The Enabler

The only way to stop Pyongyang's cycle of brinkmanship and extortion is to address the real problem -- South Korea.

Perhaps it is because I first went to school in Palermo, Sicily, that I have always found North Korea's conduct entirely logical and wholly transparent. In both places, extortion by intimidation is routinely practiced, though much more subtly in Sicily.

The transparency is not due to anything revealed by North Korea's string of rulers, from whom it is pointless to expect any change of policy -- just because the previous one liked Japanese food and film stars, or because the current Kim spent time in a Swiss boarding school. The regime, past and present, continues to exceed even Stalin's Soviet Union in its pervasive secrecy, but what remains in full public view is more than enough to explain its frenetically aggressive stance.

Even visitors closely escorted between North Korea's very few approved sites cannot miss the vital clues. Take the Pyongyang No. 1 Duck Barbecue Restaurant, the Pyongyang Number One Boat Restaurant, Pyulmori (a "Swiss" cafe), or the Austrian Helmut Sachers Kaffee -- among the few foreign-style eateries in the entire country besides Jilin-Chinese canteens in the border area. That one can eat palatable food in Pyulmori is phenomenal, but what is much more revealing is that both cafes serve authentic coffee actually extracted from real coffee beans.

All of North Korea's varied and extreme economic dysfunctions converge in its crippling shortage of foreign currency. Once the bulk of it is used to import military components, supplies, and subsystems from China (including the erector launcher vehicles for its ballistic missiles), very little foreign exchange is left. There is virtually none to import machinery to relaunch the country's hopelessly antiquated manufacturing industry, which totters on with decades-old Soviet machine tools and even some Japanese equipment from the 1930s. There is no foreign currency to import contemporary medicines for the population, which must make do with North Korean knockoffs of Chinese knockoffs of Western generics. There is no foreign currency to import even the cheapest forms of starch -- maize, sorghum, low-grade wheat -- when crops fail, so deadly famines are recurrent.

Yet there is enough foreign currency to import the coffee beans distilled at Pyulmori and Helmut Sachers Kaffee. The few half-starved cows sometimes seen browsing in harvested fields explain the unappealing bulgogi offered in the fancy restaurants, though North Korean waters do better in supplying the octopus, squid, and fish offered at the floating seafood house. But to procure a good espresso, the officials who allocate foreign currency -- automatically the supreme power in the land -- clearly found it necessary to set aside other priorities to import good roasted beans. Of course, none of this would explain anything if these were primarily tourist establishments operated to earn foreign currency. Stalin's body was hardly cold when communist regimes opened up for business with hard-currency shops, hotels, restaurants, and bars (not lacking in hard-currency companionship), which today still comprise Cuba's only successful industry.

But Pyongyang's ultraprime eateries are not that. A few foreign tourists end up dining there by way of relief from grim hotel canteens, along with a handful of humanity-loving NGO workers (who never miss out on luxuries and thus frequent these places), but both groups are simply too small to matter. Most customers are North Koreans who fall into two entirely distinct classes. First: anxious, pinched, and pallid men (rarely women) in standard blue North Korean suits, visibly excited by the heady foreign luxuries on offer -- members of midranking delegations from near or far that have wrangled or won access. The second class is the much better-dressed, better-fed singles and couples nonchalantly eating and drinking as if real coffee were an everyday pleasure for them. These are the likely parents of the children seen enjoying Pyongyang's splendidly polychrome merry-go-round expensively imported from Italy. (And this being the land of the portly Kim Jong Un, these children of the rich and privileged are apple-cheeked and distinctly chubby in a land where most children are visibly underweight.) No, these nonchalant eaters are not the winners of the capitalist free-for-all, entrepreneurs, top corporate professionals, or sports stars; they're high-ranking officials or military officers and their families, who support the Kim dynasty and win the perks of his favor.

A "palace system" drives the entire regime and its policies: To keep the Helots in isolated servitude cut off from the outside world, a stance of relentless bellicosity is kept up by the rulers year after year, decade after decade. Even though there has been no war for two generations, North Korean life is shaped by nonstop war propaganda, war censorship, martial law, and above all, a centrally planned war economy in which resources are allocated not exchanged.

But the inward projection of bellicosity is not enough, because the North Korean economy is so unproductive, especially in earning foreign exchange. To feed the palace system, North Korea must also extract payoffs from the outside world: some from enabling NGOs (food aid from which allows domestic food production to be used for army rations), some from the United States and Japan in exchange for Pyongyang's nuclear promises (never kept), but most from the fellow Koreans of the South (whose payoffs are won by sheer intimidation). South Korean President Kim Dae-jung won the 2000 Nobel Peace Prize for his unprecedented reconciliation summit with Kim Jong Il, a moment when peace and even unification seemed imminent. Only later did the truth leak out: The summit had been purchased for $100 million in cash. Unsurprisingly, it led to nothing.

