The U.S. and the Two Koreas: A New Triangle 9781685851774

Table of contents :
Contents
Preface
A Note on Korean Names
1 The Washington-Seoul- Pyongyang Triangle and the Future of the Korean Peninsula
2 The Challenges Ahead
3 U.S. Extended Deterrence in East Asia
4 Predator States and War: The North Korean Case
5 South Korea's Nuclear Option: The Interplay of Domestic and International Politics
6 U.S.-North Korea Economic Relations: Indications from North Korea's Past Trade Performance
7 U.S.-South Korea Economic Relations
8 U.S. Public Opinion of the Two Koreas
9 Japan's Response to Changing U.S.-Korea Relations
10 China's Response to Changing Developments on the Korean Peninsula
11 Conclusion: Implications of Pyongyang's Political-Economic Change
Selected Bibliography
The Contributors
Index
About the Book

Citation preview

T H E U . S . AND THE T w o KOREAS A

N E W

T R I A N G L E

T H E U . S . AND THE T w o KOREAS A

N E W

T R I A N G L E

edited by

Tong Whan Park

LYN N E RIENNER PUBLISHERS

B O U L D E R L O N D O N

Published in the United States of America in 1998 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 1998 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloging-in-Publication Data The U.S. and the two Koreas : a new triangle / edited by Tong Whan Park, p. cm. Includes bibliographical references and index. ISBN 1-55587-807-5 (cloth : alk. paper) 1. United States—Relations—Korea (South) 2. United States— Relations—Korea (North) 3. Korea (South)—Relations—United States. 4. Korea (North)—Relations—United States. I. Park, Tong Whan. E183.8.K6U2 1998 303.48'2730519—dc21 98-11346 CIP British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

©

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984. 5 4 3 2 1

Contents

Preface A Note on Korean Names

vii xi

The Washington-Seoul-Pyongyang Triangle and the Future of the Korean Peninsula Tong Whan Park

1

The Challenges Ahead Robert A. Scalapino

15

U.S. Extended Deterrence in East Asia Patrick M. Morgan

43

Predator States and War: The North Korean Case Michael J. Mazarr

75

South Korea's Nuclear Option: The Interplay of Domestic and International Politics Tong Whan Park

97

U.S.-North Korea Economic Relations: Indications from North Korea's Past Trade Performance Nicholas Eberstadt

119

U.S.-South Korea Economic Relations Marcus Noland

147

U.S. Public Opinion of the Two Koreas Philip J. Powlick

187

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vi 9 10

11

Contents

Japan's Response to Changing U.S.-Korea Relations Tsuneo Akaha

229

China's Response to Changing Developments on the Korean Peninsula George T. Yu

257

Conclusion: Implications of Pyongyang's PoliticalEconomic Change Tong Whan Park

277

Selected Bibliography The Contributors Index About the Book

297 305 309 319

Preface

The U.S. relationship with the Korean peninsula is both multidimensional and complex—multidimensional, because it spans virtually the entire spectrum of domestic and international issue areas (ranging from politics, military security, and economics to culture, science, and technology); and complex, because Washington's policies on these issues vary and interact in a complicated manner, sometimes reinforcing but at other times conflicting with one another. Multidimensionality and complexity have characterized the pattern of U.S.-Korea relations as they have evolved through many phases of continuity and change, and they will continue to do so in the future. While the diplomatic relationship between the two nations dates back more than a century, the U.S. presence in Korea began in earnest with the end of World War II. From the 1945 division of the peninsula and the ensuing U.S. military rule of the southern half, through the Korean War and the rebuilding of the war-torn south, and to Seoul's emergence as an industrial power and its entry into the Organization for Economic Cooperation and Development (OECD), the United States has been a peacekeeper on the Korean peninsula and a strong supporter of South Korea. With the end of the Cold War, pressures began to mount for the United States to reevaluate its relationship with the two Koreas. Hence, the Korean peninsula has once again become a focal point of U.S. foreign policy. The end of the bipolar era has presented the United States with a new reality in Korea: while maintaining a defense commitment to Seoul, Washington can no longer treat Pyongyang solely as a target of deterrence. As the regime and society in North Korea search for a place in the post-Cold War international system, the United States is being asked to help it survive the transition. The difficulty is to do so without estranging South vii

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Korea. Put simply, what should be Washington's policy toward Seoul and Pyongyang as the trilateral relationship undergoes structural transition? The question is doubly challenging in that the structural shift is not isolated to the trilateral relationship alone. Instead, it influences and is influenced by interaction with the other three actors in the region—China, Japan, and Russia. In particular, Beijing and Tokyo have huge stakes in what happens to the trilateral relationship among Washington, Seoul, and Pyongyang, although China's interest is more political, whereas Japan's is more economic. Though it must be interested in Korean affairs, Russia does not appear to be in a position to have a critical impact. Delineating the dynamics of the relationship among the United States and the two Koreas, especially in the regional context of Northeast Asia, is a truly demanding task, requiring systematic research. As a first step toward such an endeavor, the Forum on Korean Affairs at Northwestern convened an international conference in March 1997 in Evanston under the theme of "Washington-Pyongyang Rapprochement and Security of the Korean Peninsula." Contained in this volume are revised and updated versions of the papers presented at the conference. The basic premise underlying the book is that a new triangle is emerging among Washington, Seoul, and Pyongyang in which political, military, and economic variables interact in a hitherto unknown way. For now, the triangle is not quite fully drawn, since Cold War-like confrontation is still a major determinant of inter-Korean relations. Yet, with the United States at the apex, a figure is definitely taking shape in which at least the two sides connecting Washington with Seoul and Pyongyang are clearly discernible, with the base of the triangle, linking the two Koreas, at a formative stage. This configuration is a reflection of the current situation, which requires that the United States play the role of a "balancer" or "arbiter" between the two Koreas, even though, in theory, Seoul and Pyongyang need to iron out their differences between themselves. Just as the triangle is at a state of infancy, our studies too are exploratory in nature. It is hoped that the arguments and analyses contained in this book will encourage both cross-Pacific and inter-Korean discussion on the future of the Korean peninsula and the role of the United States therein. *

*

*

The Forum on Korean Affairs at Northwestern was established in June 1996 as part of the university's plan to build a program of Korean studies. The Forum's primary function is to promote an understanding of Korean affairs in the United States and specifically the Midwest. As in any enterprise, the beginning was the most difficult part. The Forum owes its birth to many people on both sides of the Pacific. President Henry S. Bienen of Northwestern University gave blessing and support to

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the idea of the Forum, while vice-president of University Development Ronald Vanden Dorpel was a source of constant encouragement. The Korea Press Center and GE-Korea provided financial and logistic support for the conference. My heartfelt thanks go to Kim Kwang-ok, executive director of the former, and Kim Myung-hun, managing director of the latter. Many of my colleagues and former students spared no effort at various stages of planning the conference. Though I cannot name them all here, I owe deep gratitude to Lee Dong-hwi, Institute of Foreign Affairs and National Security; Kim Kyu-ryoon, Korea Institute for National Unification; Mah In-sub, Sungkyoonkwan University; and especially Choi Eunbong of Kangwon National University, who graciously volunteered to serve as the Forum's liaison in Seoul. At Northwestern University, Michelle Szumsky and Mary Krosky in the Department of Political Science deserve special thanks, along with Ihnhwi Park, Sunil Harjani, and my daughter, Joyce, for their professionalism in running the conference. I am also indebted to designated discussants whose thoughtful comments on individual chapters helped elevate the quality of discourse contained in this volume. They are John J. Mearsheimer, University of Chicago; Raju G. C. Thomas, Marquette University; Benjamin I. Page and Jacek Prokop of Northwestern University; Choi Eunbong, Kangwon National University; and Hong Yung Lee, University of California at Berkeley. A final acknowledgment is due to the staff at Lynne Rienner Publishers, including editor Dan Eades, who have provided their expertise to make this book come to life, and who are responsible for not only the preparation of the index but also the book's overall handsome appearance. —Tong Whan Park

A Note on Korean Names

In traditional Korean names, the surname is written first, as in Kim Daejung. This order is used in the text of the book. In endnotes and bibliography, however, authors' names in the titles of publications are transcribed as in the original works. Most Korean first names consist of two Chinese characters, hyphenated; some names, however, traditionally are not hyphenated (for example, Kim II Sung), and we have followed that convention here.

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1 The Washington-SeoulPyongyang Triangle and the Future of the Korean Peninsula T O N G W H A N PARK

With only a couple of years left in the twentieth century, international relations are rapidly and forcefully shifting. Standing out among these political and economic changes are events on the Korean peninsula. Given the precarious balance between the two Koreas and the changing relationship among the four surrounding powers, it is extremely difficult to foretell the future of the Korean situation. What direction will the United States take in its foreign security policies toward the two Koreas—the Republic of Korea (ROK) in the south and the Democratic People's Republic of Korea (DPRK) in the north? With the end of the Cold War and in the midst of stiffening competition among the states, what strategies will Japan, China, and Russia adopt to boost their stature in Northeast Asia? Moreover, how will North Korea respond to the critical challenges it faces from within and without to its viability as a nation? Changes at the global systemic level pale compared with what has been happening in Northeast Asia during the last several years. Not only is the magnitude of change enormous, but its nature is complex as well. During the Cold War period, the region was maintained in a precarious, yet stable, structure of peace; the two primary pillars of the United States and the former Soviet Union upheld a system of deterrence. Even the first major test of the bipolar structure, the Korean War, ended in a draw. Japan and China, the two secondary pillars, found room to grow and to maneuver in the political and military stability of the bipolar world. Despite Pyongyang's constant bickering, the Korean peninsula also remained in a state of peace, which allowed the two Koreas to go about their business of nation building. Thus all six regional players became accustomed to a system of peace through confrontation. As for the Korean peninsula itself, there had existed two triangles that balanced each other—the northern triangle connecting Moscow and 1

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Beijing with Pyongyang, and the southern triangle linking Washington and Tokyo with Seoul. The structure could be likened to an hourglass in which the top and bottom halves were joined over the Korean peninsula. The metaphor ends here, however, because virtually no passageway existed through which grains of sand could flow. Nonetheless, this awkward configuration of two triangles worked in preventing the outbreak of another war. With the end of the Cold War, there is no longer a bipolar system that guarantees peace and stability in Northeast Asia. One of the primary poles is a pole no longer; it is doubtful whether Russia will ever regain its Cold War era international stature. Japan and China are cautiously but definitely trying to shed the image of a secondary pole. After all, they had been primary poles throughout the history of Northeast Asia; in a sense, the fifty years of Washington-Moscow hegemony were only an aberration, no more than a blip in the long tradition. Hence, the leaders of Tokyo and Beijing may have already begun dreaming about a regional system in which they are the primary pillars, with Washington—assisted by Moscow—playing the role of a balancer. These four major powers are all jockeying for a position of strength from which to influence the next phase of development in the region's uncertain environment. Complicating the calculus of power in post-Cold War Northeast Asia is that the two Koreas are still locked in a structure reminiscent of bipolar confrontation. To be sure, the two have made some gestures of rapprochement, as shown in the Joint Declaration regarding denuclearization and the signing of the basic agreement for reconciliation that went into effect in February 1992. But these "historic events" have not produced any substantive results. The two Koreas continue to behave as if the model of a northern and southern triangle still holds, although in reality it does not. What, then, is the configuration of power surrounding the Korean peninsula? Has there been a replacement for the two triangles? Though it is difficult to pinpoint the shape of the new international system that will frame the affairs of the peninsula, one can say, as we have seen, that all four surrounding powers are attempting to increase their spheres of influence. Among these competing powers, the United States has placed itself in the driver's seat as part of its emerging grand strategy in the changing world. The Clinton administration has made it clear that the United States intends to exercise leadership in the global society of the post-Cold War era. First of all, it has indicated its ambition to make Eastern Europe, and even Russia, a part of an integrated Europe. Accomplishment of this task would mean a true end to the bipolar structure that defined the world order for almost half a century. Whereas the top priority in U.S. foreign policy is Europe, it is critical to note that Northeast Asia remains no less important to U.S. national interests. The United States will continue to foster its ties with the region by

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strengthening alliances with Korea and Japan, as well as engaging China and Russia. With regard to North Korea, it has sent a consistent message in favor of maintaining peace and stability on the Korean peninsula. Washington will not tolerate Pyongyang's adventurism, and will reward its "good" behavior with economic and political benefits. The bottom line is that the United States will continue to protect the interests of South Korea, but at the same time will not forgo a process of rapprochement with the North. Returning to the structure of international relations on the Korean peninsula, it can be said that the configuration of a northern and a southern triangle, each balancing the other out, is giving way to the figure of one triangle connecting Washington, Seoul, and Pyongyang. During the Cold War era, this single triangle was incomplete and unbalanced, given that the northern and southern triangles were pitted against each other. Although there existed three bilateral relations—U.S.-South Korea, U.S.-North Korea, and South Korea-North Korea—no organic links held these three bilateral relations together. What links existed were occasional and ad hoc in nature. Now that the triangle is more complete, each bilateral relationship needs to be conducted with the third member in mind. For example, the United States and South Korea will have to manage their bilateral relationship while paying full attention to North Korea's attitude. And the other two pairs must do likewise. At present, the triangular relationship is in the middle of transition from an incomplete to a more complete shape; the trend is a gradual shift from the three separate bilateral ties to a more interconnected triangle.

Problems in the Emerging Triangle Among Washington, Seoul, and Pyongyang The primary reason that relations among the United States and the two Koreas have not improved is that each country sees the triangle from a different viewpoint. Neither South nor North Korea has treated it as a full triangle with three sides. Instead, each Korea views it as a "2.5 party" relationship. Seoul's decisionmakers find it difficult to give equal weights of "1" to Pyongyang and Washington, no matter how the international situation has changed. The long history of alliance forged in blood and the huge volume of bilateral exchanges between Seoul and Washington lead many to perceive these two as primary players and Pyongyang as a secondary player—with a value of "0.5" instead of "1." The fact is, however, that faced with creating something from nothing in the post-Cold War era, Pyongyang chose Washington as the guarantor of its security and the supplier of economic assistance. To maximize the utility of this strategy, the North has deliberately ignored the South, especially in nuclear-related negotiations—

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hence, we have at best a "2.5 party" configuration. An ideal situation might be envisioned as a different type of 2.5 relationship, in which the two Koreas would be assigned a value of "1" each and the United states "0.5." After all, the main actors on the Korean peninsula are the Koreas, whereas the United States is an outsider. Nevertheless, the incomplete triangle remains the reality, mostly as a result of mutual denigration by Seoul and Pyongyang. Unlike the two Koreas, which seek a "2.5 party" relationship, the United States appears to envision the emergence of a more wholesome triangle. This attitude may likely lead to a "two-Korea policy." Though the United States has officially denied such a stance, the disavowal does not sound quite convincing. The manner in which the United States has conducted negotiations over issues such as Pyongyang's nuclear weapons development, opening of liaison offices, proliferation of missiles, transfer of the remains of U.S. soldiers, and food aid has led many observers to believe that the United States is indeed pursuing a "3.0 party" configuration. For now, the configuration resembles an incomplete isosceles triangle in which the United States is located at the apex; the two sides connecting the United States with each Korea form unbroken lines, and the base stretching between the two Koreas constitutes at most a dotted line. Put simply, the picture may be one of a big power playing one small power off against the other. Against this background, where each party has a different perspective about the make-up of the triangular relationship, is there any way for them to begin a productive dialogue to end the Cold War once and for all on the Korean peninsula? It may be possible if the three countries acknowledge the fact that they all interpret the triangular relationship differently, but nevertheless see the necessity of face-to-face discussion on the issues and structure of the relationship.

T h e Four-Party Talks as an Interim Solution The Four-Party Talks—proposed by Seoul and Washington in April 1996—may be one way of bringing the three countries to a negotiating table to solve the pending issues. The rationale behind the quadripartite conference including China is that it may have a higher probability of success than a tripartite meeting. Nonetheless, the United States and the two Koreas should realize that this format may not be the best option for any of them. Even numerically, setting aside the complexity of coalition formation, a quadripartite conference gives each country less negotiating power than "2.5" or "3.0" parties would provide. The option is definitely less than optimal for all three, considering that Pyongyang has been trying to contain Seoul with the Washington card, Seoul has been insisting on

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talks between the primary parties on the Korean peninsula, and Washington has been pursuing a de facto two-Korea policy. Although the FourParty Talks are hardly ideal, however, one might justify them as a temporary strategic retreat. A four-party meeting appears to have a relatively high probability of success precisely because it may be the most desirable second-best alternative given the present circumstances. If the best possible route is not attainable and the parties are not in a position to allow further deterioration of the triangular relationship, they cannot afford to let the second-best choice slip away. With some skillful maneuvering in the four-party negotiations, each participant may be able to promote its interest while not losing face. The Four-Party Talks contain many advantages. First, they signal the beginning of a face-to-face dialogue among the parties to the Korean War aimed at replacing the truce with a lasting structure for peace. The 1953 armistice agreement has been effective in the sense that renewal of war has been avoided, but codification of the state of peaceful coexistence between the two Koreas has been long overdue. Second, the talks can be used as an arena in which the United States and South Korea may use China as a lever against North Korea. In light of the long-standing friendship between Beijing and Pyongyang, China may be called upon to put a brake on North Korea's unreasonable demands. China can also serve as a guarantor of whatever agreements may emerge from the Four-Party Talks. Third, North Korea may see the talks as a vehicle with which to come closer to the United States. Pyongyang made customary demands for attending the Four-Party Talks, which the United States and South Korea had to fulfill either through direct or indirect payments. 1 Once the Four-Party Talks began in Geneva on December 9, 1997, however, it became evident that Pyongyang's intention was to change them to a "2.5" or "3.0 party" negotiation while maintaining the formality of a four-power conference. Such degeneration may alienate China, but there are ways to accommodate Beijing's discontent, especially since China has much to gain from the United States in exchange for its constructive role in the Four-Party Talks.

U.S. Leadership in the Stability of the Korean Peninsula The Four-Party Talks will endow the United States with a heavier role than it enjoys currently in the management of Northeast Asian affairs. The opening of the talks might have been in the hands of North Koreans, but the conclusion will rely mostly on Washington's leadership. The talks' success can be measured by two criteria: the bringing of a permanent peace to the Korean peninsula and the promotion of economic viability in North Korea. The United States has become the guarantor of survival for

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the North and is the indispensable ally of the South; furthermore, it is seen by Beijing as the balancer of power in Northeast Asia and the blocker of Japan's further militarization. In light of the fluidity of relationship among the regional players, it may be easy to forget who has been setting the agenda in regional politics. But it is clear that the United States will be charged with the task of solving the issues, and many believe that it is able, willing, and ready for the challenge. As to the question of agenda setting, nobody can deny that the North Korean regime has been taking initiative with its nuclear weapons development. Had there existed no die-hard leadership in Pyongyang, no ill-concealed (whether intentionally or not) nuclear ambition, would the United States have invested so much political and economic energy in the Korean peninsula? Or would the Pyongyang regime still be in power almost a decade after the fall of the Berlin Wall? It is not an overstatement to say that the future of the Korean peninsula will depend on Washington's ability to handle the dynamics of the triangular relationship with Pyongyang and Seoul while managing its relations with China. Japan and Russia will surely come into the equation, but for now their involvement will be somewhat removed, to allow room for the United States and China to sort things out. The main goal, therefore, of this edited volume is to attempt a systematic investigation into the emerging triangle among the United States and the two Koreas. No matter how one looks at it, these three countries form an odd trio. One is the sole remaining superpower in the post-Cold War era, and another is a middle power that has just been admitted to the Organization for Economic Cooperation and Development (OECD), better known as the club of advanced industrialized societies. The third is struggling to survive through its own version of socialism, under the double jeopardy of food shortage and heavy military spending. North Korea is also known as a "cultist" state or a rogue regime, primarily because of its record of state-sponsored terrorism and its patriarchic rule maintained by strict regimentation and indoctrination of the people. How can these three countries coexist peacefully under one roof? What, if any, is the common interest that can bind them together? What are the issues whose resolution will serve as a learning process? What are the implications for the other three regional powers, should these three fail to reach an accommodation or, conversely, should they form a cooperative bloc? These are indeed tough questions that call for much scholarly research. Although the chapters in this volume address different aspects of these questions, they put special emphasis on matters concerning military security and economic prosperity: it is the conjunction of these two issues that will determine the future of the Korean peninsula. For the United States, it must be clear that the Korean peninsula is but one, albeit important, node in its global strategic management. Given the

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political-economic weight of the Asia Pacific basin, Washington will undoubtedly do its utmost to make and keep peace on the Korean peninsula. In terms of foreign policy priorities, however, it does not require a genius to figure out that the two Koreas should rank below Japan, China, and even Russia. Should the emerging triangular arrangement disintegrate for whatever reason, the loss to the United States will be painful but not insurmountable. For Seoul and Pyongyang, however, the stability of the Korean peninsula clearly has a vital impact on their survival from both the military and economic standpoints. Pyongyang's foremost concern is the viability of the nation, or more precisely that of the regime, which requires the capability to support a military machine and to provide its people with at least a minimum level of welfare. North Korea's dilemma is that it needs to pursue both "guns and butter" with an economy that is bankrupt even according to socialist standards. In contrast, in South Korea, where the economy is twenty times as large as that of North Korea, the main worry is the possibility of another war, which would bring unbearable destruction to its prosperity. The underlying theme of this book is the potential for a convergence of interest among not only the United States and the two Koreas but all six regional actors as well. It may not be apparent on the surface, but a careful analysis of the decision calculus for these nations should reveal the area(s) of common interest. At a minimum, prevention of a catastrophic development on the peninsula might be the point of departure for a common effort by all regional powers. Following upon or concurrently with the establishment of a peace regime, an international system of economic cooperation may be sought that would serve the interests of the constituent members. The opening chapter by Robert A. Scalapino provides historical grounding for an analysis of the triangular relationship among the United States and the two Koreas. He begins with a claim that geopolitics has played a major role in determining the alternatives for U.S. foreign policy in Korea and has also been a factor in shaping U.S. policy regionally and globally. Historically, an affinity between Korea and the United States has been plausible since the United States was perceived as a distant power helpful in many fields, including education. Yet the United States could never deliver the support desired, especially in the security realm. In the post-1945 era, shifting U.S. policies influenced trends in South Korea's domestic politics, with fears of U.S. withdrawal abetting South Korean authoritarianism. By the 1980s, North Korea was seeking to establish contacts with the United States, and this effort intensified as the North's traditional allies became less dependable. Meanwhile, the contrast between the South's dynamism and the North's stagnation became increasingly striking. While the visit by Jimmy Carter to Pyongyang in the summer of 1994 seemed to offer hope, Kim II Sung's death led to an impasse.

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Through strenuous negotiations, the October 1994 accord was reached to put a cap on Pyongyang's nuclear weapons development, and a new path was charted. Yet U.S. insistence that a North-South dialogue accompany normalization and the North's reluctance to take such a course have made progress difficult. Like most Korea watchers, Scalapino admits that the future of North Korea cannot be predicted at this time. Various scenarios must be kept in mind. He argues, however, that it is in the interests of both the United States and the ROK to seek an evolutionary path for the DPRK despite the uncertainties. Scalapino's historical synopsis is followed by Patrick M. Morgan's discussion of U.S. extended deterrence in East Asia, with special emphasis on the Korean peninsula. He offers some theoretical arguments about extended deterrence and identifies elements that shaped U.S. extended deterrence in East Asia during the Cold War. Then he suggests which of these elements still apply and which additional elements can be expected to apply to extended deterrence in the foreseeable future. He also assesses the regional security situation and its implications for U.S. policymaking and closes with the suggestion that public support in the United States for extended deterrence is weak and, furthermore, vulnerable to the appearance of a costly and burdensome challenge. Analysis of the security problems surrounding the Korean peninsula continues with Michael J. Mazarr's conceptual application of "predator states" to the North Korean case. Predator states are seen as nations that, for ideological, economic, cultural, and/or historical reasons, become prone or committed to aggression. A predator state is generally an authoritarian or dictatorial military power with an unstable society, expansionist or imperious ideology, and powerful armed forces. According to Mazarr, North Korea is a prototypical case of a predator state and poses a serious challenge to U.S. foreign policy. His prescription in dealing with countries like North Korea is to exploit their "split personality"—dangerous and hostile to the outside world, but vulnerable to threats from within. Mazarr's analysis is especially illuminating for it pits Pyongyang's nuclear weapons development as the tool of a predator state against Washington's posture of containment through engagement. In contrast to the enormous diplomatic success North Korea has enjoyed with its nuclear card, the South is thought to have mismanaged its nuclear option. Tong Whan Park addresses this question. Observing that Seoul's attempt to modernize its nuclear technology and acquire fissionable materials has been blocked by external pressures rather than domestic antinuclear sentiment, Park argues that South Korea's exercise of a nuclear option will be determined by two factors. One is how intensely Seoul desires the option, and the other is how committed Washington will be in preventing Seoul from obtaining it. There is, of course, an important intervening variable: how the drama of North Korea's nuclear weapons

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mystery will be played out within the next five to ten years. Park begins by discussing the role of nuclear weapons in the changing world order and then examines how regional politics may influence a nation's decision to develop nuclear weapons. The international- and regional-level analyses then set the stage for a two-part investigation into the situation on the Korean peninsula. The first part provides a sketch of North Korea's nuclear weapons development as a strategy of survival, and the second affords a close look at South Korea's nuclear debate, with a focus on the questions of whether Seoul ought to emulate the Japanese model of nuclear development. Park also offers some thoughts about the issue of nuclearization in a unified Korea. The chapters by Nicholas Eberstadt and Marcus Noland deal with economic issues as they affect the future of the Korean peninsula, with special emphasis on the role of the United States. Eberstadt's primary objective is to examine future prospects for new trade and aid ties between the United States and North Korea. Given that until now there has been virtually no recognizable economic relationship between the two, his starting point is an examination of North Korean trade performance over the period of 1960 to 1995. Drawing upon "mirror statistics"—statistics on exports and imports released by trading partners—it is possible to reconstruct North Korean trade patterns in some detail. The pattern that emerges over a long period is a consistently poor performance by North Korea's foreign trade sector. In fact, its export record during this period was even poorer than that of troubled sub-Saharan Africa. Generating export earnings appears to have been given low priority relative to acquisition of concessional resource transfers from foreign powers and allies abroad. The collapse of the Soviet bloc, and the end of aid and subsidized trade with Eastern bloc countries, proved to be a severe blow to both North Korea's domestic economy and its foreign trade sector—a blow from which neither has yet recovered. To make matters worse, the end of Soviet aid has coincided with a steep decline in aid from pro-Pyongyang Koreans in Japan and with a sharp falling off in North Korean earnings from weapons sales abroad. China, North Korea's last remaining ally of any significance, has emerged in the post-Cold War era as a "thrifty patron" for Pyongyang—a power unwilling to grant North Korea more than the absolute minimum aid required to forestall internal instability. Despite the severe pressures on its foreign trade sector today, Eberstadt observes, North Korea's external economic policies have undergone surprisingly little adjustment. Export data underscore this. In theory, the loss of Soviet and Eastern European markets could have freed up North Korean industrial capacity for greater exports to hard currency markets. In practice, there appears to have been very little redirection of this sort; in some key areas, in fact, the absolute value of North Korean exports to the non-Soviet bloc regions has actually declined during the 1990s. North Korean

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officials sometimes assert that they perceive the "hostile" U.S. economic policy toward North Korea as a key impediment to Pyongyang's international economic performance. Eberstadt claims that this assumption is almost certainly wrong. North Korea's trade sector has performed poorly in its interactions with China, Japan, and OECD Europe—places that have no restrictions analogous to those of the United States on their commerce with North Korea. Under Pyongyang's current policies, Eberstadt concludes, a liberalization of U.S. commercial sanctions against North Korea would be expected to have some commercial consequences, but probably not major ones. On the other hand, normalization of U.S.-North Korea relations could offer Pyongyang access to new sources of concessional transfer: Asian Development Bank (ADB), International Development Association (IDA), etc. It is possible that Pyongyang's policymakers are more interested in the latter than the former. In contrast, U.S. and South Korean trade patterns are rich in volume and largely complementary, according to Marcus Noland, who investigates the topic in depth. South Korea exports to the United States an increasingly diverse basket of manufactures, while the United States supplies South Korea with primary products, high-tech goods, and, increasingly, human capital-intensive services. In such a situation, trade expansion causes economic dislocation in the import-competing sectors of each country. This is usually accompanied by demands for protection and by international political friction. Such a pattern is likely to continue in U.S.South Korea trade for the foreseeable future. South Korean imports will exert a depressing effect on incomes, output, and employment in a wide range of U.S. manufacturing industries. Conversely, imports from the United States will remain a threat to South Korean agriculture and to emerging industries such as chemicals and aircraft. Automobiles and financial services, as well as industries targeted by Korean industrial promotion policies, appear to be likely candidates for trade friction. Structural talks appear to be a permanent fixture in U.S.-South Korea negotiations. The rapid growth of the South Korean economy, however, and its increasing integration with the rapidly growing developing economies of Asia mean that South Korea's dependence on the U.S. market is steadily declining in relative terms. Although South Korea remains significantly dependent on the U.S. market and will certainly seek to maintain a good relationship with the United States for the foreseeable future, the degree of asymmetry of dependence is declining, and the traditional U.S. approach of unilateral demands backed up by the implicit threat of market closure will probably be increasingly ineffective in the future. In the past, conflict has been played out in excessively bilateral and politicized fora. In the future, with democratization and growth, South Korea should begin to play a more prominent role in international organizations, and what have been largely bilateral issues may be submerged in more multilateral fora. The successful conclusion of the Uruguay Round and the establishment of the

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World Trade Organization (WTO) should eliminate a number of issues from the bilateral trade agenda and aid in the resolution of others. The Asia Pacific Economic Cooperation (APEC) forum could have a similar impact. Analysis of the pattern of trade friction suggests that it is highly correlated with the magnitude of bilateral trade imbalances. As long as each country (especially the United States) pursues sensible macroeconomic policies, the politically sensitive imbalances should remain modest. There is some growing evidence that intra-industry trade, which could ease the adjustment and defuse conflict, is growing, but this should not be overstated. U.S. problems with China may well deflect attention from South Korea. These factors, Noland argues, provide the basis for cautious optimism about future U.S.-South Korea economic relations. Whereas the first seven chapters in this volume suggest the possibility of tension reduction or even cooperation among the United States and the two Koreas in both security and economic matters, it is critical to turn our attention to U.S. public opinion as an important component in Washington's foreign policymaking vis-à-vis North and South Korea. After all, the triangle consists of multiple fissures. Culturally, for example, the Confucian tradition in the two Koreas is light years apart from the Christianitybased multiethnic U.S. society. Militarily, however, Seoul and Washington are allies who once fought a bloody war against Pyongyang; and politically, South Korea and the United States practice liberal democracy, while North Korea is a cultist state ruled in a feudalistic fashion. Economically, the three represent the core, semiperiphery, and periphery, respectively. U.S. foreign policy makers are known to pay attention to public opinion, particularly in a complicated situation like this triangle. The chapter by Philip J. Powlick explores attitudes of the U.S. public toward North and South Korea from the 1970s to the present. He finds that Americans consider Korea a relatively unimportant country, to which they pay little attention and about which they have little specific knowledge—although this low level of attention has sometimes changed in response to salient events. The U.S. public also tends to think of South and North Korea fairly negatively, both in terms of economic and political development, and in its more general affective assessments of Koreans themselves. Although some of the public's image of Korea is similar to that for other Asian nations, a significant proportion of U.S. citizens hold a high degree of antipathy toward Korea. On policy issues, they do not tend to think of South Korea as a close ally, nor does a majority favor defending the South if it is attacked. A certain degree of ambiguity obtains on the issue of maintaining U.S. troops there. In economic relations, Americans feel slightly threatened by Korean trade practices, but not nearly to the extent that they fear Japan. There is a great deal of concern among the public for issues of nonproliferation, and thus the 1994 crisis with North Korea elicited a surprising degree of support for the use of force to deny it nuclear weapons.

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Powlick explores the potential implications of these opinions for policy issues likely to emerge in the next several years. For example, he speculates that the U.S. public is likely to react strongly and negatively if the South moves toward trade protection. Although support exists for withdrawing U.S. troops from the South, he notes that there seems to be little intensity behind such opinion; thus, there should be little manifest pressure for withdrawal. Public support for normalizing relations with the North is likely, assuming North Korea does not engage in provocative behavior. However, if the North is seen as trying to build nuclear weapons, U.S. leaders would be able to mobilize strong domestic backing for forceful action. Such support is less likely for the use of U.S. troops to defend the South. The public is unlikely to show much interest in the reunification of Korea, providing U.S. leaders with a great deal of leeway in negotiations with the two parties. Support for moderate levels of aid after reunification is probable, Powlick observes, but aid on a major scale is likely to encounter significant public and congressional opposition. Chapters 9 and 10 in this volume are attempts to capture responses of Japan and China to the changing relationship between the United States and the two Koreas. It may be somewhat early to examine such responses since all three surrounding powers, especially Russia, 2 have taken a "wait and see" attitude toward the emerging triangle connecting Washington, Seoul, and Pyongyang. The chapter on Japan's responses by Tsuneo Akaha makes a basic argument that Japan's contemporary policy toward the peninsula is informed by three sets of factors: (1) Tokyo's overall foreign policy priorities, particularly maintenance of its close alliance with Washington, (2) its concerns regarding the peace and stability of Northeast Asia, especially stability on the Korean peninsula, and (3) domestic politics in Japan, which is complicated by the nation's past aggression against Korea. During the Cold War era, Japan's alliance with the United States generally defined its position on the divided Korea, and this served the ruling interests in Japan. Since 1953, however, Japan's interests have been served by the absence of another violent conflict on the peninsula, and for this Japan owes much to the U.S. strategic presence in the region in general and to the U.S.-South Korea defense pact in particular. Given the continuing tensions on the peninsula, Japan's interest in stability there remains strong. In this sense, the end of the global Cold War and consequent improvement of the general political climate in Northeast Asia have not fundamentally altered Japan's policy toward the peninsula. Whether Korea remains divided or reunited, Akaha maintains that Japan will continue to desire and support a stable peninsula because to do so is in its fundamental interest. Japan's own options have been and continue to be quite limited. Only if stability on the peninsula persists and North-South Korea relations improve substantially will Japan be able to

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pursue its longer-term interests, including economic interest. Japan is aware that the stability of the peninsula requires the continued engagement of the United States; therefore, Tokyo would be deeply concerned by a waning U.S. interest and commitment in East Asia in general and on the Korean peninsula in particular. George T. Yu's chapter on China's response begins with an analysis of China's rising status in the Asia Pacific rim. He argues that on the basis of geopolitical considerations, economic performance, and future developmental promise, China has now achieved international recognition as an emerging regional power with global aspirations. China's dramatic domestic development could well be maintained, accelerating its rise as a regional and global power. The impact of China's domestic development upon international relations will remain critical, especially in the Asia Pacific region. For the immediate future, China's politics toward and relations with the Korean peninsula will be influenced by domestic economic goals, which in turn relate to China's international status. Given these initial conditions, how does China view the changing relationship between the Koreas and the United States? On one hand, China's concern with the ebb and flow of these essentially bilateral relationships is minimal, as long as its foreign policy objectives are met. South Korea's economic and political maturation, for example, may significantly alter that country's relations with the United States, but does not threaten the essentially mutually beneficial synergy being built with China. On the other hand, China's role in the new Asia Pacific regionalism is certain to increase, though just how much remains uncertain. The Korean peninsula is but the first of many instances in which China will seek to further recognize its central role in the region. With the foregoing introduction, let us now move to the individual chapters. 3

Notes 1. One clear example is the food aid to Pyongyang provided directly by Seoul and Washington as well as that supplied through the United Nations World Food Program (WFP). As a precondition for North Korea's attendance at the Four-Party Talks, the United States has reportedly agreed to increase its 1998 grain shipment through the WFP to one million tons from the previous 300,000 tons. Washington Post, November 23, 1997. 2. This is the primary reason a chapter on Russia's response to the change in the U.S. relationship with the two Koreas is not included in this volume. Though several leading experts on Russia were consulted, none felt comfortable about the topic at the time of the conference in 1997. 3. Chapter lengths vary as they deal with different substantive topics. Essays exploring conceptual problems and analyses of the issues with little available data are shorter than the rest.

2 The Challenges Ahead ROBERT A . SCALAPINO

Geography is only one variable influencing a nation's domestic and foreign policies, and possibly, given the ongoing scientific-technological revolution, a variable declining in importance. Yet the history of both the Korean peninsula and the United States indicates that geography has played an important role in shaping policies and attitudes toward the "outer world."

Korea and Geopolitics United or divided, Korea is a small country surrounded by giants. Under these circumstances, it has had three basic options in selecting the foundations for its foreign policy: isolation, alignment with one or more major powers, or balance of power politics. To be sure, these alternatives need not be applied in pure form; mixtures are possible and, indeed, have frequently been operative. Nevertheless, singly or in combination, these strategies have marked Korea's choices. It is thus not accidental that the term "hermit kingdom" was applied to traditional Korea. 1 By keeping external presence or influence at a minimum, various Korean leaders sought to preserve their society's integrity. One witnesses this effort in modern North Korea, one of the most isolated societies in the contemporary world. In this age of rising interdependence, however, isolation has become increasingly difficult to sustain. Economic autarky condemns a nation to rapid obsolescence, as leaders of the Democratic People's Republic of Korea (DPRK) have learned to their dismay. Moreover, the communications-information revolution causes even the most rigorously guarded borders to be penetrated, with "spiritual pollution" an ever greater worry for some. 15

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A more realistic alternative is alignment with one or more major powers, utilizing their military and political strength to augment domestic defenses. Both Koreas have resorted to this strategy, or been forced by circumstances to adopt it. North Korea was born as a ward of the Soviet Union, and in succeeding years retained security ties with Moscow while depending increasingly upon China as ideological links to Russia loosened. 2 Pyongyang hoped that Beijing's sense of its national interests as well as its ideological position would support a firm commitment to the DPRK. The Republic of Korea (ROK) also came to independence as a client state, in this case, of the United States. 3 Its dependence upon the United States was tragically revealed anew by the Korean War. That war was the product in major part of communist miscalculation for which the United States must accept responsibility. The debate in the United States about continental involvement in Asia, and the earlier withdrawal of U.S. troops from South Korea, gave Kim II Sung reason to believe that the United States would not intervene or would seek to return too late, and he so persuaded a reluctant Stalin. 4 Out of the Korean War came the U.S.-ROK security treaty, and this is an alliance that has survived to the present, with its credibility still intact. All remaining bilateral alliances to which the United States is a party, however, including this one, have undergone substantial alterations in recent years. Patron-client relations are increasingly passé. Demands for partnership, including involvement in critical decisionmaking, are evidenced by those once clients; and on the part of the United States, the insistence is upon greater cost and risk sharing. The ROK, moreover, is not reluctant to forge closer relations with both Russia and China, experimenting with a multidirectional foreign policy even as the primary reliance, especially in security matters, continues to be with the United States. The position of North Korea in these respects is more precarious. 5 Although China remains a nominal ally, and Russia seeks to improve relations with Pyongyang after a period of steep decline, the DPRK has no truly reliable allies today. The Russians are prepared to sell military supplies to the North—but for money or goods, both of which are in very short supply in the North. The era of friendship prices and open-ended loans is over. And China, privately critical of North Korean policies even as it speaks publicly of eternal friendship, has also applied economic restrictions to the North as its economic intercourse with the South rapidly expands, although it remains a crucial source of energy and food. Earlier, the DPRK was put in an uncomfortable position when the Sino-Soviet cleavage occurred. Some effort was made to balance relations with the communist states after 1959, combining this approach with a higher degree of isolation. Generally, however, Pyongyang remained

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closer politically to Beijing, although the Cultural Revolution produced serious strains in that relation. Economic ties, however, were principally with the Soviet Union and East Europe. Thus, the socialist collapse in Europe was a devastating blow to the North, still acutely felt. The ROK refrained from attempting balance of power policies since it could depend on the United States. However, beginning in the 1990s, it sought a wider range of external contacts, as noted, and in addition began to assert positions that were not always in conformity with U.S. policies. Indeed, on a wide range of issues—from economic relations to the handling of the North—elements of friction emerged, with economic tensions beginning in the 1980s. As in all bilateral relations, cooperation and contention have coexisted, with the need for continuous dialogue to resolve— or contain—differences.

T h e Geopolitics of U.S. Foreign Policy Geography also proved to be a factor in shaping the U.S. foreign policy debate of earlier times. As a continental society protected from outsiders by two vast oceans, and with no neighboring threat, the United States in its adolescence found aloofness from "old world quarrels" a highly compatible policy. The Monroe Doctrine was employed in an effort to keep Europe out of the "New World," and the United States luxuriated in a feeling of moral superiority. The latter feeling was gradually combined with a sense of obligation to be a missionary—at first in religious terms, later in the political realm. Thus was born the second of the two foundations of U.S. foreign policy, namely, moral commitment. National interest and moral commitment sometimes reinforced each other—sometimes coexisted in contradiction in a given situation. In any case, they provided the context for the major U.S. foreign policy debates of modern times. In the early twentieth century, the United States wavered between involvement beyond the Western Hemisphere and aloofness. The 1920s gave rise both to the Wilsonian call to save the world for democracy and to the appeal to concentrate on domestic problems, letting the world take care of itself. The latter appeal emerged as more potent, but World War II proved to be a decisive turning point. In the aftermath of that war, a powerful United States decided to lead in the effort to build a stable global order. Here, national interest and moral commitment appeared to coincide, especially after the onset of the Cold War. Although the United States was the only global power in the Cold War era (1949-1988), and managed to bankrupt the Soviet Union in the contest for political and military primacy, the costs were extremely high. To build a viable balance of power in Europe and Asia, the United States expended

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billions of dollars and fought two major wars, the Korean War and the Vietnam War. Not surprisingly, as the Russian threat vanished, as key European and Asian nations have moved into the ranks of developed nations, and as regional interdependence is encased in organizations like the European Union, the Association of Southeast Asian Nations (ASEAN), and Asia Pacific Economic Cooperation (APEC), the classic debate has reemerged in the United States. Should more not be expected of Washington's allies? Should not a higher priority be given to resolving the domestic problems of the world's foremost postmodern society? Where is the threat, and how can it best be met? Thus, once again, national interests and moral commitments are subject to fierce controversy. Isolationism enjoys a certain revival, although in its extreme forms it is far from summoning majority support from the American people. Nevertheless, international commitments must be defended more rigorously by leaders, and in many instances, such as U.S.China relations, policy debates revolve around the perceived conflict between national interests and moral commitment. In the process, moreover, the issue of containment versus engagement—to put this complex issue in oversimplistic terms—has come to the fore.

