02.03.2008
Russia’s East Asian Strategy: The Korean Challenge
№1 2008 January/March
Georgy Toloraya

Director of the Asian Strategy Center at the Institute of Economy of the Russian Academy of Science and works for the “Russkiy Mir” Presidential Foundation as Chair of Regional Programs and CEO of the Russian National Committee on BRICS Research. He is also a professor at MGIMO (Moscow University of International Relations).

The situation in
the Korean Peninsula has changed radically since the end of 2006.
Although these changes are not irreversible, they have lain the
groundwork for a new geopolitical reality in which Korea will play
a greater and a much different role than it has done in the
past.

These changes
could have happened earlier. A meeting between the leaders of the
Democratic People’s Republic of Korea and the Republic of Korea
signaled a crucial step toward North-South reconciliation back in
2000. However, charges made by the U.S. against Pyongyang in 2002
that it is implementing a covert highly enriched uranium program
and North Korea’s subsequent withdrawal from the nuclear
non-proliferation treaty grew into a profound crisis that disrupted
the peace process.

However, an
agreement reached on September 19, 2005 at Six-Party Talks in
Beijing that had started in 2003 suggested that North Korea would
denuclearize in exchange for synchronized steps by its partners at
the talks (above all, the U.S.) toward normalizing relations. The
document envisioned security guarantees and multilateral economic
aid to North Korea. But once again it was practically torpedoed a
mere two months later. Accusations that Pyongyang had engaged in
illegal financial transactions and the freezing of North Korean
accounts at Macao’s BDA bank by Washington played an important
role. As a result, North Korea found itself cut off from the global
financial system.

Pyongyang
aggravated the situation further when it conducted a missile test
on July 4, 2006 and it carried out what is believed to be a nuclear
test on October 9, 2006. Paradoxically, this did produce a result.
In spite of sanctions imposed by the UN, Washington made direct
contact with North Korea – something it had rejected before – at
the end of the same month. A secret bilateral meeting between the
North Koreans and the Americans took place in January 2007 in
Berlin where the sides coordinated the main details of a mutual
compromise. The six negotiating countries “ratified” the accords in
a public statement on February 13, 2007.

The agreement
stipulated that all nuclear facilities known to exist in North
Korea be disabled and all nuclear programs by Pyongyang be
disclosed, while the U.S. agreed to move toward normalizing
diplomatic relations and economic aid. Working groups to discuss
issues related to specific areas were formed. The parameters of the
process were later coordinated and the first practical steps were
made. North Korea started disabling its nuclear facilities with
U.S. aid in November 2007. Furthermore, Washington promised at
bilateral talks that it would drop North Korea from its list of
countries that sponsor terrorism and exempt it from the Trading
with the Enemy Act.

WHERE DID THE
BREAKTHROUGH COME FROM?

Why did the peace
process suddenly acquire an almost jump-like dynamic after fifteen
years of stalemate, especially since at least 80 percent of the
current plan of action was featured in the Agreed Framework that
the Clinton administration and the North Korean government signed
back in 1994? This agreement broke down in the 1990s due to the
White House’s inaction and North Korea’s nuclear activity. The Bush
administration classified Pyongyang as part of the ‘Axis of Evil’
and wanted to isolate and pressure the country. The nuclear issue
history neatly falls into a chain of attempts to ensure security
and the status quo on the Korean Peninsula using not non-military
means, but muscle-flexing and blackmail – by the weaker partner in
this case.
Paradoxically, one must admit that the situation eventually
improved thanks to Pyongyang’s offensive – and often provocative –
policies toward the world’s only remaining superpower.

The situation can
be characterized by the following.