Unwilling to deter North Korea -- which would require a readiness to retaliate for its occasionally bloody attacks and constant provocations, thereby troubling business and roiling the Seoul stock market -- South Korea has instead preferred to pay off the regime with periodic injections of fuel and food aid, but most consistently by way of the North-South Kaesong industrial zone, in which some 80,000 North Korean workers are paid relatively good wages by South Korean corporations. The workers themselves receive very little of their salaries, of course, the majority of which gets funneled back to Pyongyang and makes up the North's largest consistent source of foreign currency. Even under supposedly "hard-line" South Korean presidents, the Kaesong transfer has continued. It was not shut down when the North sunk South Korea's Cheonan warship, killing 46 sailors; nor when the North opened artillery fire on a South Korean island, killing two soldiers and two civilians; nor when the North tested a nuclear device and launched a long-range ballistic missile. Even as the present crisis has unfolded, it was the paying South that feared an interruption of production at Kaesong, not the North, which reaps the benefits. And when media in South Korea noted with much relief that Kaesong was still open, the North Koreans promptly shut it down.

Having successfully extracted payoffs so consistently through threats and occasional attacks, the North is naturally at it again. Even though another nuclear test and the threatened launch of a mobile long-range ballistic missile appear imminent, a payoff from the South, not war on the Korean Peninsula, is the likely outcome. And Pyongyang knows this.

Meanwhile, South Korea has matched the North's bellicosity with its own strategic perversity: It remains obsessed with an utterly unthreatening Japan and has been purchasing air power to contend with imagined threats from Tokyo as opposed to the real ones just north of the demilitarized zone. Seoul is simply unwilling to acquire military strength to match its vastly superior economy. Instead, it spends billions of dollars to develop its proudly "indigenous" T-50 jet fighters, Surion helicopters, and coastal defense frigates -- alternatives for which could be much better, and cheaper, imported from the United States. Meanwhile, gaping holes remain in South Korean defenses (and thus we see the ridiculous spectacle of last-minute scrambling for missing equipment and munitions in the present crisis). And the cycle continues: Because the South allows itself to remain so vulnerable, it cannot react effectively against North Korea's perpetual threats and periodic attacks. Instead, Seoul checks its bank account and gets ready for the next payoff.

It's time for this to end. The United States cannot force the North to give up its bellicosity, but surely it can force the South to renounce its perversity. The price of continued U.S. protection should be the adoption of a serious defense policy, the closure of the Kaesong racket, and a complete end to cash transfers to the North, whatever the excuse. Pyongyang may still try to pick a fight, but at least this will eliminate the incentive to persist in this monstrous extortion strategy.

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How to Talk Kim Jong Un Off the Ledge

Is John Kerry ready to deal with North Korea? Here's how to do it.

U.S. Secretary of State John Kerry's visit to Asia is an important opportunity to start fashioning an off-ramp from the crisis on the Korean peninsula. "We are seeking a partner to deal with in a rational and reasonable way," he said upon landing in Seoul Friday. But if Kerry is to succeed in his mission, the United States will need to discard two historical myths: that Pyongyang has used bellicose behavior to squeeze aid out of a cringing United States, and that the North always cheats on its agreements. This caricature is not only wrong but also hamstrings America's ability to deal effectively with a dangerous adversary.

Exhibit A is the 1994 U.S.-North Korean Agreed Framework negotiated by Amb. Robert L. Gallucci, who was then my boss at the State Department. Under the agreement, Pyongyang pledged to dismantle its large plutonium production program and return to the Non-Proliferation Treaty in exchange for two light-water reactors and heavy fuel oil. Although the arrangement was reached after a crisis triggered by North Korean brinksmanship, the results were a success for U.S. foreign policy. At the time, U.S. intelligence estimates predicted that North Korea could build up to 100 nuclear weapons by 2000. Fast-forward to 2002, when the agreement collapsed, and the North only had fissile material for a handful of bombs. Moreover, key nuclear facilities had deteriorated so much that they could not be salvaged. The North still has not recovered from that setback.

As for the assistance provided to North Korea, even on that count Pyongyang came up short. Not only did the North Koreans trash their multi-billion dollar nuclear program, but all they had to show for it were two incomplete concrete-filled holes in the ground that can still be seen on Google Earth. No money was given in cash to Pyongyang. North Korea did receive a few hundred million dollars worth of heavy fuel oil under the framework agreement, but that seems a small price to pay for gutting a program on the verge of churning out 100 bombs.