T h e Background of U.S.-Korea Relations It is in this context that one must examine the relations of the United States and the two Koreas, past, present and future. 6 The first U.S.-Korea contacts, coming in the second half of the nineteenth century, were largely the product of shipwrecked sailors drifting to Korean shores and generally treated in a humanitarian manner. A different fate awaited the U.S. merchant ship, the General Sherman, which forced its way up the Taedong River against Korean protests in 1866. When it ran aground, the ship was burned and all aboard were killed after an armed clash. By the 1870s, however, with King Kojong shifting from an isolationist policy, contacts between the United States and Korea became more cordial, and a treaty of amity and commerce between the two countries was signed on May 22, 1882. 7 In the years that followed, Korea's leaders came to expect more of the United States than Washington was prepared to deliver. Generally, U.S. diplomats, missionaries, and educators made a favorable impression, and some became closely attached to key Korean leaders. Names like Allen, Appenzeller, Hall, Hulbert, McCune, Scranton, and Underwood are an inextricable part of modern Korean history. 8 Understandably, having committed their lives to this land, they exhibited strongly pro-Korean sentiments, frequently seeking the support of their government to counter rising encroachments upon Korean sovereignty. The U.S. government, however, had no intention of becoming deeply involved in this region. In 1905, the

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Taft-Katsura Agreement signaled Washington's acquiescence in Japanese control of Korea, in exchange for Japanese agreement to accept the U.S. position in the Philippines. Understandably, Korean nationalists and their American supporters were deeply offended. 9 In the years that followed, down to World War II, the United States allowed Korean activists to sponsor nationalist organizations in the United States, and enabled certain Korean students to undertake higher education in U.S. institutions. The government, however, remained strictly aloof from any political support of the Korean independence movement. That was left to Americans long identified with the Korean cause. Thus, at the end of World War II, the United States was largely unprepared to undertake the responsibilities of governance and reconstruction of that portion of Korea allotted to it. The United States is sometimes criticized along with the USSR for the division of Korea. The alternative, however, is rarely examined. Korea could have been unified in August 1945, but it would have been unified under Soviet aegis. U.S. forces were no nearer than Okinawa when Soviet troops were moving across Manchukuo into the Korean peninsula. They could have readily occupied the entire country, and indeed, Korean leftists quickly set up a government in the South that would have initially welcomed them. The willingness of Moscow to share with the United States in what was then presumed to be the temporary division of Korea was due solely to the fact that a prior agreement had been reached; it should be noted too that this was the pre-Cold War period. The early Occupation years were not easy ones for either the United States or the USSR. Few Koreans other than Moscow's communist wards were prepared to accept the Allied agreement for a five-year trusteeship reached in December 1945. Indeed, Syngman Rhee bolstered his political stock considerably by registering determined opposition. Rhee, incidentally, had never been the favored candidate of Americans for leadership, but having created a democratic structure, the United States had to live with him. The withdrawal of U.S. forces from the ROK came during a period of defeat for U.S. causes in Asia, most notably, the communist victory in China. Increasingly, a new strategy regarding East Asia gained support both in military and civilian circles. The new thesis was that the United States should concentrate upon bolstering an island cordon sanitaire around the Asian continent, with its primary focal points being Japan and the Philippines. Using air and sea power, the United States could contain the Communist forces without the enormous expenditure of manpower required for continental ventures—so it was argued. As noted earlier, the Korean Communists thus had reason to believe that the "liberation" of the South could be achieved quickly and without external interference. 10 Naturally, this war and its immediate aftermath

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greatly strengthened the bonds between the United States and the ROK, and rendered contact with the DPRK minimal and hostile. Yet events were to create complexities for Washington in both relations. Despite substantial U.S. economic support in the form of grants-in-aid as well as military assistance, the Rhee regime faltered, both economically and politically. The end of the Rhee era and the advent of the Chang Myon government caused Washington little pain since U.S. interests and morality seemed fused in terms of these events. 11 The new government was the most democratic in the history of the young republic. To some Koreans, however, especially certain military men, democracy at this point produced weakness and confusion. The 1961 military coup caused angst and division in U.S. official circles. Marshall Green, chargé d'affaires in Seoul, sought to support the Chang government, but a combination of confusion among its members and Washington's uncertainty rendered that effort hopeless. Soon, the Kennedy administration had accepted the new Park Chung-hee government, with pressure applied to move it toward "civilianization" as quickly as possible, holding economic aid hostage to such a development. After initial resistance, Park accepted the shift, and it took place by the end of 1963 following October elections, which Park narrowly won. In the ensuing years, U.S.-ROK relations underwent various fluctuations, with domestic factors in both societies at least as influential in shaping policies as those in the international arena. By the end of the 1960s, the United States was deeply troubled by the Vietnam War, a war that seemed to have no end and one that was causing deep divisions among the American people. President Nixon's proclamation of the Guam Doctrine shortly after taking office, a pronouncement that the United States would expect allies to be primarily responsible for manpower in the event of a conflict, with the United States furnishing air and sea power, was an indication of current U.S. strategic trends, reminiscent of the period after the Nationalist defeat in China. In 1970, one U.S. division was removed from Korea, further alerting ROK authorities to a possible shift in the U.S. commitment. The following year, secret negotiations between the United States and China opened. Events during this period reflected a retrenchment in the United States' overseas involvement and unquestionably influenced decisions made by Park Chung-hee with respect to domestic politics. 12 The so-called Yusin system came into effect and authoritarianism became more pronounced. Further, the ROK began a process of expanding its relations with other countries, a process that had commenced in 1965 with the normalization of ROK-Japan relations. Dependence upon the United States was somewhat lessened, and assertiveness grew, symbol of a Korean nationalism now strengthened by an encouraging economic picture. U.S. involvement in Vietnam may also have affected the North's policies toward the United States. In the late 1960s, the hostile rhetoric directed

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at Washington reached a new decibel level, and several incidents occurred that threatened open conflict. In January 1968, the U.S. Pueblo, an intelligence ship, was seized, and extensive negotiations took place before the crew was released. The following year, a U.S. reconnaissance plane was shot down. During this same period, North Korean infiltration into the South was stepped up, and just before the Pueblo incident, a commando team sought to penetrate onto the grounds of the Blue House and assassinate President Park. 1 3 Events of the early 1970s, however, caused North as well as South Korea to reconsider past policies. With U.S.-People's Republic of China overtures toward each other under way and a softening of U.S.-Soviet relations, the two Koreas, after high-level secret negotiations that had begun in the fall of 1971, issued a joint communiqué on July 4, 1972, pledging to work for unification based on three principles: (1) no reliance upon or interference from any external power; (2) the application of peaceful means, not force; and (3) a "great national unity" transcending differences in ideas, ideologies, and systems. Efforts based on the July 4 communiqué effectively ended in mid-1973, with no results achieved. North Korea then turned to the United States, opening a strategy that was to be pursued more vigorously at a later point. U.S.-ROK relations reached a low point at the beginning of the Carter administration. Carter had campaigned on the pledge of removing U.S. troops from Korea and, at an early point in his tenure, set forth a withdrawal plan phased over four to five years. Furthermore, he had expressed strong concern about the status of human rights under the Park regime. Conversely, certain barriers to contacts with North Korea were removed and cultural interaction increased. Although very far from adopting a twoKorea policy, the United States demonstrated some flexibility. Thus, the North now hoped that bilateral negotiations with the United States could commence. Carter, however, had to retreat from his initial plans. The troop withdrawal plan was abandoned under heavy pressure from diverse sources. Moreover, the Carter administration insisted that the South had to be a party to any dialogue, and the North initially rejected trilateral talks. However, Pyongyang continued to seek contact with Americans, prominent and otherwise. Its earliest attention was directed toward the American Left, but it soon discovered that individuals in this category had no influence at home. A second category, more promising, consisted of U.S. politicians, notably congressmen. Stephen Solarz visited Pyongyang in 1980, but this channel dried up quickly; there was no political premium for American politicians in a trip to the DPRK. In the 1980s, Northern authorities focused attention on AmericanKoreans, including young intellectuals. A number made trips, singly or in groups. 1 4 Once again, however, the returns were meager; no American counterpart to the pro-North Chochongryon (General Federation of Koreans

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in Japan) appeared. At the end of the 1980s, invitations were tendered to moderates or conservatives, several of whom had had previous governmental experience. 15 This channel remained open, but DPRK reluctance to attend most American-sponsored conferences curtailed its value. As the 1990s opened, nonofficial U.S.-DPRK contacts existed, but they were scarcely extensive, and they involved radically diverse types: religious figures, student activists, those with relatives in the North, and select scholars and researchers. Meanwhile, U.S.-ROK relations improved during the latter part of the Carter era, and generally continued that course in the Reagan years, albeit with rising tensions on the economic front. A firm security commitment to the South was coupled with pledges to insist upon ROK inclusion in any dialogue with the DPRK. In January 1984, the North appeared to accept the idea of trilateral talks, but a close reading of the DPRK statements of this period indicates that its intent was to negotiate with the United States on a withdrawal of forces, and then negotiate with the ROK on a declaration of nonaggression.

T h e Advent of a N e w Era As the 1980s drew to a close, events—both domestic and international— were dramatically changing South and North Korea in their relationship to each other and to the external environment. 16 The ROK was in the process of making a major political shift from the status of an authoritarianpluralist state to a democracy, signalled by the election of 1987 and numerous other developments. The authoritarian-pluralist system, inaugurated at the beginning of the Park era, involved controlled, constricted politics but also saw both the emergence of a civil society apart from the state with some degree of autonomy and a mixed economy, with the market playing a critical role. Under that system, South Korea enjoyed extraordinary economic development, pursuing policies that closely resembled those of Japan, with active governmental support for key industries, protectionist measures employed over a wide range of fields, select largescale enterprises encouraged, and export-orientation featured. 17 Whatever its hazards, later to be revealed, this strategy promoted extraordinarily rapid growth for more than three decades. Furthermore, taking advantage of changes on the international stage, Park initiated nordpolitik, reaching out to China and Russia. By the early 1990s South Korea had achieved recognition from the two major states that had long been affiliated with the North. Thus, the ROK was able to increase its regional and global reach, combining economic dynamism with strategic gains of major significance. This was accomplished, moreover, without damaging the U.S.-ROK security alliance.

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In contrast, the North was slipping badly on virtually every front. Pursuing its autarkic economic policies, it was increasingly separated from the scientific-technological revolution taking place elsewhere. Its economic structure, moreover, was skewed toward heavy industry and the needs of the huge military sector—consumer goods were in short supply. By the end of the 1980s, the growth rate had slowed to a minimal level. Shortly thereafter, a series of crises engulfed the DPRK. The collapse of the USSR and the political upheavals in East Europe had a serious effect upon the North Korean economy since despite the emphasis upon juche (self-reliance), more than one-half of all North Korea trade had been with the USSR, and a sizeable additional amount with East Europe. 1 8 Friendship prices, long-term loans, and extensive barter trade in DPRK-USSR economic relations were not easily transferable. Thus, the flood damage of 1995 and 1996, while very serious, was only the beginning of a steep economic decline. Some estimates place the contraction in the North Korean economy at around 30 percent between 1990 and 1996. Severe energy shortages caused key industrial plants to operate at less than 50 percent capacity, and trade fell to only 12 percent of gross domestic product (GDP). 19 The DPRK authorities had not been oblivious to their economic problems. As early as 1984, a joint venture law had been promulgated, evidence of Chinese influence. Furthermore, Kim II Sung frequently referred to the need for primary attention to be given to agriculture, light industry, and trade so as to raise the people's standard of living. In 1991, the first steps were taken to create Special Economic Zones in the Northeast, in Rajin-Sonbong and Chongjin. Yet the economic slippage continued. On the political front, in contrast to the ROK democratic transformation, the DPRK retained a system that combined strong elements of traditionalism with Stalinist supports. The dictatorship of the Communist Party, periodic mass mobilization, and lifelong indoctrination were combined with an all-pervasive cult of personality centered around the Great Leader and an intensive appeal to nationalism that progressively pushed Marx and Lenin to the sidelines. 2 0 The system, moreover, was insulated from the external world by a degree of isolation virtually unmatched by any other nation. Thus, by the mid-1990s, the two Koreas exemplified an extraordinary contrast, whether the measurement be economic, political, or strategic. The ROK, while facing certain new economic problems, was moving into the ranks of developed nations. 2 1 The DPRK was desperately seeking to extricate itself from an economic morass without jeopardizing its political system. The South was institutionalizing democracy, and in the process providing political foundations for the future that seemed increasingly firm despite the problems of money politics. The North was seeking to make a transition based upon a new—and different—Great Leader while keeping the basic system intact, but with the huge dilemma of how to modernize in economic terms while remaining traditional in a political sense.

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The death of Kim II Sung on July 8, 1994, represented a tremendous blow since North Korean politics had been centered on his proclaimed omniscience. 22 Thus, the succession, although long expected, took on a religious aura. Kim II Sung was not dead. He had been reborn in his son. And that son, respecting tradition, refrained from taking key political or party offices for more than three years, holding only the post of commander in chief of the armed forces, thereby heading the branch of government where real power lay. Never had the dominance of personalized politics over institutions been so clearly revealed as after mid-1994. There were no elections, no meetings of the Supreme People's Assembly, or Korean Workers Party congresses. All political decisions were made behind a formidable black curtain, with the qualities and authority of the new leader the subject of endless speculation. Only in the fall of 1997 did Kim Jong-il assume the post of secretary-general of the Korean Workers Party, signaling the possible rebuilding of institutional structures rather than sole dependence on informal relations between Kim and a small group of trusted advisers. Yet as 1997 closed, the office of president remained unfilled. No one, however, doubted where ultimate power lay. Meanwhile, in the South, unexpected developments in the economic realm were transpiring. In the latter part of 1997, a financial banking crisis rapidly unfolded, its timing influenced by the economic upheaval in Southeast Asia and coinciding with the darkening clouds in Japan. Wholesale bankruptcies were imminent as mountains of short-term debt were revealed. Outside aid became imperative. On the political front, dramatic developments also unfolded. Economic conditions eroded support for President Kim Young-sam and the government. The ruling New Korea Party had a name change to Grand National Party as its candidate, Lee Hoi-chang, sought to separate himself from the past. In the December 18 presidential elections, however, the veteran Kim Dae-jung, longtime fighter for greater civil rights, emerged as victor. For the first time in history, the South Korean political system had allowed a change of power through an election. In strategic terms, the South retained its security alliance with the United States while progressively modernizing its military forces and continuing to seek closer relations with all of the neighboring major states. The North maintained a huge military force, but it was also constrained and made deficient in certain respects by economic circumstances. Furthermore, as noted, the DPRK had no ally upon whom it could count with assurance, even China.

T h e Current Scene and U.S. Policies In relationship to this picture, where do U.S. policies stand, and what are the prospects for the future? The year 1991 inaugurated a new turn of

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events that is still unfolding, its culmination still uncertain. In that year, both Russia and China moved toward a two-Korea policy, with obstacles to the South's joining the United Nations removed, thus forcing the long resistant North to accept dual membership. Now, the DPRK had even greater reason to seek normalization of relations with the United States and Japan. The Bush administration, however, stipulated that progress on U.S.DPRK relations had to be tied to advances in inter-Korean talks and, in addition, that the DPRK had to sign the nuclear safeguard agreement with the International Atomic Energy Agency (IAEA). By mid-1991, it was clear that the North was prepared to move in these directions. High-level talks with the South took place, and Pyongyang agreed to sign the nuclear safeguard agreement. In the fall of the year, the United States signaled that all nuclear weapons were being withdrawn from the South. There followed the North-South negotiations that led to the agreements of December. On December 13, the South and North reached a twenty-five-point Agreement on Reconciliation, Non-Aggression, and Exchanges and Cooperation, and on December 31, a Joint Declaration of the Denuclearization of the Korean Peninsula was promulgated. These agreements were activated on February 19, 1992, with a number of joint commissions opening negotiations. As 1992 began, the scene appeared promising. 23 Clouds soon formed on the political landscape, however. Eight months after the North-South talks opened, Pyongyang ended its participation, using as its excuse the Team Spirit military exercises. In reality, the DPRK at this point sensed a heightened opportunity to deal bilaterally with the United States. The nuclear issue was looming high on Washington's agenda, and for the United States, this was a global, not merely an interKorean, issue since it viewed the DPRK as posing a threat to all nonproliferation efforts. Thus, Pyongyang quickly recognized that given Washington's concerns, this could be a highly effective bargaining card, rendering issues such as the further search for those missing in action (MIA) and missile development as subsidiary. In addition, the nuclear issue was one that promised to produce a fissure between Washington and Seoul, a cherished hope of Pyongyang. The ROK viewed the nuclear question as merely one of a series of issues, all of which related first and foremost to inter-Korean relations, and hence an issue that must involve it centrally. Seoul now worried that the United States was veering toward bilateral relations with the DPRK, leaving the ROK on the sidelines despite repeated U.S. assurances that the South's interests and involvement would be safeguarded at all times. A renewed crisis broke out in 1993 when, after quarrels with the United States and the IAEA, the DPRK announced on March 12 that it intended to withdraw from the Nuclear Non-proliferation Treaty (NPT), demanding a series of actions before it would reverse its position: a U.S. pledge not to launch an attack on it; permanent cancellation of the

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Team Spirit military exercises; the opening of U.S. military bases in the South to inspection; and IAEA respect for the independence of member nations. What course of action for the United States? An attack targeted upon the North's military installations was advocated by a few, but its risks and costs to the United States and the ROK, both military and political, were correctly deemed too great. This was not Iraq II. Sanctions under UN auspices were explored. It quickly became apparent that China was opposed to sanctions, and without Chinese support, sanctions were unlikely to be effective. Furthermore, neither Japan nor South Korea relished sanctions. Without a much greater degree of unity and determination, stringent economic punishment of the North would fail, as the questionable results of the Iraq embargo made emphatically clear. There was a further consideration of broader dimensions. Gradually, U.S. administrations—both Republican and Democratic—had moved from policies of containment to those of engagement in dealing with adversaries. In part, this was a product of the end of the Cold War. In larger measure, it was a result of experience. Containment, while useful on occasion as a threat, rarely produced the desired results. If the objective was to induce change on the part of authoritarian states in both domestic and foreign policies, an increasingly complex involvement with their region and the world at large seemed a more promising course. Economic development based on alteration of Stalinist (Maoist) economics produced diversity, and diversity in turn led to modifications in hard authoritarianism as well as to increased decentralization. In addition, rising interdependence inevitably complicated the decisionmaking process in previously autarkic states. In Asia, China and Vietnam served as examples of this process. In the case of North Korea, moreover, a special factor was present. An induced collapse of the state through policies of containment, if successful, would bring huge problems to the South. To absorb some 23 million people—half the South's population—whose living standards were no more than one-eighth those of ROK citizens, possibly much less, would cost many billions of dollars. Equally serious would be the political impact of bringing into South Korea's fragile democracy a people who had only known Stalinist politics and the worship of the Great Leader. Many South Koreans shared these views, but in both the ROK and the United States it was natural that a continuing effort to engage the North would be controversial. For example, the October 1994 Framework Agreement, one consequence of engagement, had been preceded by U.S.-DPRK talks in mid-1993 that resulted in the North's suspension of its NPT withdrawal; however, subsequent talks with IAEA were deadlocked, and it became apparent that the North wanted to keep the United States central with respect to the nuclear issue. Thus, at the end of 1993, the DPRK was seeking from the United States a peace treaty, diplomatic recognition, a genuine

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two-Korea position, and support for light-water reactors (LWR) in exchange for IAEA inspection. The final accord fell far short of these DPRK demands, but on balance it was favorable to the North, especially taking into consideration the North's steadily diminishing bargaining chips. President Jimmy Carter's visit in the spring of 1994 produced one hopeful sign; surprisingly, Kim II Sung agreed to a summit meeting with President Kim Young-sam, thereby offering the promise of a new start in South-North relations. Soon after, however, Kim was dead, suddenly succumbing on July 8. Kim's death put a halt to summitry, and indeed, the North found a new issue with which to berate the ROK government, namely, Seoul's refusal to send condolences to Pyongyang. Negotiations with the United States continued nonetheless, and the October agreement was their result. Under that agreement, the DPRK pledged to freeze the construction of its graphite-moderated reactors, abandon reprocessing, and seal its radiochemical laboratory. Its actions were to be monitored by the IAEA, including the disputed "military site," but at a much later point in the latter case. In exchange, the United States agreed to create and head a consortium that would construct two LWRs while providing heavy oil for energy use during the construction interim, with total cost estimated to be at least $5 billion—up to $3 billion supposedly forthcoming from the ROK, and financial assistance to come from Japan as well. Thus was the Korean Peninsula Energy Development Organization (KEDO) born. A slight effort was made to save face for the North by making an American, Ambassador Stephen Bosworth, KEDO chair, but the United States made it clear throughout the negotiations that the ROK must play a leading role both in financing the program and in its execution. KEDO thus has been supplying the North with heavy oil. In March 1996, Bosworth traveled to the North with his South Korean and Japanese deputies, after declining an invitation the previous September when the North had sought to exclude the deputies. Moreover, the survey teams dispatched by KEDO early in 1996 included one American, one Japanese, and nineteen South Koreans. KEDO has selected the Seoul-based Korea Electric Power Company as the prime contractor to build the two reactors. KEDO had been scheduled to deliver to the North about five hundred thousand tons of heavy oil annually. As 1997 closed, the KEDO program returned to this original schedule after a series of crises. On October 29, 1996, after hearing a report by Hans Blix, director-general of the IAEA, that Korea and Iraq were not giving inspectors sufficient access to their nuclear programs, the UN General Assembly passed a resolution urging both nations to comply with the nuclear safeguards agreement. The vote was 141 to 1, the dissenter being North Korea, with 8 abstentions, including China. Six weeks prior to the Blix report, another incident had threatened to create turmoil. On September 18, a North Korean submarine went aground

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on rocks along the South Korean coast when efforts to land twenty-six infiltrators went amiss. Naturally, the South reacted sharply, demanding that the North apologize for this act and promise not to repeat it. Otherwise, Seoul announced, the KEDO program would be suspended, and all food shipments and other forms of aid from the South would be stopped. 24 The evidence suggests that Northern infiltration for intelligence purposes had probably been regular, but on this occasion, those involved were openly exposed. Both the UN Security Council and the European Union expressed "serious concern" over the incursion. A Security Council statement urged that "the Korean Armistice Agreement should be fully observed and no action should be taken that might increase tension or undermine peace and stability on the Korean peninsula." Clearly, the DPRK had lost considerable ground in the international arena. This event also strengthened the hand of the hard-liners in the South who had long opposed acquiescence of the ROK government to what they regarded as an overly indulgent policy by the United States toward the North. President Kim's threats began to be enforced. Korean workers scheduled to begin work on the new LWR site had their trip to the North postponed, with demands that in addition to a satisfactory resolution of the current impasse, the safety of all workers be guaranteed. 25 The North in turn accused the United States and the ROK of breaking the Framework Agreement and threatened to restart its nuclear program. 26 The submarine incident also revealed a continuing difference between the ROK and U.S. governments despite efforts to coordinate policies. While U.S. officials accepted the need for a DPRK apology and urged Pyongyang to make suitable amends, there was worry that "overly tough" ROK policies would lead to the breakdown of the KEDO process. Thus, U.S. officials urged a "go slow" policy, with an initial effort at negotiations. In December 1996, Lee Hyong-chol, then head of the North American section of the DPRK Foreign Ministry, came to New York, and intensive negotiations for some three weeks ensued. Confronted with firm U.S.ROK positions on the key issues and problems that would clearly grow more serious should the impasse continue, the North finally swallowed hard and made a major concession. The DPRK government expressed "deep regret" for the incursion, and promised to "make efforts to insure that the incident will not recur, and will work with others for durable peace and stability on the Korean peninsula." 27 The ROK accepted this as an apology, and returned the ashes of twenty-four North Korean soldiers at Panmunjom. In addition to signals that the KEDO operation would be resumed, it was hoped that some type of North-South dialogue as well as U.S.-DPRK discussions could get under way, whether under the four-party proposal or otherwise.

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There had been some preliminary indications that, facing very negative prospects, the North was going to soften its position: in October, a reportedly scheduled missile test was called off after protests in the United States. Troubled young American Carl Hunziker, who had swum across the Yalu in protest, was released into the custody of Congressman Bill Richardson in early December without any U.S. concession. The rhetoric directed against the ROK and the United States was also softened somewhat, with a principal complaint against the South at this point being its "closed door" policy. Tough rhetoric against Kim Young-sam and the ROK government was resumed in early 1997, however, possibly as an effort to offset the concessions made to the South. Nonetheless, the KEDO program has gone forward, with groundbreaking ceremonies taking place on August 19, 1997. South Korean engineers and technicians have entered the North for the first time, and South Korean authorities assert that by the year 2000, as many as five thousand South Korean workers will be on site. Further, two ROK diplomats took up posts in the KEDO office in Sinpo on July 28, marking the first such development in the history of the two Koreas. To facilitate communications, moreover, a direct line to Seoul was established; until then, the only other "hot line" had been that between the Red Cross societies of the two nations. Completion of the project is currently scheduled for 2004, with estimates of total cost varying widely, but with $5 billion often cited. Disputes over cost allocation continue, and given the South's economic troubles—and those of Japan as well—these may intensify. However, the ROK and Japan are still expected to shoulder the bulk of expenses. Meanwhile, many uncertainties confront the United States in its policies toward both South and North Korea. On balance, the U.S.-ROK alliance remains strong. In its economic dimensions, this relationship has undergone monumental changes in the past decade. In the late 1980s, South Korea emerged as a major supplier of goods to the U.S. market, and the bilateral trade balance shifted sharply in Korea's favor. Consequently, the United States raised many of the same issues that it was advancing against Japan: the closed nature of ROK markets—industrial, agricultural, and financial; and the inadequate protection of intellectual property rights. Section 301 of the U.S. trade law was applied on occasion, and rancor frequently marked negotiations. By the mid-1990s, South Korea had become a relatively advanced nation, and the Kim Young-sam administration had adopted globalization as its main theme. Responding to external pressures, market opening had been effected to some degree, including financial markets. Overall tariff rates were approximately the same as those of other advanced economies, although other kinds of trade barriers remained. In the fall of 1996, the ROK was invited to join the Organization for Economic Cooperation and

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Development (OECD), a symbol of its new status. By 1996, the ROK was the world's eleventh largest economy, with a GNP of $450 billion and a per capita GNP topping $10,000. In 1995, global trade soared by nearly a third, to $260 billion. By early 1997, however, warning signs regarding the ROK economy were mounting, and soon the serious financial crisis noted earlier ensued. The heart of the problem lay with huge indebtedness on the part of banks and businesses, including the family-run business conglomerates known as chaebol. Short-term debts exceeded the ability of many to meet payments. Suddenly, the defects of a system that had for decades induced rapid growth came into full view: government-guided loans to select firms accompanied by inneffective monitoring of financial activities; continuous expansion in a period of slower growth with multiple inefficient investments; suppressed consumer spending; and inhibitions on domestic competition. Together with Japan, the ROK illustrated a critical fact: no economic strategy, however successful at certain stages, is good for all time. By November 1997, after much agonizing, Seoul decided it was necessary to turn to the International Monetary Fund (IMF) for assistance, with the expectation that certain other countries, notably the United States and Japan—both impacted by Korea's problems—would join in temporary aid. In advancing loans, the IMF sets certain macroeconomic requirements, including reduced government spending, the privatization of certain public corporations, liberalizations of markets, and major financial reforms. The ROK government has faced some difficulties in advancing these policies, with substantial opposition from various economic groups and portions of the bureaucracy. Moreover, the IMF demands evoked a strong nationalist, even xenophobic reaction, and in some quarters the United States was blamed with the IMF labeled its instrument. Nevertheless, the ROK government kept to the new course, and after initial hesitation, the United States and Japan provided essential short-term assistance, supplementing IMF aid. After his election, moreover, Kim Dae-jung pledged to pursue vigorous reforms in line with IMF requests. Notwithstanding sizeable foreign assistance, the immediate future of the ROK economy is almost certain to be troubled, although the strength of many economic fundamentals provides hope that after one or two years of considerable hardship, suitable growth will be resumed. Despite the uncertainties surrounding the financial crisis, the importance of recent U.S.-ROK economic relations must be underlined. 2 8 The ROK has been the fifth largest export market of the United States, and the third largest market for U.S. agricultural products. Two-way trade reached $55 billion in 1995, with the ROK claiming a U.S. surplus of $6.2 billion. Bilateral trade for 1996 has been estimated at approximately $65 billion, again with a U.S. surplus. This picture is likely to change, however, as the

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recent radical devaluation of the won increases ROK international competitiveness. The nature of U.S.-ROK trade, moreover, has been altered greatly in the recent past. The old pattern involved the export of low-cost Korean products to the United States and of high-tech items from the United States. At present, a two-way flow of high-value, technology-intensive products is taking place. Korean investment in the U.S. economy has greatly increased in the past three years, reaching a total of $4.2 billion, nearly one-third of all Korean overseas investment. Similarly, the United States is now a major source of investment in the ROK, with the transfer of technology increasingly in evidence. With a more liberal investment climate, U.S. investment in 1995 doubled, rising from $311 million to $645 million. Increasingly, moreover, ROK firms have been promoting joint ventures in third countries, seeking to take advantage of American technology. Korean royalty payments for U.S.-originated technology totaled $962 million in 1995, more than the $695 million paid to Japan. The U.S.-ROK economic relationship has thus been approaching that of partners. There remain, however, sector-specific issues and, from the U.S. perspective, a need for further liberalization—especially in the financial and agricultural sectors, where domestic protectionist pressures have been strong. For example, the Seoul government raised an issue of chemical residue in U.S. food exports, which the United States saw as a scheme to protect the Korean agricultural industry. Further market openings from beef, wine, and tobacco to autos, insurance, and banking have been issues. If the reforms pledged under the current international assistance program are realized, however, past U.S. grievances may be answered. Nonetheless, given the sharply reduced value of the won, the United States, Japan, and China will all face greater competition and trade deficits. 29 In certain respects, the U.S.-Japan-ROK economic relationship is intertwined. Present financial problems in Japan are compounded by the Korean situation, both with respect to won devaluation and debt nonpayment. If the situation worsens in Japan, the United States will be further affected in turn, on a number of fronts. Thus, in the recent past, the costs as well as the benefits of intensified interdependence have been graphically revealed. Meanwhile, on the political front, the U.S. and ROK democracies have certain features in common, certain features contrasting. Political competition in both societies is open, and media freedom is extensive, as illustrated by the ROK presidential election in 1997. To be sure, the ROK, concerned about the communist effort to woo supporters, preserves a National Security Law that inhibits activities considered subversive. As the suppression of the Yonsei University student demonstrations indicates, this is a government that can be tough on those who appear to abet DPRK united front efforts or who use violence. Although peaceful protests take place without interference.

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Both the United States and the ROK face the problem of money politics. Indeed, in the past year, repeated scandals have shaken the ROK, with two former presidents serving time in jail and various high officials charged with bribery and corruption. The president's son has been among those involved, contributing to the decline in Kim Young-sam's popularity. Although the American scene is not comparable, the high costs of U.S. elections and the exchange of money for access have raised troublesome questions. A conspicuous difference, however, lies in the nature of leadership. In the ROK, institutions are democratic, but personalities are often authoritarian—those in office and in the opposition alike. Few if any U.S. leaders would dare to be so imperious today as those who have dominated the Korean political stage, including those who have championed democracy in principle. Nonetheless, in comparison with the 1970s and 1980s, U.S.-South Korea relations do not confront the United States with the dilemma of national interest versus moral commitment. The two are basically reconciled. Thus, the image of South Korea in the United States is generally favorable, although not in high profile. On the South Korean side, a rise of nationalism has accompanied success and, with it, a demand for greater authority and power in the relationship with the United States. Moreover, globalization in political terms is interpreted as supportive of an omnidirectional foreign policy, one encompassing the widest range of nations. In certain sectors of Korean society, furthermore, especially among younger generations, renewed nationalism has sometimes taken anti-American forms. However, recent polls indicate that favorable sentiment toward Americans remains reasonably high. Strategically, ties between the United States and the ROK are strong, and this is likely to continue for the foreseeable future. The new president, Kim Dae-jung, has reiterated his commitment to close ROK-U.S. strategic ties, including the continuance of U.S. troops in South Korea. Even Korean unification might not cause the Koreans to want a U.S. withdrawal, depending of course on how unification was accomplished. Korea will continue to be a shrimp among whales, with a distant whale of value. The U.S. attitude toward a continuing strategic relationship, however, is less certain. At present, the ROK maintains about 630,000 armed forces, at a cost, in 1994, of $34.3 billion, or 3.5 percent of its GDR In addition, it will contribute $360 million in 1997 in support of the thirty-seven thousand U.S. troops stationed there. 30 This is a small amount of the total U.S. cost, and pressures for larger contributions are likely in the future. Joint military exercises of various types continue, although for the present, the most extensive one, the Team Spirit exercise, has been suspended, with less extensive exercise in its place. Meanwhile, the ROK is regularly upgrading its military equipment with purchases from a variety

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of sources; the principal purchases are still, however, from the United States. In the longer run, irrespective of the course of unification, U.S. ground forces in Korea may be further reduced, with higher dependence upon rapid deployment, bases kept in readiness, and various joint exercises. Trends in military technology point in this direction, as the Gulf War illustrated. Moreover, to take an optimistic view, it is possible that at some point demilitarization on the peninsula by both sides will get under way. For the present, any U.S. military withdrawal would send the wrong signals to all parties concerned. When one turns to the North Korean side of the picture, one must deal with alternative scenarios, given the complexity of the picture. If the DPRK shows a reasonable degree of flexibility and cooperation, the present U.S. course with respect to KEDO will be continued, with the hope that financial support from the various sources will be forthcoming. The basic U.S. commitment is one of engagement as noted earlier, but that commitment will naturally be contingent upon North Korean attitudes and actions. At this point, a further examination of the domestic DPRK scene is necessary, since alternative scenarios affecting U.S. policies are formed through an evaluation of the economic, political, and strategic conditions currently operative. 31 As is well known, the economic picture in North Korea is negative on virtually every front, with the only uncertainty being the degree of severity. 32 The immediate scene is one of extensive food and energy shortages. Various estimates suggest that the grain shortfall in 1996 was upwards of 3 million tons, with domestic production thus reaching barely half of the 6.72 million tons required. 33 The UN World Food Program (UNWFP) has reported that the average diet of the North Korean is just six hundred calories per day. 34 Energy shortages have severely reduced factory operations as well as heat for buildings. In the fall of 1995, the DPRK government asked for international assistance for the first time in its history. The United States, Japan, and South Korea each responded with food aid as did certain international agencies. China, moreover, emerged as a key source of help, giving oil and grain, some at "friendship prices" and some gratis. Yet China's own needs in precisely these areas are significantly increasing. North Korea has virtually no access to the capital market since its unpaid debts, mostly to Russia and East Europe, are extensive. Consequently, as noted earlier, its trade with these countries has dropped precipitously and remains minimal. North Korea's natural markets are first with the South, then with Japan, China, and the United States. Its products for export are marine products, minerals, and items benefiting from low labor costs such as apparel. The DPRK might also gain from participation in one of several Natural Economic Territories (NETs), namely, those involving the Tumen

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River Delta and the East Sea (Sea of Japan); the North has in fact regularly participated in the United Nations Development Programme (UNDP)sponsored Tumen Delta project. Recently, a new generation of North Korean technocrats has shown increasing interest in economic reform. Led by individuals like Kim Jong-u, the quest for foreign investment has grown, with trips to promising places and invitations to diverse groups. On September 15-17, 1996, the DPRK sponsored an International Investment and Business Forum at Rajin-Sonbong, attended by some 407 foreigners from twenty-six countries. 35 Contracts totaling $270 million were signed, with an additional number of letters of understanding for later investment amounting to some $840 million recorded. However, the signed contracts were principally with the Emperor Group in Hong Kong (Chinese) for a hotel and casino, and with a KoreanJapanese who pledged $50 million for a hospital. In the past, it is estimated that over 75 percent of all foreign investment in North Korea has come from Koreans resident in Japan, generally affiliated with Chochongryon. Despite the proclaimed success of the Forum, it remains questionable as to whether the DPRK can attract significant foreign investment at this point. Notwithstanding a new joint venture law, some infrastructural improvements, and ongoing efforts to train administrative personnel at Kim II Sung University, North Korea is a long way from being attractive to the average foreign investor in comparison with other East Asian suitors. Yet the efforts are accelerating. Trade offices are being set up in Hong Kong and Taiwan. DPRK air space is being made available for international carriers. An interest is being shown in programs that would improve agricultural and energy productivity. Additional special economic zones at Nampo and Wonsan have been signaled. A central question, however, is whether far more extensive reforms are necessary in the DPRK economy if the autarky and backwardness now characterizing the scene are to be fundamentally altered. In addition, even assuming a willingness to move in that direction, is there a suitable model? Some economists argue that China and Vietnam do not provide appropriate models, given the different nature of their economies, and their status at the time reforms were commenced. It would appear that the United States can play only a peripheral role with respect to the DPRK economy. Logically, the crucial role should be played by the ROK, and indeed, certain South Korean chaebol and others have shown a keen interest in investing in the North, with political problems being the principal retardant. Inter-Korean trade—which began in the late 1980s—reached $287 million in 1995 and topped $300 million in 1996.36 Japan could also be important, combining the compensation for past misconduct, as noted earlier, with investments from a portion of the Korean community. International agencies could be of additional service, and China could play an even larger economic role. But are the leaders of North

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Korea—military as well as civilian—prepared for the risks of large-scale economic reform? The scanty evidence suggests that there are divisions of opinion on this matter, and the official media still tilt strongly toward politics over economics. Turning to politics, the picture remains obscure. 37 All available evidence indicates that Kim Jong-il is secure as supreme leader, at least for the present. Given his heritage, it would be sacrilegious to challenge him. He appears to be gathering around him military and civilian cadres close to his age, with a premium on relatives and schoolmates, as the older guerrilla generation passes from the scene. He has clearly cultivated the military, promoting many younger officers; moreover, his public affiliations are strongly with them. 38 However, his private consultations are probably much more varied. Speculation about his personality and abilities has been endless. One clear fact emerges. Unlike his father, Kim Jong-il is strongly introverted and appears uncomfortable in large public settings. Lacking charisma, he must ultimately depend upon performance. The test is not necessarily in the immediate offing, but it will come. Are there fissures within the elite? From certain Northern sources have come hints of differences over the extent and timing of economic change, with hard-line positions ascribed to portions of the military. It would be surprising, indeed, given the complex risks and uncertainties involved, if such differences did not exist, and they could easily grow. Decisionmaking, however, seems tightly controlled at the center up to this point. Horizontal competition clearly exists. For example, such organizations as the Institute for Disarmament and Peace (Ministry of Foreign Affairs) and the AsiaPacific Peace Committee (KWP) vie for turf and attention. Yet as of 1998, the elite seems generally united, with survival being the supreme goal. Defections at various levels have occurred, but they have not increased dramatically, and those at higher levels seem connected with personal problems in most cases, with economic considerations being operative for others. In sum, when one surveys the alternative scenarios for the DPRK, that of rapid collapse appears to have a relatively low probability despite the current suffering from economic trauma. It cannot be completely ruled out, however, and plans should be accelerated to take this contingency into account, with the ROK bearing principal responsibility. The large flow of refugees that might result from such a collapse would, however, constitute a regional problem, with China being strongly involved. Thus, the United States should encourage quiet preparations and consultations. Collapse is a vague term, with various conditions possible. One variant is that of a slow but irreversible decline, accompanied by rising friction within the upper and middle elites over policy and power. This scenario probably has a higher potential than the type of rapid regime collapse that occurred in much of East Europe. It is also potentially more dangerous,

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since one faction might be tempted to turn to external sources for assistance, thereby regionalizing a domestic crisis. Moreover, as has been noted, refugee flows could be serious. Thus, thought and planning, along with regional consultation, should take place with this possibility also in mind. Some observers believe that despite its problems, the DPRK can batten down the hatches and continue to operate with only slight modifications of its system. They cite such instances as Cuba, and emphasize the thesis that the North Korean people have long known great material sacrifices and yet maintained a fierce loyalty to leader and system. Again, this scenario cannot be ruled out, yet the circumstances surrounding Cuba and North Korea are very different. For example, the North Koreans must live beside countrymen who are vastly more advanced in material terms, as well as having large neighbors, including socialist China, who illustrate different potentials. A far more somber scenario has been painted by certain individuals, namely, that in its desperation, DPRK leaders might launch another military attack across the Demilitarized Zone (DMZ). The figures on the North's military forces vary, but generally, they are placed at between 950,000 and 1.2 million, with a significant portion currently near the DMZ together with an impressive array of tanks and other military equipment. 39 Experimentation with missiles continues, with the Rodong 1 having a range of over six hundred miles in the experimental stage. It has been estimated that the North has been spending more than one-quarter of its GNP on military costs, probably the highest ratio in the world. Evidence suggests, however, that while quantitatively strong, the DPRK military is very uneven in various qualitative respects. Energy shortages, for example, have greatly curtailed training time for pilots. The use of soldiers for a wide variety of civilian tasks from construction to agricultural pursuits raises questions about training. Moreover, despite the high expenditures, budgetary restraints prevent the purchase of modern equipment from abroad. Thus, obsolescence is an increasingly troublesome problem. Most important, however, few leaders commit suicide on behalf of themselves and their country. The DPRK leaders know that while they could exact heavy damage on the South by a sudden strike, they would subsequently be pulverized by the combined ROK-U.S. air, sea, and ground forces. Today, the U.S. commitment is firm—and fully credible in the North as in the South. So it must remain. The North may well initiate recurrent military provocations and incidents, but the likelihood of an allout war seems very remote under current conditions. Survival, not extinction, is the primary goal of the DPRK elite. A final scenario is in order, namely, a DPRK that manages to undertake economic reforms sufficient to improve the livelihood of its people

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and the status of its national economy, accompanied by increasing regional interaction, especially with the ROK. This is the so-called "soft landing" scenario. It is also the premise upon which current U.S. policy is based. No one can guarantee the realization of a soft landing for North Korea. As noted, the obstacles to its achievement are by no means small. Yet when one views the alternatives, it clearly appears the most desirable for the United States, the ROK, and all others in the region—certainly including the North Koreans. In this scenario, it would be logical for North-South relations to gradually improve, with an initial premium upon economic ties. Kim Dae-jung has long advocated an effort to increase South-North ties and an approach to unification through confederation. Since his election, he has indicated that he would propose a summit meeting and other measures as well to create a positive South-North relationship. How will the North respond? Will the current ROK economic difficulties reduce the North's fears of facing an all-powerful, highly impressive opponent, or will they induce a "wait and see" attitude? A highly authoritarian regime can make gigantic shifts in policy or tactics rapidly. In any case, if economic intercourse advances, the potential for a network of North-South social contacts will gradually unfold. The United States should do everything possible to encourage this course of events. At the same time, the United States should continue to proffer a range of supportive actions to the DPRK. These can include seminars and technical experts in such fields as agronomy, energy, and business administration. A fellowship program can be made available, with training in both the United States and elsewhere. In the broader arena, the DPRK should be continuously encouraged to participate in such nonofficial and semiofficial programs as the Northeast Asia Cooperation Dialogue and the Council for Security and Cooperation in the Asia Pacific (CSCAP), as has been done in the past. As 1997 came to a close, there was growing evidence that a decision had been made in Pyongyang to interact both on a multilateral and a bilateral basis selectively. Agricultural and energy specialists seeking up-to-date information were sent to the United States, and a few students of business administration went to Australia. Moreover, DPRK representatives were participating in CSCAP. Yet such actions were very tentative and cautious. Fear of overexposure to the outside world remained strong. Most important, the North agreed to attend the four-party dialogue earlier proposed by South Korea and the United States, with an initial meeting in Geneva in December 1997 and a subsequent meeting in March 1998. Though the two meetings did not produce any substantive results, it was significant that officials from the two Koreas, the United States, and China sat at the same table. If this dialogue goes forward, the United States economic embargo can be further relaxed. The United States, like

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other parties to the Korea issue, must keep both carrots and sticks in store as the bargaining process goes on. Progress can also be made with respect to liaison missions if the DPRK is willing. To date, the evidence indicates that with the New York mission available to it, the North has been in no hurry to have a U.S. mission in its capital; expenses may be an obstacle, as well as a limited desire to see Americans resident in Pyongyang short of full diplomatic relations. However, if advances are made on other fronts, such a mission will be of mutual advantage. At the same time, the United States must continue to make it clear that its commitments to close coordination with the ROK remain firm, and that advances in North-South relations are imperative if solid gains in U.S.DPRK relations are to take place. Heightened U.S.-South Korea friction can only damage the peace process. 40 The U.S. interest in developments on the Korean peninsula is one that combines national interest and moral commitment, rooted in modern history but given greater substance through recent events. Unification is an issue essentially resting with the Koreans, South and North, but peace on the peninsula is a matter of legitimate concern to all of Korea's neighbors since conflict would affect the region as a whole. Thus, in the future as in the past, consultations between the United States and the other major nations—Japan, China, and Russia—should be frequent and regularized. At a time when no effective peacemaking or peacekeeping mechanism exists in the Asia Pacific region, the premium is upon constructing an effective series of arcs over specific problems. 41 In the case of the Korean peninsula, the primary arc remains that of North-South relations. Until these can become more constructive, perils will continue. Above this arc, however, are the actions and inactions of the major states, of which those of the United States are the most critical. The most appropriate course for U.S. policy at this time lies in (1) upholding the credibility of the U.S.ROK alliance and broadening its economic and political foundations; (2) maintaining consultations with neighboring major states; and (3) proffering an economic, political, and strategic program of cooperation with the DPRK in exchange for positive policies on the part of the North. The strategic goal must be to replace the fragile armistice with a peace treaty and, at some point, to begin the process of disengagement on the DMZ and progressive military reductions. Despite the pitfalls and detours that may well lie ahead, these policies, applied with patience and perseverance, offer hope for a peaceful resolution of the Korean problems. The primary tides are running in a favorable direction. There is reason to be hopeful.

