13th annual Municipal Finance Conference


13th annual Municipal Finance Conference



A Crisis that Bush Cannot Afford to Ignore

It was predictable that the recent six-party talks in Beijing on the North Korean nuclear crisis would fail to achieve substantive results. Positive spin from the White House cannot change the fact that North Korea now says it will not engage in another round of talks—and that it may soon test a nuclear weapon. Even if that is all bluster, the US and its regional partners have no commonly agreed strategy for dealing with North Korea. In fact, according to recent reports, a senior Chinese official has blamed the breakdown of talks on the US and its intransigent position.

Failure was virtually inevitable because the US insisted that North Korea give up the only thing it has of any real value—its nuclear programmes—without offering anything tangible in return. One can partially understand President George W. Bush’s position on the issue. Indignant at how Kim Jong Il, the North Korean leader, treats his own people, and at Pyongyang’s extortionate tendencies, he refuses to pay off North Korea to stop a nuclear programme it should already have ended according to a 1994 accord signed by President Bill Clinton.

That said, Mr Bush is making a big mistake. North Korea has a broken economy juxtaposed with a gradually growing nuclear arsenal, and there are no good coercive options for dealing with it. The North Korean army is too close to Seoul for US armed forces to make a pre-emptive strike without mass casualties. And Pyongyang is only too prepared let its own people starve, should the US be able to convince other countries to support a policy of gradual economic strangulation.

Washington needs to think bigger. It should offer much more to North Korea, but demand far more in return. It should also couple its demands with economic and military threats should the impasse not be resolved diplomatically. And if negotiations fail this time, we would then be much better positioned to convince our regional part ners South Korea, Japan, China, and Russia as well as our European allies that more severe measures are needed.

Clearly, it is its nuclear programme that constitutes North Korea’s greatest threat to global security. But the underlying problem is the Stalinist state’s failed economy—and its failed regime more generally. Regime change by force can only be a last resort. First, Washington should pursue a process of regime transformation. The US should press North Korea to reform its economy and even aspects of it political system as China and Vietnam have done in recent decades.

This plan requires North Korea to slash its oversized conventional armed forces, which consume at least 20 per cent of gross domestic product. Pyongyang should invite Chinese economists and technicians to teach the North Korean people how to carry out market reforms. The regime would also have to eliminate verifiably its chemical weapons and ballistic missiles, end counterfeiting and drug trafficking and release all kidnapped Japanese citizens. The nuclear programme must be quickly and verifiably frozen and, over time, fully dismantled. And North Korea’s energy demands should be met with conventional power plants rather than new nuclear reactors.

The US must also do its part. That means easing sanctions and contributing, with South Korea, Japan and China, a good deal of aid to help North Korea develop its infrastructure. Reconstruction should start in the special economic zones and then be broadened to the rest of the country and extended to health and education. The plan also should involve a peace treaty and diplomatic relations among the regional powers so as to reassure investors from South Korea and elsewhere that they should risk putting their money in a reforming North Korea.

North Korean leaders may be too paranoid to accept such a plan. Or they may feel they really need nuclear weapons in the face of a Bush administration espousing regime change and military pre-emption against the countries in “the axis of evil”. But if we try and fail, coercion may then be easier to organise. South Korea and China in particular will find it harder to dismiss it out of hand.

Washington must end the absurd pretence that the North Korean problem is not a crisis. It is a crisis, and a very large one at that. It is time the Bush administration started treating it with the gravity and seriousness it demands.