Another deal, cited by a conservative scholar during our recent joint appearance on the Lehrer Report, was reached in 1998 when, according to him, "the Clinton administration paid North Korea almost $200 million worth of food aid for the empty privilege of inspecting an empty cave in the aftermath of North Korea firing a long range missile over Japan on Aug. 31, 1998."

Since I led the inspection, I know what happened. The whole episode was a self-inflicted wound, not the result of Korean pressure tactics. The Clinton administration made a deal to inspect the "empty cave" when the conclusions of one intelligence agency that thought the North Koreans were violating the 1994 agreement by hiding a secret nuclear facility (most agencies didn't think so) were leaked the to the New York Times. Even though the North Koreans warned American diplomats that there was nothing there, the administration had to cover its domestic flank. Sure enough, there was nothing there and there never had been. The intelligence agency's analysis was simply wrong.

Food aid was indeed part of the deal, but the scholar neglected to say that the United States had planned to give it to the North Koreans anyway. The administration was not providing aid because of Pyongyang's bluster, but rather for humanitarian reasons since the North's population was suffering from a famine that may have killed as many as one million people. When the nuclear story broke, the decision was made to fold it into the inspection deal to avoid having to fork over any new assistance. That sounds to me like a smart move.

As a postscript, afterwards the Clinton administration reached a deal with Pyongyang imposing a moratorium on tests of long-range missiles and space-launch vehicles that lasted seven years until 2006. What did we give the North Koreans in return? The United States promised only to continue diplomatic dialogue, not to provide economic assistance. Just think how much worse the missile threat would be today if the North had not lost all of that valuable time.

Do the North Koreans cheat on agreements? Pyongyang's pursuit of a uranium enrichment program beginning in the late 1990s violated the spirit of the Agreed Framework, but the United States detected these activities early on. Had Vice President Al Gore won the election, plans were already in place to confront the North. Unfortunately the George W. Bush administration did nothing and allowed the problem to fester. The North Koreans did, however, abide by agreements to implement the Agreed Framework. (Many covered the construction arrangements for building the two reactors and one established a joint U.S.-North Korea project to safely store spent nuclear fuel rods at its Yongbyon facility that contained plutonium.) The same applies to a host of other arrangements until the framework ended in 2002. The bottom line: Whether with the Soviet Union or North Korea, as President Ronald Reagan said, the key is to "trust but verify."

Some may point to the February 2011 Leap Day deal that quickly broke down as an example of how you cannot reach agreements with North Koreans. But that episode was really a lesson on how knowing history is important. Even before the ink was dry, private experts noticed that the unilateral statements issued by Washington and Pyongyang allowed a big loophole, only banning "long-range missile tests," a formulation the North had long insisted did not include space-launch vehicles. Sure enough, the North claimed the agreement did not cover space-launches, fired off an Unha rocket with a satellite on top, and the agreement collapsed.

The fact is diplomacy, if conducted with care, can and must play an important role in finding solutions, even with North Korea. Contact with the North Korean leadership can clarify its intentions in a way that cannot be done by parsing the words of Pyongyang's bellicose press releases. We might learn that there are peaceful paths forward or that the North is indeed bent on confrontation. Either way, clarity is essential given the seriousness of this situation. Diplomacy is also an important tool in building coalitions; it could garner support from China, which is desperately interested in reinvigorating the diplomatic track, and also would be welcomed by our allies who have the most to lose from any confrontation with Pyongyang. That is certainly true for South Korea, whose new president has signaled her desire to reengage Pyongyang.

In addition to echoing public warnings against aggression, at the appropriate time, Washington could use meetings with North Korean diplomats stationed at the United Nations (the so-called New York channel) to signal a willingness to engage in unconditional discussions to see if there is a path forward. If Pyongyang agrees, subsequent discussions should involve higher-level officials to insure the close attention of the North's leadership. Those discussions should explore a broad agenda, including Pyongyang's concerns -- reaching a peace treaty and lifting sanctions -- and Washington's priorities -- ending the North's nuclear and missile programs. If all goes well and common ground is identified, the exploratory talks could be used as a platform to spin off more formal negotiations. U.S. allies and the Chinese, all of whom might eventually join the talks, would be kept closely informed.

So let's hope that Kerry will use this trip to go beyond reciting standard, boilerplate talking points. A new diplomatic offensive, which might open an avenue to peaceful resolution of the current crisis, would demonstrate that the United States understands that exercising leadership means more than just flexing military muscle. What's the alternative? More threats, more instability, and possibly even a war that nobody wants.

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