Notes 1. One of the earliest books by a Western scholar on Korea was that of William Elliot Griffis, entitled Corea: The Hermit Nation (New York: Charles

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Scribner's Sons, 1882). Chapter XLIV deals with "American Relations with Corea," pp. 388-395. 2. For the early postwar years of North Korea, see Dae-Sook Suh, The Korean Communist Movement, 1918-1948 (Princeton, NJ: Princeton University Press, 1967) and his Documents of Korean Communism—1918-1948 (Princeton, NJ: Princeton University Press, 1970); see also Robert A. Scalapino and Chong-Sik Lee, The Movement and The Society, Vols. 1 and 2 of Communism in Korea (Berkeley: University of California Press, 1972). 3. For an analysis of post-1945 South Korea by one who was involved, placing heavy emphasis upon its traditional antecedents and providing a detailed view of U.S. policies in the period down to 1965, see Gregory Henderson, Korea: The Politics of the Vortex (Cambridge, MA: Harvard University Press, 1968). 4. For well-researched essays on the Korean War, see James Cotton and Ian Neary, eds., The Korean War in History (Atlantic Highlands, NJ: Humanities Press International, 1989). Subsequent release of Russian documents now makes the origins of the Korean War clear. 5. For stimulating essays dealing with North Korea's foreign policies up to mid-1994, see Doug Joong Kim, ed., Foreign Relations of North Korea During Kim II Sung's Last Days (Seoul: The Sejong Institute, 1994). Also consult the wellresearched work of Byung Choi Koh, The Foreign Policy Systems of North and South Korea (Berkeley: University of California Press, 1984). 6. For discerning essays on the background of U.S.-Korea relations in addition to those cited, see Youngnok Koo and Dae-Sook Suh, eds., Korea and the United States: A Century of Cooperation (Honolulu: University of Hawaii Press, 1984). 7. A succinct survey of early U.S.-Korea relations is given in Suh, "The Centennial: A Brief History," in Koo and Suh, eds., Korea and the United States, pp. 3-22. 8. See David Kwang-Su Suh, "American Missionaries and a Hundred Years of Korean Protestantism," in Koo and Suh, eds., Korea and the United States, pp. 319-352. 9. For a penetrating study of the Korean nationalist movement during the pre-1945 period, see Chong-Sik Lee, The Politics of Korean Nationalism (Berkeley: University of California Press, 1963). 10. As noted, the release of Russian documents relating to the Korean War has settled many of the controversies over the origins of that war and the roles of Kim II Sung, Stalin, and Mao. The theses of the ideological Left have been totally undermined. The argument that the attack was merely a civil war completely ignores the international involvements at the outset and the stakes involved. Would an attack by West Germany upon East Germany in this period have been defined as merely a civil war? The Korean War commenced after Kim persuaded a reluctant Stalin, and secondarily, Mao, that rapid victory could be obtained with minimum risk. From its beginnings, the Russians provided military equipment and advisors to the North. For a recent analysis of the Russian documents, see Kathryn Weathersby, "Soviet Aims in Korea and the Outbreak of the Korean War, 1945-1950: New Evidence from the Russian Archives," Working Paper of the Cold War International History Project (Washington, D.C.: The Woodrow Wilson International Center, 1993). For a recent appraisal of the issues, see Hakjoon Kim, "Russian Foreign Ministry Documents on the Origins of the Korean War," Korea and World Affairs 20 (summer 1996): 248-271. 11. Among various works, see Young Whan Kihl, Politics and Policies in Divided Korea: Regimes in Contest (Boulder: Westview Press, 1984); Sung-Joo Han, The Failure of Democracy in South Korea (Berkeley: University of California Press, 1974); John Kie-Chang Oh, Democracy on Trial (Ithaca, NY: Cornell

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University Press, 1968); and Robert Oliver, Syngman Rhee and American Involvement in Korea, 1942-1960: A Personal Narrative (Seoul: Panmun Book Co., 1978). 12. In a conversation with this author in late 1969, President Park asserted that the United States was going to withdraw from Vietnam. I expressed doubts, but Park was totally certain. He continued, "You [Americans] must give me time to get ready for this." 13. For an analysis of the background of ROK-DPRK relations, see ChongSik Lee, "The Evolution of North-South Korean Relations," in Robert A. Scalapino and Hongkoo Lee, eds., North Korea in a Regional and Global Context (Berkeley: Center for Korean Studies, 1986). 14. For accounts of their visit to North Korea by a number of prominent American-Korean scholars, see C. I. Eugene Kim and B. C. Koh, eds., Journey to North Korea (Berkeley: Institute of East Asian Studies, 1983). 15. An invitation from the Institute of Disarmament and Peace was tendered to this author, and the trip took place in September 1989; several months later, a former ambassador to China, Arthur Hummel, visited, followed by Gaston Sigur, former assistant secretary of state for East Asia. 16. In addition to the sources mentioned, three works should be consulted for the recent period: II Yung Chung, ed., Korea in a Turbulent World (Seoul: The Sejong Institute, 1992); Young Whan Kihl, ed., Korea and the World: Beyond the Cold War (Boulder: Westview Press, 1994); and Sung Chul Yang, The North and South Korean Political Systems (Boulder: Westview Press, 1994). 17. Two works of significance dealing with the ROK economic policies of this period are Robert E. Bedeski, The Transformation of South Korea (New York: Routledge, 1994); and Karl Moskowitz, ed., From Patron to Partner: The Development of U.S.-Korean Business and Trade Relations (Lexington, MA: Lexington Books, 1984). 18. See Yu-Nam Kim, ed., Soviet Russia, North Korea, and South Korea in the 1990s (Seoul: Dankook University Press, 1992) and II Yung Chung, Korea and Russia: Toward the 2lst Century (Seoul: The Sejong Institute, 1992). 19. For important works on the North Korean economy, see Nicholas Eberstadt, Korea Approaches Reunification (Armonk, NY: M. E. Sharpe, 1995); Eberstadt and Judith Bannister, "Divided Korea: Demographic and Socioeconomic Issues for Reunification," Population and Development Review 18:3 (December 1992): 505-531; Marcus Noland, "Implications of North Korean External Econommic Reform," February 1996, unpublished paper, and his "The North Korean Economy," Joint U.S.-Korean Academic Studies, Vol. 6 (Washington, D.C.: Korea Economic Institute of America, 1996); Eui-Gak Hwang, The Korean Economies: A Comparison of North and South (Oxford: Clarendon Press, 1993); and Bruce Bueno de Mesquita and Jongryn Mo, North Korean Economic Reform and Political Stability (Stanford: Hoover Institution, 1996). 20. For a selection of Kim II Sung's early speeches and writings featuring juche, see Kim II Sung on Juche in Our Revolution, Vol. 1 (Brooklyn: Faculty Press, Inc., 1977). 21. For recent discerning essays on the ROK economy and its global thrust, see Yeomin Yoon and Robert W. McGee, eds., Korea's Turn to Globalization and Korea-U.S. Economic Cooperation (South Orange, NJ: Seton Hall University Press, 1996). 22. For my analysis of the post-Kim II Sung political scene in the DPRK, see North Korea After Kim II Sung: Continuity or Change? (Stanford: Hoover Institution, 1996). For two South Korean perspectives, see Kang In-duk, "Signs of Crisis

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in North Korea and Seoul's Strategies," East Asian Review 8:3 (autumn 1996): 3-16; and "North Korea in 1996—An Overview," Vantage Point 19:21 (December 1996) (Seoul: Naewoe Press, 1996). 23. An excellent in-depth survey of these developments can be found in the essays presented in Young Whan Kihl and Peter Hayes, eds., Peace and Security in Northeast Asia: The Nuclear Issue and the Korean Peninsula (Armonk, NY: M. E. Sharpe, 1996). See also the following well-researched pieces: Kongdan Oh and Ralph C. Hassig, "North Korea's Nuclear Program," in Kihl, Korea and the World, pp. 233-252; North's Korea's Nuclear Program: Challenges and Opportunity, a Report of the North Korea Working Group of the United States Institute of Peace (Washington, D.C.: USIP, 1994); and The North Korean Nuclear Challenge: The Post-Kim II Sung Phase Begins, North Korea Working Group of USIP (Washington, D.C.: USIP, 1986). 24. For a reiteration of these positions, see President Kim Young-sam's statement in Kuala Lumpur as reported in The Korea Times, November 28, 1996: "Kim Repeats Call for NK Apology Over Sub," p. 1. 25. See Key-young Son, "Seoul Suspends Economic Ties with NK," The Korea Times, October 7, 1996, p. 1. 26. For details, see "DPRK Warns U.S. Delaying LWR Project Would Send NDeal Falling Apart," in The People's Korea, December 7, 1996, pp. 1, 8. TPK is a North Korean organ published in Japan. 27. See Nicholas D. Kristof, '"Deep Regret' Sent by North Koreans," The New York Times, January 2, 1997, pp. 1, 5; and Jonathan S. Landay, "US Sighs Relief as North Korea Apologizes, Agrees to Talk," The Christian Science Monitor, January 2, 1997, pp. 1, 8. 28. For a recent comprehensive examination of current ROK economic policies and U.S.-ROK economic relations, see Yoon and McGee, Korea's Turn to Globalization. For ROK official views, see Ministry of Finance and Economy, Shared Interests, Shared Rewards: The Korea-U.S. Global Partnership (Seoul, September 1996). See also the speech of October 22, 1996, to the Utah World Trade Association by Ambassador Park Kun-woo in Korea Update, October 28, 1996, p. 3. Statistics on various aspects of the ROK economy are to be found in Republic of Korea Economic Bulletin, December 1996, pp. 34-49. 29. For a somber evaluation of current problems, see Heung-chong Kim, "10 Problems Hindering Transformation of Korean Economy," originally in The Shin Dong-A Monthly August 1996, and republished in Korea Focus on Current Topics 4:41 (July/August 1996): 75-85. 30. On October 22, the ROK Ministry of Finance and Economy announced this figure, indicating that it was a 9.1 percent increase from the $330 million allocated for 1996. See Korea Update, Vol. 7, No. 21, October 28, 1996, p. 4. 31. For another recent appraisal of the North Korean scene that is balanced and well researched, see "A Coming Crisis on the Korean Peninsula?" Special Report prepared by Scott Snyder, program officer, the United States Institute of Peace (Washington, D.C.: USIP, 1996). 32. In addition to the works previously cited, see Yung Namkoong, "Trends and Prospects of the North Korean Economy," Korea and World Affairs 20:2 (summer 1996): 219-235; and for a firsthand report by a UN official involved in food aid (Anthony Hewitt), see Kate Wiltrout, "UNICEF Official Predicts North Korean Hunger Will Worsen," The Korea Times, September 6, 1996, p. 3. For two very interesting papers produced by Russian scholars in 1996, both unpublished, see Natalia Bazhanova, "The Economic System of North Korea" and Valentin Moiseyev, "Socio-Economic Development of the DPRK."

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33. Quoted from Soo-Young Choi, "Socio-Economic Structure and Current Situation of North Korea," Journal of Strategic Studies 3:2, 50. 34. Wiltrout, "UNICEF Official." 35. A detailed account of the September Forum is provided in the Northeast Asia Economic Forum Newsletter, Issue No. 18 (Honolulu: Hawaii Asia-Pacific Institute, fall 1996), pp. 2-7. 36. Young Yoon Kim, "The Problems and Practicability of Inter-Korean Economic Exchanges and Cooperation," East Asian Review 8:3 (autumn 1996): 77-94. 37. For five perspectives on the North Korean political scene as of early 1996, see Jianming Zhou and Lingyi Wang, "Still Stable Korean-type Socialism"; Takashi Sakai, "The Present Situation and the Prospect of North Korean Ideology"; Yuri V. Vanin, "North Korea: Hard March"; Moon-Young Huh, "The Stability and Durability of the Kim Jong-il Regime"; and Sung Chull Kim, "Development of Systemic Dissonance in North Korea"; all in The Korean Journal of National Unification, Vol. 5 (Seoul: The Research Institute for National Unification, 1996). Interesting Russian perspectives are provided in a series of unpublished papers, all written in 1996: Professor V. Denisov, "The Role of the Army in the Political System of The People's Democratic Republic of Korea"; V. P. Tkachenko, "The Contemporary Political Development of North Korea"; and Alexander Zhebin, "Some Aspects of Social Control Machinery in the DPRK." 38. On the political role of the DPRK military, in addition to the works cited, see Young Tae Jeung, "Political Role of the Military in North Korea," East Asian Review 8:2 (summer 1996), republished in Information Service on the Unification Question of the Korean Peninsula (Seoul: Ministry of National Unification, November 30, 1996), pp. 44-60. 39. Park Sang-hoon, Ministry of Foreign Affairs official, citing official ROK figures, asserts that the DPRK armed forces number 1.23 million or 5.1 percent of the 24 million population, with $2.2 billion expended on the military in 1994, or 26.7 percent of GDP. Park, "Korea's Security Policy," The Institute of Foreign Affairs and National Security Review 4:3 (1996): 15. 40. A recent discerning appraisal of North and South Korean strategy is Nicholas Eberstadt, "Assessing 'National Strategy' in North and South Korea," The Korean Journal of Defense Analysis 8:1 (summer 1996): 55-76. 41. For two recent and broadly gauged collections of essays on the international and Asia Pacific regional orders, see Desmond Ball, ed., The Transformation of Security in the Asia-Pacific Region (London: Frank Cass and Co., 1996), and Sung-Joo Han, ed., The New International System: Regional and Global Dimensions (Seoul: The Ilmin International Relations Institute, Korea University, 1996).

3 U.S. Extended Deterrence in East Asia PATRICK M . MORGAN

This chapter opens with some initial thoughts about the nature of extended deterrence, then turns to an effort to identify the key elements of U.S. extended deterrence in East Asia during the Cold War. It then seeks to identify those elements from the Cold War that continue to apply and any new elements that have been introduced. This becomes the basis for assessing the future of U.S. extended deterrence, with special attention given to the Korean peninsula.

Initial Reflections on Extended Deterrence Extended deterrence situations can be divided into those that involve immediate deterrence and ones concerned with general deterrence. In immediate deterrence situations, the deterrer confronts the distinct possibility of an attack because a known opponent is giving very serious consideration to launching one, and the deterrer reacts by trying to forestall the attack by threatening a very punitive response. In a general deterrence situation, by contrast, the deterrer confronts only hypothetical, though plausible, attacks from various parties, and in broad terms it issues a threat of a punitive response to prevent anyone from starting to think seriously about a real attack. For general deterrence, states go about their business looking too armed and too dangerous to provoke. For immediate deterrence, they try to turn that military power into a specific threat of harm to a specific potential attacker in a confrontational, even crisis, situation. There is a gray area between the two because, for instance, a state may pursue general deterrence without specifying anyone as a potential attacker when, in fact, it has someone in particular in mind, and it may operate as if a lurch into 43

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immediate deterrence is possible at almost any time. Generally speaking, a deterrence failure begins with the erosion or collapse of general deterrence and the first steps toward emergence of an immediate deterrence situation; and the failure becomes complete when a deterrer's threats do not prevent a looming attack from taking place. 1 Deterrence theory, designed to explain what makes for success and failure in these situations, was developed very largely with immediate deterrence in mind—general deterrence has been a relatively unexplored subject. This is unfortunate since general deterrence is the norm, and much that states do to try to achieve success in imagined immediate deterrence situations is designed and carried out within the framework of general deterrence. While extended deterrence can be pursued with many specific objectives in mind, there are two broad categories into which those security objectives commonly fall. One is the prevention of an attack on a specific state or other actor, whether it is an ally or a client or is highly valued in some other way (such as by having a strategic location or key resources). The other is to contribute to the stability and security of a whole system or subsystem, such as when extended deterrence is meant to produce a securityenhancing distribution of power among a set of states, or when it is intended to forestall behavior by the protected state that would otherwise disturb the security relations among a set of states. Extended deterrence is normally discussed as an endeavor of a state. However, it can readily be supplied collectively, with a group of states extending protection to a nonmember or set of nonmembers. This group might be organized as an ad hoc coalition or an institutionalized collective (such as the UN Security Council). Regardless of the nature of the deterrer, it has always been held that extended deterrence is more difficult to operate successfully than direct deterrence. Actors are considered far more likely to respond very punitively to a direct attack on themselves than to an attack on a third party, no matter how highly valued that third party is. Thus, extended deterrence threats have less inherent credibility; they are harder to make convincing to a would-be attacker. As a result, extended deterrence has less reliability. By the same token, it is harder to convince the party being protected; thus the beneficiary of extended deterrence frequently needs reassurance about the durability of the deterrer's commitment. 2 In one way or another all of these considerations are highly pertinent to any discussion of the past and the future of U.S. extended deterrence in East Asia.

The Past Analysis of the future of U.S. extended deterrence in the Far East is best initiated by examining the past. When the Cold War ended, it seemed at

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first that the past would offer little guidance. It was widely anticipated that with the end of the Cold War, major shifts in U.S. extended deterrence were inevitable. Many analysts suggested that the United States would retreat from its active and dominant role in East Asian security affairs, because it had lost the impetus to carry on that role provided by the Cold War and because it now had to confront an accumulation of serious domestic problems. Observers also speculated that the United States would experience a sharp decline in its relative power and influence, generated by its domestic difficulties and by the surge of East Asian societies. "Asianization" of East Asian international politics was a prospect. Not only would the United States be inclined, prepared, and required to do less, but a vigorous U.S. role in upholding security in the region would now be seen by its residents as less necessary and less welcome. Alternatively, there were suggestions that the relative salience of East Asia in U.S. foreign and security policy would grow. The center of gravity in world politics was shifting from the North Atlantic to East Asia, and this would inevitably, and relatively rapidly, adjust U.S. conceptions of its national interest and bring about a serious realignment in American attention and effort. Particularly in Europe, there was speculation that the United States would become primarily oriented toward the Pacific. Thus far neither has turned out to be true. Of course, these developments may simply be slower in coming than expected, so that too little time has elapsed to see them clearly. 3 Still, the preponderance of the evidence to date does not support either view. The United States remains deeply engaged in European security, and there is no sign that this will change in the near future. To the dismay of the French (who led the way in anticipating a U.S. retreat from Europe), the United States continues to play the dominant role in everything from recasting and operating the North American Treaty Organization (NATO), to Bosnia and plans on any future Bosnias, to shaping Russia's role in European security, to guarding the interests of the North Atlantic nations elsewhere. Yet, the United States has not "come home" from its involvement in East Asian security matters either. Its alliance with Japan, the cornerstone of the U.S. military presence in the Far East, has just been refurbished, the United States is the central player in efforts to dissolve the logjam in Korea, it is deeply involved in limiting the conflict between China and Taiwan, and the tenor of its relationship with China is generally considered the key to the future of regional security. Perhaps the most significant change is that the United States now is closer to treating East Asian and European security arrangements and developments as of equal importance, a change reflected in official visits, rhetoric, and above all in U.S. military deployments that have moved toward roughly equal levels in the two regions. Like Mark Twain's death, reports of U.S. decline were greatly exaggerated. The economy is up and the deficit down; the nation is now highly competitive in world markets, and its growth rate is enviable; its military

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capabilities are unmatched in technological sophistication, reach, and depth; and without the constraints of the Cold War its range of action is now even greater when it chooses to act. Meanwhile, Europe's economic health is woeful, and it seems as far as ever from being able to manage without the United States. Likewise the East Asian economies are hardly self-sufficient. Japan continues to suffer from what is now an eight-year recession, and both Korean political and economic systems have taken a sustained battering, China confronts problems of severe economic dislocation, Vietnam continues to languish, and Indonesia experiences unrest on the eve of political succession. Those who suggested that East Asia's rapid economic advance would have shorter legs than anticipated—as the benefits from adding very cheap inputs to Asian economies were exhausted— now appear vindicated by the slowdowns in the Republic of Korea (ROK) and throughout Southeast Asia. With respect to extended deterrence, sorting out just what is and is not relevant from the past is more complicated than might be supposed. The future will hardly be a simple extrapolation from the past, yet important elements from the Cold War era clearly continue to play a role.

Extended Deterrence in the Cold War U.S. deterrence efforts in East Asia grew up at roughly the same time as they did in Europe and within the same rubric provided by the Cold War and the strategy of containment. Nonetheless, there were important differences between extended deterrence in Europe and Asia. Most striking was that in Europe deterrence came to be embodied in a huge and quite intimate alliance, whereas in Asia, despite early U.S. efforts to duplicate NATO, deterrence took the form of a "wheel and spokes" pattern—a set of individual bilateral alliances between the United States and various countries. 4 As things have turned out, this has been very important in shaping the options available since the end of the Cold War. Another important difference is that while the active, energetic character of U.S. extended deterrence was primarily provoked by the impact of the Korean War, its center of gravity was in Europe and not Asia. It was in and around Europe that the United States maintained its largest and finest military assets on behalf of friends and allies, even though the most serious challenges to deterrence arose far more often elsewhere. The usual estimate is that roughly 60 percent of U.S. defense spending and military power was maintained with Europe in mind. 5 Apart from its Berlin crises, though, Europe remained quiescent in comparison with the Korean War and later crises and upheavals in Korea, the Taiwan Straits, Laos, and Indochina. Supposed challenges to deterrence in East Asia were for years associated with either outright military threats or fighting, whereas in Europe,

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by contrast, challenges usually came indirectly in the form of threats to the military balance or political challenges to Western unity. The United States saw itself embroiled in immediate deterrence situations on numerous occasions in the Far East, something that occurred in Europe only in 1948-1949 and 1961 in Berlin. Deterrence failed outright, repeatedly, in Vietnam, something that never happened in Europe. It was fortunate that Europe remained quiescent in this regard. Direct challenges to extended deterrence in Europe would have been threats to unravel the central U.S./Western position in the Cold War. Challenges elsewhere, including in East Asia, were considered important primarily because of the impact it was believed they would have, if successful, on the credibility and stability of U.S. extended deterrence in Europe. This was true in the Korean War and thereafter. In East Asia the United States engaged in a violent defense of commitments that, within the logic of the presumed interdependence of commitments in a global extended deterrence posture, were vital to preserve deterrence stability in Europe. Immediate deterrence challenges in East Asia had to be met, first and foremost, to uphold general deterrence half a world away. East Asia was a second or even a third priority. Thus U.S. extended deterrence in East Asia was, in an important sense, derivative—not just intrinsic to the pursuit of U.S. interests there. Its first function was to help sustain extended deterrence on the other side of the world. Only then did it serve to protect Asian allies and clients valued in their own right. Of course, those Asian commitments reflected real U.S. concern for the security of Japan, the ROK, Taiwan, the Philippines, and South Vietnam. In each case the United States had a demonstrated interest based on prior direct involvement in creating or sustaining the government. But Asian governments always knew, and always objected to the fact, that they ranked lower in priority than Europe in U.S. security policies and arrangements. 6 Thus it is hardly surprising that there was a wave of concern in the region at the end of the Cold War about the durability of continued U.S. involvement in—that is, management of—the East Asian security arrangements. Extended deterrence is always suspect to the client anyway; repeated reassurances are never fully convincing. It can only be more so when the protector has always had a more prominent priority, and now apparently has less compelling reasons to shoulder heavy deterrence burdens at all. U.S. policymakers have responded with a litany of statements that the United States is going to remain "engaged" in East Asia. In the Cold War era, U.S. extended deterrence there had several functions that pertained solely to the region. It was the framework within which the reemergence of Japan as a great military power was suppressed. It was a resource for discouraging national unifications that the United States regarded, on political/ideological or strategic grounds, as unacceptable in

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Korea, in Vietnam, and with respect to Taiwan. It was employed in an attempt to contain Vietnamese imperial expansion. It was actively pursued as part of the containment of Soviet power and influence, and of Chinese power as well until the Sino-U.S. rapprochement. Finally, it evolved into a vehicle for stability and security management in the regional system, largely along hegemonic lines, which came to be seen in Washington as an indispensable basis for the economic vitality and political stability that eventually spread through the area. Thus there was a good deal more to extended deterrence than simply backstopping the containment and deterrence of Soviet power in Europe. This brings us to the central current questions about the future of U.S. deterrence in East Asia. First, what survives, and will continue to be relevant, of the prior justifications and functions of U.S. extended deterrence in East Asia? Second, are there now additional justifications and functions, arising out of the post-Cold War situation of the region and out of the place in it the United States now occupies? And does this combination of functions provide a suitable basis for the continuation of U.S. extended deterrence? Finally, whatever the justifications provided, is the United States going to be willing to bear the burdens involved?

What Carries Over from Before? Little remains to link extended deterrence in East Asia with security in Europe. The elimination of an enemy on a global scale greatly waters down the perceived interdependence of U.S. commitments and with it the tendency to treat U.S. commitments everywhere as at least symbolically equivalent—"a loss anywhere is a loss everywhere." Now it is clearer that U.S. commitments in East Asia must be considered on their own merits. Beyond this, however, the United States is now embarked on the pursuit of security in Europe via an approach in which extended deterrence remains relevant but is far less in the forefront. I like to think of it as a layer cake. In the past there were two layers. NATO was the base, providing security against the outside enemy via deterrence, with a pluralistic security community for the North Atlantic nations (built up via NATO and other arrangements) as a second layer to eliminate security concerns among the members. Now the cake is much more elaborate. Although the alliance continues as the deterrence base, a layer of collective management has been added that merges a refashioned NATO with military contributions by nonmembers to project power into troublesome situations (such as Bosnia). Efforts are under way to concoct a third layer, via NATO enlargement and links to nonmembers, whose purpose is to take on, over time, the elements of a true collective security system. Meanwhile, work continues on development of the fourth layer—a Washington to Vladivostok pluralistic security community

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within the Organization for Security and Cooperation in Europe (OSCE) framework. Finally, Europeans themselves are pursuing a smaller fifth layer—an enlarged European Union to replace international relations, up to a point, with integration. This is a cake meant to be consumed from the top down. The upper layers are to be so rich and filling that it will not be necessary to go all the way to the bottom to get one's fill of security. U.S. (and NATO) extended deterrence is to be of residual, eventually very residual, importance. And no linkage to deterrence in East Asia is presumed or necessary. Also gone by the wayside is the necessity of deterring the Soviet Union, and now Russia, in East Asia. Russia is not a serious political or military threat there and provides no real justification for continued U.S. extended deterrence, Japanese assertions to the contrary. Even if a new regime emerges that is dedicated to restoring Russia's place in the world by threats and by force where necessary, it would have to begin by focusing its attention for years on domestic revival, and then it would be preoccupied with its relations with the West in Europe. The Far East would be a distant third (or lower) priority. There is little prospect of a revival of Vietnam's ambitions to dominate its neighbors. Vietnam seems determined to devote its energies to the onerous task of blending domestic economic development in some variant of a market system with a communist political system. In this connection, and in view of its worries about China, it displays a strong interest in cooperative relations with its neighbors. Even if its old ambitions revived, it is doubtful that the United States would make thwarting them a justification of extended deterrence, given the powerful impact of the Vietnam syndrome. Turning to the other functions extended deterrence performed during the Cold War, we find elements that have not disappeared. Restraint of Japanese military power continues to be important, although in a somewhat altered form. During the Cold War the U.S.-Japan alliance gradually evolved from a substitute for virtually any Japanese military strength to encompassing a limited but not insignificant contribution by Japan to defense of its territory and surrounding waters. Now envisioned is a slowly developing Japanese capability to further defend the surrounding seas, to contribute support for U.S. military efforts in the region, and to join collective peacekeeping endeavors. But all this is to take place within what has been a stable or shrinking Japanese defense budget. Meanwhile, Japan continues to stockpile plutonium, work on an advanced fighter aircraft, develop a space program, and take other steps that lay the basis for a firstrate military capability should it ever decide to develop one. 7 But it is still an article of faith in Washington, Tokyo, and elsewhere that dissolution of the alliance or removal of U.S. forces (so that deterrence on Japan's behalf would be practiced at arm's length—inciting a Japanese military buildup

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in response) would be a threatening and destabilizing development in the region, reviving old fears, old conflicts, and old rivalries. The United States does not want this; having worked hard to prepare for the shifting of more responsibility for regional management to Japan, it does not want Japan perceived with suspicion. Thus, the use of extended deterrence to curb hostility toward Japan, if not to curb Japan itself, remains. Preventing unwanted national consolidations has now been altered too. Deterrence is now used instead to prevent them from occurring in an unacceptable fashion, via aggressive destabilization or military seizure. The United States remains deeply committed to deterring an attack on the ROK from the North and is, without an alliance to say so, committed to deterring an attack from China on Taiwan. (Pursuit of engagement with China is partly a recognition of this.) However, peaceful unification is now acceptable, under a communist government in one case and a noncommunist one in the other. Will this continue to be an important justification for extended deterrence? It seems likely. There is no significant pressure in the United States to drop either commitment. 8 As for using extended deterrence to maintain stability and security in the East Asian international system, this is clearly at the forefront of contemporary U.S. thinking. Exactly what this means is often not specified, but the following are all relevant. The United States believes its alliances keep some of its allies from otherwise being too powerful for regional stability: U.S. power is less destabilizing, more acceptable, than Japanese or ROK power. The United States also believes that this restraint on its allies and others, plus the U.S. presence in other ways, produces a generally low level of concern about security throughout the region (Korea excepted), and that this results in higher levels of cooperative interaction. In the usual official U.S. rhetoric, it is behind the sheltering U.S. military presence that trade and investment and an emphasis on peaceful domestic pursuits have been able to flourish. This is the important U.S. contribution to the continued peace and surging prosperity of East Asia. But it is extended deterrence of an odd sort. Clearly it falls into the category of general deterrence, except for the concern about North Korea, in the sense that there is no immediate threat of an attack that motivates it. It is allegedly maintained now against no specified target other than Pyongyang—and the United States would like to remove North Korea as a target sometime soon if it could—and is practiced for a broader purpose than protection of specific U.S. clients. It is not that someone deliberately threatens peace and stability and must be fended off, or might otherwise do so if the deterrence were not there. Instead, extended deterrence is to help prevent the revival of traditional international politics, of competitive multipolarity, in the region. Here there is an exact parallel with extended deterrence in Europe. In both, extended deterrence is now said to be about

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providing the framework within which the parties concerned can effectively avoid returning to the bad old days. However, unlike in Europe, this extended deterrence in Asia is not undertaken within a large multilateral arrangement in which the beneficiaries participate and contribute. This is a reflection of the absence of such arrangements during the Cold War. In the U.S. view the point is that extended deterrence is to serve as a form of insurance against the collapse of system-level security via the return of traditional multipolarity. With it, the ability of governments to retard a preoccupation with conflict and competition is enhanced. One way to characterize such behavior is "hegemonic stability," but that normally implies the hegemon is getting the lion's share of the benefits, and that is hard to demonstrate in either East Asia or Europe. Instead, it operates so that Japan and China can continue running big trade surpluses with the United States, Taiwan can continue piling up dollar holdings, Europeans can cut defense spending and avoid hard choices about coordinating foreign and security policies, and so on. Hegemonic stability also normally implies that the hegemon does most of the work because the stability is a by-product of its energetic pursuit of its own interests. This circumstance allows others to free-ride almost indefinitely, but the United States is busy trying to enlarge the European pillar of NATO and pass more responsibility on to others in both regions—perhaps, suspect these others, in order to make its own interests less obvious. This leaves three continuing functions of extended deterrence: protecting Japan so it does not scare everyone by undertaking to protect itself; ensuring that acceptable national reunifications take place peacefully; and allowing Asian states to try to escape from traditional international politics. That is an odd line-up: protecting one of the world's advanced societies not from an obvious threat but from provoking reactions to the threat it might pose; keeping two powerfully armed states (the ROK and Taiwan) from being overrun by neighbors unable to overrun them; and fending off a traditional international politics many Asian observers think is unavoidable.

Additional Functions and Justifications Extended deterrence in East Asia is relatively easy to sustain. The necessary forces and infrastructure are in place; there is no combat looming, no serious crisis at hand. This has largely been true since the end of the Vietnam War, except for the period when the Soviet military buildup in the Far East escalated U.S. costs and concerns. The United States has confronted far more difficulties in Europe or the Middle East in recent years than in East Asia. Needless to say, this may not last. There may be instances when the costs and burdens rise sharply in fact or in prospect. Thus, sustaining

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deterrence will require a decent national consensus, and that will require more substantial justifications for it than the ones outlined above. What might those be? Everyone's favorite is the growing U.S. economic stake in the Far East. The argument is familiar. U.S. investments there are substantial, and the future opportunities are incalculable. U.S. trade there far surpasses that with any other region, and the opportunities here are also immense. The future economic health of the nation turns on participation in the continuing East Asian economic miracle. Extended deterrence protects this U.S. economic stake while providing the secure environment within which the region's economic vitality—which makes that stake so valuable—can thrive. The final flourish is the Clinton administration's one-liner, its assertion that economic interests are a central part of national security. Sounds good. Missing, however, is evidence that the absence of U.S. military involvement would mean either that the region's economy would be crippled or that the United States would be shut out of it. Neither is obviously true. Of course, U.S. military involvement contributes to regional stability, but, as I have argued elsewhere, 9 the striking improvement in regional security in the past three decades has been achieved largely by East Asians themselves via painstaking efforts to either resolve or suppress a myriad of conflicts. In the past twenty-five years virtually every conflict relationship in East Asia has significantly improved and is now in better shape than in the early 1970s. No conflict is now worse than it was then. Powerful inclinations to mute conflicts and promote cooperation have clearly been at work. The impetus is obviously the opportunity to promote very rapid national development without serious international violence, via participation in the global economic system. This is an opportunity the United States has been instrumental in creating, primarily by allowing a stupendous access to the U.S. market, but it is now closer to being selfsustaining within East Asia itself. Extended deterrence has helped but hardly seems to have been the crucial U.S. contribution, and it is hard to see how it is critical to East Asian growth now. Would the United States be shut out of East Asia economically if not for its military presence? That is also unlikely. Beyond the specific trade figures involved, it is of great advantage to less developed economies to interact with more developed ones. In addition, the East Asian economic miracle depends heavily on a liberal international economic order, and the chief proponent of that system is therefore an attractive trade partner. The United States also appeals as an alternative to Japan, as a source of capital and technology, and to China, as a market. It also continues to be the world's largest exporter of food. No doubt the U.S. military presence helps enhance U.S. leverage in promoting its economic interests, but East Asians have been steadily cultivating relations with Europe for the past decade (Europe's economic involvement there has rapidly multiplied) and the

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Europeans make no significant contribution to security in the region. 10 The achievement of U.S. economic objectives in the Far East hardly requires U.S. military leverage. Another obvious favorite for justifying extended deterrence is containment of China. Proponents argue that extended deterrence must be maintained because China is coming, and China is hostile to U.S. values and interests in both its political system and its foreign policy. It cannot be seduced or lured into fully accepting the norms and obligations of today's international system and must instead be confronted with serious consequences if it does not. China's leaders are said to fully anticipate future conflict with the United States; they are scurrying to rapidly expand China's military strength, seeking to pare down the U.S. position in the region and to thwart U.S. objectives in countries like Iran, Pakistan, and even Russia. Extended deterrence will be needed to encourage China to cooperate and, when necessary, to compel it to behave. 11 How realistic is this justification? This is a very large subject and cannot be discussed in detail here. China may eventually need containing, but not now. It is a minor military threat outside its territory, and tries to be such a threat only with respect to areas—specifically, the South China Sea and Taiwan—that it considers its own territory. Otherwise, in all of its current bilateral relationships, from Russia right around to India, the Chinese government has spent years trying to improve relations and avoid serious conflict, and with great success. Even its relationship with Taiwan is much better than it was; the flows of money, trade, and people across the straits are now vast. The Chinese government is not ideologically expansionist, expresses no imperial ambitions, seems disinclined to pick serious quarrels, and shows no inclination toward militarism. It has no economic necessity to seek territorial expansion, and there is no sign of a would-be conquering hero rising in its political system. 12 China is normally seen as a target for containment only because of (1) the assumption that a U.S.-China conflict is inherent in the international system or inherent in the sudden rise in power of a major state; (2) China's military modernization; and (3) Chinese disregard of U.S. and Western nonproliferation concerns. Each will be difficult to sell as the rationale for any elaborate U.S. containment and extended deterrence of China. Is a severe conflict between the United States (and other major states) and China inevitable? To be sure, Chinese analysts often seem to think so, and the Chinese government itself regularly talks in these terms. Many other analysts in Asia, furthermore, predict rising conflict between China and others for dominance in East Asia that will generate or revive clashes over status, borders, and resources and promote arms racing and confrontations. Apart from the possibility of creating a self-fulfilling prophecy, such views can be taken seriously only by systematically ignoring the recent

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record. As noted above, China has been resolving or limiting conflicts with others and has had no trouble finding partners for this in Russia, Japan, India, and the United States. Why, then, is China modernizing its military forces so rapidly, especially since it now faces fewer military threats than at any time in its modern history? Three reasons stand out. First, a long period of deliberate neglect by a government focused on rapid economic growth left the Chinese armed forces decrepit. They were backward in posture, training, doctrines, weapons, and infrastructure, having made little progress in many areas since the 1950s. They lacked the ability to control the coastline or the airspace over China against any significant opponent, could mount a serious defense of the country only by attrition, and lacked the ability to mount even a (contested) minor military action more than a short distance beyond the nation's borders. The Gulf War drove home the scale of these deficiencies. They are so substantial that no reputable military expert believes they can be corrected in less than two decades or more. 13 The resulting capabilities will still be suitable far more for active defense along China's borders than for any serious power projection or lengthy offensive operations abroad on a large scale. 14 Second, the armed forces secured an end to their regimen of short rations by supporting the repression at Tiananmen Square. Ever since, the armed forces have been recognized as an important prop of the political system and thus as a major player in the unfolding political succession struggle today. They have been able to secure far more political attention and support than earlier. The result is a campaign to shrink the armed forces significantly and to professionalize them, to upgrade their capabilities in all areas. Third, the Chinese leaders evidently expect to face a movement toward containment led by the United States and to be subjected to U.S. pressure. The United States is not seen as a relatively benign hegemon but as an active imperialist that will resent the source of any reduction in its relative power and influence, and that will be ready to militarily threaten, even attack, that source. Even more frightening to Beijing is its view that the ultimate U.S. objective is the collapse of the present Chinese political system, not just the containment of China. Not surprisingly, Chinese leaders want to expand their military ability to resist such pressure. Thus, China as a military threat is best considered roughly as Russia is now: there is a potential for a serious threat but it will take a good many years to be realized, years in which other options besides containment and deterrence can be pursued to see where they lead. The United States continues, in the meantime, to cultivate relations with those concerned about China's future course in the region (Vietnam, Japan, and the Philippines most recently) and to improve its own forces significantly. While it would be wrong to ignore the potential for trouble in the future, it would be foolish

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to react severely to a threat that does not yet exist. As long as this is so, it seems unlikely that a case for U.S. extended deterrence based primarily on offsetting China's military power could garner sufficient domestic support. When we come to Chinese resistance to the U.S. arms control agenda, it is clear that thus far China distrusts the U.S. conception of international stability as too self-serving; it has been unwilling to accept tutelage on how far sovereignty should be curtailed in pursuit of arms control. France, however, has often held the same view, as does Russia now, and various states have frequently gone further than the United States wished in transferring arms and nuclear technology, without any of them being depicted as deliberately attempting to destabilize the international system. We should not forget that China has now adhered to the nuclear testing moratorium and supported the extension of the Nuclear Non-Proliferation Treaty (NPT). It has also slowly become more cooperative with regard to sales of nuclear technology and ballistic missiles to governments such as Iran and Pakistan. 15 We must also recall China's impressive cooperation on North Korea's nuclear weapons program, and its contribution to containing that obstreperous government. Once Russian support for the Democratic People's Republic of Korea (DPRK) disappeared, China moved to distance itself from the North. Even though it remains North Korea's only ally, by cutting that country off from most trade and aid (until providing emergency assistance in response to the famine) and by deliberately designating the ROK as its preferred partner on the peninsula, 16 China has done more than any other state in the past few years to cripple North Korea, cast doubt on its political legitimacy, and bring it to the brink of collapse. As noted, it also contributed greatly to the direct pressure on Pyongyang to give up its nuclear program. It is not surprising that the United States, Japan, Korea, the Southeast Asian states, Russia, India, and even Taiwan are all busy with some version of an "engagement" policy toward China in which there is a steady expansion in normal relations. They are all wary about what the future will bring and are preparing themselves for possible problems with China, but when it comes to containing China now, there is not much to contain. Unless China's misbehavior escalates markedly, it will be very difficult to rest U.S. deterrence on the necessity for containment. Uneasiness about a possible threat from China will certainly support keeping the U.S. military presence as insurance, just as uncertainty about Russia does so in Europe. But that is not enough to maintain a large and expensive presence indefinitely. Even a modest sanctions regime designed to slap Beijing's wrist for human rights violations garnered too little support in the United States (and particularly in Asia) in recent years to be sustainable. The justifications, therefore, for continued extended deterrence do not seem very compelling. However, the United States seems clearly intent on remaining deeply involved in East Asian security affairs and, at least for now, the odds seem good that it will. On what basis? Apart from those

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already mentioned as still relevant, three additional considerations seem most likely to shape U.S. policy in the years ahead. The first is that no one has yet figured out how to achieve withdrawal of the U.S. military presence and Asianization of the region's security management without creating tremendous pressures for the proliferation of weapons of mass destruction. 17 Japan, Korea, and Taiwan are good candidates to develop nuclear weapons if the Americans really go home. If the United States is deeply committed to preventing proliferation, retaining U.S. commitments and a military presence will have considerable appeal. Nonproliferation is now a cornerstone of U.S. security policy. The intensity of that commitment was manifest during the long fencing with the North Koreans. For a time the United States seemed inclined to elevate nonproliferation above nearly any other foreign policy objective in the region, and there was a great deal of congressional and domestic political support for doing so. 18 Second, the U.S. commitment to democratization is now a cornerstone of U.S. foreign policy in a way it was not before. This is more than a requirement to promote human rights and democratic reforms, the form it normally takes and with which most discussions are concerned. Hidden within promoting democracy is an implied commitment to protect any decently viable democracy from being militarily overwhelmed in an invasion. 19 This is the best answer to the question of whether the United States will maintain an alliance with a unified Korea. If Korea is strongly democratic, then the United States will be committed to preserving it even with no formal alliance. Similarly, although U.S. policy officially regards Taiwan as a part of China, if a steadily more democratic Taiwan opts for independence, the United States will end up resisting any attempt by China to forcibly incorporate it. 20 The third consideration is a curious feature of public opinion. Polls in the United States, as well as in other nations, have shown considerable support for NATO enlargement but not, in response to separate questions, for having to fight on behalf of the new allies or for bearing much higher costs and risks. (This is true not only of public opinion in the West but in Eastern Europe as well.) 21 What makes expanding NATO acceptable is the notion that it will not have to be upheld by force because of the increased cooperative interaction that will be involved. Something like the same view applies to U.S. deterrence in the Far East. It readily commands public support, but polls on whether the United States should readily go to the defense of its Far Eastern allies show much lower support. The point of sustaining the U.S. military presence is to facilitate such good relations in the region that the need to uphold deterrence will not arise. This is a striking departure from treating deterrence as something that keeps the peace via threats but is therefore a stumbling bloc in promoting international cooperation. The United States now cites its alliances in East

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Asia (and NATO) as not aimed at or threatening anyone, but as contributions to a general peace and stability that are more political and psychological than military in nature. As a corollary the United States emphasizes "engagement" with North Korea and China, the building of multilateral forums for security management, enlarged economic interactions, and more open societies as its preferred ways of dealing with these difficult governments. It is assumed that extended deterrence can underpin and facilitate all of these, not stand in their way. Officially, China does not agree, but it might if it ever had to face the alternative—China's military buildup arouses anxiety throughout Asia but produces much less of a reaction there than it would if the United States went home. 22

H o w Will U.S. Extended Deterrence Fare? There are two broad dimensions determining the success of any venture in extended deterrence—the level of effort the deterrer is willing to sustain and the nature of the challenges to be confronted. We will take up the latter first, and break that discussion into two sections: the challenges pertaining to U.S. extended deterrence in Korea, and those likely to arise elsewhere in East Asia. Then with some sense of the prospective need for extended deterrence, we can conclude with a look at the level of effort the United States is apt to be willing to offer. Extended Deterrence and Korea The most dangerous situation that confronts U.S. extended deterrence in East Asia at the moment is still in Korea. 23 This is where the possibility of a slide into immediate deterrence is most plausible. The North continues to maintain roughly two-thirds of its very large armed forces (some ROK analysts think the ratio is higher) poised at the border shared with the ROK, in a high state of readiness and with a posture and doctrine reflecting emphasis on rapid offensive action. It continues to develop longerrange ballistic missiles, which it sells to states such as Iran and Iraq, and has now deployed some that can reach Japan. 24 It is believed to have a considerable arsenal of nonnuclear weapons of mass destruction (WMD) and is suspected by some analysts of having a handful of nuclear weapons, although it is unclear whether these can be mounted on missile warheads. 25 It is frequently provocative, always opaque, constantly belligerent, and deeply insecure. 26 Rumors of a possible attack by the North, perhaps in a frantic bid for survival provoked by its deteriorating economy and the famine, have been circulating for some time. As long as Pyongyang's belligerence remains high, the United States will be heavily involved in extended deterrence in the ROK.

