and the public debt.

Poland's economy fate has long been intertwined with Germany's -- and that hasn't changed in recent years. This has proved a blessing, as German demand for Polish exports helped sustain growth through the crisis. And it explain in part why Poland's  Foreign Minister Radoslaw Sikorski has openly embraced Germany's leadership of Europe in spite of historical enmity. As he put it: "I fear Germany's power less than her inactivity [in the fight to keep the eurozone intact]."

Poland's economic interests in European integration are even more direct: Between 2007-2013, the country received around € 70 billion in infrastructure subsidies from the E.U. budget as part of the E.U.'s "cohesion" policy. And, as noted above, it is a net beneficiary of the Common Agricultural Policy. Changes in E.U. priorities in the wake of the eurozone crisis that undercut the goal of cohesion would thus slow the pace of public investment in Poland, perhaps drastically.

Actually, Poland's growing economic ties to western Europe are part and parcel of a broader movement toward the integration of western and central Europe. Poland is the largest national economy by far among the so-called the Visegrad Four (with Slovakia, Hungary and Czech Republic, all of which joined the E.U. in 2004).  The region's economic clout is growing rapidly; its collective GDP now exceeds $1 trillion -- a four-fold increase since the mid-1990s. And Germany's trade with the V4 now exceeds that with France (its largest single trading partner) and is almost three times higher than with Russia.

Along with being a testament to Poland's determination to distance itself from the Soviet nightmare, the country's economic transformation is proof positive of benefits of European integration. Poland has thrown in its lot with a united Europe -- a gamble, in essence, that the union will not be fatally damaged by the flaws in the eurozone's rules for economic coordination. If the E.U. flourishes, so will Poland. Indeed, for the first time in its modern history, Poland's uncomfortable proximity to Europe's great powers will prove an asset rather than a liability.    

Photo by Nigel Waldron/Getty Images