  • North Korea has
    de facto obtained nuclear status. Although this status has not been
    recognized by the world community, it exerts influence on political
    processes and decisions;
  • This development
    resulted in an about-face in U.S. policy that ranged from pressure
    and attempts to bring down the North Korean regime to engagement.
    The explanation lies at the surface. Washington badly needs
    achievements in foreign policy against the background of growing
    problems in Iraq and Iran and the intensifying internal political
    struggle. The normalization of relations with Pyongyang does not
    threaten U.S. strategic interests in any way, except for stirring
    ideological idiosyncrasies;
  • After the
    stereotypes were discarded, U.S. and North Korean diplomats easily
    found agreement on the terms for halting Pyongyang’s nuclear
    program in exchange for security guarantees (including the
    normalization of bilateral relations) and economic aid;
  • There is no
    confidence at this time that the pivot in U.S. policies, which was
    borne out of tactical, transitory and personal factors, is
    irreversible. Progress in this sphere actually hinges on the
    persistency of the President and the Secretary of State. There are
    well-grounded doubts as to whether influential forces in Washington
    have fully renounced the strategic goal of replacing the North
    Korean regime, albeit by milder methods rather than through the use
    of force. Yet the existing reality prevents the materialization of
    such aspirations – over the short term at least. This will help
    consolidate positive tendencies. Even if this deal is not fully
    implemented during President Bush’s term in office, it will serve
    as lasting legacy for the future U.S.
    administration; 
  • The emergence of
    a basis for peaceful coexistence between North and South Korea has
    proven to be a tangible factor and the inter-Korean summit of
    October 2007 provided a graphic illustration of this. Pyongyang and
    Seoul de facto reached a consensus on maintaining separate
    statehoods simultaneously with a growing economic and, at a later
    date, cultural integration of both countries. South Korea has
    assumed the role of a self-styled sponsor and an advocate of North
    Korea in the international arena, pushing China aside in this
    traditional capacity. South Korean economic aid has turned into the
    main factor for North Korea’s survival. New conservative president
    Lee Myon Back is unlikely to fully reverse such a
    policy;
  • The steady
    progress of six-nation talks builds up the potential for
    transforming them into a permanently functioning mechanism for
    peace and stability in Northeast Asia.

All of these
factors inspire hope that, regardless of internal political changes
(such as a new president in South Korea and possible leadership
changes in the countries opposing North Korea), a sudden return to
a tense confrontation would not happen easily. It looks like the
political elites in the West, to say nothing of South Korea, have
developed a clear realization of the catastrophic aftermaths
(ranging up to a civil war) that cataclysms in North Korea might
have for the entire region. Additionally, rising awareness in Seoul
that a collapse of North Korea and the subsequent need to shoulder
responsibility for the neighbors (the cost of restoring the North
Korean economy might run over $1 trillion) would demolish South
Korea’s own model of economic progress as a country integrated into
the global economy.

DEVELOPMENT
SCENARIOS

Finding a
solution to the nuclear problem will be the most crucial factor for
political processes both inside and outside of North Korea. The
following scenarios are possible in this regard.

Scenario
1
. The talks make successful progress, Pyongyang discloses
and dismantles all nuclear facilities and programs it has and, most
importantly, signs an agreement to destroy its stocks of fissile
materials and nuclear explosive devices at its disposal. This lays
the basis for the normalization of North Korea’s relations with the
U.S.  and Japan. The sides lay the foundation for a
multilateral maintenance of peace, while other countries refrain
from interfering in Pyongyang’s internal affairs. The world
community provides large-scale aid to Pyongyang. One delicate
problem may be the construction of light water reactors (something
that was promised to North Korea in the statement of September 19,
2005). This may predetermine the further pace of denuclearization
and continuation of the peace process. A reduction in external
threats and interaction with the world economy (first of all with
South Korea) may prompt Pyongyang to attempt to introduce market
economic levers that will be handled by the existing political
elite.

It remains to be
seen whether such impressive results can be achieved before the
2008 presidential election in the U.S. The new U.S. administration
might not feel that it has to fulfill the agreements reached by its
predecessors, all the more so that a legally binding and verified
plan of action has not emerged so far. If the Democrats win the
White House, the fear of rebukes for liberalism will restrict their
freedom to make concessions to countries like North Korea,
especially if new grudges against Pyongyang are voiced, including
claims that it ostensibly handed over nuclear technology to third
countries. One should remember that Israel bombed a facility in
Syria in September 2007 that supposedly was a nuclear power unit
being built with North Korean assistance.