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Thus, although Washington is now pursuing engagement with the North, it has not abandoned deterrence. For years the United States viewed itself (and the ROK) as practicing what verged on immediate deterrence. The North seemed to be so poised for attack, was so intense and provocative in its design for a violent unification of the peninsula, and so isolated from any normal contacts with the ROK and the United States that it appeared—to nearly all observers—willing to exploit without hesitation any serious weakness in ROK-U.S. deterrence. Deterrence was taken to be the only real barrier to another attack like the one in 1950. In recent years the United States has moved away from this view to pursue a policy of interaction, in order to open a more normal relationship with the DPRK in which deterrence would be much less prominent. It was led to do so by the decline of the Cold War, the advice of Japan and China, the expectation that North Korea will collapse sooner or later, 27 and the sense that, apart from nuclear or other mass destruction weapons, the scale of the military threat that the North posed was declining. This amounted to the view that deterrence was not quite as central now, that other ways of dealing with the North could now be productive. This has had several results with respect to extended deterrence. First, the United States has retreated from nuclear deterrence of the North, other than in a residual existential fashion (the deterrence that goes with being a possessor of nuclear weapons). It has indicated it will not use nuclear weapons against the North, and has withdrawn its nuclear weapons from the ROK and from surface naval vessels in the area (as well as all other surface ships elsewhere). This creates a distinction between deterrence via the promise of unbearable obliteration and that via the promise of unacceptable damage—two outcomes that are equivalent in full-blown nuclear deterrence. The gap inevitably invites fears that extended deterrence is now less credible, fears often voiced in the ROK. 28 This also means that the United States is now practicing deterrence primarily via the threat of an effective defense, that is, via the promise that any attack by the North will be thrown back. To this is added the promise that an attack by the North will result in the end of that regime. Thus the "unacceptable damage" the United States threatens amounts to the loss of existence for a state that has put survival above all other considerations. This is certainly a ferocious threat but could be very costly to implement entirely on the conventional level in a war. Next, adding engagement to the policy quiver has produced a variety of complications. Engagement can always be seen as undermining the credibility of deterrence, and that certainly has been the case here. Critics charge that engagement amounts to appeasement of the North, particularly when it requires not insisting on knowing about whether the North actually has nuclear weapons, or counseling a weak reaction when a North Korean submarine is caught landing saboteurs/provocateurs in the South, or

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canceling the annual Team Spirit exercise. This is held to be the wrong posture for sustaining deterrence credibility. Although deterrers are said to overestimate the problem of maintaining credibility (as noted earlier), critics will certainly raise the issue and decisionmakers must worry about it in any case. Another complication is that the United States has pursued better relations with the North in spite of ROK objections, which have been not to the general idea but to the specific steps taken. As a result there have been significant strains in the alliance relationship. 29 As the credibility of an alliance is related, most officials and analysts feel, to its cohesion, these frictions add to the uneasiness about credibility in various quarters. A further element in this debate is the fear that this prototypical "rogue state" will be too irrational to deter. 30 One objective of engagement is to breach the isolation of the North in hopes of strengthening its grip on reality. By the same token, however, an almost instinctive response to a target state suspected of irrationality is to insist that the deterrent threat be as stark and overwhelming as possible. Thus, setting aside nuclear deterrence, the ultimate in stark threats, leaves various analysts worried. Just as engagement might erode deterrence credibility, deterrence threats can undermine engagement. This has been a persistent problem for the United States in its relations with the North (as in its relations with China). For example, the negotiations that led to the Agreed Framework were halted several times by DPRK objections to the Team Spirit exercise, to U.S. shipments of additional military equipment to the ROK, and to steps by the United States to strengthen its own forces there. In short, strengthening deterrence may poison the relationship further and thus make deterrence seem even more important, crippling the chances for success via an engagement strategy. The United States has been inclined to seek a solution to this problem by keeping new military deployments as nonprovocative as possible, and also by seeking—for example through approaches to China—to locate relations within a broad multilateral framework for security management in the region. To date, however, North Korea, just like China and for roughly the same reasons, has not been amenable to this. By turning to an engagement policy, the United States contributes to impressions that North Korea will survive for some time. Engagement implies U.S. acceptance, to some extent, of responsibility for contributing to North Korean security and to the chances that the regime will survive at least in the short run. Merely by dealing with the North, the United States has enhanced the regime's legitimacy. Offering food assistance without political preconditions likewise raises the chances that the North will survive its current crisis. To these efforts the United States and ROK have added the proposal for Four-Party Talks, a proposal now backed by China, to revise the armistice arrangements that are now nearly forty-five years old, as

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a response to the North's abandonment of most diplomatic elements of the armistice. If the United States does not consistently behave as if North Korea's days are numbered and as if its only goal is elimination of that regime (which is the way it behaves about Cuba), then it becomes harder for the North to treat the continuation (or upgrading) of U.S. extended deterrence elements as simply hostile and provocative. With all its complications, leavening deterrence with engagement has continued unabated. 31 So intent is the United States on this, in fact, that it set aside within a very short time the provocative incident in which North Korea landed agents in the South by submarine, settling for a very limited North Korean apology. In the meantime, deterrence of a major North Korean attack remains unlikely to fail. North Korea has a capacity to attack at almost any time, not an ability to win or draw in any resulting war. In fact, the North is in desperate shape and lacks meaningful allies, and the absence of a plausible route to a satisfactory outcome of a war matters a good deal for the strength of deterrence. 32 The United States and ROK can readily and totally defeat the North in any war, and have promised that the North will not survive one. If the North attacks, it will be because it was not deterrable, rather than because the United States and the ROK did not do enough to deter it. Assuming that the North remains deterrable and that deterrence holds, the most complex problem now facing Northeast Asia is the prospect of managing the transition from two Koreas to one. Everyone would prefer a "soft landing"—i.e., the departure of the regime in the North in a peaceful and orderly fashion—but no one has any idea how to achieve this, and it is clear that the odds of bringing it about are not very good now.33 As was the case in Europe, the key will be whether the regime becomes so politically exhausted that almost no one will rise to defend it once it begins to lose control. No consensus exists as to when unification might occur, but recent developments lend support to the view that it cannot be far off, within the next few years at most. The major states will, in principle, find considerable overlap in their objectives on unification. First, all seem to agree that it is primarily the responsibility of the Koreans themselves. In addition, each wants an important say in the unification process; a peaceful unification process with no serious disruptions; no heavy costs and burdens from unification—or, if this is impossible, none that it must bear alone; and a unified Korea that is neither hostile nor under the dominant influence of any of the others. These should, through informal agreement at least, come to be seen by all four great powers as basic principles for their interaction with respect to Korean unification, and as the basis for contingency planning. In effect, the four-power talks will have to be broadened at some point to include Japan and Russia. Whether the great powers will be this sensible is open to question. In any case, although the details will

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raise endless complications, the problem now is inability to know when unification will occur and how it will actually take place. It is also difficult to predict the role that extended deterrence will play. One can only hope that the prior experience of collaborative containment of the DPRK's nuclear weapons program will facilitate collaboration in the unification effort. After Korea unifies, what happens to U.S. extended deterrence? When the threat from the North that is the basis for the ROK-U.S. alliance disappears, will the alliance do so as well? 34 Probably not, though the U.S. forces in Korea would likely be withdrawn. Those forces are there to provide deterrence and some initial defense against a direct and palpable threat, and it is hard to see where such a threat would arise to a unified Korea. ROK officials can readily generate hypothetical threats, especially on the basis of Korean history, but the United States is unlikely to agree with them. The revival in the neighboring great powers of imperial ambitions to seize the peninsula or militarily overawe it appears very unlikely. China should not pose a threat to Korea that an alliance would be required to offset; it has long signaled, via its extensive relations with the South, that unification under Seoul is acceptable. Furthermore, the ROK has consistently demonstrated that it wants to maintain very good relations with China, and few Korean analysts express about China anything like the uneasiness they openly offer about Japan. The two nations should have nothing serious to quarrel about, particularly if unification leads to more distance between the United States and the ROK, which is highly likely. 35 The same should be true of Korea's relations with Russia: Moscow and Seoul are on good terms, Moscow is ready to accept unification under the South, and there are no outstanding issues of great consequence between them. Korea remains fearful of Japan's ultimate intentions, but the validity of these fears is hard for the United States to accept. Nevertheless, the United States will not countenance a Japanese attack on Korea. With no specific threat to confront, a vestigial alliance will become an exercise in general deterrence, with little prospect of its eroding into immediate deterrence. This is why U.S. forces would depart. Even though the United States always says its troops will stay as long as the ROK wants them there, it is most unlikely that there would be public and legislative support in either country over the long run for a significant U.S. military presence. Suggestions of a regional security function for the U.S. bases and forces, in cooperation with ROK forces, will lack appeal unless U.S. (and ROK) relations with China really deteriorate. Nonetheless, the alliance will very likely continue. Historically—including during the Cold War—alliances tended strongly to be threatfocused and threat-induced. We now seem to have entered an era in which alliances are equally or more likely to be developed or sustained by the close consultative links that participation in collective regional and global

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management can provide. A s a result, remarkably f e w U.S. alliances or close security associations have been disturbed, much less canceled, by the decline of the Cold War. Given R O K aspirations to participate vigorously in regional security issues and the U.S. desire to use its alliances to provide a base for collective management of security and other matters—i.e., as a base for multilateralism—neither party will want to detach itself from the other. The association with Korea has been important to U.S. security management in the Far East, and the United States will seek to retain the alliance as long as it continues to bear those responsibilities. In this connection the alliance offers a way to continue trying to facilitate KoreanJapanese security cooperation, which has been a consistent U.S. objective. Because of its responsibility for Japan, the United States is going to continue to care about what happens in and to Korea. It will want to prevent any nuclear or other W M D proliferation there. It will not want to see Korea embroiled in conflicts with China or Russia that might become military clashes. It will want to enhance economic relations with what is now its seventh largest trading partner and one of the fifteen largest economies in the world. A n d it will want to see democracy flourish there. These are enduring interests a continuing alliance can serve. Looking further into the future, w e can speculate that the United States will be encouraged to reduce its military presence yet retain its commitment to Korea through the Revolution in Military Affairs, a subject now widely discussed in Washington. While the R M A is too elaborate to be explored here, its champions expect it to greatly enhance the ability of the United States to project power at a great distance with very high accuracy, and perhaps to defend against attack even by ballistic missiles. The result would be an ability to do great harm, with conventional forces, at limited cost. This would enhance the utility, and the credibility, of extended deterrence while enhancing its political sustainability by easing the burden of maintaining forces abroad. Considerations of this sort already helped persuade the Bush administration to withdraw nuclear weapons from the R O K ; if R M A continues to enhance U.S. conventional capabilities, then it will tend even more to encourage the withdrawal of U . S . forces and the continuation of the alliance. T w o serious contingencies would raise grave problems for a continued alliance. One is the possibility of a nuclear-armed Korea. There is speculation that unification might be f o l l o w e d by Korean development of nuclear weapons, one response by a small state to having to live amidst three great powers. 3 6 Given current U.S. policies and attitudes, if Korea follows this road, the alliance will be suspended. If Korea had ample provocation, the United States might reconsider, but it is hard to see where that provocation might come from. The other c o n t i n g e n c y — a n d one too plausible for c o m f o r t — i s a marked deterioration in U.S.-Chinese relations. If this happens, the United

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States will try to enlist Korea in the containment of China, and that will place Korea in an extremely awkward position. Much would depend on the nature of the specific issues involved; for instance, if Sino-U.S. relations become inflamed by a xenophobic Chinese seizure of foreign investments, including Korea's, and by considerable Chinese hostility toward those along its borders (as in the Cultural Revolution), Korea would be likely to join in a strong response. In other cases, however, strong U.S. hostility toward China would clash with Korea's obvious preference for broadening its economic opportunities and enlarging its political dealings with Beijing, for enlarging its contacts with the several million Koreans in China, and for minimizing any threats along its borders. Such a case might well develop out of a Sino-U.S. clash over Taiwan, which is something Korean diplomacy should strive mightily to prevent. This possibility is of particular interest now in light of the serious friction between the R O K and Taiwan, officially over Taiwan's dealing with the D P R K on nuclear waste disposal but actually over the growing ties between Seoul and Beijing. It will not be beneficial if the clash between Seoul and Washington over U.S. overtures to the North is duplicated on other matters. If the United States comes to regard the R O K , and then a unified Korea, as not amenable to U.S. interests in the region, it will not be inclined to minimize clashes with China out of deference to Korean views. These considerations are speculative, of course, but worth considering now because change of a severe sort is overdue in North Korea, change that could lead to unification. In the meantime, long-term thinking about the future U.S.-China relationship is flourishing in Washington, and much of it is not compatible with Korea's current conceptions of what its longterm relations with Beijing should be like.

Extended Deterrence Elsewhere in East Asia We can readily anticipate important changes in East Asian international relations in the next two decades, but it is not clear that these changes will introduce a highly combustible great power competition. East Asia still seems in the early stage of a long surge into modernity. Since this motion need not be based on territorial expansion or imperial exploitation, and since it requires broadening interactions with the outside world plus restraint on hierarchical, authoritarian rule at home, it need not culminate in rising rivalry and violence. Enhanced national pride and confidence will be factors, but these are unlikely to take on aggressive and combative overtones for some time to come. The benign security situation in the region today rests on the absence of fundamental or imperial conflicts among the most powerful states. They have disagreements over policies but not basic conflicts over power and status. It is a very common expectation, however, that such conflicts will emerge eventually, or that everyone is poised on the edge of such conflicts,

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or that the conflicts are already emerging in muted form: that is, the hegemonic United States is already containing China (a Chinese view); a ChinaJapan struggle for supremacy is inevitable (often heard in Korea); a ChinaAssociation of Southeast Asian Nations (ASEAN) conflict is brewing over Southeast Asia; Russian imperialism will certainly revive; Japanese imperialism is reemerging. . . . All of these expectations would, if borne out, have major implications for U.S. extended deterrence. In anticipating the next decade, shall we take them seriously? The most plausible developments are as follows. The United States seems determined to remain a Pacific power. As long as it does so, Japan will lack a national consensus for building its own separate defense capability and strengthening its assertion of regional leadership. 37 Thus the U.S. alliance with Japan will continue, not because Japan is in peril but as the best place to center the U.S. military presence. It offers the best framework for pursuing a slow rise in Japanese participation in regional security management. It is the equivalent of the way NATO and the European Union (EU) make larger German military responsibilities acceptable in Europe. It gives both countries more leverage in campaigning for multilateral efforts at security management, efforts that would be unacceptable if seen as a cover for either the end of the U.S. military presence or the rise of Japanese preeminence. Far more troublesome than any external threat to Japan will be the continued U.S.-Japan friction on economic matters, especially since Japan is once again heading toward exporting itself out of economic difficulty. The structural difficulties in the economic relationship remain. What is most likely to happen with respect to China? The most plausible of several possibilities is that China will remain focused on rapid economic growth and on coping with the domestic social and political problems that growth will provoke. It will open its society and economy even further, as part of achieving membership in the World Trade Organization and in order to facilitate the flow of capital and technology, and above all food and energy, needed for its growth. It will also slowly accept the utility of multilateral fora and vehicles for regional management. Since multilateralism will not dominate the region any time soon (see below), this will not mean very much, but it will give China ways to signal that it is not a real threat. China will gradually shift further, therefore, toward avoiding the sorts of foreign policy stances and actions that alarm the neighbors and incite containment sentiments. This shift will probably come to apply in the dispute over the South China Sea, a place where Chinese belligerence would consolidate anti-Chinese sentiments from Japan to the United States to Southeast Asia. If this general prediction holds, then U.S. extended deterrence will not have to face severe challenges from China for some time in the future. The United States will continue seeking engagement rather than containment, with extended deterrence in the background, accepting China's growing weight as long as China is disposed to continued cooperation.

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What is most likely to poison the development of this relatively sanguine future is the Taiwan problem. If China behaves in a very provocative manner, nearly everyone will begin to oppose placing Taiwan's advanced military equipment, huge foreign exchange reserves, productive capacity, and exports under Chinese control. Consolidation of these powerful assets with a threatening China would certainly be seen as unacceptable. Is Russia going to be a major threat? It is hard to see how and why. At present it is all the Russians can do to garner a modicum of attention or a hearing in East Asian security affairs. The chief Russian theme is the need to move toward multilateral efforts; in such a context, Russia couldn't be excluded from important discussions and decisions. Other than arms, Russia has little to offer, and it has much to gain by being on good terms with all the major players. It continues, therefore, to promote its ties with China, and it is slowly rebuilding its contacts with the DPRK. It has recently opened discussions on military matters with Japan and has indicated that it does not regard the U.S.-Japan alliance as a threat to regional stability. U.S. extended deterrence is most unlikely to be challenged by Russia any time soon. In Southeast Asia it is hard for a number of reasons to be certain about the future success of ASEAN. Important political change is coming in Indonesia, Vietnam is not going to be a normal member of the association in many ways for years to come, and ASEAN is for the first time explicitly trying to engage in security management—something it eschewed for most of its existence as too difficult and sensitive. Still, the members know that it is ASEAN alone that makes them significant actors in the region and that, collectively, they have a far more impressive basis on which to interact with China. The whole history of ASEAN is of the members creatively recognizing the value of hanging together in spite of pressures and temptations to do otherwise. 38 An effective ASEAN limits the burdens U.S. extended deterrence might have to bear in Southeast Asia, which is one reason the United States remains its strong supporter. Thus the United States will continue to have a strong defense connection with Australia and over-the-horizon kinds of links to ASEAN, enough security involvement to provide some comfort about possible contingencies but not an obvious military presence in the area. In light of these probable developments, it is difficult to accept the more worrisome scenarios for the region that are often broached. For instance, in the next two decades East Asia seems far from ready to duplicate the intense arms racing and increasingly confrontational behavior that characterized Europe after 1890. No urge to dominate, via a great war if necessary, seems likely to shape the foreign policies of the major states. In this sense, it is hard to conclude that the region will be caught in the throes of a power transition that will drive some of the major states into war. It is unlikely that multilateralist approaches to security, and to handling other

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problems that can have security implications, will flourish with no broad multilateral base on which to build. For instance, the endless proposals that have appeared on multilateral security arrangements for Northeast Asia neglect the political reconciliation and acceptance that are the prerequisites for any such step and which do not now exist. 39 Multilateralism in Europe has rested on an acceptance—a sometimes eager acceptance by various major participants—of constraints on their independent action. This is precisely, and quite correctly, what China, North Korea, and some other Asian states fear from multilateralism. The United States has yet to really succeed in bringing about a high level of trilateral security cooperation with Korea and Japan despite years of effort; more ambitious endeavors, involving participants over whom U.S. leverage is far smaller, will not result in great progress any time soon. The most plausible form of serious security cooperation is a great power concert, building on the great power cooperation already employed in dealing with North Korea and likely to be needed again. A concert would offer a variety of benefits and would be in keeping with the professed objectives of all four to avoid serious conflicts and to continue to engage one another. A concert would be more comfortable for them than trying to construct and operate a much larger multilateral institution. Japan is now proposing a trilateral U.S.-China-Japan security discussion as a regular feature of their relations—moving to a full concert would not take much more. What Will the United States Be Willing to Do? The other broad dimension that determines the success of extended deterrence is the level of effort the deterrer is willing to sustain. How will U.S. extended deterrence fare on this score? To start with, if no serious threat emerges, the United States will soon (within Clinton's second term) decide to cut its forces in East Asia (as well as in Europe) by 10 or 15 percent. The hints and trial balloons appearing in the media have been unmistakable. 40 The relevant factors are as follows. There is no pressing threat in either region. The current force levels obtain only because the United States committed itself to possessing the ability to fight two major regional wars simultaneously. But it does not and cannot possess such a capability at its present levels of defense spending. There is no sign that the current administration will authorize any increased defense expenditures beyond those already scheduled for procurement of advanced weapons in the next few years. The only real option is to reexamine the two-regional-war standard, which has always had severe critics. 41 Reexamination is particularly relevant if the United States is to maintain important capabilities in peacekeeping and peace enforcement for cases like Bosnia; such capabilities are now very difficult to fund with present and prospective defense budgets.

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The last Quadrennial Defense Review (1997) examined the two-regionalwar standard and concluded that in maintaining the standard the United States should rely more on others to help with regional security management and should pursue modest cuts in defense spending (15 percent) and military personnel (60,000). Since then, the politically painful process of closing military bases at home and finding the funds for defense spending when no major enemies loom has made for recurring pressures from Congress and others to cut U.S. forces outside the country. The United States has been programmed for a reduction of its forces in Korea of roughly six thousand since early in the Bush administration— a reduction suspended only because of the problem of North Korea's nuclear weapons program. 42 With the North weaker than ever and the Agreed Framework so far holding up, if efforts toward normal relations with the North make progress, the reduction plan will reappear. There will probably be a roughly similar reduction in U.S. forces in Japan at the same time, since some of those forces are earmarked to support a U.S. military effort in Korea if necessary. Troop reduction in Japan is also attractive as a way of meeting pressures from the Japanese public, which continues to find the U.S. military presence disturbing, without actually admitting to public concession. 43 What will this mean for the U.S. ability to militarily uphold its commitments? Opinions vary considerably. 44 In a relative sense, the United States is militarily stronger than it was in the latter stages of the Cold War: that is, it retains much of its military capabilities but confronts a much weaker set of foes and potential opponents. It is also busy exploring how to continue to add to its military effectiveness via the exploitation of new technologies. Success here would permit cuts in forces with no loss in capabilities. There is more to operating extended deterrence than having forces available. Also needed is the requisite political will and support. This will be a highly questionable aspect of U.S. extended deterrence in the future. For one thing, the United States has long been practicing extended deterrence in East Asia without having to pay serious costs. The North Koreans never did invade and they gave up their nuclear weapons program without having to be literally forced to do so. Russia never did challenge the United States or Japan in a military confrontation in the region. China and the United States functioned as allies in the containment of the Soviet Union. As noted earlier, the states in East Asia have been working hard for years at mitigating their conflicts and promoting their cooperative endeavors. The United States got through the long years when the Vietnam syndrome most clearly applied without a scratch. It has yet to be demonstrated anywhere in the world that U.S. extended deterrence can readily survive a highly frustrating military encounter, particularly one with significant casualties in a location perceived

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by the U.S. public as relatively unimportant. 45 The public was not supportive of the plans to invade Kuwait or to occupy Haiti. When interventions went very badly in Somalia and (during the Reagan administration) in Lebanon, public and congressional outcry forced their swift termination. This would almost certainly have been true as well of the Bush intervention in Panama and the Bosnian effort—large casualties from the start in those cases with signs they would continue would have doomed both efforts. Extended deterrence in East Asia will be highly vulnerable to the same outcome for many plausible contingencies. A highly multilateral intervention could mitigate such a reaction, but a truly multilateral character for any application of U.S. extended deterrence in East Asia is unlikely. For instance, one can readily imagine U.S. naval and air forces sent to assist Taiwan to ward off an invasion, but it is much harder to envision anyone else's forces being sent as well. U.S. extended deterrence is no longer anchored in a profound public concern or cohesive perspective such as that provided by anticommunism and the Cold War. It rests on little more than the general understanding that the United States is the world's most important country and has certain responsibilities as a result, including a requirement to be "involved" abroad, and that this requires maintaining a significant military capability to act. There is nothing on the horizon that would re-create the support available during the Cold War, support that was relatively distinctive among democratic states in that era. The Clinton administration has worked out a general policy framework for military interventions that reflects the limited public support now normally available, displaying "an extraordinary concern about casualties, at least as much emphasis on getting out as getting in, and at least as much emphasis on what you are not going to do as what you are going to do." 46 From this perspective alone, the United States has a significant credibility problem with respect to its extended deterrence in East Asia. The problem could readily get much worse if a particularly unhappy case emerges. The difficulty of sufficiently reassuring the states in the region, though not insurmountable, will continue to be substantial. Increasing limitations in terms of public support have also played an important role in the U.S. approach to the redesign of NATO. One element in that renovation is provision for security problems in the European area that may call for military action but in response to which the United States is not inclined to act. Steps are being taken to increase the capacity of the Europeans to act on their own. It is interesting to think about an analogous approach in the Far East. The United States has been urging Japan to accept more responsibility, but in the case of a specific intervention, Tokyo will not do so in the absence of U.S. leadership and participation. Nor is anyone else in the region ready to accept such a Japanese role. As for participation by others, the organizational framework is missing through

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which a coordinated Asian intervention might supersede U.S. participation. Development of such a framework is not as difficult to imagine as it once was, with governments ranging from Japan to Australia now exploring the possibilities. Nevertheless, it certainly will not come in the next decade or more and may not emerge until the pressure of events—such as another case like Cambodia—forces the pace. Thus there is less to fall back on in the Asian arena if some costly future U.S. intervention—there or elsewhere—poisons the domestic political situation for upholding U.S. extended deterrence.

Conclusion The United States will continue practicing extended deterrence in East Asia for some years to come. It will also keep its fingers crossed that it doesn't have to do much to sustain it, for fear that the necessary public support will not be there. East Asians will continue to operate officially as if the extended deterrence is real and effective, and will prepare for the possibility that it is only fleeting and partially real. Continued evidence that the United States remains engaged will not eliminate Asian uneasiness about the present and future security situation. If extended deterrence has not in fact been as important in East Asia as the United States likes to think, the gradual ebbing of the U.S. role will not greatly affect prospects for the emergence of a peaceful and stable region. But since no one can be sure about this, no one will want to alter abruptly the military presence of the United States and its web of commitments in East Asia. If there were a pattern of developments on the part of both the United States and its Asian associates that promised to completely outmode the broad approach that is now of many years standing, then the promise of more of the same would be cause for alarm. But as of now there is no such pattern in evidence.

Notes 1. For purposes of testing deterrence theory or a deterrence strategy, the definition of a deterrence failure is much more complex since a failure requires that a deterrence threat be unambiguous and be clearly understood by the potential attacker—otherwise it is not a deterrence failure but an inadequate application of it. 2. Recent theoretical analysis, bolstered by selected case studies, asserts that the problem of maintaining credibility in the eyes of an opponent is highly exaggerated. The difficulty of successfully reassuring allies is underappreciated and probably impossible to achieve. See Jonathan Mercer, Reputation and International Politics (Ithaca: Cornell University Press, 1996). 3. Of all the dimensions of international politics, the one about which the field lacks the most understanding is time. Often we lack even a rudimentary way of estimating the time it will take for selected developments to occur.

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4. It should be noted that some of the bilateral alliances in Asia were very intimate. The U.S.-ROK alliance, for instance, went further in melding the respective parties' military forces in case of attack than NATO, and this appears to have been true for the alliance with the Philippines. 5. Richard K. Betts, "Wealth, Power, and Instability: East Asia and the United States After the Cold War," International Security 18:3 (winter 1993/ 1994): 34-77. 6. This was just as had been the case during World War II. The lengths to which General MacArthur carried his effort to change this was what eventually led to his being fired. 7. Japan is even upgrading and expanding its intelligence capabilities. See "Tokyo Unveils a Spy Agency," International Herald Tribune, January 21, 1997. 8. For an argument that the United States could well do without its commitment to Korea, see Doug Bandow, "Leaving Korea," Foreign Policy 11 (winter 1989/1990): 77-93. 9. Patrick M. Morgan, "Security Issues: New Threats, Old Threats, No Threats," in George Yu, ed., Asia's New World Order (London: Macmillan, 1997). 10. The limits of Asian-European security cooperation are displayed in the most extensive potential agenda for it yet proposed. See Dong-Ik Shin and Gerald Segal, "Getting Serious About Asia-Europe Security Cooperation," Survival 39:1 (spring 1997): 138-155. 11. See, for example, Denny Roy, "Hegemon on the Horizon? China's Threat to East Asian Security," International Security 19:1 (summer 1994): 149-168; Richard Bernstein and Ross H. Munro, "The Coming Conflict With America," Foreign Affairs 76:2 (March/April 1997): 18-32. 12. For similar assessments, see Michael G. Gallagher, "China's Illusory Threat to the South China Sea," International Security 19:1 (summer 1994): 169-194; Fei-Ling Wang, "Chinese Security Policy in Northeast Asia," in TaeHwan Kwak and Edward A. Olsen, eds., The Major Powers of Northeast Asia: Seeking Peace and Security (Boulder: Lynne Rienner Publishers, 1966), pp. 41-68; Gary Klintworth, "Greater China and Regional Security," Australian Journal of International Affairs 48:2 (November 1994): 211-228; and David Shambaugh, "Chinese Hegemony Over East Asia by 2015?" The Korean Journal of Defense Analysis 9:1 (summer 1997): 7-28. 13. A nice summary of several of the latest studies that come to this conclusion is contained in Paul H. Kreisberg, "Threat Environment for a United Korea: 2010," The Korean Journal of Defense Analysis 8:1 (summer 1996): 77-109. In that same issue, see also Jing-dong Yuan and Yuchao Zhu, "Sizing Up Chinese Military Buildup: The Limitations to Defense Modernization," pp. 231-251. 14. The commander of U.S. forces in the Pacific has recently indicated that a significant Chinese power projection capability is fifteen or more years away. See "US View of PRC Threat" in Northeast Asia Peace and Security Network Daily Report, May 20, 1997, Berkeley, ftp://ftp.nautilus.org/napset/daily_reports. 15. For background see Jennifer Weeks, "Sino-U.S. Nuclear Cooperation at a Crossroads," Arms Control Today 27:4 (June/July 1997): 7-13. 16. China's trade with the ROK, for instance, is now approaching $20 billion annually. 17. For a good illustration of just what the United States fears, in this case an argument that a unified Korea must either have an alliance with the United States or develop its own nuclear weapons, see Woosang Kim, "Korea's Security Strategy for the 21st Century," in Tae-Hwan Kwak and Thomas L. Wilborn, eds., The U.S.ROK Alliance in Transition ("Seoul: Kyungnam University Press, 1996), pp. 167-180.

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18. See, for instance, Leon V. Sigal, "The North Korean Nuclear Crisis: Understanding the Failure of the 'Crime-and-Punishment' Strategy," Arms Control Today 27:3 (May 1997): 3-13. 19. It is an interesting question whether there is a similar implied commitment to go to the assistance of any well-established democracy threatened by internal sources. Clearly there is no such commitment to a fledgling democracy. 20. "Now that Taiwan has officially embraced the forms of democracy, its cause has acquired a new moral dimension for liberal Americans . . ." in Robert O'Neill, "The Security of South-East Asia: The Role of the United States and Europe," CAPS Papers No. 12, Chinese Council of Advanced Policy Studies (November 1996): 7. 21. This is evident in the results of USIA and other polls in the past three years. See in particular U.S. Information Agency, The New European Security Architecture, Volume II: Public Attitudes Toward European Security (Washington, D.C.: Government Printing Office, 1996); and Steven Kull, "Is There Sufficient Public Support?" NATO Review (January 1997): 9-11. 22. The point is that the U.S. alliances help make it possible for China to carry on a considerable, and many would feel a justifiable, military modernization without disrupting the regional system. 23. In a speech in Beijing, the chairman of the Joint Chiefs of Staff, General Shalikashvili, referred to the security situation in Korea as "worse than it was twenty-five years ago." "Shalikashvili 5/14 Speech at China Defense University," U.S. Information Agency text, Washington, D.C., May 14, 1997. This seems quite untrue but is a good indication of how dangerous the situation there remains. 24. For reports on the deployment of the Rodong 1 missile and its range, see "DPRK Missile Threat," Northeast Asia Peace and Security Network Daily Report, May 15, 1997, Berkeley, ftp://ftp.nautilus.org/napset/daily_reports; and "DPRK Missile Threat," Northeast Asia Peace and Security Network Daily Report, May 16, 1997, Berkeley, ftp://ftp.nautilus.org/napset/daily_reports. 25. See David Wright and Timur Kadyshev, "The North Korean Missile Program: How Advanced Is It?" Arms Control Today (April 1994): 9-12. The CIA testimony by then Director James Woolsey several years ago left open the distinct possibility that the North had a few nuclear weapons, and the recent high-level North Korean defector has indicated too that he believes the North has some nuclear weapons. 26. With analysts disagreeing deeply about how to characterize the regime, it is consistently difficult to understand how strong the current leadership is, and how likely the regime is to survive. For a thorough and careful recent assessment see Amos A. Jordan and Jae H. Ku, "Prospects for North Korea: Facing a Regime Crisis and a Regime Collapse?" in Tae Hwan Ok and Gerritt W. Gong, eds., Change and Challenge on the Korean Peninsula: Past, Present and Future (Seoul: The Research Institute for National Unification, 1996), pp. 18—4-1. 27. See Larry Niksch, "The Agreed Framework View from Washington," in Kwak and Wilborn, The U.S.-ROK Alliance in Transition, p. 141-152. 28. For a valuable discussion of how the U.S. nuclear umbrella continues to exist for the ROK and Japan, as retaliatory now in nature rather than first-use, see Shinichi Ogawa, "The Nuclear Security of Japan and South Korea: A Japanese View," The Korean Journal of Defense Analysis 9:1 (summer 1997): 29-50. 29. While space precludes exploring this further, the major disagreements have been (1) initial ROK complaints the United States was moving too slowly, then complaints that it was moving too quickly; (2) U.S. complaints that the ROK was mainly awaiting North Korea's collapse instead of dealing with it; (3) ROK

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desire to have resumption of ROK-North Korea talks be treated by the United States as a prerequisite for progress in U.S.-North Korean relations; (4) ROK unhappiness at U.S. expectations that the ROK bear most of the costs of the Agreed Framework without having participated in the negotiations; (5) ROK complaints that the Agreed Framework leaves it unclear whether the North actually developed a nuclear weapon; (6) ROK objections to a perceived U.S. willingness to put nonproliferation objectives ahead of ROK interests; and (7) U.S. objections to ROK commentaries ignoring the elaborate consultation on the U.S.-North Korea negotiations that had taken place. See Don Oberdorfer, The Two Koreas: A Contemporary History (Reading, MA: Addison-Wesley, 1997); Dong Eon Hwang, "Disagreements Between Washington and Seoul over Policies Regarding North Korea: Causes and Problems," East Asian Review 9:1 (spring 1997): 35-48; Michael J. Mazarr, North Korea and the Bomb: A Case Study in Nonproliferation (New York: St. Martin's Press, 1995). 30. There has been something of a debate about whether North Korea is too irrational to deter, which has not been very enlightening. Many analysts feel that since the North has craftily manipulated the outside world via its threat to develop nuclear weapons, it is clearly rational. Actually, the case for the North's irrationality is overwhelming—its perspectives are terribly skewed, its policies have placed the regime and the nation in great jeopardy unnecessarily, and it displays many signs of paranoia. Many irrational actors are very crafty. However, there is no consistent connection between irrationality and being impervious to deterrence, so concluding that the North's leadership is irrational tells us nothing definitive about whether deterrence will work. It also tells us little about whether offering a much starker threat of destruction is the best way to apply deterrence, contrary to the usual assumption. 31. As Robert Manning notes, North Korea is now the second largest recipient of U.S. aid in Asia! That is quite a shift toward engagement. See Manning, "Diplomatic Hiatus in the Korean Endgame: Time to Step Back and Reassess Next Steps," Northeast Asia Peace and Security Network Special Report, October 14, 1997, ftp://ftp.nautilus.org/napset. 32. See John Mearsheimer, Conventional Deterrence (Ithaca: Cornell University Press, 1983). 33. A solidly pessimistic view: William Taylor, Jr., and Abraham Kim, "Is Peaceful Unification Possible?" The Korean Journal of Defense Analysis 9:1 (summer 1997): 51-78. 34. For a discussion of this question and support for the continuation of the alliance, see Jonathan D. Pollack and Young Koo Cha, A New Alliance for the Next Century: The Future of U.S-Korean Security Cooperation (Santa Monica: RAND, 1996). Solid discussions on all aspects of the alliance can be found in Kwak and Wilborn, The U.S.-ROK Alliance in Transition. 35. For considerable detail in support of this view, see Kreisberg, "Threat Environment for a United Korea: 2010." 36. See, for example, the discussion in Kim, "Korea's Security Strategy for the 21st Century." 37. Japan would not find it easy to take on the entire burden of defending itself even if U.S. protection began to slip away. On the domestic barriers that would have to be overcome, see Peter J. Katzenstein and Nobuo Okawara, "Japan's National Security: Structures, Norms, and Policies," International Security 17:4 (spring 1993). 38. See Yuen Foon Khong, "ASEAN and the Southeast Asian Security Complex," in David A. Lake and Patrick M. Morgan, eds., Regional Orders: Building Security in a New World (State College, PA: Penn State University Press, 1977).

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39. For examples of such proposals, see Young Whan Kihl, "Confrontation or Compromise on the Korean Peninsula: The North Korean Nuclear Issue," The Korean Journal of Defense Analysis 1 (winter 1991): 101-129; Andrew Mack, "A Nuclear Free Zone for Northeast Asia," IGCC Policy Paper No. 9 (San Diego: Institute on Global Conflict and Cooperation, University of California, San Diego, 1994); Kook Chin Kim, "An Approach to Multilateral Security Regimes in Northeast Asia—With a Focus on the South Korean Perspective," East Asian Review 6 (winter 1994): 3-16; and James E. Goodby, "The Context of Korean Unification: The Case for a Multilateral Security Structure," in Phil Williams, et al., eds., Security in Korea: War, Stalemate, and Negotiation (Boulder: Westview Press, 1994), pp. 233-249. 40. Just two of many examples: Bradley Graham, "Pentagon Chiefs Rethinking Feasibility of 2-War Scenario," International Herald Tribune, December 13, 1996; and Paul Richter, "Are 100,000 Troops in Asia Too Many? Pentagon Takes a Look," International Herald Tribune, February 5, 1997. 41. One example: Laurence J. Korb, "The Pentagon's War on Thrift," Afew York Times, May 22, 1997. 42. U.S. forces in the ROK now total approximately 37,000, with a prepositioned set for a heavy brigade. While U.S. nuclear weapons have been removed, the tension over the North Korean nuclear weapons program led to further upgrading the already high level of conventional equipment of those forces. 43. A large majority of the Japanese people have expressed support for a gradual withdrawal of U.S. forces from Japan. See W. Lee Howell, "With or Without You: The U.S.-Japan Security Alliance and the Korean Peninsula," in Ok and Gong, Change and Challenge on the Korean Peninsula, pp. 42-58. The poll data can be found in Everett Carl Ladd and Karlyn H. Bowman, Public Opinion in America and Japan: How We See Each Other and Ourselves (Washington, D.C.: AEI Press, 1996). 44. For instance, Brian Sullivan emphasizes the growing strength of the U.S. armed forces (though he worries about the ability of the United States to use them well in East Asia) in "The Reshaping of the U.S. Armed Forces: Present and Future Implications for Northeast Asia," The Korean Journal of Defense Analysis 8:1 (summer 1996): 129-152. Taeho Kim asserts that "after a series of recent cuts in defense budgets and force levels, the U.S. is ill-prepared to meet major regional contingencies in areas such as Northeast Asia . . . " in a paper prepared for American Defense Annual 1996. 45. In the words of a congressional aide, "If the Serbs want us out of Bosnia, they know exactly how to do it. They kill a couple of U.S. soldiers and, boom, public support will collapse." In Michael Dobbs, "The 'Clinton Doctrine' of ScaledDown Force," International Herald Tribune, November 18, 1996. 46. Dobbs, "The 'Clinton Doctrine.'" The words are those of Richard Haass, former national security officer in the Bush administration.

4 Predator States and War: The North Korean Case MICHAEL J . MAZARR

In 1989, it finally became undeniably obvious that North Korea was assembling the elements of a nuclear weapons program. The United States, and through its briefings South Korea and others, had long known of the existence of a North Korean nuclear power plant complex at the mysterious Yongbyon site. That disturbing piece of evidence was now joined by several others: the North was building a reprocessing plant capable of removing weapons-usable plutonium from the spent fuel rods of its reactors; it was apparently conducting explosive tests of the sort required to design a nuclear warhead; and it had begun construction on a new, massive nuclear reactor that would pump out enough plutonium for at least several nuclear weapons a year. To many observers, this behavior was unsurprising. North Korea was, after all, an aggressive, totalitarian, militaristic state. Its ideology proclaimed an ultimate goal of reunifying the peninsula under Pyongyang's rule, by force if necessary. And through its repeated recourse to terrorism and provocative military incursions against the South, North Korea had proved itself willing to use deadly violence for its own ends. In other words, North Korea was, and remains, in a category of countries that have been called "rogue states." In this chapter, I will use the term "predator states" to describe roughly the same class of nations, and discuss North Korea as one detailed example of the phenomenon. Predator states are nations that, for ideological, political, economic, cultural, historical, and also systemic reasons, develop aggressive, expansionistic foreign policies. They share a set of roughly similar and identifiable internal characteristics. They are responsible for most of the interstate warfare in the last century. As in the case of North Korea, they inject into world politics much of the tension that is found there, and they create most of the threats to U.S. national interests that call for a military response. 75

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The reality of predator states has important practical implications— implications that amount to nothing less than a new guiding purpose for U.S. foreign policy. If predator states indeed account for the majority of conflict and threats to U.S. and allied interests, then it naturally follows that the primary objective of U.S. policy should be both to contain and undermine those predators that already exist, and to prevent the rise of new ones. Yet that twofold responsibility, relatively straightforward in theory, turns out to be very complicated in practice: identifying predators and choosing the right strategies to prevent or counter their rise are impossible to do perfectly and very hard to do well—partly, as neorealists would remind us, because of the character of an anarchic world system rife with misperception and miscalculation. These difficulties, as well as the continuing utility of the predator state model, are evident in the U.S. response to the North Korean nuclear program. Merely because the North qualifies as a predator state does not mean that the U.S. and South Korean response can be purely militaristic bluster with the goal of intimidation and deterrence. As in the case of individuals, the aggressive characteristics of predators often have their roots in feelings of weakness, of insecurity, of past insult and injury. Very seldom does a predator emerge with an unalloyed sense of superiority and desire for conquest and power; more commonly, its aggression stems from an angry dissatisfaction about the way in which it was treated in the past, combined with a host of domestic, social, and economic processes. With respect to North Korea, I will argue that the proper response to its aggression is not merely deterrence, but a combination of that strategy with much larger doses of reassurance and engagement than the United States and South Korea have attempted to date. Such a strategy responds to the paradoxical nature of the predator—aggressive and yet weak, militarily threatening and yet easily menaced, apparently intent on beginning a conflict and yet as likely drawn into war by provocations as concessions.

