Korean Peace on the Horizon: Beware the Trap

by Stephen Bryen

Reports coming out of South Korea in anticipation of the upcoming meeting between the North Korean head, Kim Jong-un and South Korea’s President Moon Jae-in has raised “informed” speculation that one of the big results of the Kim-Moon summit meeting with be an end to the state of war between the two Koreas.  While this is not quite a peace treaty, it is about as close as you can get without catching pneumonia.  Legally it means that the two sides can decide to normalize the border in certain ways, which of course will require definition.

North Korea runs a very restrictive border control system that not only is intended to keep foreigners out, unless accepted and guided by North Korean operatives, but also to keep North Koreans in. It is rather like what the Soviet Union used to do, but perhaps even tougher.  North Koreans cannot travel freely, and foreigners can’t move around North Korea without being accompanied.  

The border between North Korea and its immediate neighbors –South Korea, China and Russia also deploys many North Korean soldiers to enforce order.

There is no obligation in ending a state of war to open borders, but there is every reason to suppose that the North Koreans may be willing to make some concessions on their border with the South in exchange for some concessions from the South.  Therefore it has to be asked what North Korea would want?

Both sides may show renewed interest in mutually beneficial business deals.  North Korea has low cost labor, an asset for South Korea if it can train the northern labor force and bring it up to modern standards.  But it is a tricky space, because Moon’s support depends on support from domestic labor unions who won’t likely favor cheap North Korean labor deals.  And Moon’s relationship with the chaebols, South Korea’s mainly family owned business conglomerates is not good.  The arrest of two former Presidents, one already sentenced to a long jail term and one awaiting trial  who had strong chaebol support plus the arrest of industrialists including from Samsung is a simmering pot that will make any bid by Moon for support in that sector hard to achieve.  It may be therefore that Moon won’t be able to deliver as much as he would like to Kim Jong-un in the way of business deals.  That does not mean that he can’t find alternatives, for example large industrial loans to the North.  Moon may remember, and if he doesn’t Kim will, that the United States made large loans to Soviet Russia as part of the Nixon-Kissinger “detente” program, some of them financed under the table in secret agreements between the U.S. Export Import Bank and then-the USSR’s Vneshtorgbank.   It is reasonable to anticipate very large multibillion dollar loans to the North for such things as improvements in the infrastructure and modernizing “basic” industries.  In addition there might be generous subsidized loans to cover agricultural commodities.  Historically, North Korea was the industrial heartland of the Korean peninsula and South Korea the “rice basket.”  Nowadays South Korea has both agriculture and ultra-modern industry while the North’s industry is badly underdeveloped and North Korea often experiences food supply disasters due to inefficient farming methods, collectivization and bad weather.  

This raises the sanctions issue, which will be something the two Korean leaders probably are seeking to eliminate.  While Moon is constrained by the United States and will have to wait for the outcome of the Kim-Trump summit, Moon will be pressuring the United States to lift at least part of the embargo, certainly anything involving food supplies and maybe energy.  To do this Moon may push for power grid integration steps between North and South Korea.  South Korea currently has 22 nuclear power plants providing 29% of South Korea’s electrical power consumption.  Certainly South Korea can build more nuclear power plants and Kim could use more electricity for industry and for his capital city.  Ending the state of war makes integration of services possible provided the sanctions issue can be bridged.

North Korean leader Kim Jong-un and Chinese President Xi Jinping.

But Kim may also want “peaceful” nuclear power plants built on North Korea’s territory.  One of these a 1,000MWe light water reactor was promised in 1994 as part of an announced denuclearization that in the end did not happen; there were other attempts and agreements that fell through and eventually North Korea built its own light water reactor that is supposed to start generating some electricity this year.  It may also generate weapons grade plutonium! But given North Korea’s precarious financial situation and the need to rebuild its power grid, a single reactor even if it works reliably is not the answer.  Does denuclearization mean new power reactors?  This is an issue certainly on the table as the leaders attempt to sort through the various issues that ultimately center on “regularizing” North Korea.

The other issue that might certainly be raised between Moon and Kim, probably secretively is what also is certainly on Kim’s mind, and maybe Xi Jinping too.  That issue is the large military presence the U.S. has in South Korea and, especially annoying to China the presence of the U.S. THAAD anti-ballistic missile system, which Moon would like to get rid of because he think it traps South Korea more than it defends South Korea, by making South Korea a target in any U.S.-North Korea dispute (or even U.S.-China dispute).

Do you need bases and missiles if there is an end to the state of war between North and South Korea?  And does South Korea need a Mutual Defense Treaty with the United States that obliges South Korea to respond to any “armed attack in the Pacific area on either of the Parties in territories now under their respective administrative control, or hereafter recognized by one of the Parties as lawfully brought under the administrative control of the other” and the Agreement “declares that it would act to meet the common danger” meaning that South Korea would be obliged to render assistance to the United States if the threat came against, for example the U.S. Marine Base in Okinawa or a missile attack on Guam.  In short, the Mutual Defense Treaty obliges South Korea to perform as part of a U.S.-led alliance, something that China and Russia both would like to see removed.

President Moon is probably not in a position to take any open stand against the Mutual Defense Treaty, but there is a danger that he may seek “clarifications” to distance South Korea from its broader aspect, meaning trying to confine it just to the Korean peninsula, and using the progress between North and South, if he can to drive a wedge even there, seeking to end the 1954 treaty sometime in the future should subsequent events in the “peace process” permit him to do so.

This is very risky territory for all the players, but especially for the United States where its influence in North Asia could take a hard hit unless the negotiations are  managed carefully and Washington understands the dangers.

There is little doubt that ending the state of war between North and South Korea is a much more complicated step, and a potential trap than might be immediately apparent.