Japan, which is
concerned about the fate of its own citizens kidnapped by North
Korea in the past, is also standing in the way of normalization
between the U.S. and North Korea and Washington cannot ignore the
interests of its closest ally.

Scenario
2.
A situation in which North Korea maintains the status
of a country having a limited nuclear potential also looks quite
realistic. The world community may reconcile itself to this fact
and become unwilling to press for full denuclearization. Pyongyang
in its turn will abstain from perfecting the nuclear devices it
already has, increasing their stockpiles, resorting to nuclear
blackmail or proliferating nuclear technologies, the latter being
the most important for the West. Dismantling nuclear facilities and
programs should be a precondition in this case. One cannot rule out
that North Korea intentionally overstates the problems that the
elimination of its nuclear industry evokes, as this may help them
get as much aid as possible, including construction of nuclear
power-generating facilities.

If the
international community eventually puts up with Pyongyang’s
“Indo-Pakistani” status, this will result in highly deplorable
international consequences and will impact the non-proliferation
regime. That is why the halfway solution may be disguised in a
continuation of talks on North Korea’s final nuclear disarmament or
on the country’s reverting to the format of the non-proliferation
treaty as a non-nuclear state. The fruitlessness of these
negotiations will prevent full normalization of relations with the
West, but will not stop it altogether. Displays of “dignified”
conduct on the international stage will enable Pyongyang to
continue receiving economic aid even in the absence of visible
changes inside the country. However, the liberalization of the
regime will continue in one form or another.

If a changed
North Korea manages to ensure its external security through
diplomatic methods, it will eventually not need weapons of mass
destruction in a more distant future and will give them up
voluntarily (remember that South Africa destroyed its nuclear
arsenals). This is far from the worst scenario and it will
eventually bring a solution to the problems of the Korean
Peninsula. Implementing this scenario depends on the continuity of
U.S. policies toward a dialog with North Korea, on the one hand,
and on the North Korean leadership’s self-restraint and
preparedness to avoid provocation.

Scenario
3
. One cannot rule out a possible deterioration in the
situation due to conflicts, for instance, involving North Korea’s
ambitions to keep nuclear weapons or ways of suspending the nuclear
program or over the problem of providing a nuclear power plant to
North Korea. This may be fuelled by a number of circumstances, such
as the success of U.S. troops in Iraq, an unexpected untangling of
the Iranian nuclear problem, collisions of internal political
grappling in the U.S., a tougher approach toward the North on the
part of a new South Korean conservative leadership, or Pyongyang’s
own reckless actions.

Scenario
4
. A reverting to forceful methods of action may be caused
by a crisis inside North Korea, for instance, by Kim Jong Il’s
departure from power and the subsequent fight for “succession to
the throne,” by popular unrest or by a collapse of the system of
governance as a result of an economic crisis. However, this
scenario is not very likely and, should it materialize, it does not
necessarily imply a re-emergence of attempts for a military
solution. China and South Korea are the two powers that have
paramount interest in preventing military intervention in North
Korea and they will attempt to use all possible measures (including
economic ones) to minimize the risks of a U.S.
incursion.

In the short
term, a stabilization of developments around the North Korean
nuclear program with gradual positive trends seems to be the most
realistic prospect. All the main actors are interested in this, but
everyone should be ready for possible new breakdowns and for
nerve-wracking moments that Pyongyang will yet give to negotiators
in a chase for maximum concessions. However, if the efforts prove
successful, possibilities may appear for the modernization of the
country with support from other states and for its opening to the
outside world, while the ruling class will keep their hands on the
levers of power.

Such a course of
events would not contradict Russia’s interests either. It would not
demand a major readjustment of approaches on our part. But the
consistency of political priorities does not mean that Moscow
should not step up its role in the Korean settlement process,
including economic projects. On the contrary, Russia must play a
more active role in order to consolidate its positions in Asia,
especially in the light of the growing competition on “the Korean
front.”

Long-term
prospects conceal far more serious strategic challenges. It is
important to weigh up now what the future geopolitical layout of
Northeast Asia will be like after the ongoing processes draw to a
logic end there. For the first time after the Korean War of the
1950s the geopolitical balance in the region will experience a
major change. Idle watching may bring up trends detrimental to
Russia’s national interests. At the same time, opportunities are
opening up for more fruitful strategies.