The Predator State A predator state is one that, because of some combination of internal factors (which can include reactions to external or systemic factors), becomes prone or committed to aggression. In general I have in mind territorial aggression, but one could imagine a state that conducts its predation through terrorism.1 States also exist that are predatory only in the economic sphere but nonpredatory, even neutralist or isolationist, in the political-military realm. 2 The list of basic characteristics of a predator state is not fixed and could vary with the specific nation-state under consideration. A critical point to understand about this concept from the beginning is its necessary

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haziness; the notion of a "predator state" is a rough-and-ready category that will overlap at several borders with neighboring ones like praetorian, imperialistic, and mercantilistic states. Nonetheless, each of the following elements seems to be present in most cases to a greater or lesser degree. It is the way they work together—the critical mass created by several of them operating in concert—that is decisive in the creation of a predator state. The first and most fundamental criterion of a predator is the lack of full democracy. No predator on record, at least in the modern era, has boasted anything approaching a fully democratic polity. In some cases, such as Nazi Germany or imperial Japan, a dictatorship operated with at least the de facto support of a large proportion of the population, if not a majority. Nonetheless, the checks and balances involved in a true democracy seem generally effective in dampening predation. In their internal character, predators also generally suffer from social and economic difficulties, which either recommend or mandate predation. A stagnant society may suggest aggression as a means of distracting and rallying the attention of the populace. The prospect of long-term economic decline, an ongoing or emerging civil war, or other forms of socioeconomic weakness may have the same effect. In short, predator states are often domestically unstable for some fundamental reason, and this instability helps to direct the attention of their leaders to foreign adventures, both for the perceived economic benefits (note here Iraq's effort to increase oil prices and acquire more reserves through its invasion of Kuwait) and to create a social rallying effect. Predators also generally possess some form of expansionist ideology or culture. Some actively promote the idea that neighboring territories belong by right to the predator; others merely portray themselves or their cultures as superior to other countries and thus in possession of some form of overlordship. The scope here ranges from Nazism to pan-Arabism, from the Soviet and Chinese communist claims of ultimate world hegemony to North Korea's belief in reunification of the Korean peninsula under its leadership. In some cases, these ideologies emerge as reactions to past abuse by other countries, a common element in predators. Such states as North Korea, Germany before World War II, and Russia have carefully cultivated ideologies of victimization. The politics of memory operates powerfully in all these countries, causing them to react by forming aggressive, predatory instincts with the avowed purpose of avoiding future abuse. For predators, moreover, economics is not generally an overriding priority. For the most part in these countries, military, nationalistic, and territorial issues continue to play a large role in domestic politics and in the state's approach to the world. Thus Iraq and North Korea for many years ignored economic competitiveness and growth issues (easier to do in

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Iraq's case because of its oil revenues) in favor of the politics of nationalism. Even today, although both seem intent on overcoming economic isolation, neither has truly placed economic issues front and center on its domestic agenda. As a consequence of these other characteristics, predator states are distinguished by the degree to which they maintain a large military force. Their military budgets as percentages of total domestic production tend to be very high, as indeed they must to support an expansion-oriented military force. In sum, then, a predator state is generally an authoritarian or dictatorial military power characterized by an unstable society, an expansionist or imperious ideology (which may have emerged as a reaction to long-standing victimization), a focus on political and military issues rather than economics, and a powerful military force. North Korea, it almost goes without saying, fits this description like a glove. The North represents a prototypical case of a predator state, and U.S. policy toward the North thus constitutes a major case study of the difficulties of dealing with predators. Perhaps the most important thing to keep in mind from this discussion, however, is that a predator state is not an uncomplicated unitary actor with a singular personality. Certainly, its ideology, dictatorial rule, and impulse to expand render it dangerous and hostile, and demand deterrence, containment, and other tough responses. But predators are also weak in important ways: many have internal instability that has caused them to seek expansion; most have a sense of victimization at the hands of their neighbors or other outside powers; and isolated, dictatorial governments can worry about their own power and authority in ways an outside observer might not expect. Therefore, the fundamental nature of predators is a split personality—strong, hostile, and aggressive, both objectively and in the eyes of the outside world; but also, in the eyes of their own leaders, subject to imminent and serious threats from many quarters. I shall argue below that the North Korean case demonstrates how this split personality constitutes the fundamental policy challenge of predators, and that U.S. and South Korean diplomacy toward North Korea offers a promising model for overcoming the dilemma. It hardly needs emphasizing that predator states are engines of war. Their very nature speaks to the issue: they are, in character and outlook, inclined—and in some cases bound—to expand. They cast a perpetually covetous eye on the territory of their neighbors. They thrive on confrontation and wither in the face of peace. Given this analysis, it should hardly come as a surprise that predators seem responsible for most wars in the modern world, and many ancient ones as well. The convulsive European wars inaugurated by Napoleon, World War II, the Korean and Vietnamese conflicts, the drawn-out Cold War, and dozens of others stand out as the work of predators. This fact supports the seriousness with which the outside world treats the risk of North Korean aggression—as a predator state, it is

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inclined to war, and arguments for new policies of reassurance or engagement must continue to deal with this disturbing reality.

T h e Decline of Predator States History is slowly edging predators into its rubbish heap, for a variety of reasons. This process is not going on equally all over the world; the end of predation will arrive at different times and in different ways throughout the world. But it will arrive. This claim, which I will investigate in some detail, furnishes a crucial element of context for thinking about policy toward North Korea. It supports, I will contend, a policy of limited or conditional engagement toward the North, as toward any predator, as the best way to encourage change and reduce the risk of war. Time is not on the side of North Korea, or other predators; objective economic, psychological, social, political, and technological factors are working to undermine their power. This being the case, a policy of conditional engagement, of trading economic and political contacts for a reduction in the military threat posed by the North, is very much in the interest of the United States and South Korea. This is precisely the sort of bargain represented by the 1994 Agreed Framework, which can serve as a model for future policy. Four factors currently operative that signal the decline of predator states can be identified as socioeconomic development, democracy, nuclear weapons, and evolutionary learning. Decline will arrive, first of all, because of continued worldwide socioeconomic development. The simple fact is that extremely rich states do not engage in predator behavior; they have become "postimperial." Fouad Ajami writes that in the United States, Bill Clinton is the "first post-imperial president for a post-imperial society. We have little taste for burden abroad, we rush here and there, now and again, but without much conviction." 3 The reason is simple: to the citizens of a highly advanced, prosperous nation, predatory military action appears both as unnecessary and as a major threat to continued economic development. One can hardly find a better description of the underlying process at work than Joseph Schumpeter's, from 1919. Because the needs that created imperialism have "passed away for good," he contended, "it too must gradually disappear," though it is revived to some degree with every new war. It tends to disappear as a structural element because the structure that brought it to the fore goes into a decline, giving way, in the course of social development, to other structures that have no room for it and eliminate the power factors that supported it. It tends to disappear as an element of habitual emotional reaction, because of the progressive rationalization of life and mind, a process in which old functional needs

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are absorbed by new tasks, in which heretofore-military energies are functionally modified. "If our theory is correct," he concluded, "cases of imperialism should decline in intensity the later they occur in the history of a people and of a culture," a general rule that seems to hold true at least within the period of modernity. 4 "A purely capitalist world therefore can offer no fertile soil to imperialist impulses," Schumpeter contended 5 —an argument that has been taken up and made with increased vigor by such recent theorists as Richard Rosecrance and Robert Keohane. Jack Snyder, discussing praetorian states, cites historical cases in which benign international circumstances helped to undermine, among ruling classes in would-be predator states, incentives for seeking war. During the 1920s, he argues, "Weimar Germany and Taisho Japan were societies on the cusp of emerging from praetorian patterns," drawn into the liberal world trading system by the expanding trade of the time and reassured in the security context by a number of arms control regimes. "When this relatively liberal international order collapsed with the Depression at the end of the 1920s, however," Snyder explains, "the liberal regimes in Germany and Japan collapsed along with it." 6 A second reason for predation's decline is the rise of democracy. Democracy's growth, in terms both of the total number of states that are democracies and the percentage of total world states they comprise, is undeniable. Although the debate over the connection between democracy and war is a spirited one, in general democracies are ill-suited to the requirements of predation. In terms of the characteristics of predator states, for example, in democracies people generally are allowed to focus, without demagogic distractions, on what is most important to them—prosperity. Unless predation serves that goal, therefore, democracies will generally produce little popular outcry for war. There are exceptions, of course, as the popular response to insults to national pride can be fierce, but such insults of a scale that justify war are most likely to originate from predators. 7 Nuclear weapons provide a third compelling reason to believe that large-scale predation is a thing of the past. If the leaders and people of a predator state realize that they will annihilate themselves in the course of their aggression, even the predator's powerful "rational" impulses toward war can pale into insignificance. Not all predators, of course, confront nuclear-armed neighbors, but nearly all major powers do, and this fact cannot fail to have an important influence on the prevalence of predation at the level of grand geopolitics. We can already see the hints of these first three barriers to predation in North Korea. Its focus on economic prosperity has yet to match that of the world community, but Pyongyang seems to recognize that some additional trade and investment is a prerequisite for its stability. The Agreed Framework reflects such thinking, representing a direct trade-off between military

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capabilities (an expanding nuclear arsenal) and the promise of greater economic and political contacts with the outside world, particularly the United States. Our goal, then, should be to encourage this line of thinking in the North—not to crush it, as Washington and Seoul risk doing with their understandable but ultimately self-defeating unwillingness to fulfill the real spirit of the promises of engagement made in the framework. History, then, casts a new light on the hoary claim that engagement will make the North stronger; in fact, a socioeconomic focus and a military one seem to trade off fairly directly in predators. In terms of the other factors, the regime in Pyongyang is certainly not a democracy, and can, perhaps, be expected to collapse before it becomes one. The United States and South Korea are putting less emphasis on the need to democratize the North as an antidote to predation because they appear to assume that the North will inevitably be absorbed into the South. Nonetheless, the democracy-as-antidote-to-predation thesis does provide the eventual hope that, once the peninsula is reunified under a democratic Seoul, concerns of aggression or militaristic behavior will fade—a claim that seems obvious enough to Western eyes, but which may not be fully accepted in Tokyo or Beijing. Finally, inasmuch as the North has for some time confronted a nuclear-armed alliance, its hope for a successful invasion of the South must by now have been tempered, redirected toward enhancing security via nonmilitary avenues. Fourth and finally, social construction and its corollary—the potential for evolutionary learning—are helping to undermine the ideological and theoretical foundations of predator states. If for half a century the nations of Europe establish and constantly repeat the principle that predation in their region will not be accepted, that it is an unacceptable form of behavior for a gradually uniting region, eventually that notion will become established social fact. Examples of emerging, socially constructed realities that transform old patterns of political life are legion—the birth and coalescence of the United States of America being one major case in point. There is no reason such a process cannot work gradually to exclude predation from world politics, first in isolated pockets of the international system and then more completely. Alexander Wendt puts it this way. If predation is a sort of "genetic trait" immune to all influence from the outside, a cultural or other form of predisposition to warmaking, then the hope for evolutionary change is slim. On the other hand, "in the more likely event that predation stems at least in part from prior systemic interaction—perhaps a result of being victimized in the past (one thinks here of Nazi Germany or the Soviet Union)—then it is more a response to learned identity and, as such, might be transformed by future social interaction in the form of appeasement, reassurances that security needs will be met, systemic efforts on domestic politics, and so on." There is hope, in other words, to "transform a bad apple into a good one." 8 We might look at the question through the other

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side of the lens, too: if predation is a result of past aggression that went unpunished, the way to change future behavior is through credible deterrence. Deciding when to appease and when to contain—the sort of arduous choice that the United States increasingly faces in its China policy—is, as we shall see, one of the most challenging aspects of any strategy for dealing with predator states. Richard Rosecrance explains how a learning process would help expunge predators from the system. In all recent historical cases of predation, he writes, "it is interesting to note that the aggressor forged the decisive balance against himself, a balance that would not otherwise have been created." Napoleonic France, Nazi Germany, and imperial Japan are only a few of the many predators who met nasty ends at the hands of international coalitions, which slowly, sometimes grudgingly, but always decisively rose to the challenge. 9 Repeated enough times in history, this pattern—visible again, if in imperfect form, in the Persian Gulf War—cannot help but burn a critical message onto the consciousness of would-be predators: predation does not pay. In the end, the predatory route to prosperity and glory is a futile one. Such learning can take place very quickly on the part of would-be predator states who confront a credible deterrent. This process, too, might well be under way in North Korea; in fact it might have been underway for some years. Despite its efforts to drive a wedge into the U.S.-South Korean alliance, Pyongyang almost certainly must appreciate the inevitability of a U.S. and international response to a full-blown attack on the South. One can never discount the existence of a handful of North Korean generals, isolated from outside information and nurturing decades-old resentments, who might actually believe that an attempt to reunify the peninsula by force might make sense. If such people exist, however, their numbers must be dwindling, and their advice would certainly be opposed by the dozens of North Korean officials whom we know to have had reasonably extensive contact with U.S., Chinese, Japanese, Russian, and other diplomats. In short, forty years of staunch deterrence by South Korea and the United States, combined with the gradual emergence of a strong global norm against territorial aggression (on display for the North in the Persian Gulf War), have very likely taught many in Pyongyang that predation will not pay. The North may therefore seek some alternate strategy to bolster its stability and power—a strategy that may be reflected in its approval of the Agreed Framework.

Dealing with Existing Predators: The Policy Challenge of North Korea The analysis below uses the concept of predator states to cast light on the policy challenge the United States faces in its dealing with the North as

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well as recent U.S. policy toward Pyongyang. Its general theme is that the broad process of engagement ratified by the Agreed Framework of 1994 indeed represents the preferred means of dealing with a regional predator—attempting to begin the process of reform that will dilute the elements of predation in its society. Naturally, deterrent threats—the explanation that predation will not be tolerated—must play a role in the spectrum of U.S. policy; overuse of that tool, however, will exacerbate the North's sense of victimization and perhaps encourage a return to predatory instincts. In turn, U.S. policy toward North Korea allows us to see the effort to mellow a predator for what it is: an intensely complicated, difficult, and often ambiguous balancing effort between the continued requirement for deterrence and the emerging need to offer rewards for abandoning predation. When used to describe U.S. policy toward the North, then, the wellworn phrase "carrots and sticks" conveys a much simpler reality than actually exists. Yet, despite the exacting nature of this policy challenge, in broad terms the U.S. approach to the North seems to have balanced these competing priorities fairly cleverly since about 1990, except for one understandable failing: the refusal to begin extending truly substantial economic rewards to the North, out of a concern that its predatory instincts have not been cured but are only in hibernation. Background: North Korea's Nuclear

Program

As a predator state, North Korea has had a number of powerful reasons for seeking nuclear weapons. Not all of them, it is important to explain, indicate an overridingly aggressive motivation in Pyongyang; some were almost surely related to a sense of victimization stemming most recently from the Korean War (notwithstanding Kim II Sung's role in starting it), and more generally from the previous Japanese occupation and the broad Korean national ideology of victimization. In general, however, North Korea appears to have been interested in clearing the playing field on the peninsula for its own expansionist purposes. 10 First and foremost, North Korea was probably intent on equalizing and deterring the U.S. nuclear presence in Korea. Until the early 1990s, that presence was forcefully expressed in the form of tactical nuclear weapons stationed in South Korea. North Korean officials must have felt directly threatened by those weapons, as well as severely constrained militarily in terms of their aspirations to the south. Second, North Korean officials may have also intended their nuclear arsenal as insurance against eventual South Korean military superiority, and later as a sort of trump card to negate U.S. conventional dominance in the region. As the North fell further and further behind the South in economic terms, its military was bound to decay and lose relative strength

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compared with the South's, a gap that the North may have hoped to close with a modest nuclear capability. At the same time, North Korean leaders could easily have persuaded themselves that the threat of a nuclearized conflict would keep the United States out of a North-South war and thereby grant the North a critical military benefit. Third, and in a broader political-military sense, North Korea must have viewed—it certainly came to view—its nuclear program as a source of political and economic leverage. Simply put, outside powers, including South Korea and the United States, began in the early 1990s to make clear their willingness to offer the North substantial benefits in exchange for an end to its nuclear program. North Korean officials quickly turned this willingness to their advantage by using it to promote their decades-long strategy of engaging the United States in bilateral talks to the exclusion of South Korea, thus encouraging strains in the U.S.-ROK alliance. They also made the new outside interest the foundation of a renewed, if ineffectual, attempt to attract outside economic investment and assistance. If successfully completed, the light-water reactors (LWRs) promised the North in the Agreed Framework will help it meet its energy demands, a direct economic benefit from its nuclear program. Fourth, even a limited form of nuclear status would grant the North additional independence from its traditional sponsors, China and Russia, and allow it more freedom of diplomatic movement. Always a concern for Pyongyang, which has long labored under constraints imposed from Beijing and Moscow, this independence has become an especially important priority with the end of the Cold War and the accompanying decline in support from those quarters. It also, theoretically, allows the North more opportunity for predation. All of these motives share one common feature of predator states: a strange and challenging admixture of aggressive and defensive sensibilities and motivations. Each one of these factors could be as important for a country intent only on defending itself as it is for a potential predator; indeed, even states planning predation often harbor severe security concerns. As a result they are prickly negotiating partners and are easily provoked into aggression. What this meant, in the North Korean case, was that any U.S. and international strategy for dealing with the North's nuclear ambitions could not be punitive alone—it would have to combine elements of the carrot as well as hints of a stick. In fact, this was precisely how the United States proceeded. North Korea's program of nuclear technology emerged as early as the late 1950s; it gained momentum in the 1960s and again in the mid-1980s. The North initially obtained a small research reactor from the Soviet Union, and later began construction on a larger, central reactor at the Yongbyon site. U.S. intelligence discovered this reactor under construction in 1984, and pressured Moscow to gain North Korean agreement to the

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Nuclear Non-Proliferation Treaty in late 1985. But a series of delays— some the fault of the International Atomic Energy Agency (IAEA), some encouraged by the North—kept IAEA inspectors away from Yongbyon for several years. Meanwhile, through 1988 and 1989, evidence mounted of an emerging North Korean nuclear weapons project: U.S. satellites detected explosive tests at Yongbyon, for example, of the sort that would be needed to design a nuclear warhead (which uses conventional explosives to compress fissile material and begin the nuclear chain reaction). By 1992, U.S. intelligence officials were commenting that the North had conducted as many as seventy explosive tests at the site, 11 potentially more than enough to build a warhead. Of most concern, 1989 also brought news of a North Korean reprocessing facility near the main reactor at Yongbyon. In May of that year, the Seoul paper JoongAng Ilbo reported that the U.S. Central Intelligence Agency had conclusive evidence of such a facility, and subsequent revelations confirmed the claim. Such a plant would allow the North to process the nuclear waste from its own reactor, and crucially to extract the small amounts of plutonium produced in the nuclear reaction, plutonium that could then be used to manufacture nuclear weapons. In fact, some later estimates contended that the facility would be large enough to handle two hundred tons of spent fuel per year, far more than could be produced at the single Yongbyon reactor, indicating plans for a large, multi-reactor complex. The existence of the reprocessing facility was perhaps the single most galvanizing discovery in connection with the North's nuclear program, for without a facility the North could make little military use of its nuclear capability. In May 1992, IAEA Director Hans Blix finally visited the site and pronounced it "undoubtedly" a reprocessing facility, causing the North to retract numerous claims to the contrary and admit the purpose of the building. Thereafter, ending the facility's operations and placing it under international inspection became a major focus of U.S. nuclear diplomacy. In early 1992, a KGB document, dated early 1990, was released that shed interesting light on the possibility of North Korean nuclear weapons work in the late 1980s. Signed by then KGB head Vladimir Kryuchkov, the brief report stated, "The KGB has received information from a reliable source that scientific and experimental design work to create a nuclear weapon is continuing" in North Korea. "According to information received, development of the first atomic explosive device has been completed." 12 For some years, many Soviet (and then Russian) officials and scientists would express deep skepticism about the North's technical ability to build a working nuclear device, but this KGB report provided a disturbing hint that the observed progress at Yongbyon in 1989 had indeed led to a North Korean nuclear bomb. By the late 1980s, therefore, the United States and South Korea faced the worrying prospect of a predator state well on the road to nuclear capability.

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One South Korean defense intelligence analyst wrote in a public essay of July 1989 that "the time frame for potential North Korean production of a nuclear weapon will be the mid-1990s." 13 It had become disturbingly apparent that Washington and Seoul had at best four to five years to halt and reverse the North's nuclear ambitions before they confronted a nucleararmed predator. As noted above, their strategy toward the North would have to respect the predator's challenging combination of aggressiveness and defensiveness. As I shall argue, from 1990 through 1994, the United States and South Korea proved themselves up to the challenge; their strategy included just the right mixture of carrot and stick. The result was the Agreed Framework of 1994, roughly the best compromise imaginable on the North Korean nuclear issue short of risking or conducting a major war. The U.S. Strategy: Obtaining Nuclear Inspections Confronted with fairly unambiguous evidence of a North Korean nuclear program, the Bush administration convened an interagency group in 1990 to discuss the problem and suggest possible solutions. Although the group's formal recommendations and analyses remain classified, all indications are that, during this period, the Bush administration outlined the basic elements of the approach that would guide U.S. policy for the next four years. It was a sophisticated combination of initial concessions to answer stated North Korean security concerns and a package of incentives and thinly veiled threats to achieve bargaining on the nuclear issue, toward the specific end of halting the North's program and providing regular inspections to verify its status. Ultimately, it was a strategy that succeeded. 14 The U.S. approach to the North explicitly and implicitly reflected two sets of constraints on U.S. policy: general domestic and international political constraints and the constraints of dealing with a predator state. No reasonable U.S. politician (or voter) treated lightly the idea of a war to prevent a North Korean nuclear program; the U.S. deterrent presence in the South enjoyed only a bare majority of support in the United States, and with the end of the Cold War Americans and their political leaders wanted to focus anew on social and economic issues at home. Internationally, too, few regional states, from China to Japan to Russia, favored a highly confrontational approach to the North; but many, including Japan as well as South Korea, insisted that something be done to halt the North's nuclear work. Moreover, as suggested above, U.S. officials recognized the paradoxical nature of the North's predatory instincts and knew that their diplomacy would need to encompass elements of reassurance as well as continued deterrence and aspects of implied threat. The first step was the withdrawal of U.S. tactical nuclear weapons from South Korea. The U.S. government had never confirmed the presence of these weapons and did not now admit that they had been there; it merely

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stated in late 1991, along with Seoul, that no U.S. nuclear weapons were stationed on Korean soil. This step answered the long-standing, fundamental, and really quite obvious North Korean response to demands for IAEA inspections of its nuclear facilities: Why should the North confirm its nonnuclear status as long as it confronted a direct U.S. nuclear threat in South Korea? More than any other single step, this U.S. initiative demonstrated a willingness to address the North's legitimate security concerns. The step was taken unilaterally, with no demand of reciprocation from the North, largely because U.S. military officials felt that, given U.S. conventional military dominance, the tactical nuclear weapons held more costs and risks than military value. At the same time, the United States took a number of steps to reaffirm the strength and effectiveness of its conventional military deployments in South Korea. During the twenty-third annual U.S.-ROK Security Consultative Meeting (SCM) in Seoul in November of 1991, U.S. officials, led by Secretary of Defense Richard Cheney, made some pointed comments about the consequences for the North if it undertook hostilities. U.S. and South Korean officials made oblique references to "forcible inspections" if the North did not comply with IAEA demands; Cheney said the United States was considering a postponement of the modest reductions in U.S. troop levels in South Korea that were planned; and the two allies agreed to step up their annual military exercise, Team Spirit, to include the latest U.S. military technology, such as F-117 stealth fighters. The combined effect of these first two moves in the nuclear chess game in mid to late 1991 was to address both sides of the dilemma posed by a predator state. The tactical nuclear withdrawal moved in the direction of easing North Korea's security concerns and dealt, to some extent, with the North's victimization syndrome. Toward the same purpose, the United States noted at the SCM that it would consider allowing inspections of its military bases in the South to verify the departure of its tactical weapons as part of an overall inspection regime. At the same time, U.S. and South Korean defense officials outlined the standards of behavior which they demanded that the North respect, most notably nonaggression and nonproliferation, and restated their ability and willingness to deal with any North Korean provocations. Already, the two-sided U.S. and South Korean approach to the North was taking shape. As 1991 gave way to 1992, Washington added two more unilateral moves to its strategy, more evidence of its willingness to meet North Korea halfway in the search for peninsular security. For some time, the U.S. military had been interested in changing the annual Team Spirit exercise to a biennial event; it was expensive, and some officials said that eighteen months rather than twelve were really required to carry out preparations properly. Late in 1991, South Korean officials announced that they would consider "suspending" Team Spirit for one year if North-South

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relations improved. The North had long characterized Team Spirit as a recurrent threat to its security, forcing it to engage in counterexercises in case U.S. and South Korean forces turned North during the exercise to attack. Washington and Seoul did in fact suspend the 1992 exercise, thus making a negotiating virtue out of a financial imperative. The United States also participated in early 1992 in the highest-level diplomatic contact it had had with North Korea since the Korean War. On January 22 of that year, at the offices of the U.S. mission to the United Nations in New York, U.S. Undersecretary of State for Political Affairs Arnold Kanter led a U.S. delegation that met with North Korean Workers Party Secretary for International Relations Kim Yong-sun. Though not quite a warm and friendly encounter, the session nonetheless opened the possibility for the North to achieve one of its most important and longstanding goals: direct political contacts with the United States. All of this diplomacy had a tangible effect on North Korea. In December 1991, once the United States had confirmed South Korea's claim that no U.S. tactical nuclear weapons remained in the South, the North announced that it would finally sign the IAEA inspection protocol. In that same month, then, the North and South signed the historic Joint Declaration for the Denuclearization of the Korean Peninsula, in which the North promised to open its nuclear program to inspection and, significantly, to abandon the right to nuclear reprocessing, a pledge that would require it to shut down the Yongbyon reprocessing facility. On January 7, 1992, a North Korean spokesman announced the North's intention to sign the IAEA inspection agreement. South Korea quickly followed by formally announcing the postponement of Team Spirit for 1992, and the North praised this action in unusually warm language. On January 30, 1992, a North Korean deputy minister of nuclear energy initialed the IAEA agreement in Vienna, and the way was finally opened for international inspections of North Korea's nuclear facilities. North Korea's Supreme People's Assembly rubber-stamped the pact on April 9, and by late May, IAEA chief Hans Blix and his inspectors were at Yongbyon. This initial U.S. and South Korean approach to the North, with the provisional goal of gaining access to the North's nuclear facilities in the form of IAEA inspections, stands as a model for dealing with predator states. Washington and Seoul laid out clear criteria for North Korean behavior—in this case, nonproliferation and admission of the IAEA inspectors—and garnered strong international support for these criteria. U.S. and South Korean officials also maintained a robust deterrent on the peninsula to make clear that military action would not succeed, thus ruling out the course of action—territorial aggression—to which a predator is inherently predisposed. At the same time, this course of diplomacy took pains to address North Korean security issues and make clear that the overall process

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offered benefits to the North, not merely threats and costs. Because of its sense of victimization, its often weak economic and political condition, and its personalized central leadership, a predator is much more prone than other kinds of states to provocations and security dilemmas, and the U.S. and South Korean diplomacy recognized this fact. In this context, concessions to North Korea emerge not as unwarranted gifts to a potential aggressor but reassurances designed to keep a predator from deciding that aggression is necessary. The U.S. Strategy: Getting a Nuclear Deal This same approach would be on display from 1992 through 1994, when the United States negotiated with North Korea to obtain a more formal agreement to end the North's nuclear program and answer once and for all the international concerns about its nuclear ambitions. From the beginning, the U.S. negotiators recognized that they were engaged in bargaining rather than in issuing ultimata. Thus the U.S. strategy involved assembling a persuasive enough package of benefits to entice the North into abandoning its nuclear weapons ambitions, while indirectly reminding the North of the consequences of a long-term refusal to cooperate. Ultimately, the Agreed Framework offered the North two light-water nuclear reactors to replace its Yongbyon site and other larger reactors it had under construction, interim deliveries of oil, and expanded economic and political contacts with the United States and other powers. Criticisms that the North was being "rewarded for proliferation" missed the point: short of a military attack, the United States and South Korea simply had to engage in horse trading to get North Korean assent to nonproliferation. Even a predator must be negotiated with. Another way in which U.S. diplomacy leading up to the Agreed Framework reflected the balancing act necessary to deal with predator states was in the character of the inspections allowed by North Korea. In the final deal, the North refused to allow immediate IAEA inspections of various sites, specifically two nuclear "waste dumps" at Yongbyon, that agency officials thought were critical to determining whether North Korea had extracted enough plutonium from the main nuclear reactor to build one or more bombs. Essentially, the North was hedging, demanding that it be allowed to preserve for some years ambiguity about whether it had a bomb. U.S. negotiators granted the North this concession, making inspections of the waste sites and other related facilities a precondition for the final completion of the light-water reactors, a stage of the process that might have then been as much as a decade away. During this process, Washington and Seoul were forced to deal with a series of crises in which Pyongyang vented its displeasure at the pace of the negotiations or over U.S. or South Korean statements. Of these, the

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most serious was the North's threat in spring 1993 to withdraw from the Nuclear Non-Proliferation Treaty unless a number of demands were met. U.S. and South Korean officials reacted moderately and carefully to all these provocations, not allowing the North's prickliness to sabotage the overall process. These disagreements revealed that the negotiation process with predators will seldom be smooth or easy. The conclusion of the Agreed Framework and the manner in which it was achieved thus further reinforce the lesson outlined earlier about the dual personalities of predators. They are aggressive and militaristic, and must therefore be deterred and told that they will be held to certain standards of behavior. On the other hand, like any nation-state, they do have legitimate security concerns—concerns over which they are inclined to be especially protective given the history of victimization and degree of internal weakness that so often characterize them. As they did with the effort to gain IAEA inspections in the North in the first place, the United States and South Korea perhaps unconsciously integrated this kind of thinking into the negotiating process that produced the Agreed Framework. The success of that process owes much to this sophisticated strategy. It is interesting to compare the U.S. strategy toward North Korea with its early approach to Iraq. In the case of Iraq, the United States had adopted a more unconditional strategy of engagement, treating the regime as a counterweight to the fundamentalist Islamic state in Iran. As a result, Washington did little to constrain Baghdad's military advances; despite some indications of a nuclear program, there was no suggestion of a "package deal" for Iraq. U.S. officials did not, wrongly in retrospect, view the country as a direct and immediate threat to U.S. interests in the same way as they had viewed North Korea. Iraq, then, symbolizes the mistake of engaging a predator without sufficient qualification.

Conclusion: T h e Policy Challenge of the Predator Predator states obviously pose substantial policy challenges to U.S. and allied diplomacy. They embody a complicated mix of aggressive and defensive instincts, and any approach to deterring and mellowing them must take this split personality into account. U.S. and South Korean diplomacy toward the North has indeed reflected such thinking, and its success, at least to this point, therefore suggests that the predator state model can help us to understand the requirements for U.S. policy in some cases. I conclude this essay with some general comments about the policy challenges of predators and their specific implications for the North Korean case.

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One Policy Challenge: Identifying Predators In the longer run, this diplomacy will also bear on another key analytical question related to predators: the problem of identification. Recognizing predators has been one of the most daunting challenges for leading states or coalitions throughout history. Often it proves difficult to tell mischievous states from predators, and to then arrive at the proper balance of appeasement and containment. In the past, incorrect identification has led to wars, both through overly generous appeasement of predators (Hitler's Germany is a case in point) and through threats and preemptive strikes launched against states that may not have turned out to be predatory. (Security dilemmas, such as the one that developed between North and South Korea in 1950, may give rise to this latter error.). The question of identification is very much on the agenda with China today: Is Beijing a predator to be deterred or a nonpredatory great power that might react to threats and containment by becoming predatory? As the preceding analysis should have demonstrated, this dichotomy is actually a false one. Even predators embody elements of both aggression and apprehension. Deterring or taking steps to mellow a predator—even if one has been successfully identified—is not as simple as opting for the hard-line approach. One major lesson of the North Korean case is that the problem of identifying predators is not as damning as it may first appear, because the suspicion that one is dealing with a predator should not produce unambiguous hostility. Instead, a sophisticated combination of carrots and sticks, such as the one employed in this case, can provide the necessary toughness and deterrent strength while offering the predator benefits if it abides by international norms. Thus, if the target turns out not to have been a predator at all, it will be able to express its responsibility by accepting the offer of cooperation and downplaying the deterrent threats. North Korea as Predator In the North Korean case, though, the challenge is even more complicated than identifying a predator—a category to which, more than four decades after the Korean War, North Korea appears to belong. Instead, U.S. and South Korean officials have had to ask whether the North has transformed itself into a reformed predator—if it has surrendered its territorial ambitions on the South in favor of a desperate attempt to shore up its economy and society, struggling merely to remain independent. The overarching question is this: How can we tell when a predator sheds its skin and becomes a status-quo power? Even in a reformed predator, many of the defining elements of predators—a dictatorial state, a large military, domestic weakness, and others—

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will still hold true. Predatory behavior could reemerge at any moment. Conclusive evidence will be hard to come by that the country's leaders have truly abandoned the ideology or plans that led them to predation. In the North Korean case, for example, the process of nuclear inspections will not for some time provide, if it indeed ever provides, conclusive evidence that the North does not possess one or two nuclear weapons. Much of the policy debate surrounding the Agreed Framework has centered on this point. Critics of the framework contend that U.S. strategy assumes that the North is a reformed predator, when in fact it might not have moved into this category. If not, the critics suggest, the process of engagement is only strengthening a state still intent on predation. Indeed, it is clear that doubts about whether the North has truly reformed linger even among U.S. government officials who support the framework process, doubts that have obstructed a more complete U.S. engagement of the North. Again, however, if we take seriously the split personality of predator states, we can find a persuasive answer to these criticisms. The simple fact is that only in the most extreme and unambiguous cases of predation will the appropriate response not involve some balance of threat and reward. Even during the Cold War, U.S. policy toward the Soviet Union was not one of complete, total, and uncompromising hostility and refusal to negotiate; in a variety of ways, successive U.S. administrations aimed to make clear to Moscow that its security concerns would be respected, even as those U.S. governments made clear that predation would not be tolerated. Even though we now know the true depths of Hitler's predatory instincts and plans, moreover, a revised Western approach for deterring Hitler's Germany and for laying the groundwork for his removal from power might not have required an invasion of Germany but some combination of carrots and sticks. Here again, we can see how the character of a predator demands a strategy more intricate than a military ultimatum; even if the North's predation is not fully reformed, engagement still makes sense. It also makes sense in a long-range context. A s argued above, an indispensable part of any program to prevent the rise of predation in a state that is not currently a predator is some level of international economic and political engagement. Global trade and political relations provide the fundamental alternative to predation for states interested in gaining power, and without engagement such an alternative will not exist. This is precisely the same kind of thinking, of course, that has led the West to engage a post-Soviet, postpredatory Russia, and it also justifies engagement with the North in the hopes of mellowing its predatory character in the long run. In essence, as we have seen, an engagement strategy allows the factors that undermine predators to do their work. This should be no less true with North Korea than with any other predator.

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The Future of the Nuclear Weapons Issue in Korea It is argued here that evolution of the nuclear issue in Korea will depend in substantial measure on how successful the United States and South Korea become at balancing the contradictory requirements of dealing with a predator state. As of mid-1998, political winds in both countries were blowing in a distinctly hard-line direction, preventing the kind of subtle, balanced combination of deterrence and reassurance, isolation and engagement, that produced the Agreed Framework. In short, without significant new steps to put political and economic flesh on the bones of the Agreed Framework, North Korea's incentive to continue abiding by its requirements may dim over time. For its first three years, at least, the framework has unquestionably served its main purpose of capping the North's nuclear weapons program. Pyongyang has been abiding by the letter of the framework law, shutting down its main Yongbyon reactor and the reprocessing facility, allowing repeated IAEA site visits, and doing everything else the agreement called for. The light-water reactor project will not for some time reach the stage at which the North will be required to allow inspections of the controversial nuclear waste sites at Yongbyon, so it is too early to tell whether the North will eventually answer questions about the one or two nuclear weapons it may or may not possess. All the important questions short of that very fundamental one seem to have been answered, however, and South Korea and the world community do not now confront the threat of an accelerating North Korean nuclear weapons program. This is not to say that such a threat could never emerge again. Indeed, it may be that the stern reluctance of the United States and South Korea to enter into a more formal engagement of the North could bring the nuclear issue back to the surface. For one thing, as has been noted, predator states generally express aggression as a by-product of insecurity and past abuse, and this pattern certainly holds with North Korea. Addressing the underlying causes of its hostility—as the United States did with such foresight, for example, in 1991 and 1992—is a necessary component of any long-range strategy; very little of such reassurance, however, is forthcoming three years after the framework. Moreover, for the North to persist in its threat-for-prosperity trade-off, Pyongyang must see tangible rewards from the economic and political engagement it has been promised. The benefits it has so far received constitute somewhat thin gruel for the North, so thin that North Korea might well be tempted to engage in brinkmanship on the nuclear issue once again, in part because it feels it has little to lose. None of this is to suggest that Washington and Seoul ought to write off the threat posed by North Korea, put aside its human rights abuses and terrorist acts, and begin sending billions in investment and credits into the

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North. As the United States learned in Iraq, unconditional engagement can be as dangerous as unconditional isolation. The balance struck in Korea, however, leaves little room for reassurance and engagement and leaves too much in the hands of fate. A more ambitious offer to the North, strict in its demands for responsible behavior but serious in the benefits it promises, would help address these shortcomings. Politically, however, the chances for such an initiative seem very slight. In sum, then, the notion of predator states offers a new organizing principle for U.S. foreign policy: responding to and forestalling such states. It won't stop all war but will make a big dent. North Korea is a major current test case of this approach. Using the model, moreover, allows us to see the immense challenge of U.S. policy toward the North in a somewhat new light, to better appreciate its paradoxes and contradictions. It helps us, I would argue, to appreciate the wisdom and subtlety of a process of U.S. nuclear diplomacy toward the North that has had to contend with these paradoxes. And, in the end, I would argue that the predator model supports the value of expanded contacts with the North in economic as well as social terms—while recognizing that its predatory instincts will mellow slowly and admitting that deterrence remains a clear necessity in the years ahead.

Notes 1. It is important to contrast an internationally predatory state from one that is predatory against its own citizens. The predator state described here is not the same as one that is domestically predatory, though the two can overlap: the sort of aggressive dictatorship that becomes a global predator is most likely a domestic predator as well. 2. Essays that address the concept of predator states include Joseph Schumpeter, "Imperialism and Capitalism," in Richard Betts, ed., Conflict After the Cold War: Arguments on Causes of War and Peace (New York: MacMillan, 1994), p. 196; Charles A. Kupchan and Clifford A. Kupchan, "The Promise of Collective Security," International Security 20:1 (summer 1995): 60; and Alexander Wendt, "Anarchy Is What States Make of It: The Social Construction of Power Politics," International Organization 46:2 (spring 1992): 407—408. 3. Fouad Ajami, "Egyptology," The New Republic, November 11, 1996, p. 34. 4. Schumpeter, "Imperialism and Capitalism," p. 197. Schumpeter did not fail to see the war clouds on Europe's horizon even as he wrote these words. He well recognized that the process he described was not complete, and argued (pp. 205-206) that classes "oriented toward war," which kept alive "war instincts and ideas of overlordship, male supremacy, and triumphant glory—ideas that would have otherwise long since died"—were making their sinister mark "on present-day politics, threatening Europe with the constant danger of war." See also Richard Swedberg, Schumpeter: A Biography (Princeton, NJ: Princeton University Press, 1991), pp. 98-102. 5. Schumpeter, "Imperialism and Capitalism," p. 199.

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6. Jack L. Snyder, "Averting Anarchy in the New Europe," in Betts, Conflict After the Cold War, p. 483. 7. The one true exception to this rule would be a worldwide depression or national devastation so great that it undercuts the fundamental economic obsession of democracies and opens the way once again to nationalists and warmakers. Weimar Germany, for example, devolved from a peaceful democracy in the making to a Hitlerian nightmare of a predator state. Avoiding predators thus has one overwhelming and primary requirement: preventing economic collapse, either global or national. 8. Wendt, "Anarchy Is What States Make of It," p. 409. 9. Richard Rosecrance, "A New Concert of Powers," Foreign Policy 71:2 (spring 1992): 68. 10. This analysis is drawn from Michael J. Mazarr, North Korea and the Bomb: A Case Study in Nonproliferation (New York: St. Martin's Press, 1995), pp. 17— 19 ff. 11. James Hackett, "Close to Producing the Bomb?" Washington Times, November 7, 1991, p. G4. The same figure appeared in the Republic of Korea Defense White Paper in 1994; see Foreign Broadcast Information Service (FBIS)—East Asia, October 19, 1993, pp. 24-25. 12. The report emerged in the March 1992 issue of Argumenty I Fakty\ cited in FBIS—Soviet, March 17, 1992, pp. 4-5. 13. So Yong Ha, "North Korea's Nuclear Capability Assessed," Hoguk, translated in FBIS—East Asia, August 3, 1989, p. 26. 14. This strategy is discussed in Mazarr, North Korea and the Bomb, chapter four.

5 South Korea's Nuclear Option: The Interplay of Domestic and International Politics T O N G WHAN PARK

There is an ongoing debate in South Korea about the nuclear issue, focused on Pyongyang's nuclear weapons development in general and Seoul's nuclear option in particular. The debate has not reached the stage at which public opinion is divided and the opposing sides are attacking each other in the media. Instead, quiet, but serious, exchanges are being made among intellectuals and policymakers. This is a rather significant development in light of the fact that the official stance of the Seoul government has been to discourage such a discussion. Imagine a South Korea that is embroiled in a debate over whether to reclaim its nuclear option. Imagine further a Seoul government, driven by public sentiment, attempting to use its nuclear card, real or potential, as an instrument of foreign policy. Such an assertive posture by South Korea would surely put a new twist to the way in which Korean affairs are to be handled by the regional players. For example, how would it affect the 1994 Geneva nuclear accord between Washington and Pyongyang? Further, would it force the United States to rethink its policy of serving as a balancer between the two Koreas? What would be the responses of Tokyo, Beijing, and Moscow to a South Korean attempt to become a player in the nuclear poker game in the region? And what would be the political and military implications for Northeast Asia, which must contend with three nuclear powers (the United States, China, and Russia), a nuclear-ready state (Japan), and one being suspected of possessing a few nuclear bombs (North Korea)? The purpose of this chapter is to examine the question of Seoul's nuclear option by analyzing various factors that underlie the current debate in South Korea. It begins with a discussion of the role of nuclear weapons in the changing world order, followed by a look at how regional politics 97

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may affect a nation's decision to go nuclear. The international- and regionallevel analyses then set the stage for a two-part investigation into the situation on the Korean peninsula. The first part provides a synoptic view of North Korea's nuclear weapons development as a strategy of survival, and the second a detailed report on South Korea's nuclear debate, with special emphasis on whether to emulate the Japanese model of nuclear development. The chapter concludes with some thoughts about the question of nuclearization in a unified Korea.

