RPI believes that a significant insight has been provided by the Seoul-based think tank Chey Institute for Advanced Studies, working in collaboration with Center for Strategic & International Studies (CSIS) in Washington DC: economic incentives are essential to persuade DPRK to engage in dialogue with the US about denuclearisation.1
However, while it is essential in our view to provide such incentives, it is also vital that such incentives are placed within a transformational framework. Only then will it lead to long-term peace on the Peninsula, by moving away from the zero-sum game within which all discussion about the peace and security of the Korean peninsula is currently trapped.
The history of offering economic incentives to DPRK has not been encouraging. The Agreed Framework put forward by President Clinton in the 1990s did not reach completion, with both DPRK and the US blaming the other for acting in bad faith. The Sunshine Policy led to joint working at the industrial complex in Kaesong for a number of years although it continued to remain a political football up to the time of its final closure in 2016; similarly, the Mt KumganWonsan International Tourist Zone closed in 2008, and The Leap Day Accord of 2012, when the US offered oil and considerable humanitarian grain imports in return for denuclearisation.
Despite the specific reasons to for the closure of each of these schemes, in our view all failed for the same underlying reasons. They did not address the key economic issue – long-term goal of DPRK to achieve long-term modernisation of their economy; nor did they address the key relational issue between DPRK and ROK –in terms of demonstrating mutual respect. Further, none of these schemes were able to build long-term relationships of trust and cooperation across the Peninsula.
From a relationships perspective, there was no basis for long-term and incremental cooperation, either between DPRK and ROK in the case of the Sunshine Policy, nor between DPRK and the US in the case of the ‘Agreed Framework’ and the Leap Day Accord.
From the DPRK point of view, all humanitarian or other aid may feel patronising; within Juche ideology, economic growth and modernisation must be achieved without relying on humanitarian aid from neighbours or other nations. Any economic arrangement, especially with ROK, must be based on cooperation, involving mutual recognition of competence, skills and abilities.
From the US and the international community’s point of view, any economic benefit given to DPRK potentially provides it with hard currency. So, while DPRK may agree on the one hand to some element of denuclearisation in return for economic benefit, on the other hand the hard currency enables it, if it so chooses, to continue to build its nuclear arsenal and delivery capability, even under the strictest of surveillance regimes. It was the fear that this was happening in the early 2000’s which resulted in President Bush dismantling the Agreed Framework.
Therefore, economic incentives must satisfy three criteria if they are to meet the aspirations and concerns of the six parties who have most to gain or lose from granting such incentives (DPRK, ROK, US, China, Russia and Japan):
- Economic incentives must demonstrate mutual respect, and clearly demonstrate mutual advantage, so that they cannot be seen as patronising by either side.
- The incentives must be in a framework which offers DPRK the real chance to achieve modernisation, without generating hard currency for DPRK which could be used and advance its nuclear program.
- To build the necessary trust on both sides of a relationship which has been difficult for many years, the incentives also require a process of incremental steps, which are in parallel with an incremental process of confidence-building at the level of national security, to ensure the safety of the whole Peninsula within its wider international context.
RPI would like to request the parties to the former Six Party Talks, and especially the leadership of both DPRK and ROK, to consider carefully our proposal for a Bilateral Free Trade Agreement between DPRK and ROK, starting in Phase 1 with the agricultural sector. Bilateral trade agreements are always based on mutual economic advantage. This would provide economic incentive of economic transformation to DPRK, based on the relational principle of mutual respect, thus building long-term trust between DPRK and ROK, as well as meeting the security concerns of the US and the international community. Thus it satisfies the three criteria set out above.
Note: the proposal has been explored in some detail on this website, in the resources section, which can be found here.
1 https://www.koreatimes.co.kr/www/nation/2021/05/103_309014.html