HOW MAY NORTH
KOREA CHANGE?

These processes
may be catalyzed by changes inside North Korea and by its increased
interaction with the outside world. The totalitarian regime cannot
last forever with a bankrupt economy, although the current
improvement in the country’s international standing and economic
aid has already sparked attempts by North Korean leaders to crack
down on “petty proprietary instincts,” “bourgeois showings,” and
“penetrations of alien culture” (coming from South Korea in the
first place). Conservatives and siloviki continue to have a large
influence on the political elite and young cadres are still being
recruited in those milieus.

Yet there are
quarters in Pyongyang that want change. There is growing
dissatisfaction among the people and an increasing external
influence. This is a natural result of a withdrawal from
self-isolation and the normalization of relations with the West and
it will push the country’s leadership toward a tough choice –
between a collapse and an all-embracing systemic transformation.
The problem is whether the political elite will be able to lead the
transformation or will act as a diehard and watch the country fall
naturally downhill.

It looks like the
North Korean leadership has recognized that it would be impossible
to escape that choice and it is ready for reforms, apparently
hoping that this will help prop up the regime and avoid collisions.
The main condition here is one hundred percent external security.
However, issuing guarantees of security should not become a mandate
for Pyongyang to conserve the old  system. On the contrary,
the international community should precondition guarantees to the
North Korean state by the latter’s “drift toward the norm” (or
‘conventionalization’).

Some novel
features in the North Korean economy show that changes are budding.
They are emerging in the form of a paradigm that has been tested
many times in transition economies. It would be appropriate to make
references to China here, as well as to Vietnam and
Russia.

North Korea’s
centralized command-and-control system of the distribution of
commodities and finances came to a virtual standstill in the 1990s.
The abrupt ending of aid from Socialist countries and isolation
ignited an economic crisis and caused a massive famine, which
forced the North Koreans to bartering. The process became
irreversible and the North Korean economy has become diversified.
Market economy outlets – retail trade, shuttle traders, joint
ventures and free economic zones – coexist with a practically
dysfunctional state sector. A shadow (criminalized) economy also
exists.

Ownership
relations are also showing signs of change. One should not exclude
in a longer  perspective the emergence of semi-state-owned –
and eventually privatized by the political elite – conglomerates
like the South Korean chaebols. But these processes are gradual and
hidden from view, as their failure may not only cause a change in
the regime, but also destroy the North Korean statehood as
such.

Change is
creeping into ideological priorities at the same time. Communist
phraseology is step by step giving way to the nationalistic one,
and growing cooperation with South Korea plays a noticeable role in
this process. The Koreans in the North and the South may possibly
consolidate around the idea of winning a worthy place in the world
for the nation. This perfectly fits the North Korean Juche
(Self-Reliance) ideas, which incidentally were invented in Korea
long before the import of any Communist theories.

The North Korean
regime has a chance to survive if it implements a cleverly designed
policy and simultaneously improves the living standards of its
citizens. We may see a totally different North Korea in fifteen to
twenty years – an authoritarian (not totalitarian) country with a
market (or quasi-market at the beginning) economy and broad links
to South Korea. There are other such countries and if North Korea’s
confrontation with the West and especially with the U.S. and Japan
ends, there will be no reason anymore for assigning the ‘rogue
status’ to Pyongyang.

Nationalistic
moods in the North strike home to the South Koreans and the
emergence of new generations of leaders may lead to a revaluation
of the problem of Korea’s reunification. Seoul has realized that
the two Korean states must work toward a long-term peaceful
coexistence for a start. The most sagacious South Korean
politicians may harbor egotistic considerations, realizing that
only the maintenance of North Korea’s independence in one or
another form can prevent a spread of its problems to the rest of
the nation and thus avert the outbreak of a sweeping political,
social and economic crisis.