Nuclear Weapons in the Post-Cold War International System To an idealist, the end of the Cold War could mean the closing of the era in which power dictated international interactions. Should the concept of power be limited to military capabilities, this view may have some merit. Given the collapse of the Leninist systems in the former Soviet Union and Eastern Europe, military power has indeed seen a dramatic fall in its potency as the determinant of international relations. The role of power as a primary driver of international relations remains unchanged, however. Although the battlefield has been replaced by the marketplace, the phenomenon of the strong dominating the weak still prevails. The need to sustain bipolar balance during the Cold War had forced the United States to maintain an international regime of hegemonic stability, in which its clients reaped enormous economic benefits, often exceeding what they could have earned on their own. For proof, one needs to look no further than the rise of Japan, West Germany, and Korea under the protective umbrella of the United States. As there is no longer a bipolar world and global economic competition is becoming more fierce, the United States has stopped playing the role of a "shock absorber" for its allies. Instead, the law of the jungle dictates the operation of the global market. In future wars, goods and services will replace guns and bullets, and the losers could suffer a fatal blow to their quality of life. In light of these changes, what will be the functions of nuclear weapons in the post-Cold War international system? Is the idealist vision of swords turning into plowshares about to materialize? Put differently, what use is there for nuclear weapons in an economic war? On the surface, it would be difficult to deny the growing irrelevance of nuclear weapons in the era of nuclear disarmament. Looking carefully, however, one finds that the picture is not so simple. This is due to the fact that the impact of nuclear weapons on international relations must be weighed on two dimensions simultaneously—East-West and North-South. On the East-West dimension of superpower rivalry, there is no longer an imminent danger of nuclear exchanges. The United States and Russia

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will draw down their respective arsenals according to the schedule of their arms reduction agreements, while the world will observe the ban in all manner of nuclear weapons testing. Clearly, "butter" has won the game against the "guns." Unfortunately, we cannot make an equally optimistic statement about the North-South relationship—where a situation of nuclear "haves" versus "have nots" obtains overall. If anything, conflict between the two camps is on the rise despite the indefinite extension of the Nuclear NonProliferation Treaty (NPT). Is this conflict real or artificially contrived? Many countries that were denied membership in the nuclear club had complained about the unfair nature of the nonproliferation regime even during the Cold War period. After all, it was designed to perpetuate the North-South configuration at the time of signing the NPT. Some went ahead anyhow to develop their own bombs, and there was even evidence that Washington had turned a blind eye toward Israel in its acquisition of nuclear weapons. As an issue, however, horizontal proliferation was overshadowed by vertical—by the increasing nuclear armaments of the two superpowers. Why is the sole remaining superpower, the United States, now so intensely seeking nonproliferation? Do its policymakers suddenly feel insecure, with the existence of only one superpower instead of two? This is unlikely, as aspiring nuclear powers will be no match against the United States in the military sense, even though the number of warheads it holds decreases steadily. Is it because the so-called rogue regimes are not reliable citizens in the international system and may use nuclear weapons in an act of terrorism? This question holds some water, but not to a great extent. Americans had expressed a similar concern about China before it became a nuclear power, but to date the only country that has used nuclear weapons is the United States. A plausible explanation of Washington's intense pursuit of nonproliferation in the post-Cold War era may be found in the very structure of relationship between the nuclear North and the South. If it can first be shown that, in some cases, nuclear weapons and economic survival are closely interconnected, then a program of nuclear weapons development is an appropriate decision on the part of a nuclear aspirant. If it is then also possible to demonstrate that the United States could gain political and economic advantages from engaging such countries—advantages difficult to obtain otherwise in the absence of a bipolar international system—it makes sense that the United States might use the issue of proliferation as a foreign policy lever. Moreover, the threat of nuclear proliferation provides the U.S. military with a rationale to resist any further erosion in defense spending. North Korea's nuclear weapons development perfectly fits this line of reasoning, and it shows that nuclear weapons of a small country do matter in a world with virtually no chance of an all-out nuclear war. It may be argued that the North Koreans have found in their nuclear weapons

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program a versatile instrument to use in a post-Cold War international environment characterized by uncertainty and instability. Thus far, it appears that their reading of world politics has been highly accurate. The next question to pose is about the behavior of the Seoul government. While North Korea was playing the nuclear game rather successfully, what was South Korea doing? Did it fail to sense the shift from EastWest to North-South in the orientation of nuclear politics? Or did a combination of internal bureaucratic inertia and external pressures from Washington make it reluctant to recognize such a change? Is there a possibility that Seoul may follow the footsteps of Pyongyang, perhaps not all the way to weapons development but at least to acquire nuclear technology for peaceful use? Prerequisite to answering these questions is an analysis of what North Korea has done with its nuclear card.

North Korea's Nuclear Weapons Development as a Strategy of Survival Perhaps anticipating a sea change in international relations, Pyongyang's leaders made an apparently shrewd decision to play the politics of nuclear weapons proliferation. Not doing so would have been to waste an opportunity. Had it not played the nuclear card, the Pyongyang regime might not exist today. In 1993, I summarized the common wisdom among Korea watchers about Pyongyang's motivations to go nuclear as follows. The Domestic

Viewpoint

1. In order to complete the father-son succession and maintain the regime's viability in the rapidly changing international environment, North Korea needed a historic feat that could be attributed to Kim Jong-il, who lacks the kind of charisma his father possessed. 2. Facing economic hardship that was not likely soon to disappear and the rising sense of deprivation that its people may have felt relative to the South, Pyongyang wanted not only a diversionary instrument for domestic control but also an option that could eventually be traded, in part or whole, with capitalist countries for economic and technological assistance. 3. As Pyongyang has been able to spend barely half of what Seoul allocates to defense each year and yet its military burden amounts to a quarter of its gross national product (GNP), North Korean leaders chose nuclear weapons as a relatively inexpensive alternative to a conventional arms buildup. The International

Viewpoint

4. Under the pretense of conducting the inter-Korean dialogue, Pyongyang intended to improve its image in the international community and

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hence its chances of rapprochement with Washington and Tokyo—the two most important sources of political recognition and economic support. It reasoned that the nuclear card would strengthen its hand against these capitalist giants. 5. In contrast to the case of Iraq, Pyongyang's strategists calculated that Washington would be extremely hesitant to utilize military sanctions, lest U.S. troops in Korea be placed under a massive counterattack from the North. 6. As in the cases of China and India, Pyongyang presumed that once it credibly demonstrated that it had developed nuclear weapons, the international community might accept a fait accompli. Moreover, claiming that the NPT discriminated against states without nuclear weapons, it wanted to exercise leadership among the have-not countries when the NPT came up for renewal in 1995. 7. Insofar as the nuclear card is played carefully, Pyongyang saw that its utility would continue to remain very high in its external relations. 1 These observations still remain valid and are consistent with the two major arguments among Korea watchers about North Korea's decision to go nuclear: the diplomacy of terror argument and the defensive versus offensive power argument. The Diplomacy of Terror

Argument2

With the end of the Cold War, the balance of terror, along with the prospect of mutual assured destruction that had maintained the "cold peace," began to lose its utility as a stabilizing mechanism. There no longer exists an adversary that can challenge U.S. nuclear supremacy. As even the late Kim II Sung once commented, "One or two [nuclear] bombs would be useless because those countries with one or two cannot match tens of thousands by the big powers." 3 But does this mean that a few nuclear bombs in the hands of a "rogue" regime have little or no terrorizing effect? The answer would in part depend upon the target for which the bombs are intended. Since Pyongyang does not possess a second strike capability against Washington, the two are not in a balance of terror relationship. On the other hand, the North Korean bomb definitely is a source of fatal threat to South Korea, a country protected by the U.S. nuclear umbrella. Assuming that Washington would honor its commitment to Seoul of extended nuclear deterrence, the two Koreas are locked in a system of mutual assured destruction. In the absence of a nuclear counterattack by the United States on Seoul's behalf, however, Pyongyang's nuclear bombs would have potency beyond imagination. As far as nuclear threat is concerned, the relationship between the two Koreas might be compared to that between the former Soviet Union and Finland during the Cold War era.

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Militarily, therefore, the balance of terror against the South could be a no-loss proposition for North Korea. Its only concern may be a preemptive strike by the United States against its nuclear facilities. It is known that the U.S. Defense Department conducted a study on the possibilities of launching a surgical strike against Yongbyon's nuclear facilities. The result of the research was that the United States could not, within a reasonable cost, wage an effective preemptive attack on a country like North Korea— that is, a country that not only is thought to have developed some type of nuclear devices, but that also maintains a strong conventional military force. 4 If the probability of provoking a preemptive strike by the United States is in fact low, then Pyongyang's decision to go nuclear was arguably a savvy move that would enhance its chance of survival in the post-Cold War international system. North Koreans must also have remembered that it was Moscow's nuclear arsenal that had prevented the United States from interfering in the internal affairs of Russia after the disintegration of the former Soviet Union. The Defensive Versus Offensive Power Argument While the logic of a questionable balance of terror vis-à-vis South Korea appears persuasive, it is but a first cut since it fails to address the substance of the interaction between North Korea and the United States. For instance, it was believed that during the negotiations for the 1994 Agreed Framework, the United States failed to get North Korea to act in the way it had wanted. If the two had been in a virtual balance of terror relationship, stemming from Washington's commitment of extended deterrence to Seoul, the United States would have been able to deal with North Korea on equal terms. Instead, it appeared that Pyongyang was able to push Washington to the wall and gain significant concessions, such that the North Koreans hailed the framework with such superlatives as "flawless" and "a milestone in solving the nuclear problems." 5 What made the giant superpower "give in" to the pressures of a midget? One way to explain this apparent abnormality in international interactions has been through the defensive versus offensive power distinction. 6 Its proponents claim that the North Korean nuclear issue, althouth critical, was not a matter of life and death for the United States but only one part of its global design to prevent nuclear proliferation. In contrast, Pyongyang's leaders played the nuclear game for the survival of the regime and the socialist Weltanschauung. Hence it was evident that "North Korea's perceived stakes in the nuclear game were much higher than the stakes for the U.S., and this greatly contributed to North Korea's exercise of its defensive power." 7 The fact that Kim Jong-il had been fighting a losing battle in economic performance also added powerfully to North Korean stakes. If he could not build his legitimacy through economic growth, at

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least he would show his people that he could successfully repel outside interference. An added bonus was that he obtained economic and technological assistance from the United States while squarely confronting this "imperialist enemy" and the world's greatest power. Extending these two lines of argument, I can now see with hindsight that nuclear weapons development was part of a cleverly designed grand strategy on the part of North Korea. Here is the reasoning. As is widely known, the late Kim II Sung had championed juche (selfreliance) as the ruling ideology of North Korea. Touted as a step-level improvement over Marxism-Leninism, juche functioned as a catch-all concept used in justifying whatever the Kim family decreed. Not only did the Kims develop juche as the guiding philosophy within the nation, but they also tried to export the idea to developing countries. Officially, it is still the dominant thought in North Korea; even after the disintegration of Eastern Europe, Pyongyang raised the slogan of "socialism our way." The most fundamental pillar supporting this doctrine of self-reliance has been antiAmericanism. The United States has been portrayed as the source of all evils, including the division of the peninsula after World War II and the devastation of the northern half during the Korean War. In a sense, juche and anti-Americanism are like two sides of the same coin. Enter, however, the revolutionary change in the international political economy of Northeast Asia that began in the late 1980s. The former Soviet Union, and even China, started to act like ordinary neighbors, no longer offering special treatment to North Korea. Confronted with the brutal reality that Pyongyang could not expect much assistance from its erstwhile patrons, but somehow had to survive economically, what choice was left for Kim II Sung? Self-reliance? Leader of a cultist state or not, Kim was no fool. Self-reliance was an impossible dream for North Korea. The only option left was rapprochement with the United States. Having branded the United States for decades as the archenemy of his people, Kim could not have made a direct appeal to Washington for support. The only viable route was to make the Americans come to him, as Mao had lured Nixon a quarter century ago. In contrast to the Sino-U.S. détente, however, it was unthinkable for North Korea to pursue peaceful cooperation with the United States. The détente would have to come as a by-product, not as a goal in itself. Given the extent of anti-Americanism Kim had inculcated in the minds of North Koreans, Kim needed a reason for the United States to come to him in a state of tension, the resolution of which would mean political and economic assistance. Nuclear weapons development gave him the key to solve this dilemma. Since the negotiations between the United States and North Korea over the nuclear issue have been discussed in previous chapters of this volume, it is sufficient to show here how much Pyongyang has given up and gained so far. According to the October 1994 Agreed Framework, North

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Korea agreed to (1) allay all remaining nuclear suspicions prior to the delivery to North Korea of key parts of light-water reactors (LWRs) by fully implementing obligatory safeguard measures—including special inspections—prescribed by the International Atomic Energy Agency (IAEA); (2) overall freezing of the activities of the existing nuclear facilities and dismantling of all nuclear-related facilities concurrent with the stages of construction of L W R s — t h i s includes terminating plans to refuel its 5 MWe atomic reactor, suspending construction of and later dismantling the 50 MWe and 200 MWe reactors, and immediately closing the radio-chemical laboratory; (3) safe storage of spent f u e l rods without reprocessing them during the period of the construction of LWRs, and transfer thereof later to a third country; (4) complete return to N P T and acceptance of special and general inspections by the IAEA; and (5) show of sincerity toward implementing South-North Korean relations through resumption of South-North dialogue and implementation of the Joint Declaration of the Denuclearization of the Korean Peninsula. In return, the United States agreed to implement (1) creation of an international consortium in charge of raising and supplying funds to finance two 1,000 M W e LWRs for North Korea and conclusion of a contract for the supply of LWRs to North Korea; (2) provision of heavy oil as an alternative energy source in connection with the suspension of a 5 M W e atomic reactor and of the construction of graphite-moderated atomic reactors (50 and 200 MWe); (3) provision of heavy oil until LWRs become operational, beginning with 50,000 tons per year in the initial phase, later up to 500,000 tons; and (4) alleviation of trade and investment restrictions against North Korea and normalization of U . S . - N o r t h Korea diplomatic relations—first by creating liaison offices in each o t h e r ' s capital cities (following the resolution of technical problems through experts' talks) and then by elevating bilateral relations to the ambassadorial level, once progress is registered in matters of mutual concern. 8 In essence, the Agreed Framework produced North Korea's promise to freeze its present and future nuclear activities in exchange for a U.S. pledge to take leadership in supplying two 1,000 megawatt LWRs and heavy oil until these reactors are completed. The accord does contain a stipulation about the establishment of past transparency in P y o n g y a n g ' s nuclear weapons program, but effective implementation here is quite doubtful. Since many contingencies will intervene before North Korea has to accept special inspections by the IAEA, the earliest time for such inspections is likely to be around 2003. The bottom line is that the accord has allowed Pyongyang to keep the nuclear card hidden in its sleeve while Washington puts a temporary cap on North Korea's nuclear weapons development. The accord was indeed a diplomatic coup for Pyongyang, as it came on the heels of another m a j o r concession Washington had made over a year earlier, in June 1993. To appease Pyongyang when it was threatening to withdraw f r o m the NPT, the United States had taken the unprecedented

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action of giving a negative security assurance (NSA) to North Korea. Because of the asymmetrical nature of the NPT, states without nuclear weapons had demanded that the nuclear powers pledge not to use nuclear weapons against them. The nuclear powers countered this demand by arguing that UN Security Council Resolution 255 of 1968 stipulates the protection of states without nuclear weapons when they are under nuclear attack—a form of positive security assurance (PSA)—thus making the guarantee of nonuse for individual countries unnecessary. There is no question that the PSA falls short of the provision of NSA. No wonder Pyongyang advertised the acquisition of NSA from the United States as a tremendous success in its diplomacy. Judging from Pyongyang's behavior and Washington's handling of the nuclear negotiation, it is safe to predict that the former is not likely to give up its nuclear card. Though it is prudent to assume that North Korea has already assembled a few nuclear warheads, it is irrelevant from Pyongyang's perspective. As long as North Korea can maintain its own version of a "neither confirm nor deny" (NCND) policy in regard to the possession of nuclear weapons, its nuclear option remains viable.

South Korea in a Dilemma of Nuclearization The objective conditions of international and regional systemic changes should be the same whether seen from North or South Korea. However, they can be interpreted or responded to differently. Judging from the assessments made by decisionmakers in Seoul, it seems that they have not erred in their interpretation of external developments. But their responses have been the polar opposite from those of their northern counterpart. Although their perception of the international and regional environment may have been similar to that of North Korea, their decision calculus in response to that perception appears to have been radically different. One can pose the following questions with regard to Seoul's nuclear policy. Did it not ever occur to policymakers that a nuclear deterrence against Pyongyang was an alternative worth exploring? Why did they give up even the technologies for uranium enrichment and spent fuel reprocessing that would have been completely legal in the nonproliferation regime if placed under IAEA inspections? Could they have learned nothing from the Japanese, who have developed cutting-edge nuclear technology and secured a huge stockpile of plutonium? These questions require fuller exposition. Deterrence

Versus Compellence:

The Uses of Nuclear

Weapons

Nuclear deterrence was sought by some have-not states even in the bipolar era. One might conjecture that with the nuclear umbrella of the superpowers

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and the extended deterrence provided by them, there should have been no need for indigenous nuclear weapons. Some, however, clearly took exception to this logic. There are two characteristics common to those countries that developed nuclear weapons in the Cold War period. One is regional rivalry: India to counter the threat of China's bomb, Pakistan to counter India's, Israel not to be driven to the sea by the Arabs, and so forth. When regional threats were absent, even those with technical and financial wherewithal chose not to go nuclear. The most typical case is Australia, a country that has become an avid advocate of nonproliferation while enjoying its geostrategic location removed from the hotbeds of conflict. Unquestionably, adopting such a position has helped Australia promote its uranium export. The other important characteristic of those countries that went nuclear is the relative inattention by one or both superpowers to their activities. For the two Koreas, it was this second characteristic that was out of reach during the Cold War era. Simply put, there was no blinking in the watchful eyes of either the United States or the Soviet Union. Their efforts notwithstanding, the Koreans simply were not able to overcome the pressures from their respective superpower patrons. With the disintegration of the Soviet Union, an opportunity has finally presented itself. Whether the South Koreans themselves ought to exploit finally this golden chance to develop their own capability of nuclear deterrence is the subject of ongoing debate in Seoul. The main argument of those supporting the government's inaction is that the best policy for South Korea is continued dependence on U.S. nuclear protection. They claim that it has worked to date, and since a Cold War-like confrontation still exists on the Korea peninsula, the revival of a nuclear dream will gravely undermine the U.S.-Korean alliance. Some even say that if the South were in fact to launch a secret nuclear weapons program, it would be better not to raise suspicion among the Americans. Opponents maintain that whatever has worked so far may no longer be effective, since the global system is changing and the legacy of the bipolar confrontation on the peninsula may be giving way. They also argue that although it is critical to keep the Washington-Seoul link in good shape, a democratic government in South Korea should have more decision latitude than did previous authoritarian regimes, whose legitimacy had to be derived from the United States. Regarding the possibility of clandestine nuclear weapons development, the critics are of one voice in denying its plausibility for South Korea: all of Seoul's nuclear energy activities are monitored by the United States and the IAEA; furthermore, the acquisition of weapons-grade fissile materials requires a very long lead time. The focal point of the debate is whether a few nuclear weapons in the hands of a small power have the power of deterrence. The answer, as discussed before, depends on the target of deterrence. In the case of an all-out

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exchange with a big nuclear power, the survival of the latter is virtually guaranteed, and the former will be totally annihilated. There will be no mutual assured destruction and thus no deterrence in the classical sense. But a small nuclear power does have some leverage to influence the behavior of a big power in a situation of threat and deterrence. As the small state in effect becomes a "porcupine" with nuclear spikes, the more powerful state will be hesitant to launch a conventional attack for fear of nuclear retaliation. A nuclear hit, regardless of the scale, may be considered "unbearable" by the potential attacker. Unless the big power wants total destruction of the small state with a very swift nuclear attack, its strategists will feel deterred by the few weapons held by the small power. One of the many concessions Pyongyang has won with its nuclear card is elimination of the U.S. option to retaliate with tactical nuclear weapons in response to a conventional and guerrilla attack by the North against the South. Seoul is thus in a strategic dilemma. What is the value of the nuclear umbrella provided by the United States now that Washington not only is in a deterrence-like relationship with Pyongyang but, more crucially, has pledged not to use nuclear weapons against it? How would the U.S.-Korea mutual defense treaty be executed in case of war between the two Koreas? Would the United States intervene as it did in 1950 or simply try to play the role of a mediator? This is a particularly troublesome specter to those in Seoul, which is located just twenty-five miles south of the Demilitarized Zone (DMZ). Just as the balance of military power in Europe during the Cold War rested between the Warsaw Pact's tanks and NATO's tactical nuclear weapons, the South Koreans once believed that U.S. nuclear power was their ultimate deterrence against a conventional attack by North Korea. There is no balance anymore. What is Seoul to do in the case of an armed invasion from Pyongyang that could be cleverly camouflaged as an indigenous southern guerrilla movement? Some critics claim that this dilemma—created by the United States—has forced South Korea to rethink its nuclear option. Although the South Koreans feel less secure about deterrence against Pyongyang, they have learned from the North's successes that nuclear weapons development does contain an element of compellence in interaction with big powers. The United States may indeed have left a poor precedent in its negotiation with North Korea. To put it bluntly, why did it not punish Pyongyang as it did Baghdad? Was it because Seoul carries less weight than Tel Aviv, and because Washington can safely play Seoul against Pyongyang? Or did Washington have reason to gamble that North Korea's nuclear politics were without substance and only a bluff with which to attract U.S. assistance? From this context rises an intriguing question. Should Seoul decide to emulate Pyongyang, what would be the consequences? Would Seoul be

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able to compel Washington to fulfill its political and economic needs? When a prodigal son is treated with favor, does the father then whip the eldest son for his own attempt to become a little independent? Many thinkers in South Korea argue that the two previous presidents, Chun Doo-hwan and Roh Tae-woo, should have tried to test the United States instead of succumbing to Washington's demands in the name of policy coordination. Technological

Denial9

There have been no nuclear weapons in South Korea since 1991, when the United States withdrew tactical nuclear weapons from the peninsula. Influenced in part by this withdrawal, the two Koreas signed the SouthNorth Joint Declaration on the Denuclearization of the Korean Peninsula, which went into effect on February 19, 1992. This agreement banned not only nuclear weapons but also uranium enrichment and plutonium reprocessing. Considering that North Korea had been expected to complete the whole nuclear fuel cycle by the early 1990s, 10 why did South Korea sign such a grossly inequitable document? Setting aside the question of asymmetry between the two Koreas in nuclear fuel cycle, it definitely made no sense for Seoul to give up enrichment and reprocessing. As of 1997 South Korea had eleven nuclear power reactors in operation and seven under construction. Its dependence on nuclear-generated electricity is very high (about 27 percent in capacity and 36 percent in production) and is expected to increase even further. 11 From the standpoint of energy security, it is thus critical for South Korea to lower its dependence on foreign sources of reactor fuel. Because one way to reduce this dependence is through the acquisition of technologies for enrichment and reprocessing, the signing of the Joint Declaration, which went beyond nuclear weapons, was either a very obtuse act or influenced by external pressures, especially from the United States. Circumstances surrounding the signing of the document strongly point to the latter. If indeed it was the United States that insisted on the prohibition of uranium enrichment and plutonium reprocessing by the two Koreas, what was Washington's intention, knowing that Pyongyang had either already acquired the full nuclear cycle or was very close to it? The answer is twofold—first, in order to use the Joint Declaration as a lever against Pyongyang in subsequent negotiations; and second, to maintain control over South Korea's nuclear fuel market. Now that Japan has become an advanced industrial power in reactor fuel, it is reasonable to assume that the United States felt uncomfortable about the potential for South Korea to become another Japan. Furthermore, Seoul's failed attempts in the 1970s to acquire nuclear weapons technology from abroad are worth reviewing in this context. The

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Nixon Doctrine of 1969 had declared that the United States would play a supportive role in conventional extended deterrence, but that the primary burden of fighting would have to be shouldered by the allies. Then followed Washington's decision to withdraw one of its infantry divisions from Korea, significantly reducing the number of U.S. troops stationed there. Shocked by these developments, the late President Park Chung-hee started a program of greater self-sufficiency in defense. For this purpose, Park's government established two organs: the Agency for Defense Development (ADD) to modernize South Korea's weapons system and the Weapons Exploitation Committee to obtain high-tech weaponry, including nuclear devices. Finally, the fall of Vietnam in 1975 and the late North Korean President Kim II Sung's visit to Beijing in the same year had an extremely destabilizing effect on Korea's security environment. In an interview with the Washington Post (June 25, 1975), Park Chung-hee made a public statement about the South's possible development of nuclear weapons in the case of withdrawal of the U.S. nuclear umbrella. Until his assassination in 1979, Park is known to have pushed the nuclear weapons development program with special emphasis on the acquisition of fissionable material. 12 Because South Korea, unlike the North, has negligible deposits of natural uranium, it sought to purchase a reprocessing plant for spent nuclear fuel. In 1972 the Seoul government began negotiations with France about nuclear fuel fabrication and the supply of a reprocessing plant, which resulted in the 1974 Agreement for Technical Cooperation in Atomic Energy. In order to alleviate Washington's concern about "the South Korean bomb," Seoul ratified the NPT in 1975 while the Seoul and Paris governments signed the Agreement for the Application of Safeguards under the IAEA. In late 1975, the French government notified South Korea of its readiness to supply nuclear reprocessing facilities worth $20 million. Korea was about to acquire a reprocessing plant. The U.S. government had decided, however, that the French-Korean deal was not to materialize. Various forms of pressure were exerted on Seoul and in January 1976, at a Senate Government Operations meeting, an acting assistant secretary of state named Myron B. Kratzer disclosed that South Korea had canceled its plans to purchase a French plutonium reprocessing plant. Though frustrated by U.S. intervention, South Korea continued to show interest in obtaining the reprocessing technology. Under President Chun Doohwan, Park's successor, a proposal was allegedly made by the Canadian Atomic Energy Agency to recycle spent fuel from a U.S.-made LWR in South Korea into mixed oxide fuel (MOX), which would contain weaponsgrade plutonium to be used in the Canadian heavy-water reactor (HWR) at Wolsung. Again the U.S. government reportedly blocked the proposal. After Roh Tae-woo succeeded Chun Doo-hwan in 1988, his primary foreign policy goal was to improve relations with the "northern" countries,

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including Eastern Europe, the former Soviet Union, and China. Preoccupied with this nordpolitik, Roh showed no interest in anything that might endanger his diplomatic initiative, including nuclear weapons development. It was his administration that signed the denuclearization document. President Kim Young-sam, who took office in 1993, copied Roh's foreign policy line as far as nuclear weapons were concerned. Though his administration was often accused of vacillating in its attitude toward Pyongyang's nuclear weapons development, the foundation of his policy was to establish nuclear transparency in both North and South Korea. Seoul's utmost and most consistent priority has been to uncover Pyongyang's nuclear past and to put a stop to the implementation of any further nuclear weapons program. Unfortunately, a huge gap is evident between the rhetoric and achievement of the Kim government in this area. Will South Korea continue to refrain from developing a nuclear weapons program? At first glance, unless there occurs a radical change in the security environment of Northeast Asia, it is prudent to observe that Seoul is not likely to go nuclear. Following this premise, then, what are the circumstances under which the South Koreans may think of developing their own nuclear weapons? It does not take a wild stretch of imagination to identify three contingencies that individually or in combination might encourage Seoul to consider an indigenous nuclear weapons program. They are the withdrawal of the U.S. nuclear umbrella, the reduction of U.S. troops stationed in Korea to a dangerously low level, and Japan's entry to the nuclear club. Conspicuously missing in this list, we may note, is a possible complication or breakdown in the ongoing light-water reactor project under the auspices of the U.S.-led consortium, the Korean Peninsula Energy Development Organization (KEDO). 13 Such a breakdown is not likely because Pyongyang has too much to lose from it. If, contrary to common belief, North Korea is nowhere near becoming a nuclear power, then Pyongyang's leaders will eventually abide by the terms of the Agreed Framework. If, however, North Korea has already fabricated a few nuclear devices but hidden them away in one of twenty thousand underground tunnels, it has no reason to give up the payoffs that will accrue from the LWR project. Simply put, Pyongyang is in a "no loss" situation as far as its dealings with the KEDO are concerned. The three contingencies in which South Korea may go nuclear appear improbable. First, as sole military hegemon in the post-Cold War era, the United States can reduce the number of nuclear warheads in its arsenal without weakening its capability to cover the globe with its nuclear umbrella. Approximately three thousand warheads to be at the disposal of the United States by 2003 should be sufficient for this purpose, especially in combination with U.S. precision delivery systems. Second, since U.S. troops in Korea are seen to be playing the role of "dual deterrence" between the South and the North, their withdrawal or reduction to a token

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size is unthinkable. Clearly their presence is welcomed in the region, and they help protect U.S. political-economic interests in the Asia Pacific rim. Finally, the Japanese may be too clever to jump the nuclear threshold any time soon. As long as they enjoy the full benefits of nuclear-ready status, they should see no reason to irritate the other three major powers by becoming a nuclear weapon state. By staying just below the threshold, albeit able to cross it within short notice, militarily Tokyo can expect Washington's sustained support while posing as an equal against Beijing and Moscow. Even though these three contingencies are unlikely to occur, one cannot, and should not, rule out the possibility that South Korea might try to develop an indigenous nuclear capability as it did in the past. This caution is doubly to be counseled when one considers that Japan became a nuclearready state in the absence of such security threats as contained in these contingencies. Given the long lead time required in nuclear weapons development, it would be too late to begin by the time any of these contingencies actually occurred. Combine this with the fact that South Korea's energy industry would benefit immensely from the possession of a full nuclear fuel cycle, and one can understand why some South Koreans advocate the adoption of the Japanese model of "asymptomatic nuclearization." Adoption

of the Japanese

Model?

Asymptomatic nuclearization describes the process of climbing the nuclear ladder without emitting the "symptoms" normally associated with the production of nuclear weapons and, until completion becomes necessary, stopping just below the last rung. Those who claim that Seoul should follow Tokyo's example in this method of nuclearization base their argument on a very simple but compelling logic: If Japan could and did, why not South Korea? I shall not be reviewing here the merits and demerits of this view. Instead, what follows is a summary of the scenario proposed by its proponents, which should shed light on the thinking of some leading intellectuals in South Korea on this critical matter of nuclear option. 14 The scenario is based on the premise that there are moral, legal, political, and economic imperatives for Seoul to reclaim its nuclear option. The only problem is hence one of practicality, or how to do it in the face of U.S. opposition. The scenario has been designed to assure the best possible chance of solving this problem of practicality. Acknowledging that South Korea cannot openly seek and possess nuclear weapons, advocates of asymptomatic nuclearization preach the inevitability of developing a nuclear option customized for the South Korean setting. They argue that Seoul's nuclear option could be developed in three phases: (1) the improvement of potential military capability through modernization of technology for peaceful nuclear energy; (2) the acquisition of

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nuclear deterrence and the adoption of the NCND posture; and (3) the establishment of a system of nuclear mobilization for rapid response. Of these, the first component can be undertaken publicly, but there is no question that the second and third should be pursued in extreme secrecy. As mentioned earlier, modernization of nuclear technology for peaceful use is not prohibited in the international community as long as it is properly safeguarded. Especially for a country like South Korea with heavy dependence on nuclear-generated electricity, the acquisition of nuclear fuel cycle, though not easy, should not present undue difficulties. Technically, the first step is to obtain technologies for uranium enrichment and plutonium reprocessing. South Koreans may cite as a supporting case the 1967 deal in which Japan was allowed to do the reprocessing in return for a declaration to denuclearize. Along with the development of a nuclear fuel cycle, it would be necessary to promote the related industries of electronics, material science, chemical engineering, and aerospace. At this stage, it would also be possible to invest in research and development for nuclear propulsion for use in nuclear-powered submarines, optics for military use, nuclear batteries, kinetic energy projectiles, and radioactive sterilization techniques for the prolonged storage of battlefield rations. To make these technical advancements possible, however, Seoul's leaders would need to show strong political will, not only to persuade their domestic clientele to undertake the costly investment but also to convince the international community that they would abide by the rules of the NPT. The ultimate objective of this first phase in asymptomatic nuclearization is to reach the point where South Korea would be able to obtain fissionable material. Since it is estimated that the process would take eight to ten years, it becomes important for South Korea to start this component of the program as early as possible. Advocates of asymptomatic nuclearization claim that now may be the opportune moment to make such a move. Their reasoning is that the United States may currently be less sensitive to South Korea's indigenous efforts to modernize nuclear industries for two reasons. First, in 1995 the NPT was extended indefinitely, thus removing one big burden from the Clinton administration. Second, the LWR project that started in 1997 should eventually help resolve the issue of North Korea's nuclear weapons development. With the NPT regime in good shape and South Korea committed to the financing and construction of the LWR project in North Korea, Washington may arguably demonstrate some lenience about an attempt by Seoul to build an industrial structure for the nuclear fuel cycle. Toward the middle or end of the first stage, the second phase project of acquiring the capability for nuclear deterrence can be launched. According to the scenario, the capacity to fabricate five twenty-kiloton implosion-type plutonium bombs is sufficient for deterrence against North Korea as well as other regional adversaries. Here the key word is "capacity" and not the

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actual production of nuclear devices. As long as South Korea obtains the capacity to build nuclear bombs in a short period of time, it may be deemed to have achieved a nuclear deterrence vis-à-vis North Korea. With such a capacity, proponents argue, a skillful manipulation of the NCND policy will give South Korea at least a nuclear-ready status. During this second stage, the scenario also requires modernization of South Korea's missile technology to the range of at least one thousand kilometers and the preparation of an aircraft to carry nuclear bombs, all of which will give added credibility to South Korea's deterrence capability. At the same time, research and development need to be undertaken for the construction of nuclear-powered submarines, the third leg of the strategic triad. While the second phase requires great secrecy, the third one may need even more. This last component of asymptomatic nuclearization is a plan to prepare for the unthinkable before South Korea completes the second stage of acquiring a credible nuclear deterrence. Should Pyongyang undertake a nuclear experiment or should a conventional war break out on the Korean peninsula, it may be necessary for Seoul to accelerate the first two stages. The third component is to prepare for such an emergency by building and maintaining a contingency plan to mobilize human and physical resources for a South Korean version of the Manhattan Project. Nobody knows whether the current or future administration in Seoul would execute a plan for asymptomatic nuclearization. What is important is that there exists a community of experts in South Korea who believe that such a program could be viable and might even be desirable. 15 For the time being, they are a minority group and criticized as advancing a form of nationalism in the era of internationalism and global harmony. 16 The group's response to such criticism is that internationalism without a solid base of nationalism is like a sand castle. In any case, debate about the possibility of asymptomatic nuclearization is public and ongoing. As to whether and when Seoul might adopt the Japanese model of nuclear development, we will have to wait and see.

Korean Unification and Nuclear Weapons Another critical question is the potential effect of unification upon South Korea's nuclear option. The answer is not easy, since unification can assume different forms—e.g., German absorption, Vietnamese unification by force, or European-style integration. If we rule out merger through an allout war on the Korean peninsula, however, the type of unification may not exert undue influence on the nuclear question. Assuming that the military and scientific infrastructures of the two Koreas remain relatively intact after unification, so will the nuclear weapons capabilities. That is, North Korea will be in a virtually nuclear-ready, if not already nuclear, state, and

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South Korea will have made significant advances in the peaceful use of nuclear technology. The longer it takes for the two Koreas to merge, the more nuclear-capable South Korea will become. Should the Seoul government actively push the programs associated with asymptomatic nuclearization, it may even be able to come close to Pyongyang in nuclear technology. Given this picture of technological capabilities, what then would be the nuclear options available to the leadership of a unified Korea, and which one would they select? As reference, there are four different precedents that the Koreans may use: (1) the South African model of acknowledging possession of nuclear weapons before dismantling them; (2) the Japanese model of staying ever-ready for nuclear armament; (3) the Israeli model of NCND while expressing willingness to give up the nuclear option in exchange for regional denuclearization; and (4) the Chinese model of presenting the world with a fait accompli. Which one or combination of these four will be the choice of a unified Korea? Or would Korea come up with its own variant? To answer this question, we must ask first whether the unified country would need its own nuclear weapons. A grand strategy that dictates the acquisition of nuclear weapons would certainly bring, at least from the perspective of Korean leaders, additional security, prestige, and leverage. But without nuclear weapons would a unified Korea face any mortal danger? Assuming that the four major powers would continue to play the game of balancing each other in Northeast Asia, one might argue that the security of a nuclear-free Korean peninsula would probably not be threatened. If this is so, are nuclear armaments worth the political and economic costs? Simply put, what is the marginal utility to be gained from the possession of nuclear weapons? And what types of concessions could Korea win from its neighbors if it agreed to make the peninsula a nuclear-free zone? These are the questions that demand examination—in a systematic fashion from a long-term perspective—by the political leadership of the unified Korea. An extremely critical component of such an assessment would be the possible responses of major powers to Korea's attempt to nuclearize. Would they allow a unified Korea to become a nuclear power? Is it possible that this prospect might further reduce their enthusiasm for the unification itself? It is difficult and perhaps unwise to prejudge what the leaders of unified Korea would do with their nuclear option. It is also premature to suggest a specific course of action for them at this time. One can make the general observation, however, that their wisest course is to leave their options open. During the last several years, South Koreans have been perhaps too quick to acquiesce to the demands of Washington on the nuclear issue. They have earned very little from this posture of compliance. In contrast, Pyongyang has gained quite a bit, both politically and economically, with

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a seemingly defiant attitude toward the United States in the process of partially resolving the issue of its nuclear weapons development. The simple lesson that can be drawn from this experience is that power politics does work against major powers, especially when the state of international relations is in flux as in today's Northeast Asia. In sum, a unified Korea will most probably see little need for nuclear weapons, since even without them its security can be assured. Particularly, it may not want to possess them because the power configuration in the new international system is expected to be more cooperative than conflictual in nature. Technologically, however, a unified Korea would almost be able to produce nuclear weapons. The challenge would then be for its leadership to balance this technical capability with political and economic considerations. If, by some chance, the ledger favored going nuclear, then serious thought ought to be given to nuclearization. If not, the leadership should figure out how to trade its nuclear chip for maximum payoffs from the major powers with interests in the Korean peninsula.

Conclusion For now, it appears that the South Korean government is not in a position to take any public initiative about reclaiming its nuclear option. This is largely due to the issue of North Korea's nuclear weapons program, which is being resolved through a shaky and painstaking process. That all four surrounding powers have shown keen interest in this resolution process leaves Seoul with very little room to maneuver in the area of nuclearization. After all, it would hardly make any sense for Seoul to seek a nuclear option while at the same time demanding that Pyongyang give up its own. It may be hasty, however, to predict that Seoul will remain without a nuclear option for a long time to come. Seoul's previous attempt to modernize its nuclear technology and acquire fissionable materials reveals that external pressures, not domestic sentiment, have been the main hindrance; in particular, it is Washington that has thus far blocked Seoul's road to nuclear weapons development. The keys to solving the puzzle of South Korea's nuclear option can be found in two variables. One is the intensity of South Korea's desire, and the other is the degree of Washington's commitment to thwarting it. Compared with these two, concerns of the other regional players, albeit weighty, should be considered marginal. As for the mood among South Koreans, it may be safe to say that the emergence of a nationwide antinuclear movement is unlikely. Because South Korea is sandwiched between the maritime and continental powers, its survival has historically depended on the art of balancing dependence and autonomy. Insofar as possession of a nuclear option could enhance the

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nation's autonomy in foreign policy, it would not face overwhelming opposition. There might even emerge a wide base of support for going nuclear, especially if it could be done discreetly. The U.S. government, however, will continue to favor nonproliferation. Washington may not tolerate moves to develop nuclear weapons by a country such as South Korea that it considers to lie within its sphere of influence. How seriously, though, would the United States react if South Korea started a program of asymptomatic nuclearization? Would it treat Seoul as it did Baghdad? Or would it turn its face the other way as it did to Tokyo and Tel Aviv? This is a tough question for which nobody can provide a conclusive answer. It is doubtful in fact whether Washington policymakers have the answer. While no one can predict with certainty the actions of either Seoul or Washington, it must be noted that the unfolding drama of North Korea's nuclear weapons mystery will have a tremendous impact on the question of Seoul's nuclear option. The establishment of Pyongyang's nuclear transparency—past and present—is a long time away, however. Meanwhile, South Korea's own dilemma will not disappear.

Notes 1. Tong Whan Park, "The Deadly Game of Survival: Pyongyang's Nuclear Politics in the Changing Inter-Korean Relationship," Korea Observer 24:3 (autumn 1993): 395-415. 2. For a discussion of South Korea's position in the nuclear game between the United States and North Korea, see Taewoo Kim, "South Korea's Nuclear Dilemmas," Korea and World Affairs 16:4 (summer 1992): 250-293. 3. Washington Times, April 15, 1992. 4. Washington Post, April 13, 1994. Upon a nuclear attack from North Korea, however, this study led by Ashton Carter concluded that the United States was to respond with a strike against its nuclear installations. 5. Rodong Shinmun, January 1, 1995, carried a New Year editorial which stated that the Agreed Framework was the "brilliant fruition of [North Korea's] firm independent position" and the year 1994 was a "historic year when the external prestige of [the] republic was significantly heightened." 6. For a summary of this line of thinking, see Kyung-Ae Park, "North Korea's Influence in the Nuclear Deal with the U.S.: A Case of Small State Influence in the Post-Cold War Era." Paper presented at the International Conference on Politics and Security in the Korean Peninsula, Michigan State University, East Lansing, MI, April 5-6, 1996. 7. Park, "North Korea's Influence in the Nuclear Deal." 8. Office of the South-North Dialogue, Seoul. South-North Dialogue in Korea 62 (July 1995): 46-47. 9. The sections on technological denial and the possible adoption of the Japanese model of nuclearization are the updated versions of those in Tong Whan Park, "Is Nuclear Option an Option for South Korea?" in Raju G. C. Thomas, ed., The Nuclear Non-Proliferation Regime: Prospects for the 21st Century (Basingstoke, Hampshire, UK: Macmillan Press; and New York: St. Martin's Press, 1998), pp. 243-259.

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10. The Ministry of National Defense, Defense White Paper 1997-1998 (in Korean) (Seoul: The Ministry of National Defense, 1997), p. 54. 11. The Korea Electric Power Corporation, Atomic Energy 1996 (in Korean) (Seoul: KEPCO, 1996). 12. According to the documents obtained recently by JoongAng Ilbo (October 27, 1997), the late president had set up an elaborate plan to possess atomic bombs by 1985 and had made notable progress until his assassination put an end to it. 13. The KEDO was launched in March 1995 in New York with the United States, South Korea, and Japan as "original members." KEDO is charged with the task of securing the funds for and supplying the two LWRs along with the arrangement for the delivery of heavy oil to North Korea. 14. A leading thinker in this school is Kim Tae-woo. His thoughts are summarized in his book Why Not South Korean Nuclear Sovereignty? (in Korean) (Seoul: Jisik Sanupsa, 1994). 15. This community consists of social and physical scientists as well as influential writers in the media. There are even middle-level policymakers who have shown a favorable disposition to the existence of such a group, if not to its way of thinking. 16. For an example of this type of criticism, see Sam-sung Lee, The Nuclear Issue on the Korean Peninsula and America's Diplomacy (in Korean) (Seoul: Hankilsa, 1994).

6 U.S.-North Korea Economic Relations: Indications from North Korea's Past Trade Performance NICHOLAS EBERSTADT

For most of the history of the always troubled relationship between the governments of Pyongyang and Washington, the nature of the economic linkages between the Democratic People's Republic of Korea (DPRK, or North Korea) and the United States could be easily described in a single phrase: essentially nonexistent. Three days after the outbreak of the Korean War on June 25, 1950, the U.S. Congress approved legislation to ban all exports to North Korea. Over the next four decades, the scope and specificity of U.S. legal sanctions against commercial and financial transactions steadily expanded. By the early 1990s, possibilities for any economic contact between the two countries were proscribed by at least ten separate laws 1 as shown in Table 6.1. Discretionary regulatory strictures, enforced by presidential authority but enjoying broad bipartisan support within the U.S. Congress, further limited any remaining opportunities for commercial engagement between the two countries. In the mid-1990s, however, the U.S. posture toward economic contact with North Korea changed suddenly and substantially. With the signing of the U.S.-DPRK Agreed Framework on October 21, 1994 (a document through which U.S. and North Korean negotiators jointly outlined a peaceful resolution to the North Korean nuclear confrontation of 1993-1994), the United States formally embraced a new approach toward economic relations with the DPRK: an approach that envisioned not only progressive expansion of bilateral trade, but also de facto commitment to a long-term program of direct official aid from Washington to Pyongyang. Under the

An earlier version of this essay appeared in Korea and World Affairs 21, no. 4 (winter 1997/98).

