Economic Reform and Military Downsizing; a Key to Solving the North Korean Nuclear Crisis

By O'Hanlon, Michael; Mochizuki, Mike | Brookings Review, Fall 2003 | Go to article overview

Economic Reform and Military Downsizing; a Key to Solving the North Korean Nuclear Crisis


O'Hanlon, Michael, Mochizuki, Mike, Brookings Review


U .S. policy toward North Korea is in need of a major overhaul. Six party negotiations in Beijing in late August did not break down, but neither did they achieve any substantive progress. Meanwhile, North Korea continues to develop a nuclear arsenal right before our eyes. We propose an ambitious plan that would get to the heart of the matter--North Korea's broken economy and other aspects of its failed society--by proposing a grand bargain to Pyongyang. North Korea would be offered a new relationship with the outside world and substantial aid if it would denuclearize, reduce military forces, and move in a direction similar to that of Vietnam and China in recent decades. If" the plan failed, Washington would have a huge consolation prize--having seriously attempted diplomacy, it would then be in a much stronger position to argue to Seoul, Tokyo and Beijing that tough measures were needed against North Korea.

Despite some impressive successes, notably the 1994 Agreed Framework capping North Korea's nuclear activities, the Clinton policy of engagement does not offer a promising route. That approach was effective for a time but was somewhat too narrow and tactical, focusing largely on the crisis du jour. The approach appears ultimately to have encouraged in North Korea's repressive leaders a worsening habit of trying to extort resources from the international community in exchange for cutting back its dangerous weapons programs.

President Bush is impatient with this sort of attempted blackmail. But his apparent policy preference--insisting that North Korea immediately stop its nuclear activities and severely limiting talk of possible incentives to Pyongyang until it does--may fail. To date, it clearly has been failing, as the North Korean situation has changed From a serious security problem to a major crisis on his watch. North Korean leaders tend to become more intransigent when their backs are against the wall, and they are clearly willing to see their own people starve before capitulating to coercion. Pushing North Korea to the brink may also increase the odds that it will sell plutonium to the highest bidder to rescue its crumbling economy and preserve its power.

North Korea is now well into its second decade of poor economic performance, and its leaders do not seem to know what to do. They have tried modest reforms--price liberalization, special economic zones, and limited business transactions with South Koreans--with little success. They have not yet been prepared to take the risks associated with China-style economic reforms, and their instincts still push them toward high military spending. The nation's huge military force--1 million troops out of a population of 22 million--is the largest in the world in per capita terms and 10 times the global average. North Korea devotes a far greater share of gross domestic product to its armed forces than any other country, and its forces arrayed near the demilitarized zone with South Korea are the densest concentration of firepower in the world by far.

We propose a plan that would address the nuclear weapons crisis that has so dominated headlines in recent months--and would also go much further to recast North Korea's overly militarized economy (see box on page 16). Its centerpiece would be a combination of deep conventional arms cuts, economic reform, and external economic assistance aimed at reform. President Bush himself, shortly after taking office, suggested the need For conventional arms cuts in North Korea in exchange for continued aid and diplomatic relations. Though the administration did not follow up on the president's suggestion, the idea is worth pursuing seriously. Aside from the security value of reducing North Korea's huge military presence on the Korean peninsula, a fleshed-out plan along those lines could reduce the enormous economic burden that pushes North Korea to provoke nuclear crises to extort resources from the international community. …

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