It can also not
be ruled out that a confederation based on a significant regional
autonomy will prove the most viable form of a unified Korean
state  in the future. This formula was de facto agreed on by
the leaders of the North and South at their first summit in 2000.
Their agreements indicated that the processes of national
reconciliation and rapprochement should develop in an evolutionary
way beginning with non-political spheres, and should take account
of the integration experience of nations in other parts of the
world.

The reunification
of the two countries is something for the long term. The two
countries should first level out their development and overhaul
their relationship before practical discussions of this issue can
begin.

SIX-PARTY TALKS
AND THE REGION’S FUTURE

The process of
peace-building in the Korean Peninsula started with a search for
solutions to the North Korean nuclear problem, but the success of
this process looks problematic without the adoption of broader
principles of interaction between the countries involved. The
confrontation paradigm between blocs that guaranteed the status quo
in Korea in the past should be replaced by a new model of security
preservation. This is critical especially in the light of a nascent
standoff between China, on the one hand, and the U.S. and Japan, on
the other, which both sides would like to avoid in principle. All
these factors lay the ground for a broader mandate to the
six-nation process and would be essential for fulfilling the
agreements reached, as well as for coordinating economic aid to
North Korea. The experience the six negotiating countries have
accumulated could lead to a gradual expansion of the scope of the
problems discussed.

The growing
internationalization of economic life, the cross-border nature of
the new challenges and threats, and the current migration problems
in Northeast Asia require an instrument of interstate coordination
that would function irrespective of the Korean problem. The idea of
giving an institutional status (up to creating a Northeast Asia
Security and Cooperation Organization) to the six-party mechanism
became a subject of discussions long ago.

What mandate
could such a multilateral organization have in the Northeast Asian
region? 

  • A search for
    precursor approaches to forming a collective and comprehensive
    security system. For this purpose, the sides should begin designing
    confidence-building measures for the prevention of maritime and air
    incidents, notifications about military exercises and inviting
    observers to monitor them, annual reviews of defense doctrines (The
    White Books), etc. Ensuring security of maritime communication
    lines in Northeast Asia and to the south of it may also be
    relevant;
  • Elaboration of
    countermeasures to unconventional threats and challenges –
    assistance during natural disasters, as well as fighting epidemics,
    environmental problems, cross-border crime, drug trafficking, and
    illegal migration;
  • Discussion of
    multilateral economic projects and coordination of regional
    economic policies, particularly laying out common approaches to
    setting up new free trade areas and reforming existing ones. Russia
    is particularly interested in the latter as an intensification of
    regional integration may leave it on the sidelines
    otherwise;
  • The setting up
    of an infrastructure for inter-civilizational and inter-ethnic
    contacts and rapprochement in the region where there is historical
    ethnic strife. It is important to develop joint projects in
    culture, science and education and to stimulate multilateral
    humanitarian exchanges with due account of experience gained at
    bilateral negotiations.

This multilateral
process is desirable – in one degree or another – for most
countries in Northeast Asia, and especially for China as the “host”
of the diplomatic process. Beijing looks inclined to turn the
six-party talks into one more international organization under its
auspices (considering its experience in the formation of the
Shanghai Cooperation Organization). The Chinese would like to
consolidate their influence in the region and on the global plane,
and “soft adhesion” to U.S. policies in Northeast Asia might be
instrumental in this sense.

The U.S. is
typically pessimistic about such regional associations, but it has
recently shown interest in this particular opportunity. Washington
might regard multilateral formats as an instrument for containing
China and a leverage for strengthening its own position in the
region.

Seoul wants to
turn the Korean Peninsula into the economic ‘hub’ of the region.
South Korea is positioning itself as a balancer and a go-between
power that could have mediatory functions precisely in the format
of the multilateral mechanism.

North Korea is so
far undecided, but its negative attitude toward organizations that
“restrict sovereignty” is well known. Nonetheless, Pyongyang might
become interested in the opportunities offered by an international
structure committed to observing North Korea’s legitimate rights in
the international arena, as well as in access to
resources.