119

120 Table 6.1

Nicholas Eberstadt

U.S. Sanctions Against North Korea

Date

Related Laws

January 28, 1950 December 17, 1950

Export Control Act Trading With the Enemy Act

September 1, 1951 August 1, 1962

Trade Agreement Extension Act Foreign Assistance Act

January 3, 1975

Trade Act (1974)

May 16, 1975

Export Control Act

October 5, 1986

Act on Ex-Im Bank

January 20, 1988

Export Control Act

April 4, 1988

International Arms Trading Regulations (revised)

March 6, 1992

Munitions Control Items

Sanctions Ban on exports to N. Korea Freeze on N. Korean assets in U.S.; announcement of the Overseas Assets Control Regulations, which virtually made a total ban on trade and monetary transactions with N. Korea Prohibition from giving MFN status to N. Korea Ban on grant of aid to N. Korea Prohibition from giving GSP benefits to N. Korea Application of a comprehensive embargo on N. Korea by the U.S. Export-Import Bank Prohibition from giving credits to N. Korea by the U.S. ExportImport Bank Listed as a terrorism supporting country, N. Korea was subjected to bans on trade, grants by the GSP, the sale of articles listed among the munitions control items, and aid and credits from the Export-Import Bank; U.S. instructions to vote against in case an international monetary institution was to decide on a grant of aid to N. Korea Ban on sales of defense industry materials and services as well as imports and exports with N. Korea. Confirming N. Korea was involved in giving missile technology to Iran and Syria, the U.S. banned the export of articles listed among the munitions control items and the government's contract with N. Korea for two years; application of these bans on all activities of N. Korea related to the manufacture of missiles, electronics, space aviation, and military aircraft

Source: Zachary S. Davis et al., "Korea: Procedural and Jurisdictional Questions Regarding Possible Normalization of Relations with North Korea," CRS Report for Congress (November 29, 1994).

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parameters of the framework, the U.S. government would provide (and the U.S. public would pay for) up to half a million tons of heavy oil for North Korea per year until the "safe" Western-style nuclear reactors that were to be constructed in the DPRK by, and financed through, the new Korean Peninsula Energy Development Organization (KEDO) became operational. Commercial relations between the United States and the DPRK were to be normalized as progress in other areas of contention was achieved. This embryonic economic relationship between the two countries has also been conditioned by developments wholly unanticipated in the Agreed Framework. In the wake of Pyongyang's unprecedented 1995 formal international appeal for emergency food relief, the United States has assumed a role as a donor of humanitarian aid to North Korea. In comparison with other U.S. relief and food aid programs past and present, the current U.S. initiatives under way for North Korea can be described as modest. 2 Yet in mobilizing tens of millions of dollars through private charities and taxpayer monies for the relief of a country to which Washington has never extended diplomatic recognition—and against which U.S. troops have long been deployed to defend U.S. allies—this strikingly new effort can nonetheless be regarded as significant. Commercial contacts between the United States and the DPRK may be said to have started in March 1995, with the U.S. Department of Commerce's approval of the sale of fifty-five thousand tons of corn to North Korea by a U.S. grain dealer. 3 Since that commencement, authorities have approved a number of other transactions on a case-by-case basis, including telecommunications link-ups, tourist excursions, airline overflight payments, purchases of North Korean magnesite, and a grain-for-zinc barter deal. 4 In addition, representatives of some of the largest U.S. businesses— including Coca-Cola, Boeing, and General Motors—have visited North Korea to explore possibilities for merchandizing arrangements, joint ventures, or direct investments. 5 Given all of these unexpected—perhaps once unimaginable—recent changes in the character of the U.S. approach to economic cooperation with North Korea, we may well ask: What lies in store for the new relationship in the period ahead? Do today's tentative and episodic U.S.-North Korean business contacts presage a commercial relationship that will ultimately, in some meaningful sense, be "normalized"? Presuming a continuation of the DPRK's regime and system, how substantial an expansion of U.S.-North Korean economic ties can we realistically envision? No less important: Would a blossoming U.S.-DPRK economic relationship avail North Korea of the resources, markets, and managerial expertise that would at last permit Pyongyang to stabilize and revitalize its apparently badly faltering domestic economy?

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Assessing the U.S.-DPRK Trade Outlook: Quantitative Estimations, Expectations, and Historical Indicators To anyone seriously considering them, these are daunting questions. Each outcome will be affected by a complex, quite likely changing, and very possibly unstable array of economic and political factors, not all of which can necessarily be identified beforehand, and about many of which reliable information is presently unavailable. How then does one approach the task of assessing the outlook for U.S.-DPRK commercial and financial relations? Three contrasting possibilities are suggested by the three different types of information currently available for use in such an undertaking: (1) prospective quantitative estimates; (2) current expectations of concerned participants; and (3) the DPRK's historical record of international economic performance. Prospective

Estimations

Some bold analysts have already offered quantitative estimates of the potential and scope for U.S.-North Korean trade under more "natural" terms of intercourse. In South Korea, for example, the Korea Trade and Investment Promotion Agency (KOTRA) reportedly concluded in 1994 that a full lifting of the U.S. trade embargo, in conjunction with improved NorthSouth relations, could result in an immediate 10 percent increase in DPRK exports 6 (implying, roughly, a $100 million boost in DPRK sales abroad). Unfortunately, the reasoning and method underlying this calculation have not been fully explained. In a recent and much more methodologically transparent study on the North Korean economy, the U.S. economist Marcus Noland offered some rather detailed computations bearing on a possible transition to a more normal trade regime for the DPRK. 7 (Presumably, U.S. economic sanctions against the North would not be part of this more normal set of arrangements.) Using a standard "gravity model" that does well in predicting trade volumes elsewhere in the Asia Pacific region, Noland concludes, as shown in Table 6.2, that as of the early 1990s roughly 7 percent of the DPRK's total trade turnover would have been expected to occur with the United States. On the basis of that same model, and the clearly tentative estimates of North Korean GNP used in it, 8 the implied overall "natural" volume of U.S.-DPRK trade would be around $1 billion a year. Relative to the DPRK's estimated annual total trade turnover of under $2.5 billion in the mid-1990s, 9 this is a consequential sum. Utilizing economic techniques for assessing "revealed comparative advantage" within existing trade patterns, Noland further indicated a variety of product areas in which North Korean exports might, under more "normal" trade arrangements, be internationally competitive (and thus

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Table 6.2

Actual and "Natural" North Korea Trade Shares (percentage)

Actual Trade Shares

'Natural" Trade Shares

China Japan Russia Iran Rest of world

26 18 11 9 36

South Korea Japan China U.S. Rest of world

35 30 13 7 15

'Actual" share of total trade in GDP

15

"Natural" share of total trade in GDP

71

Source: Marcus Noland, "Economic and Regional Cooperation in Northeast Asia," Joint U.S.-Korea Academic Studies 6 (1996): 162.

potentially attractive to U.S. purchasers, among others). In this reckoning, North Korea's "prospective comparative advantage" would lie in the sale of such things as seafood, semiprocessed mineral products, and textiles or apparel. Noland is careful to remind his readers that all of his calculations hinge upon assumptions that are currently contrafactual. The calculations are not offered as predictions of the future, but rather as numerically denominated illustrations of one hypothetical alternative for the North Korean economy. As it happens, this is really the most that can reasonably be demanded of positive econometric techniques under such circumstances. For better or worse, when it comes to specifying the prospects for U.S.DPRK trade, the limits of the cliometric sciences are both immediate and completely unyielding. Computational procedures and econometric models could of course be harnessed to the manufacture of additional "estimates" or "scenarios" for U.S.-DPRK trade and finance in the years to come, but these would likely be little more than exercises in false precision. Authoritative

Expectations

The fact that economic studies and statistical methods can only provide a broad and general impression of a few possible directions for U.S.-DPRK commerce, of course, has not prevented some observers and principals from developing firmly held and sometimes elaborate views about this very outlook. Such expectations, of course, can sometimes be informative in and of themselves. Of particular interest in this regard are the views and arguments of DPRK officialdom. Apart from their long-standing denunciation of U.S. sanctions, North Korea's official media offer few comments on U.S.-DPRK economic relations. When addressing U.S. audiences directly, however, leading figures from North Korea have been more forthcoming—and revealing. On at least three occasions over the past two years, highly placed DPRK officials or diplomats have expounded on the problems in U.S.-

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DPRK economic relations at seminars or public gatherings in the United States. 10 In each of these instances, the North Korean speakers asserted that U.S. economic sanctions stood as a major—if not the major—obstacle preventing greater DPRK participation in the international economy. These officials also commonly indicated that they expected a full lifting of U.S. economic sanctions to result in a dramatic upsurge of trade and direct foreign investment for their country. A press report on one of these seminars captured the essence of the other presentations as well: "North Korea seems to think that the lifting of the U.S. economic sanctions is the most urgent task at present. . . . The North Korean delegates insisted that lifting the economic sanctions would affect other countries and greatly contribute to North Korea's economic revival." 11 Coming as they do from personalities intimately familiar with the DPRK system, the informational value of these perspectives might be judged to have some worth. Although, there are also compelling grounds for discounting these opinions heavily, even if they were volunteered in all sincerity. North Korean authorities, after all, have demonstrated to date something less than a masterful understanding of the opportunities inherent in the international trade system (or for that matter, of the therapies necessary for inducing economic recovery in their own country). Past DPRK Trade Performance The DPRK's established record of performance in its international commercial and financial transactions may in fact afford greater insight into the prospects for U.S.-North Korean economic relations than any other data currently available. Given the distinctive nature of the DPRK system and the strong continuities that may be said to have characterized the state's economic policies and practices over the past decades, past North Korean trade patterns may well offer some guidance into the constraints that could continue to trouble the U.S.-North Korean economic relationship after sanctions were fully lifted. 12 Given the extraordinary scarcity of reliable information on North Korea's economic situation, moreover, a review of North Korean trade performance has the additional benefit of providing one of the rare apertures through which the broader performance— and problems—of the DPRK domestic economy can be observed.

Reconstructing North Korean Trade Patterns, 1970-1995: Methods and Problems North Korea does not regularly release detailed information about its trade relations with other countries. For this reason, North Korea's trade patterns

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must be reconstructed from "mirror statistics"—that is to say, from the reports of North Korea's trading partners on their sales to, and purchases from, the DPRK. The painstaking procedures involved are fairly straightforward, 13 but should be briefly reviewed nonetheless. Detailed mirror statistics on North Korea's foreign trade can be drawn from four separate sources: 1. the United Nations Statistical Office's International Commodity Trade Database, into which as many as 170 countries report; 2. Soviet and Russian trade statistics (Moscow has never yet contributed to the UN trade database); 3. ROK statistics on its post-1988 North-South trade (which are specifically excluded from the "international" trade data Seoul regularly transmits to the UN); and, 4. for a few years in the 1980s when it was not participating in the UN trade database, Chinese customs returns. To reconstruct overall DPRK trade patterns from these data, we must use a common system for classifying the merchandise traded, and a common medium for the valuation of transactions. The UN database provides its maximum coverage under the familiar commercial taxonomy known as Standard International Trade Classification (SITC), rev. 1. Detailed Chinese trade data (available for 1982 onward) have also been presented in terms of the SITC framework, and the Republic of Korea's (ROK) North-South trade can easily be harmonized with that format. Soviet trade data are more of a problem: they were presented in accordance with the CMEA's (Council of Mutual Economic Assistance, or COMECON) own Standard Foreign Trade Classification (SFTC). Fortunately, researchers at the U.S. Census Bureau's International Programs Center (IPC) have already converted Moscow's accounts on its trade with Pyongyang to SITC, rev. 1 for the period 1972-1995. 14 From these various sources, we can thus obtain a detailed breakdown on the reported composition of North Korea's international trade. By contemporary international convention, foreign trade is usually valued in current U.S. dollars. The UN database, Chinese customs statistics, and ROK reports on the North-South trade all measure their trade in current dollars. Soviet trade volumes, however, were reported in current rubles; the aforementioned IPC study on Soviet-DPRK trade, fortunately, used official dollar-ruble exchange rates to present that commerce in nominal dollar terms. From these sources, we could thus reconstruct a detailed "global" picture of North Korea's export and import patterns for the years 1970-1995. 15 A number of problems with this reconstructed trade picture should be recognized. 16 First, several of North Korea's major or potentially major

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trading partners (e.g., Iran, Iraq, Ukraine, Taiwan) simply do not report on their trade with the DPRK, or are omitted from the UN database for other reasons. Second, since the DPRK's external commerce has been disproportionately geared toward items often excluded from standard trade accounts (e.g., weapons and contraband), a portion of North Korea's trade with reporting partners may be excluded. (By the same token, some of the barter trade along the China-DPRK border is probably not captured in Chinese trade accounts.) Third, "mirror statistics" contain spurious entries (South Korean products, for example, may be miscoded as "North Korean"), 17 not all of which are likely to be detected. Finally, it is by no means clear that calculating transactions in "nonconvertible" currencies (e.g., the Soviet ruble) on the basis of official dollar rates of exchange will provide a realistic valuation of this aspect of the DPRK's commerce. Nevertheless, when all is said and done, mirror statistics probably provide a reasonably good approximation of the level, trends, and composition of North Korea's foreign trade. Used with care, they may illuminate otherwise obscure features of North Korea's international economic performance—-and perhaps more than that alone.

Characteristics of DPRK International Economic Performance, 1970-1995 In examining North Korean trade patterns, as reflected by mirror statistics over the period 1970-1995, a number of striking, unusual, and consistent patterns may be discerned. Each of them arguably has a bearing on the prospects for U.S.-DPRK economic relations. 1. Extraordinarily Weak Long-Term Trade Development If we go by the indications from mirror statistics, North Korea had one of the world's very poorest performance records in international trade over the quarter century between 1970 and 1995. Just how weak the DPRK's showing may have been is suggested by Figure 6.1, which contrasts estimated export earnings for North Korea with those for other areas. Note that all of these export earnings are measured in current U.S. dollars. There is no reliable means of converting current trade rubles into constant dollars, and thus no obvious method for devising a "constant" index for North Korea's overall imports or exports. 18 Between 1970 and 1995, the nominal volume of total international exports, by the International Monetary Fund's (IMF's) reckoning, increased by a factor of 16 or more. For the DPRK, by contrast, estimated nominal value barely tripled. No other Asian country for which data are available fared nearly so poorly in the world economy over that period; for Asia as

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Figure 6.1 Comparative Export Earnings: World, Asia, Africa, DPRK, 1970-1995 (index: 1970 = 1)

x «

•o

1

H

1

1 tttiH IIIIII 1

1

1

Sources: Derived from UN Commodity Trade Statistics, China Customs Statistics, ROK Ministry of Unification, and U.S. Bureau of Census.

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abroad may thus be viewed as winnings from this international struggle— or given Korea's history, perhaps even as a sort of tribute from abroad. 33 Like the South Korean government of an earlier era, North Korea today appears to be guided by an aid-maximizing economic strategy. 34 Yet an earlier generation of South Koreans decisively discarded aid-maximizing economic policies because they judged these to place their country under unacceptable economic and political constraints. Those same constraints continue to limit the scope of the possible for the DPRK. Three overarching problems beset an aid-maximizing strategy. First, no matter how consummate one's officials may be in maximizing it, concessional aid is, in the final analysis, always a political transaction, and thus is subject to the vagaries of sudden and unpredictable political change. From the DPRK's standpoint, the collapse of the Soviet bloc may be the most vivid illustration of this grim truth, but it is hardly the only one: remittances from North Korea's supporters in Japan appear to have fallen precipitously since the early 1980s, 35 and China's aid seemed surprisingly grudging once Beijing was no longer obliged to compete with Moscow for influence in Pyongyang. 36 Second, no matter how "self-reliant" an aid-bolstered polity may fashion itself to be, a regimen financed by subventions from abroad is ultimately a dependent regimen. North Korea learned just how dependent it was upon external largesse in 1994, when Beijing cut its shipments of friendship grain to 300,000 tons (from 800,000 tons the previous year): by the spring of 1995, North Korean officials were forced to launch their emergency appeal for international food aid, implicitly acknowledging that their regime was unable to feed its people. 37 For about $300 million a year in grain imports, according to some estimates, 38 this new "food problem" could be made to vanish; the DPRK's aid-maximizing international economic regimen, unfortunately, was incapable of dealing with such a problem on its own. Third, no matter how successful one may be in the quest for aid, the scope for obtaining foreign resources through concessional transfers is incomparably smaller than through commercial trade. As much is indicated by the broad outlines of the contemporary world economy, in which annual trade turnover is estimated to be well over one hundred times greater than yearly net disbursements of official development assistance (ODA). 39 More to the point in North Korea's case, in the economic race between the two Koreas there was a time when the DPRK's absolute volume of imports exceeded the ROK's. 40 Today, however, South Korea imports over $10 billion in goods and services every month,41 and it regularly finances these imports through its own export earnings. To judge by Figure 6.2, the DPRK has never succeeded in extracting more than $1.2 billion in aid in a single year from foreign benefactors. What are the chances that North Korea could ever muster concessional aid flows of $10 billion a year (let alone $10 billion a month)!

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There may also be an additional, incalculable drawback for North Korea from an aid-maximizing orientation, since North Korea's dealings with the outside world betray a lingering confusion about the difference between business-based transactions and charitable bequests. Pyongyang's economic relations with Western countries remain seriously damaged to this day by Pyongyang's de facto default upon almost $1 billion in commercial loans in the mid-1970s. Many other countries have also fallen behind on their scheduled international debt repayments at some point during the past two decades; North Korea appears to have been unique, however, in insisting that it should not have to make good on any portion of its outstanding obligations. Though banking circles have treated the precise details of North Korea's behavior as proprietary information, many observers believe that the DPRK has made virtually no interest or amortization payments toward these debts over the last twenty years. 42 Pyongyang's defiant stance toward repayment of these Western debts has long puzzled financial specialists. Although students of North Korean affairs have offered a variety of plausible hypotheses to explain it, 43 a possibility seldom discussed is that the DPRK never intended to repay these monies in the first place. Yet that possibility would be entirely in keeping with North Korea's previous posture toward loans extended to it by Soviet bloc countries: according to a number of Soviet sources, these were simply never repaid. 44 Given its fundamentally political interpretation of its international commercial and financial dealings, it may be that the North Korean government views nonperformance on its Western debts not only as justifiable but also as deft. The consequence of treating those loans as if they were gifts, however, has been to undermine the DPRK's international creditworthiness, to preclude regular trade finance, and to reduce the country to barter for most of its transactions in the world marketplace. 3. Chronic Underinvestment

in Foreign Machinery and Equipment

Given the "investment fetish" common to all communist economies 4 5 and evident in the DPRK in an extreme form, it may seem counterintuitive to suggest that the North Korean government has spent too little on capital goods of any sort. Yet mirror statistics on North Korean trade reveal a long-term pattern of skimping on expenditures for foreign machinery and other productive equipment that could modernize the economy's capital stock and improve its industrial infrastructure. As Figure 6.3 indicates, the share of North Korean imports allocated to the purchase of capital equipment has markedly and steadily declined over the past two decades. Even during the upswing in its economic relations with the USSR in the late 1980s—when Pyongyang presumably had some say over the composition of its growing aid from the USSR—the share of capital goods within overall imports continued to drop.

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Figure 6.3 Capital Goods as a Percentage of Total DPRK Merchandise Imports, 1972-1995

Year Sources: Derived from UN Commodity Trade Statistics, China Customs Statistics, ROK Ministry of Unification, and U.S. Bureau of Census.

By any international benchmark, North Korea has been a persistent and extreme underinvestor in foreign capital goods. Over the past generation, the DPRK's share of capital goods within imports, and its absolute level of capital goods imports per capita, have been lower—typically, far lower—than in other communist economies. They also contrast sharply with patterns in the noncommunist, low-income world. By the early 1990s, in fact, per capita imports of machinery and equipment for the developing regions as a whole may have averaged about ten times the North Korean level. 46 While economies throughout the rest of the world were incorporating ever more foreign machinery and equipment into their domestic capital stock, North Korea's imports of these goods were stagnating, or worse. The year 1975 may actually have been the high-water mark for DPRK imports of capital equipment, even in nominal dollar terms. Although the figures necessary for such calculations are not available, it seems quite possible that the DPRK may have had the lowest proportion of imported capital goods within gross domestic capital formation—or within its endowment of fixed reproducible capital—of any country in the world by the early 1990s. From the standpoint of the architects of North Korea's independent socialist economy, this may have appeared to be an accomplishment in its own right. Yet the economic implications of this fateful policy determination have been almost unremittingly adverse.

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Absent the option of replacing old equipment with updated machinery from abroad, North Korea finds itself locked into a generally aging industrial infrastructure that embodies generally obsolescent technologies; any prospects for innovation correspondingly rest largely with the DPRK's own juche research and development efforts. Since imported capital goods are typically less expensive and more productive than domestically manufactured alternatives, 47 North Korea's strictures against foreign machinery and equipment have consigned the economy to wasteful expense in its own investment sector, and to unnecessarily slow economic growth. Chronic underinvestment in foreign machinery and equipment has had a pronounced and constricting impact on North Korea's ability to export—an impact in some measure independent of, and in addition to, other exportrestricting factors in the North Korean trade regimen. 4. Unsustainable Militarization

of Trade

The North Korean economy has undergone an extraordinary degree of militarization over the past generation, a transformation presumably reflecting Pyongyang's strategy for reunification of the Korean peninsula on its own terms.48 In its contest with Seoul for claim to the entire peninsula, this wholesale militarization both posed problems and offered potential solutions. North Korea's enormous military burden handicapped the North in its long-term race against the South. No less troubling, innovations in military technology rapidly changed the terms of battle in recent decades, and North Korea's defense industries were not able to produce the sorts of advanced munitions and materiel that would be available to its adversaries. Pyongyang seems to have attempted to resolve this dilemma by militarizing its international trade. Through its tilt toward Moscow in the 1980s, North Korea managed to obtain massive amounts of Soviet military hardware, thereby improving the correlation of forces against the South. At the same time, North Korea made a push into the international weapons market as an arms supplier, selling the sorts of products its defense sector could produce to clients willing to purchase them. The military consequence of Pyongyang's revitalized ties with Moscow is indicated in Figure 6.4. It quantifies the unidentified residual in the USSR's reported exports to the DPRK; these "commodities and transactions not classified according to kind" (in the SITC taxonomy), we surmise, present a reasonably good approximation of the volume of Soviet weaponry shipped to North Korea. Between 1974 and 1984, at official ruble-dollar exchange rates, this unexplained residual remained well under $100 million a year. It jumped to $400 million in 1985 and continued to climb thereafter. Over the years 1985-1990, these unidentified shipments would have amounted to $5 billion at official ruble-dollar rates. These imports, moreover, came to dominate not only the DPRK's trade with the Soviet Union, but the DPRK's entire trade profile. Between 1988 and 1990,

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Figure 6.4 DPRK Imports of SITC 9 Items from USSR/Russia, 1972-1995 1U0U 900 800 700

in c o

600 500

Ë

300 200

I 1 . .

100 0

&

M

m

##

. ^

•

•

•

^/ ^#

• #

i

^

#

l

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#

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f

£

£

^

#

^

year

Source: U.S. Bureau of Census, Center for International Research.

for example, imports of Soviet weaponry appear to have accounted for nearly a third of North Korea's total imports from the outside world. 49 Estimating North Korea's arms exports is more problematic, insofar as these illicit transactions generally do not show up in mirror statistics. The U.S. Arms Control and Disarmament Agency (ACDA), however, has offered estimates of this commerce; though the numbers shown in Figure 6.5 should not be treated as exact, they may be illustrative nonetheless. According to ACDA, the DPRK entered modestly into arms exports in the mid-1970s and became an arms supplier of some consequence in the early 1980s. Between 1981 and 1989, by ACDA's reckoning, North Korea exported almost $4 billion in weaponry (principally to Iran for its war against Iraq). If those numbers are roughly correct—and we should emphasize that we have no means of determining whether they are—weapons sales would have accounted for nearly 30 percent of North Korea's total exports during that period. Ultimately, however, the militarization of North Korean trade proved to be an unsustainable policy. With the collapse of the Soviet Union, the transfer of military goods from Moscow to North Korea also collapsed; by 1994-1995 those flows had apparently ceased altogether. North Korea's weapons exports, for their part, apparently also collapsed after 1988, evidently a casualty of the end of the Iran-Iraq war, the end of the Cold War, and international nonproliferation efforts. If ACDA's figures are correct, the nominal dollar value of North Korea's weapons sales in 1995 was under $50 million a year—lower than it had been in the late 1970s. Until and unless Pyongyang completely recasts its reunification strategy, the DPRK's desire for foreign weaponry should be expected to grow.

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Figure 6.5 ACDA Estimates of DPRK Arms Exports, 1975-1995 800 700 600 10 c o

500

I

400 -

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300 200

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•

100

1

1 1

0 •

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year Source: U.S. Arms Control and Disarmament Agency, WMEAT Database.

Imported weaponry, after all, would seem to offer the DPRK one of the very few available "quick fixes" to its increasingly unfavorable strategic position vis-à-vis South Korea. But because of other policies the regime has long pursued, the country cannot now afford to purchase the materiel necessary for redressing the strategic imbalance, even if suppliers for such merchandise could be found. By the same token, the apparent erosion of the DPRK's industrial infrastructure, and the increasingly antiquated technology undergirding it, would limit prospects for weapons sales by North Korea today, even if the geopolitical changes attendant on the end of the Cold War had not done so already. 5. Inability to Penetrate Nonembargoed Western Markets A final characteristic of North Korean trade patterns worth mentioning has been the country's rather limited success in merchandizing its products in the very large markets in which there are no standing sanctions against its trade. Up until this writing, Washington's apparatus of sanctions has indeed denied North Korea access to the largest single market in the world. Yet the U.S. market accounts for only a modest fraction of total imports by industrialized countries. Nearly four-fifths of the international purchases of merchandise by the Organization for Economic Cooperation and Development (OECD) grouping, in fact, come from countries other than the United States. In 1995, the total imports of those same countries exceeded $2.6 trillion. None of those countries, moreover, maintain economic sanctions against North Korea.

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Lack of legal obstacles against entry notwithstanding, North Korea has yet to make any appreciable inroads into these enormous markets. North Korea's indifferent performance is highlighted in Figure 6.6, which contrasts the growth of these non-U.S. OECD markets with changes in North Korea's exports to them. Between 1975 and 1995, the nominal dollar value of the imports of the non-U. S. OECD increased by a factor of 5.2; North Korean exports to those countries, on the other hand, did not quite triple. In relative terms, North Korea's share of the non-American OECD import market was barely half as great in 1995 as it had been in 1975. In absolute terms, North Korea's exports to those markets are estimated to have been lower in the 1990s than they were in 1980—even in nominal dollar terms. This lackluster record, to repeat, cannot be explained in terms of hostile economic policies toward North Korea. It is instead to be understood as a largely predictable consequence of the distinctive characteristics of North Korea's trade that we have already described. North Korea's performance in non-U.S. OECD may actually be even poorer than Figure 6.6 suggests. With the collapse of the USSR and the virtual termination of Moscow-Pyongyang trade, one might have expected export capacity that had previously serviced Soviet markets to be redirected toward hard currency sales. Such an adjustment, however, does not yet

Figure 6.6 Changes in Trade: Total Imports of Non-U.S. Industrial Countries Versus D P R K Exports to O E C D , 1970-1995 (index: 1975 = 1)

A^> A s

a'V A*^ A^ &

A^ A^ A1^

.dp t& .dp .dp d> . dp d> .op> c> dfc> .dp -Op .OP-OP ¿P ¿P ¿SP.OP ¿SP ¿5° .dp ¿P K K of* o8> ^ ^

Year

Sources: Ibid.

Conclusion The future of the U.S.-DPRK economic relationship cannot be predicted with any great precision. If the DPRK's past trade patterns, policies, and

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U.S.-North

Korea Economic Relations

Figure 6.8

Export Performance: Vietnam Versus DPRK (index: 1989 = 100)

300

250

3

100

50

0

1989

1990

1991

1992

1993

1994

1995

Year Sources: Vietnam statistics derived from Asian Development Bank, Key Indicators of Developing Asia and Pacific Countries, vol. 26; DPRK statistics derived from UN Commodity Trade Statistics, China Customs Statistics, ROK Ministry of Unification, Korea International Trade Association, and U.S. Bureau of Census.

practices offer guidance into what we may expect from Pyongyang in the immediate future, three general observations about this new prospective relationship are in order. First, under the DPRK's current policy regimen, even a complete and summary remanding of all restrictions against U.S.-DPRK trade should be expected to result in only modest volumes of commerce. After normalization of trade relations, the primary constraints against expansion of U.S.-North Korean trade would lie in the nature of the North Korean trade regime itself. 50 That trade regime may of course change. As I have argued, however, it currently seems to reflect core values and objectives of the North Korean state, and thus may only be "reformed" with the utmost reluctance. Second, notwithstanding the expressed expectations of leading North Korean officials, it would seem highly unlikely that a normalization of U.S.-DPRK trade relations, in and of itself, could provide the impetus for arresting North Korea's economic decline, much less alleviating its current economic woes. The economic resources that might be unleashed by such a relaxation would likely pale next to the requirements for such tasks, presuming the current policy regimen remains in place. North Korea's economic difficulties might arguably be remedied without enormous outlays of external economic resources under a very different economic regimen—but

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to speculate about radical changes in North Korean economic policies is tantamount to begging the question of the continued existence of the state itself. Finally, if past North Korean policy provides any guidance, Pyongyang's interest in a normalized economic relationship with the United States lies less in the prospects for expanded commerce than in the potential for unlocking new sources of aid. In this regard, the hopes and expectations of North Korean authorities might not be unfounded. Under a more normalized diplomatic and economic relationship, the United States could arrange for substantial inflows of aid to North Korea even if it committed few funds of its own. Washington could, for example, pave the way for a more successful international appeal for humanitarian relief for the DPRK; it could provide the opening for North Korea for concessional assistance from such multilateral institutions as the World Bank and the Asian Development Bank; 51 it could even be influential in facilitating the longsought financial "settlement" from Japan. For North Korea today, the search for new patrons may be a more familiar, and attractive, challenge than the trials of learning to compete in international markets. Pyongyang may correctly judge its relationship with the United States to be critical to its prospects for securing aid flows from other Western sources. Whether North Korean foreign policy can satisfy conditions for a more favorable U.S. disposition toward Western aid for the DPRK—and whether such aid could resuscitate the ailing North Korean economy—are questions that can be answered only with time.

Notes 1. For details, see Zachary S. Davis, "Korea: Procedural and Jurisdictional Questions Relating to a Possible Normalization of Relations with North Korea," Washington, D.C.: Congressional Research Service, November 24, 1994; and Kook Shin Kim, "The Origins of the U.S. Aid Policy Toward Korea and the Outlook for Its Future Development," East Asian Review 8:4 (1996). 2. Between September 1995 and July 1997, the U.S. government allocated or pledged a cumulative total of just over $60 million in food and medical aid for the DPRK. Korea Times, July 15, 1997, reprinted in U.S. Foreign Broadcast Information Service (hereafter, FBIS) as "South Korea: U.S. to Provide Another $27 Million in New Food Aid to DPRK," FB/S-EAS-97-116, July 15, 1997. These donations would constitute only a very small fraction of the official U.S. funds regularly allocated for such purposes. By way of perspective: between 1992 and 1995 U.S. bilateral aid programs spent an average total of about $1 billion a year on food aid, and an additional $800 million a year on emergency and distress relief. Organization for Economic Cooperation and Development, Development Cooperation 1995 (Paris: OECD, 1997), p. A36. 3. Kim, "The Origins of the U.S. Aid Policy Toward Korea," p. 81. 4. For some details, see Nigel Holloway, "Don't All Jump at Once," Far Eastern Economic Review, August 3, 1995, pp. 55-56; Donna Marino, "Return to North

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Korea," Travel News, February 13, 1996, p. 41; "Seoul May Block N. Korean Air Deal," Financial Times, October 11, 1995, p. 6; and "Cargill Signs Metals Deal in North Korea," American Metal Market, April 15, 1997, p. 2. 5. See, for example, Steve Glain, "Unlikely Prize: Evolving North Korea Attracts Foreigners Seeking Business Deals," Wall Street Journal, September 20, 1995, pp. A1,A9. 6. As reported in The Korea Times, July 8, 1994, p. 8; reprinted as "Trade Group Reports Increase in North Exports," FS/5-EAS-94-131, July 8, 1994. 7. Marcus Noland, "The North Korean Economy," Joint U.S.-Korean Academic Studies 6 (1996). 8. "Gravity models" of trade customarily require data on, among other things, the size of a country's GNP and its level of per capita income. For North Korea, Noland used figures published by the ROK Bank of Korea. Among available estimates for such things, these may be as good as any others, and perhaps better than some. For obvious reasons, though, they are nonetheless problematic. 9. The ROK ministry in charge of national unification, for example, has estimated North Korean trade turnover at $2.11 billion in 1994 and $2.06 billion in 1995. Korea Times, March 23, 1996, p. 6; reprinted as "ROK: NUB Says DPRK Economy Shrank 6 Percent in 1995," Fß/S-EAS-96-058, March 26, 1996. These particular estimates exclude inter-Korean trade, which totaled, very roughly, $200 million in 1994 and $300 million in 1995. Later in this chapter we will introduce our own estimates of DPRK trade volume. Our estimates will differ somewhat from those of the National Unification Board just cited; even so, the totals are broadly similar. 10. In August 1995, for example, DPRK Ambassador to the UN Han Song-yol addressed a seminar in Los Angeles on investment opportunities in North Korea for U.S. firms; in April 1996 in Washington, D.C., Kim Jong-u, chairman at the time of the DPRK Committee for the Promotion of External Economic Cooperation, offered remarks at a George Washington University seminar on the North Korean economy; and in March 1997, DPRK Vice Foreign Minister Kim Kye-kwan spoke in Washington to a gathering at the Heritage Foundation. For some details, see Hanguk Ilbo, August 5, 1995, p. 6, translated as "Han Song-yol Hopes U.S. Will Lift Sanctions," FS/S-EAS-95-177, August 7, 1995, p. 42; Sisa Journal, May 9, 1996, pp. 78-79, translated as "ROK Weekly Examines DPRK's Reform, Opening Up," Fß/S-EAS-96-091, May 9, 1997; and Seoul Sinmun, March 14, 1997, p. 10, translated as "Daily Reports on DPRK Delegation's Washington, D.C., Visit," FBIS-EAS-97-073, March 14, 1997. 11. "Daily Reports on DPRK Delegation's Washington, D.C., Visit," endnote 10. 12. In posing the problem in this manner, we have implicitly embraced the following assumptions: (1) North Korea's trade patterns to date strongly reflect, and have indeed been largely determined by, the DPRK's own political economy; (2) within that political economy is an embedded regime logic that is not highly sensitive to changes in domestic conditions or international events; and (3) the primary determinant of the scope of a postsanctions commercial relationship between the United States and North Korea would be the DPRK's own political economy and internal regime logic. It is worth making these assumptions explicit, since it is by no means clear that every reader would agree with them. 13. There is a considerable literature drawing upon such techniques. Specialists on communist economies, for example, made extensive use of mirror statistics to analyze the performance of earlier regimes subject to official "statistical blackouts" (e.g., Stalin's USSR and Maoist China). For the DPRK, one of the first

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efforts at reconstructing North Korean foreign trade through mirror statistics is to be found in Joseph Sang-hoon Chung, The North Korean Economy: Structure and Performance (Stanford, CA: Hoover Institution Press, 1974). To date, perhaps the most comprehensive reconstruction and analysis of North Korea's trade is Sooyoung Choi, "Foreign Trade of North Korea 1946-1988: Structure and Performance," Ph.D. dissertation, Northeastern University, 1991. 14. Marc Rubin, "North Korea's Trade with the USSR and Russia, 1972-1995," Washington, D.C.: U.S. Bureau of the Census, International Programs Center, unpublished paper, November 1996. 15. An additional set of adjustments attempted to take account of the loading, insurance, and freight (c.i.f.) charges that would be paid by North Korea in its purchases from abroad, but not reported in its trading partners' accounts (and, conversely, included in their purchases from North Korea but not paid to the DPRK). These c.i.f. costs, of course, are unknown. Following International Monetary Fund (IMF) convention, we assumed that c.i.f. costs amounted to 10 percent of f.o.b. (free on board) values, and scaled accordingly. 16. For a fuller exposition on these issues, see Nicholas Eberstadt, "The DPRK's International Trade in Capital Goods, 1970-1995: Indications from 'Mirror Statistics,'" Journal of East Asian Affairs (forthcoming, 1998). 17. The UN database reports hundreds of millions of dollars in trade between "North Korea" and Saudi Arabia between 1974 and 1982, and hundreds of millions more between "North Korea" and Mexico in 1994 and 1995. We have taken these to be erroneous, and have purged them from our reconstructed series. Some other smaller but equally implausible records (e.g., for Sikkim-DPRK transactions) have likewise been stricken. 18. This issue is dealt with in greater detail in Nicholas Eberstadt, Marc Rubin, and Albina Tretyakova, "The Collapse of Soviet and Russian Trade with the DPRK, 1989-1993: Impact and Implications," Korean Journal of National Reunification 4 (1995). 19. Note, incidentally, that "non-Soviet" is not simply a euphemism for "Western economies." For the DPRK, consequential "non-Soviet" trade partners during these years included China, the countries of CMEA Europe, and the "Third World" grouping. We will deal more specifically with North Korea's performance in Western markets later in this chapter. 20. If we deflate North Korea's estimated non-Soviet commerce by the price indices for U.S. exports and imports, for example, the DPRK's real exports to these regions would have declined by about 10 percent between 1975 and 1995; its real imports from them, by about 15 percent. Price indices are taken from Organization for Economic Development and Cooperation, National Accounts: Main Aggregates, Vol. 1,1960-1995 (Paris: OECD, 1997): 1 4 6 ^ 7 . 21. For details, see Choi, "Foreign Trade of North Korea 1946-1988." 22. For details, see Eui-gak Hwang, The Korean Economies: A Comparison of North and South (New York: Oxford University Press, 1993); and Bon-hak Koo, The Political Economy of Self-Reliance: Juche and Economic Development in North Korea, 1961-1990 (Seoul: Research Center for Peace and Unification, 1992). 23. For one reading of these measures, see Nicholas Eberstadt, "North Korea: Reform, Muddling Through, or Collapse?" in Thomas L. Henriksen and Kyongsoo Lho, One Korea? Challenges and Prospects for Reunification (Stanford, CA: Hoover Institution Press, 1994). 24. The two other priority areas mentioned were agriculture and light industry. 25. Political instability and eruptions of civil turmoil are factors that have prevented some contemporary countries from participating in the international

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upswing in trade. Suffice it to say that lack of firm political control by central authorities has not been the DPRK's problem. 26. Our calculations would place per capita DPRK exports in 1995 at about $40 (presuming a 1995 population of about 23 million). While some North Korean exports for that year are doubtless not included in our series, the absolute value of this unmeasured commerce is probably not great. 27. In 1994 North Korea's estimated level of exports per capita was about $10 greater than in 1995, but was still only slightly above that of the Central African Republic, and below that of Laos and Kenya. Derived from the International Financial Statistics Yearbook (Washington, D.C.: IMF, 1996). 28. For details, see Nicholas Eberstadt, Korea Approaches Reunification (Armonk, NY: M. E. Sharpe, 1995). 29. For some details, see Karoly Fendler, "Economic Assistance from Socialist Countries to North Korea in the Postwar Years: 1953-1961," in Han S. Park, ed., North Korea: Ideology, Politics, Economy (Englewood Cliffs, NJ: Prentice Hall, 1996). 30. Some of this history is recorded in Chin O. Chung, Pyongyang Between Peking and Moscow: North Korea's Involvement in the Sino-Soviet Dispute, 1958-1975 (University, AL: University of Alabama Press, 1978). 31. For details, see Eberstadt, Rubin, and Tretyakova, "The Collapse of Soviet and Russian Trade with the DPRK." 32. These shifts are detailed in Nicholas Eberstadt, Christina W. Harbaugh, Loraine A. West, and Marc Rubin, "China's Trade with the DPRK, 1990-1994: Pyongyang's Thrifty New Patron," Korea and World Affairs 18:4 (1995). 33. It is interesting to note that sadaejuui—the historical doctrine that informed the tributary relations between the Yi court and the Chinese empire—is a term of the utmost opprobrium in the DPRK's political lexicon. One interpretation would suggest that juche simply stands sadaejuui on its head: demanding (or attempting to demand) tribute from abroad as the prerogative of an independent socialist Korean state! 34. In the apt phrase of David C. Cole and Princeton N. Lyman. See their Korean Development: The Interplay of Politics and Economics (Cambridge, MA: Harvard University Press, 1971), pp. 171-74. 35. See, for example, Nicholas Eberstadt, "Financial Transfers from Japan to the DPRK: Estimating the Unreported Flows," Asian Survey 36:5 (1996). 36. See Eberstadt et al., "China's Trade with the DPRK, 1990-1994." 37. The correspondence between the drop-off of Chinese food shipments and the emergence of an officially acknowledged DPRK "food problem" is examined in Nicholas Eberstadt, "DPRK's International Trade in Food, Energy, and Motor Vehicles: Indications from 'Mirror Statistics,'" Asian Survey (forthcoming, 1998). 38. Hong-Tack Chun, "Economic Conditions in North Korea and Prospects for Reform," Korea Development Institute, KDI Working Paper #9603, March 1996, pp. 7-9. 39. In 1995, international exports and imports totaled an estimated $10 trillion; ODA disbursements, by contrast, came to about $70 billion. International Financial Statistics Yearbook 1996; OECD, Geographical Distribution of Financial Flows to Aid Recipients, 1991-1995 (Paris: OECD, 1997). 40. E.g., the early 1960s. For details, see Eberstadt, Korea Approaches Reunification, chapter 1. 41. Derived from International Financial Statistics Yearbook 1996. 42. For background, see Hwang, The Korean Economies; and Choi, "Foreign Trade of North Korea." 43. See, for example, Joseph S. Chung, "Foreign Trade of North Korea: Performance, Policy and Prospects," in Robert A. Scalapino and Hongkoo Lee, eds.,

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North Korea in a Regional and Global Context (Berkeley, CA: University of California, Institute of East Asian Studies, 1986). 44. See, for example, George Ginsburgs, "Soviet Development Grants and Aid to North Korea, 1945-1980," Asia Pacific Community (Tokyo) 18 (1982); and Erik Van Ree, "The Limits of Juche: North Korea's Dependence on Soviet Industrial Aid, 1953-1976," Journal of Communist Studies 5:1 (1989). 45. For lucid expositions of the phenomenon, see Jan Winiecki, The Distorted World of Soviet-Type Economies (Pittsburgh, PA: University of Pittsburgh, 1988); and Janos Kornai, The Socialist System: The Political Economy of Communism (Princeton, NJ: Princeton University Press, 1992). 46. For a fuller treatment, see Eberstadt, "The DPRK's International Trade in Capital Goods, 1970-1995." 47. For evidence to this effect, see Jong-Wha Lee, "Capital Goods Imports and Long-Run Growth," Journal of Development Economics 48:1 (1995). 48. For a more detailed exposition of this interpretation, see Nicholas Eberstadt, "The DPRK's Unification Policy, 1948-1996: A Long, Failed Gamble," Korea and World Affairs 19:4 (1996). 49. According to some military specialists, Soviet weapons shipment to North Korea during those years consisted of such things as avionics systems and highperformance aircraft—items the DPRK could not manufacture domestically. 50. The U.S. business community, as it happens, is beginning to get a taste of North Korea's guerilla-style, "hit-and-run" approach to dealings in the international market. According to one State Department official, a U.S. grain trading concern has already been left with $70 million in unpaid bills for produce it delivered contractually to the DPRK. C. Kenneth Quinones, "The Agricultural Situation in North Korea," Korea's Economy 1997 (Washington, D.C.: Korean Economic Institute, 1997), p. 103. According to a recent news report, furthermore, North Korean authorities unilaterally abrogated their "breakthrough" grain-for-zinc barter deal with Cargill Inc. after the price of zinc moved up by $100 a ton on the international spot market, and it seemed possible that a more advantageous swap might be arranged. Washington Times, June 13, 1997, p. A9. Such practices, one may note, have been quite typical of DPRK international business techniques over the past generation. 51. U.S. authorities have reportedly indicated that they would view favorably a DPRK application for admission to the ADB. "Japan to Block N. Korea in ADB," Financial Times, May 10, 1997, p. 3.