Russia has
traditionally spoken in favor of a multilateral system of security
in Northeast Asia, although the specific advantages of Russia’s
participation in an association of this kind have not been clearly
stated so far. Given the relative weakness of Moscow’s positions in
Northeast Asia, engagement in a multilateral mechanism would
presumably reward Russia with a full-fledged role in regional
decision-making. The multilateral format is also useful for
equitable presence in Russia’s  Far East, which would help it
avoid a slide into the position of a resource vault for Northeast
Asia’s economic growth.

If the processes
described above continue progressing, they will kick off sizable
geopolitical shifts. A decrease in the U.S. role in Korea may bring
about a relocation of the line of China’s “deterrence” eastwards to
Japan. Until fairly recently it was impossible to imagine that
American troops would pull out of the Korean Peninsula, but this is
very possible to imagine today. A deeper integration between the
two Koreas would contain China’s ambitions to “global domination.”
Japan, too, will see its field for maneuvering shrink, as the two
Korean states will then play a much more independent role in
regional and global affairs.

RUSSIA’S
INTERESTS AND POLICIES

How will all this
affect Russian policy and interests in the region? It appears that
the possible benefits outweigh the hypothetical
problems.

  • There are not
    many disagreements between Seoul, Pyongyang and Moscow. A deepening
    of contacts depends first and foremost on Russia’s readiness to
    give them more attention and resources. Good-neighborly relations
    with both Koreas would help Russia use the Korean factor to balance
    off the influence of China and Japan in the region and even
    strengthen its positions in the dialogue with the U.S. All the more
    so that the Koreans would also need a counterbalance as they build
    more independent relations with the centers of global power. Russia
    is quite suitable for this. In this light the progress of relations
    with both Koreas not only has a value per se, but also has a
    broader political significance;
  • Russia
    successfully avoided being drawn into in the inter-Korean
    confrontation on either side in the 1990s and now it can get some
    of the political and economic dividends. Innovative trilateral
    projects in railway transportation and in the energy sector seem to
    be particularly promising. Russia may become a “Eurasian bridge,”
    which will speed up the development of its Far Eastern regions and
    facilitate its deeper integration in the Asian economic
    space;  
  • Moscow should
    make its interest in North Korea’s denuclearization more
    pronounced, show its readiness to assist this process, and take
    part in providing economic aid to Pyongyang in the framework of
    multilateral agreements. This is necessary for a deeper
    understanding with other parties to the peace process (and China
    and the U.S. in particular), as well as to convince them that
    Russia does not have any hidden agendas and its increasing presence
    in Korea will not damage the interests of other players. It is
    inadmissible to let Russia’s role in regional processes slide,
    especially as it is often criticized for its inactivity. The
    maintenance of that role needs political will backed up by
    resources. This in turn will require the elimination of
    inter-departmental miscommunication and the coordination of efforts
    at the political level;
  • Participants in
    multilateral processes can promote their interests through a search
    for compromise rather than through face-to-face collisions (the way
    it has happened in the past). This means that an
    institutionalization of the Northeast Asian security and
    cooperation mechanism does not run counter to Russia’s interests at
    least. It might play an important role in a changeover from
    contentions based on mutual deterrence to a system of
    cooperation/competition grounded in the balance of interests, i.e.
    in a ‘concert of powers.’

It is time Russia
contemplates a more inventive and vigorous diplomacy toward the
situation in Korea. There are no obstacles to Russian leadership in
designing the concept of Northeast Asian security and cooperation;
all the more so that, as shown by past experience, other parties to
the six-nation process do not object to ceding this role to
Moscow.

Washington and
Beijing would obviously like to avoid confrontation around a
problem that does not translate into practical policies yet, and
hence they have taken a wait-and-see stance. Japan is fixed on
narrower problems and it has not formulated the basic ideological
parameters of its positioning in the region so far. South Korea, in
spite of all its ambitions, will scarcely have enough vigor to
claim the role of a regional leader for integration, although its
resources can be drawn in for this purpose.

Russia has a
chance of getting an attractive niche in Northeast Asian affairs
now – peacefully, without irritating its partners and avoiding
considerable costs. The Russian position in the region may in some
measure resemble (although with a much smaller military element)
the one that Russia had in post-Versailles Europe, when the absence
of conflicts with other major players allowed it to play a
balancing role.