7 U.S.-South Korea Economic Relations MARCUS NOLAND 1

Historically the economic relationship between the United States and South Korea has been dominated by the essentially complementary nature of the two economies and the patron-client relationship of the two states. Broadly speaking, the United States has been strong in sectors where South Korea has been weak (e.g., natural resource-based industries including agriculture and high-technology manufacturing) and weak where South Korea has been strong—labor-intensive and, increasingly, capitalintensive manufacturing. This pattern of complementary specialization has profound implications for the economic relationship. While the gains from trade are obvious and evident, expansion of trade may be accompanied by wrenching dislocation in the import-competing sectors of each country (i.e., the displacement of South Korean farmers or low-skill U.S. manufacturing workers). Moreover, each country's attempt to affect the composition of its output through trade or industrial policies disproportionately impacts the other; South Korean policies to protect the agriculture sector or promote high-tech manufacturing and U.S. attempts to protect less sophisticated manufacturing sectors are relevant here. The result is that these government interventions quite naturally become points of bilateral political contention themselves. Add to these structural reasons for conflict very different cultural, legal, and political traditions, and one would appear to have a recipe for very serious trade conflict. In fact, South Korea chronically receives far more attention in the U.S. Trade Representative's (USTR) annual

Reprinted by permission of the Institute for International Economics. Copyright © 1997 by the Institute for International Economics. All rights reserved.

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compendium of foreign trade barriers than its importance in U.S. trade alone would warrant. 2 What is striking is that with so much fuel for fire, the relationship has been fundamentally good, and conflict has tended only to flare up and then recede. The maintenance of a robust bilateral economic relationship, and of conditions in which conflict has been more the exception than the rule, must be ascribed to the deep bonds formed between these two countries by the hot war on the peninsula and to tireless efforts of policymakers in both countries over a period of decades. Current trends, however, point to a fundamentally different kind of relationship emerging between the two economies, if not the two governments. The rapid development of South Korea has had two potentially profound effects. First, South Korea is larger and becoming relatively more important to the United States in economic terms. South Korea is now the United States' fifth largest export destination (third largest in the case of agricultural exports) and its seventh largest source of imports. At the same time, the growth of the South Korean economy and its increasing integration with the rapidly growing developing economies of Asia means that South Korea's dependence on the U.S. market is steadily declining in relative terms (although the United States remains the most important destination of South Korean exports and the second largest supplier, after Japan, of South Korean imports). The share of South Korean national income accounted for by exports bound for the United States has fallen from a peak of 11.7 percent in 1988 to 5.6 percent in 1996, and is likely to continue to decline. In the past, when conflicts arose, most pointedly in the late 1980s, they were largely bilateral in nature. That is to say that both the disputes themselves and the attempts to resolve them were framed in bilateral terms, as opposed to multilateral, regional, or plurilateral terms. This bilateral emphasis, perhaps natural in patron-client terms, arguably impaired conflict resolution by overly politicizing issues, contributing to political demagoguery, and generally casting economic relations in zero-sum terms. Although South Korea remains significantly dependent on the U.S. market and will certainly seek to maintain a good relationship with the United States for the foreseeable future, the degree of asymmetry of dependence is declining. The traditional approach to disputes—in which the United States made unilateral demands backed up by an implicit threat of market closure—will probably be increasingly ineffective in the future. 3 Rather, both countries are likely to rely more heavily on multilateral bodies such as the World Trade Organization (WTO), the Asia Pacific Economic Cooperation (APEC) forum, or even the Organization for Economic Cooperation and Development (OECD) to resolve disputes. The second implication of South Korea's development is that intraindustry trade (trade in alternative varieties of differentiated products) is increasingly important relative to the traditional complementary pattern of

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trade in different homogeneous goods. Although as recently as a few years ago the bulk of South Korean exports were still in relatively labor-intensive products such as consumer electronics, textiles, and footwear, the last few years have witnessed a dramatic shift in the composition of South Korean trade. The largest sectors of South Korean net exports to the United States are electronics parts, including semiconductors ($2.3 billion), autos ($1.5 billion), and computer components ($1 billion). U.S. exports to South Korea are in turn concentrated in natural resource-based sectors (such as agricultural products) and in engineering goods such as aircraft and machinery. The largest net export sectors to South Korea are aircraft ($1.7 billion), telecommunications equipment ($.9 billion), and specialized machinery ($.6 billion). Moreover, relaxation in South Korea's foreign investment restrictions and the development of the South Korean economy have given rise to extensive direct investment in both directions, with the United States emerging as the largest investor in South Korea. As of 1995 the stock of U.S. investment in South Korea was $5.3 billion, and South Korea had $.9 billion in the United States. As a consequence of this rise in intra-industry trade and two-way investment, it is possible that the bilateral relationship may become less contentious than it was in the past; the predominately intra-industry expansion of trade may pose fewer adjustment problems for both economies, with the notable exception of South Korean agriculture. Accordingly, issues such as industrial promotion and competition policies in South Korea may project a higher profile in the economic relations of the two countries. In the remainder of this chapter I will try to provide an overview of the terrain of current and prospective economic conflicts, the factors determining the observed intermittent quality of conflict, and the modalities by which these conflicts may be resolved in the future. I conclude that although structural complementarities between the two economies will continue to pose serious difficulties, grounds for guarded optimism may be found in an increased role for multilateral institutions in the relationship, improved macroeconomic management, and an uncertain degree of convergence in the structural features of the two economies.

Trade Policies in the United States and South Korea Trade policy is used to raise and maintain the relative incomes of protected factors. These are typically those that are "scarce" in international trade terms. In the case of the United States and South Korea, two countries with very different factor endowments, it is likely that their respective trade policies will run directly counter to their partner's area of comparative advantage.4

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As a developing country, South Korea has historically maintained far more extensive barriers to trade than has the United States. In 1978 South Korea initiated a unilateral and gradual, though uneven, trade liberalization. In 1980, the average tariff was 24.9 percent, and nearly one-third of imported products were under some sort of quantitative restriction. By 1993 the import-weighted average tariff had fallen to 10.6 percent, and less than 2 percent of imported products were subject to quantitative restriction. 5 The recently completed Uruguay Round of multilateral trade negotiations could potentially have a major impact on U.S.-South Korea trade relations. 6 The United States, South Korea, and 114 other participants agreed not only to cut tariffs but also to integrate into international trade rules a number of areas that formerly have effectively been outside of General Agreement on Tariffs and Trade (GATT) disciplines—including agriculture, textiles and apparel, services, investment, and intellectual property rights. The agreement also made progress in reforming allowable nontariff barriers (NTBs) to trade, improved the multilateral dispute settlement procedure, and founded the GATT's successor, the World Trade Organization (WTO). Agriculture In the area of agriculture, participants in the Uruguay Round agreed to reduce subsidies, increase market access, and to tarrify existing nontariff barriers. Although South Korea has been a major market for U.S. agricultural exports, a vast majority (86 percent) of these exports are accounted for by bulk commodities. This figure is largely the result of quotas and other NTBs that effectively exclude from South Korean markets U.S. producers of high-value-added or processed agricultural products. 7 Excluded items of particular interest have included fruits, vegetables, grains (e.g., rice and barley), poultry, and beef. 8 Indeed, calculations by Kim indicate that the tariff equivalents of these nontariff barriers can be hundreds of times the nominal tariff rates, as shown in Table 7.1. 9 In the politically contentious rice sector, South Korea agreed to a minimum market access commitment that would involve imports supplying 1 percent of domestic consumption in 1995, with this figure rising to 4 percent in 2004. The tariff equivalent is nearly six hundred percent. In addition, South Korea is permitted to maintain state trading in a number of products (most notably rice), which potentially negates the impact of tariff cuts; in other cases South Korea was able to negotiate increases in previously bound tariffs. The United States has raised complaints about the implementation of the tariff quota schemes. In the case of oranges, for example, the South Korean government designated the country's only citrus cooperative as the sole importer of fresh oranges, creating what appears to be a clear conflict of interests. 10 As a consequence of actions such as these, the implications of the Uruguay Round for South Korean agriculture may be slight. 11 Be-

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Table 7.1 Estimates of Tariff-Equivalents of South Korean Agricultural N T B s (percentage)

Product Beef Pork Poultry Dried onions and garlic Dried beans Nuts Peppers Barley Corn Milled rice Malt Soybeans Peanuts Oilseeds Dairy products Leaf tobacco

Collected Tariff Rate 3

Nontariff Barrierb

Tariff Equivalent of Tariff and NTBC

20.1 20.8 20.1 52.5 30.0 34.6 38.9 34.9 2.6 5.0 35.1 3.0 40.3 34.8 21.5 19.9

148.9 30.2 44.9 206.9 463.8 199.2 261.1 389.5 362.4 590.0 263.9 538.0 215.8 458.3 128.6 51.1

169.0 52.0 65.0 259.4 493.8 233.8 300.0 424.4 365.0 595.0 299.0 541.0 256.1 493.1 150.1 71.0

Source: Namdoo Kim, Measuring the Costs of Visible Protection in Korea (Washington, D.C.: Institute for International Economics, 1996), Table 2.17. Notes: a. Collected tariff rate is measured as tariff revenue divided by total import value, using average annual exchange rate for 1992 ($1 = 780 won). b. The nontariff barrier equals the tariff equivalent of the total difference between domestic and foreign prices, minus the tariff rate. c. The tariff equivalents of the product categories comprising several subitems with different tariff equivalents are derived by taking the weighted average of individual products' tariff equivalents based on their production values for 1992.

yond these broader measures, the United States has concerns about a variety of secondary barriers, as discussed below. Tariffs In the area of manufactures, more effort focused on cutting existing tariffs. Table 7.2 shows pre- and post-Uruguay Round South Korean tariff rates on manufactures weighted by the composition of U.S. exports to South Korea and U.S. tariff rates weighted by South Korean exports to the United States. 12 South Korean pre-Uruguay Round tariffs on U.S. manufactured exports averaged 16.29 percent, with the highest rates on tobacco products (100.00 percent), apparel (29.48 percent), rubber products (27.88 percent), miscellaneous manufactures (27.74 percent), and textile products (27.64 percent). South Korea's Uruguay Round commitments reduce the average tariff on manufactures to 7.71 percent. The largest tariff cuts are in tobacco products (34.50 percentage points), miscellaneous manufactures (19.09 percentage points), rubber products (18.73 percentage points), and

152 Table 7.2

Marcus Noland Tariff Rates (percentage) South Korea

Sector

pre-UR

post-UR

Metal mining Coal mining Oil and gas extraction Stone and other nonmetallic minerals Food and other kindred products Tobacco products Textile mill products Apparel products Lumber and wood products Furniture and fixtures Paper and allied products Printing and publishing Chemicals and allied products Petroleum and coal products Rubber and miscellaneous products Leather and leather products Stone, clay, and glass products Primary metal industries Fabricated metal products Industrial machinery Electrical machinery Transportation equipment Instruments and related products Miscellaneous manufactures Total Average

2.05 9.21 10.71 3.92 14.76 100.00 27.64 29.48 8.25 26.21 11.40 4.40 18.34 8.69 27.88 22.09 25.29 16.61 22.69 18.26 20.33 4.21 20.02 27.74 16.29

2.05 2.79 10.79 2.29 8.98 65.50 18.05 19.05 6.85 8.58 0.24 0.14 6.73 5.67 9.15 10.40 12.50 7.71 11.42 11.85 6.79 3.31 9.08 8.66 7.71

United States pre-UR n.a. 0.00 1.26 1.54 4.83 19.57 12.71 16.80 4.75 3.69 3.11 2.31 6.78 1.28 9.90 11.20 8.83 3.69 5.22 3.20 4.35 2.63 5.22 6.46 7.74

Source: USTR, 1995, National Trade Estimates of Foreign Trade Barriers,

post-UR n.a. 0.00 1.26 0.31 3.19 8.70 9.49 15.48 2.38 0.20 0.74 0.54 4.00 1.27 9.00 10.84 6.06 0.24 2.70 1.30 0.96 2.54 2.21 3.41 5.73

unpublished

data. Office o f the Chief Economist, U S T R , Washington, D.C. Note: Data organized by Standard Industrial Classification (SIC).

furniture and fixtures (17.63 percentage points). In some sectors, including paper, steel, semiconductors, and pharmaceuticals, South Korea joined with other industrial countries in "zero-for-zero" cuts, eliminating tariffs in January 1995, and agreed to bind approximately 90 percent of remaining tariff lines as well. U.S. tariffs are by and large lower than South Korean tariffs. South Korean exports to the United States faced an average tariff of 7 . 7 4 percent, with tobacco products ( 1 9 . 5 7 percent), apparel ( 1 6 . 8 0 percent), textiles (12.71 percent), and leather and leather products (11.20) having the highest applied rates. The U.S. Uruguay Round commitment reduces the average tariff facing South Korean manufactured exports to 5.73 percent, with the biggest cuts coming in tobacco products (10.87 percentage points). In summary, South Korea's Uruguay Round tariff cuts reduce tariffs to a level similar to that faced in the United States after 1989, when the United States removed South Korea from the Generalized System of Preferences; the U.S. commitment cuts U.S. tariffs a couple of percentage points more.

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Furthermore, it is possible that the United States and South Korea will significantly accelerate the phase-in of these tariff reductions as part of their APEC commitments. Nontariff

Barriers

Tariffs are not the whole story, however. Outside of agriculture, there have been two principal sources of quantitative restraints on trade. One is the Multifibre Arrangement (MFA), which is a global web of bilateral textile and apparel quotas. The MFA is supposed to be phased out under the Uruguay Round agreement, though the backloading of liberalization raises questions about the credibility of this commitment. The other is the application of so-called "voluntary export restraints," which were eliminated (with one temporary exception per country) in the Uruguay Round agreement. In 1981 more than half of South Korean exports to the United States were subject to quantitative restrictions, a figure that fell to 7 percent in 1995, almost all in the textile and apparel sector. (It has been estimated that the tariff equivalent of these restrictions is about 10 percent in the case of textiles and 23 percent in the case of apparel.) If the Uruguay Round is faithfully implemented, this share will fall to zero by 2005. 13 In addition to quantitative restrictions, both the United States and South Korea impose other nontariff barriers on imports. However, these core NTBs (specific practices, identified by international trade bodies) appear to affect little of each other's trade outside of agriculture. 14 Applying the four-digit International Standard Industrial Classification (ISIC) index of the prevalence of core NTBs to the bilateral trade data, one finds that these NTBs affect less than 1 percent of bilateral trade. Many observers would argue, however, that the list of core NTBs is too narrowly drawn— that both governments, especially the South Korean government, restrict trade in less formal ways not captured by these measures. These less formal barriers are discussed at a later point in the chapter. Finally, the discussion thus far has focused on nominal rates of protection. Effective rates of protection take into account the impact of protection of intermediate inputs on the incentives to produce finished products domestically. If, for example, inputs are more highly protected than the finished product, then that sector receives reduced actual protection since the protection afforded the finished product is more than outweighed by the high prices producers are forced to pay for intermediate inputs. More typically, tariffs escalate (rise by degree of processing) so that effective rates of protection for sophisticated manufactures exceed nominal rates. Yoo, Hong, and Lee estimate the effective rates of protection in South Korea prior to the Uruguay Round, as shown in Table 7.3. 15 Their results affirm that in the case of South Korea, variation in nominal rates of protection across sectors is manifested in even more highly dispersed rates of effec-

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Table 7.3 Effective and Nominal Rates of Protection, Selected Sectors, 1990 Sector Rice Vegetables Fruits Livestock Plywood Wooden furniture Textiles Apparel Industrial chemicals Other chemicals Glass and glassware Ceramic products Metallic household articles Other metallic articles General machinery Electrical machinery Automobiles

Effective Rate of Protection 2

Nominal Rate of Protection b

499.6 13.1 140.1 144.3 5.3 -2.3 -8.5 71.0 13.6 49.4 11.1 6.2 18.7 29.0 25.0 77.5 16.6

311.0 15.4 98.8 43.5 6.4 4.2 5.2 29.7 11.3 29.0 10.7 7.7 12.9 16.0 17.3 35.4 14.8

Source: Jung-ho Yoo, Sung-Hoon Hong, and Jae-Ho Lee, Korea's Industrial Protection and Distortion of Incentive System (in Korean) (Seoul: Korea Development Institute, 1993), Tables VI-1, VII-1. Notes: a .The effective rate of protection for sector jis defined as [VAyVA w j-l], where VAj is value added at domestic prices and VAwj is value added at world prices. b. For industrial products, nominal protection estimated by comparing domestic and foreign prices; for agricultural products, it is the sum of tariffs and the tariff equivalents of NTBs.

tive protection. In the extreme cases of wooden furniture and textiles, effective protection is actually negative—inputs are so highly protected relative to outputs that producers are discouraged from engaging in those activities. On the other end of the scale, rates of effective protection in apparel and electrical machinery are more than double their nominal rate, providing a big boost for domestic production of these products. 16 Antidumping and Competition Policy Negotiators made less progress in reining in antidumping laws, which continue to bedevil U.S.-South Korea trade. Thirty-eight cases of dumping have been initiated in the United States against South Korean producers; of these, twenty-five (or roughly two-thirds) have resulted in the levying of antidumping duties, with an average margin of 38.6 percent applied. 17 Even in the cases where no duty is levied, direct costs of defending against the charges and uncertainty about market access can act as a significant impediment to exporters. Despite the 9.5-month investigation stipulated in U.S. law, actual periods of investigation ranged as high as 14 months. Moreover, according to Bark, the periods of restriction are long, averaging

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two to three years, and there "was a wide disparity in the determination of dumping margins between the preliminary and final verdicts and a wide variation in the margin rates imposed on the different firms. In addition, there was a large discrepancy between the final dumping margins derived by the Department of Commerce and the Court of International Trade. This seemingly arbitrary nature of determining dumping margins causes great uncertainty for Korean firms facing anti-dumping charges." 18 The Uruguay Round agreement does contain some language that should streamline the process (of which South Korea ran afoul in the polyacetal resin case), but does little if anything to alter the fundamentally irrational nature of the permitted practices. 19 These problems have become clear in the recent cases involving color television receivers and dynamic random access memory (DRAM). Both were continuations of existing dumping cases, which the South Korean government alleged to violate the "sunset" provisions of the Uruguay Round agreement. In the case of DRAMs, the South Korean government initiated formal dispute settlement procedures under the WTO and signaled that it would launch a WTO case if the matter were not resolved quickly. The DRAM case points to three problems: the law with regard to assessing likely future dumping in these cases is vague; the section of the U.S. Department of Commerce charged with making these decisions is frankly protectionist; and the technical characteristics of the semiconductor industry (and other industries characterized by large sunk costs and steep learning curves) is such that even perfectly competitive firms with no predatory intent will price below cost (and thereby dump if sales are exported) during certain phases of the product cycle.20 The alternative to the use of antidumping measures would be improved competition policies. South Korean competition policy got its start with the Antitrust Act, promulgated in 1980, which outlaws a number of horizontal restrictions on trade (such as the formation of cartels) as well as vertical restraints on trade (such as retail price maintenance), and establishes the Korean Fair Trade Commission (KFTC) as an enforcement agency (a task it shares with the Antitrust Division of the Korean Department of Justice). 21 Until 1994, however, the KFTC was under the authority of the Economic Planning Board (EPB), and competition policy concerns were subordinated to other economic policy goals. It has since been established as a legally independent regulatory body. From a U.S. perspective, concern centers on the considerable regulatory authority that industry associations are granted formally and informally in South Korea, and on the government-affiliated monopoly that allocates radio and television advertising time. An investigation by the South Korean government of the industry associations found a majority engaged in anticompetitive practices. 22 The most obvious solution would be to invigorate the KFTC and to engage in some joint international competition policy initiatives. The possibility of joint antitrust action was discussed in

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the Dialogue for Economic Cooperation (DEC), but participants in these negotiations believe that joint activities are a long way off, despite the KFTC's increased autonomy and the public unpopularity of chaebols (business conglomerates). 23 An alternative in this case would be extraterritorial application of U.S. antitrust law in South Korea. Presumably this would not be welcomed by South Korea. Customs

Procedures

Import clearance practices have also been of concern to both the United States and South Korea, and the two countries have been working together to resolve problems including arbitrary delays, inability to obtain customs classifications, arbitrary reclassifications, and unduly cumbersome inspection procedures (for example, inspecting every container of imported chocolates or cherries). In South Korea delays can take a month or more, far longer than that observed in other Asian countries, as shown in Figure 7.1. Moreover, these practices can be damaging as well as irritating, because the products are not refrigerated during inspections and are consequently subject to spoilage and reduction in retail shelf life. For its part, South Korean complaints include arbitrary reclassifications to increase duty, different duties charged by different customs offices, excessive delays, arbitrary alterations in origin labeling, and discrimination depending on whether the customs broker is a U.S. or South Korean firm. 24 In 1994 South Korea introduced legislation to streamline customs procedures, and the South Korean custom service subsequently accelerated

Figure 7.1 Number of Days Required for Customs Clearance

Japan

Taiwan

Malaysia

Singapore

Hong Kong

South Korea

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the timetable for reform from 1998 to 1996. Many of the problems, however, appear not to arise from the behavior of the customs service but rather to stem from policies and decisions made by the Ministry of Health and Welfare (MOHW) and the Ministry of Agriculture, Forest, and Fisheries (MAFF). The former agency seems to have been insufficiently trained in international norms, and the latter appears to have been captured by import-competing interests. 25 Problems have continued to fester, and the United States and South Korea have been through multiple rounds of consultations through the WTO. 2 6 Standards, Testing, and Certification Requirements U.S. observers have identified as the most onerous secondary barrier South Korean standards, testing, labeling, and certification requirements that apparently have been drafted without reference to international norms and that effectively target only imported products. 27 South Korea issues new standards without notifying trade partners, as required under the GATT Agreement on Technical Barriers to Trade, and frequently, moreover, these standards are vague and implemented in a nontransparent manner. Many complaints relate to agricultural products. U.S. exporters report unduly restrictive and arbitrary phytosanitary requirements, and in many cases South Korean food importers are denied requests for scientific data on the basis of which the South Korean government has barred entry of their shipments. 28 The South Korean government took steps in 1993 and 1994 to improve the transparency of its standards-setting practices, and these have been subject to bilateral consultation under the auspices of the DEC. U.S. trade negotiators believe that the Uruguay Round agreement on sanitary and phytosanitary restrictions and the improved dispute settlement mechanism will greatly increase the likelihood of resolving these issues. Indeed, the specter of a WTO case appears to have contributed to resolving a celebrated sausage dispute. 29 Following submission of a Section 301 petition by the U.S. beef and pork industry, in May 1995 the United States initiated formal consultations under the WTO dispute settlement mechanism, with particular regard for the South Korean government's mandated shelf-life restrictions. This action led to a bilateral settlement in July 1995, in which South Korea agreed to phase in the common international practice of manufacturer-determined sell-by dates for most food products. From the standpoint of South Korea, Hong provides information on discriminatory U.S. phytosanitary requirements. 30 Examples include U.S. Food and Drug Administration quarantines of more than one month for South Korean pears and instant noodles, and more than three months for seaweed. Again, the new phytosanitary agreement and the improved dispute settlement procedures should aid in resolving these difficulties.

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Government Procurement In the past South Korea maintained a variety of practices to encourage domestic firms in government procurement, but open competition is now required, as a result of South Korean's recently completed accession to the GATT Government Procurement Code Agreement as part of the renegotiations of the agreement conducted parallel to the Uruguay Round. South Korea began implementing these new obligations—covering goods and services procurement (including construction and computer networks) by central government, subcentral entities, and many parastatal enterprises— in 1997. However, the USTR reports anecdotal evidence that the intended impact of these changes has been nullified through other means. 31 With respect to the United States, government procurement is quite open at the federal level, but some states and municipalities maintain "buy American" laws that have been a source of complaint. Intellectual Property Rights In 1989 the United States placed South Korea on its "priority watch" list under the "special 301" intellectual property provisions of the 1988 trade act. Subsequent progress in bilateral negotiations moved South Korea from the "priority watch" list to the "watch" list in 1990, but it was returned to the "priority watch" list in 1992, where it remains. The major areas of U.S. concern have been pirating and counterfeiting of printed materials and of computer software, trademark infringement (including Mickey Mouse), exports of infringing goods to third countries, lack of pharmaceutical patent protection, and lack of protection for semiconductor designs. In 1991 South Korea passed a new law on video piracy and in 1993 strengthened customs, copyright, and computer software laws. Enforcement has also improved. 32 Nonetheless, intellectual property rights enforcement remains a topic of bilateral consultation. In principle many of these issues should be resolved through South Korea's implementation of its Uruguay Round commitments. USTR and Amcham both claim, however, that certain aspects of recent implementing legislation fail to bring South Korean domestic law into conformity with treaty obligations. 33 Investment and Services South Korea has historically discouraged foreign investment (and, inter alia, access to its service markets) through a "negative list" that restricted foreign investment through equity participation and imposed other requirements. Although the pervasiveness of these barriers has declined over the years, 34 as a consequence of these restrictions South Korea stands out

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as one of the few countries in the world where minority participation (rather than majority ownership) is the dominant form of direct investment. These restrictions have deleterious implications for the United States by foreclosing a variety of strategic alternatives and by imposing dependence on local partners whose interests may not be completely coincident with the U.S. investor. The United States thus made investment issues the focus of its efforts in the DEC. 35 South Korea's commitments under the Uruguay Round prospectively amount to a major liberalization of its investment and services regime. A sixty-day notification and citation of one of only five specific reasons is required for the government to reject foreign investment that does not fall in a "negative list" sector. 36 In the absence of these conditions, investment must proceed. Once established, foreign firms are accorded fully equitable treatment except with regard to certain land acquisition and national security provisions. 37 Korea agreed to the elimination of notification requirements in a broad range of service sectors, and except for a narrow national security condition, the government will have no legal basis for interfering in private investment decisions in these areas. Moreover, as in the case of the sanitary and phytosanitary agreement, the existence of an improved WTO dispute settlement procedure means that South Korea is far more likely to adhere to these agreements than in the past. According to the 1997 USTR Estimates and Amcham, remaining areas of concern not covered under the Uruguay Round agreement include aspects of the land acquisition laws; forced sale of stock to the public; some remaining restrictions in the distribution system; restrictions on investment in cargo and courier services, language training centers, cable television, and insurance brokerage; restrictions on advertising; and regulations that amount to a screen quota for television programs and movies. 38 In July 1997 the two countries concluded a telecom agreement that included tariff reductions on information technology products, an increase in the ceiling on foreign ownership in domestic telecom service providers, and nondiscrimination in the areas of procurement and technical standards.

Automobiles

Automobiles are among the potentially most contentious trade issues on the horizon between the United States and South Korea. Although South Korea has emerged as the world's fifth largest manufacturer and third largest exporter of automobiles, and although it possesses the most rapidly growing market in Asia, it continues to severely circumscribe access to that market—where imports make up only about 1 percent of consumption. (In contrast, in the United States non-North American imports account for 15 percent of consumption, with Korean imports alone accounting for 2 percent.) In 1990 the South Korean government launched an austerity or

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anticonsumption campaign. Limitations were placed on promotional activities, and purchasers of imported automobiles were threatened with tax audits. South Korean officials asserted that the campaign was against ostentatious and excessive consumption, not imports per se, but a number of examples noted later in this chapter suggest that this was not entirely the case. 39 Although publicly denied by the National Tax Administration in 1994 and again in 1995, it appeared during this period that purchase of an imported car would result in a tax audit. President Kim Young-sam publicly repeated in 1996 that purchase of a foreign car would not result in a tax audit, but in 1997 South Korean negotiators admitted that the practice had continued, terming it a "mistake." 40 The perception thus continues to persist and to affect consumption practices. More directly, the U.S. government is concerned about tariffs (currently 8 percent), discriminatory internal taxation (based on engine size), and residual restrictions on U.S. firms' consumer financing activities, as well as certain aspects of consumer auto bank loan financing in South Korea. 41 The automobile industry is highly politically influential in the United States. In response to industry requests in 1995 that the administration launch a Super 301 case against South Korea on autos, the two governments undertook a series a bilateral consultations that resulted in a Memorandum of Understanding addressing many of the specific legal concerns of the U.S. side. 42 Overall, however, the United States was disappointed in progress attained under this agreement. In October 1997 it designated South Korean automobile practices as a priority violation under the Super 301 law, subject to sanctions eighteen months after designation. 43 For its part the South Korean government threatened to take the United States to the WTO if sanctions were imposed. Both countries have indicated a willingness to negotiate, and ultimately it is unlikely that sanctions will be imposed. U.S. Domestic Trade Laws

Section 301 of the 1974 trade act authorizes the president of the United States to impose restrictions in response to "unfair trade practices" in foreign countries that U.S. negotiators have been unable to remove. Proportional to its trade with the United States, South Korea has been heavily targeted by Section 301, especially during the period 1985-1989. The 1988 trade act greatly enlarged the scope of Section 301. In 1989 the United States and South Korea entered into negotiations over agricultural trade barriers and foreign investment restrictions; this was still before the United States Trade Representative named priority countries and practices under Super 301 provisions. Although South Korea was able at that time to avoid designation as a priority country under Super 301, many South Koreans viewed this episode as an example of unilateral bullying on the part of the United States. 44

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In July 1996 the United States designated South Korea a priority foreign country (PFC) in its review of telecom trade undertaken pursuant to Section 1377 of the trade act. South Korea was designated a PFC for allegedly pressuring private telecom service providers to purchase South Korean-made equipment. This dispute was resolved (at least temporarily) in July 1997. Section 337 involves the importation of products whose manufacture violates intellectual property protection. South Korean products have been cited under Section 337 in ten cases. Eight cases were resolved through negotiation, but in two cases (semiconductors and plastic bags) no mutually agreeable solutions were found, and in 1987 the U.S. International Trade Commission issued import bans. In 1989, a GATT panel ruled that certain provisions of Section 337 were GATT inconsistent. Indeed, it has been the U.S. implementation of Section 301, Section 337, and contingent protection rules that has raised the greatest ire in South Korea. For its part, Amcham identifies U.S. visa issuance procedures as the single biggest constraint imposed by the U.S. government on U.S.-South Korean trade. The procedures impede travel to the United States by South Korean businessmen as well as tourism in the United States, especially in Hawaii. 45 According to U.S. and South Korean government figures cited by Amcham, the number of visas processed per officer at the Seoul embassy has nearly tripled since 1988, and cases per officer workload is triple that of the U.S. embassies in London and Paris. Moreover, the U.S. embassy charges the highest processing fee of any embassy in Seoul, and the average wait for a visa is exceeded only by the Chinese embassy. All told, Amcham puts the tourism losses to the United States at $500 million (excluding airfare) due to the visa backlog.

Financial Market Opening South Korea has maintained highly regulated and repressed financial markets since the founding of the republic as part of its economic development strategy. As the country has grown larger and richer, there have been increasing calls, especially from the United States, for South Korea to liberalize its financial markets. Financial markets are not directly comparable to goods markets, however. Financial markets impinge directly on macroeconomic stability, and there is less intellectual consensus about the desirability of completely open financial markets than there is for goods markets. Likewise, international obligations in the financial management realm are typically weaker than in the case of goods markets. For both of these reasons, the case for financial market opening is less compelling than goods market opening. Nonetheless, most analysts (myself included) would support financial market opening from the standpoint of improving

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the welfare of domestic residents. 46 Disagreements arise over the sequencing and timing of liberalization. The major fear of the South Korean government has been that overly rapid opening would lead to large net capital inflows, real exchange rate appreciation, and possibly severely depressing effects on domestic output. 47 As a consequence, in 1993 the government set out on a gradual financial deregulation according to the conventionally recommended sequencing of domestic financial liberalization, followed by liberalization of capital account transactions as set out in the Blueprint for Financial Liberalization and Market Opening. This amounts to an acceleration of policies begun in the 1980s, and carried through into the 1990s. Despite this progress, however, the financial system remains relatively repressed. The government maintains considerable involvement in the banking system. It continues to issue detailed regulations regarding corporate financial decisions—including restrictions on overseas investments, on equity finance, and on overseas finance. Participants in the financial markets are subject to a positive list system, which inhibits the introduction of innovative financial instruments and practices. The pervasive pattern of government intervention creates a symbiotic relationship between the government and the private sector, eroding private sector autonomy and facilitating the corruption of the political system. Banks, which had previously been government owned, have been privatized. Yet most bankers have not changed their habits. They still set interest rates in an administered way, rather than by competition in an open marketplace. They still make loans to sectors favored by the government, rather than to borrowers who are independently judged to represent profitable investment opportunities with good credit risks. In part this is because the appointment of bank presidents still begins with the recommendations of a committee of the Ministry of Finance and Economy (MFE). 48 The banks retain a somewhat bureaucratic character, manifested by overstaffing and an implicit guarantee of lifetime employment. Returns on assets are low, relative both to returns observed in other countries and to the returns on assets of foreign banks operating in the South Korean market. Outside of the banking system, there has been more progress. An equity market has developed, for example. But liquidity is insufficient, and there is currently a large backlog of companies waiting to be listed, more than 360 according to some press accounts. 49 Money markets and bond markets are still underdeveloped, with only a limited range of maturities. In all markets, heavy restrictions still obtain on international inflow and outflow. Foreign investors are subject to equity ownership ceilings in listed South Korean companies and are even more severely restricted in the bond market. The result of these restrictions is that South Korean interest rates are far above world interest rates, and the prices of shares in

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South Korean companies held by foreign investors are above those in the domestic stock market (though this gap has narrowed in recent years). Thus the cost of capital to South Korean corporations is higher than it would be if there were a full financial opening. Additional government interventions in the market drive up the cost of capital further still. 50 Over time, U.S. interest has shifted from issues of exchange rate management to financial market access. 51 U.S. concerns center on banking, securities, and insurance. In the case of banking, the United States maintains that foreign banks have experienced difficulties both in gaining market access and in terms of limitations on operations once established. For example, foreign banks, but not domestic banks, are required to capitalize each subsidiary branch, and the use of branch capital to determine certain limits on credit and funding places foreign banks at a disadvantage. These issues are not addressed in the "Blueprint." 52 Access should improve due to measures undertaken as part of the financial sector restructuring program agreement concluded with the International Monetary Fund in December 1997. Grumbling can still be heard about lack of transparency and the inability to introduce innovative products. Foreign participation in the stock market is also limited. The government restricts the number of shares that foreigners can hold in individual stocks. In January 1992 this was set at 10 percent; it was raised to 12 percent in December 1994, 15 percent in July 1995, and 18 percent in April 1996. In June 1996, the government announced a further phased opening that would increase the ceiling to 20 percent in 1996, and three additional percentage points annually thereafter to 29 percent by 1999. 53 In an attempt to survive the financial crisis of December 1997, however, the Seoul government accepted the IMF's demand, and raised the foreign ownership limit in local stocks to 50 percent in 1997 to be followed by 55 percent in 1998. Until that radical opening, a consequence of this segmentation was that the shares held by foreigners often traded at a premium over the shares held by domestic residents. The government has not permitted screen-based trading for shares held by foreign investors, however, nor does it allow publication of stock market price indices for those shares, creating an illiquid market that conveys abnormal profits to dealers with price information. 54 The long-term bond market is large, with the corporate bond market five times as large as the domestic bond market. The government has discouraged the development of an efficient auction and secondary market for government bonds, and no swap, bond, or interest futures markets exist. Foreigners are eligible to purchase only a limited number of corporate bond issues. The government announced in August 1996 that foreign investors would be allowed to invest in convertible bonds issued by large corporations beginning in 1998; full opening of the bond market, however,

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would be delayed until the differential between South Korean and overseas interest rates, currently 6-7 percent, narrows to 2 percentage points—and there is no necessity of this ever occurring. 55 Participation in South Korean capital markets by foreign firms is also limited. Foreign securities firms have been permitted to own up to 10 percent of the paid-in capital of South Korean securities firms, and in 1995, they were allowed to establish branch offices or joint ventures. In June 1996 the MFE announced a new proposal to eliminate the 10 percent limit on ownership, and to permit foreign firms to open wholly owned subsidiaries in December 1998.56 On the outflow side, capital outflow by residents has been largely liberalized, though some restrictions remain. Domestic residents are permitted to invest in foreign stocks in the thirteen largest markets through mutual funds, though actual investments have been minuscule, and South Korean residents' portfolios appear to be highly concentrated in wondenominated assets. In the case of insurance, South Korea is the second largest market in Asia (following Japan), and the sixth largest in the world. 57 U.S. firms complain about lack of rate competition (rates are regulated) and restrictions on introducing new products, both of which factors reduce their ability to exploit competitive advantages. The relevant deregulation, furthermore, will not occur until the late 1990s. These complaints about lack of transparency and inability to introduce new products in the financial sector are strikingly similar to those expressed by U.S. firms in Japan. 58 Moreover, the failure of the Uruguay Round financial services negotiations—in contrast to success in the goods market case—means that in financial market issues the United States and South Korea will be without an internationally agreed upon set of rules and a workable multilateral dispute settlement system. However, South Korea's application to join the OECD did provide a point of leverage to accelerate the liberalization of South Korea's financial markets. 59 The current plan breaks down some barriers within the domestic market, emphasizes the liberalization of long-term capital markets before short-term capital markets, and liberalizes capital outflows before capital inflows. Portfolio capital outflows are scheduled to be completely liberalized by the end of 1998. By the end of 1999, there will be no restrictions on firms' abilities to issue domestic securities overseas. Domestic firms will no longer be required to obtain prior approval for issuing equityrelated securities (warrants) in foreign currency denominations, but rather will be subject only to a reporting requirement. Nonresidents will be allowed to issue won-denominated securities, the ceiling on nonresidential purchases of equities will continue to be raised and will be increased to 100 percent by the end of 1999, and friendly

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takeovers will be encouraged. Restrictions on foreign purchases in the bond market were eliminated December 30, 1997. In respect to short-term capital flows, nonresidents will be allowed to open won-denominated accounts at overseas branches of South Korean banks. Restrictions on both inward and outbound direct investment rules are to be partially eased. Foreigners are to be allowed to buy land freely in some sectors (though they will still need the permission of local authorities in others); limits on outboard foreign direct investment (FDI) will gradually be lifted. With regard to the participation of foreign financial institutions in South Korean markets, by 1998 foreign banks and securities firms will be allowed to establish subsidiaries. Foreign insurance firms will also be granted access to the South Korean market, though it is unclear whether the South Korean regulatory authorities will permit them to freely determine their rules. In short, the plan continues the liberalization process on a variety of fronts, though many of its provisions leave the government with significant discretion, and it is unclear what controls will remain in 1999. At the end of 1995 domestic market interest rates had largely been freed (indeed, a year ahead of schedule). However, the government still regulates the portfolios of commercial banks. It still owns a large number of financial institutions (of which the Korea Development Bank is the largest), and state-owned financial institutions dominate some markets (such as mortgage lending). According to the OECD, there are restrictions that impede the flow of capital from commercial banks to other financial institutions, including the privately owned nonbank institutions that the OECD identifies as the most dynamic part of the South Korean financial sector. Government control of the introduction of new instruments has retarded the adoption of innovations in the securities market. Despite the decline of policy loans, the central bank still acts as a source of subsidized lending to preferred borrowers. Foreign participation in South Korean financial markets is circumscribed, and access by residents to international capital markets is still restricted. The problems associated with financial repression came to a head in December 1997. Early in the year prices for key exports such as semiconductor chips and automobiles had begun falling, reducing expectations of corporate profits, thereby causing a fall in the stock market and with it a depreciation in the won. It is arguable that these asset price declines were exacerbated by contagion from the financial market crises that hit Southeast Asia in June. In the case of South Korea, the key underlying problems were overborrowing by chaebols, the weak state of the South Korean banking system, and the symbiotic relationship between both financial and nonfinancial firms and the state. These problems were manifested in a mismatch

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between financial credits and liabilities, resulting in a large buildup of shortterm foreign currency debt, much of it held by weak Japanese banks. Despite emerging difficulties in the financial sector, the South Korean government showed no willingness to come to terms with these problems. The government continued to release implausible data, and the National Assembly refused to act on even a relatively weak financial reform proposal. As the problems in South Korea became apparent (and the problems in Japan intensified), private financial institutions became increasingly unwilling to rollover the debt. In November 1997, official foreign exchange reserves fell by $15 billion as South Korean banks moved funds to foreign subsidiaries to cover withdrawals by depositors and as the government engaged in a futile effort to defend the exchange rate. By the beginning of December, South Korea was less than a week from default on its foreign obligations. The government subsequently negotiated a loan package of approximately $60 billion with the IMF and other international public sectors. In return for the loans, South Korea agreed to a set of conditions including macroeconomic tightening, financial sector restructuring, trade liberalization, capital account liberalization, corporate governance reform, labor market reform, and improved transparency and provision of financial information. This package proved controversial both inside and outside of South Korea; some regarded it as overly intrusive, and others charged that it bailed out a fundamentally flawed system. As of December 1997, there remained many questions about the package and its implementation. The package appeared to have been only grudgingly accepted by the South Korean polity. Many of the conditions of the loan were either ambiguous or attached to imprecisely defined timetables, leading many observers to wonder how many of the agreed reforms would actually be undertaken. Therefore, it was fortunate for both Seoul and the international financial community that President-elect Kim Daejung reaffirmed his resolve to abide by the terms of the agreement with the IMF. In a sense, it was a golden opportunity for Kim to overcome his handicap as a minority president who had garnered only 40.3 percent of the votes in the December 18 election. If the financial crisis were successfully resolved, he could not only firm up his leadership but also bring about the restructuring of South Korea's economy, which his predecessor had failed to accomplish. It should be noted that the crisis has forced South Korean authorities to accelerate or deepen a number of its scheduled financial reforms, including some of interest to the United States, in an effort to attract foreign capital to recapitalize its failing financial system. However, the expected dramatic reduction in domestic demand and the depreciation of the won are likely to generate a significant trade surplus with the United States that could lead to increased tension in the short run.

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Relations

Two Interpretations of U.S.-South Korea Trade Conflict Given the ample fuel for fire, it is striking that U.S.-South Korea trade tensions are not constant—rather, they flare up and recede, and have in fact largely been in recession during the 1990s. According to econometric modeling reported in Noland, bilateral trade imbalances, however irrational from an economic standpoint, act as a primary determinant of bilateral trade conflict between the United States and its trade partners. 60 The timeseries data on the bilateral trade balance between the United States and South Korea shown in Figure 7.2 would appear to support this contention. The question then becomes: what determines bilateral trade imbalances? As can be seen in Figure 7.2, the U.S.-South Korean trade balance remained within $1.5 billion until 1982, which saw the implementation of the Reaganomics package of fiscal profligacy combined with tight monetary policy and currency appreciation. The deterioration of the U.S. trade position vis-à-vis South Korea paralleled the growth in the United States' global trade deficit, which peaked at nearly $160 billion in 1987. At the same time the reverse was occurring in South Korea: the trade balance went into surplus for the first time in 1986, eventually reaching $11.4 billion in 1988. Noland reports the results of time-series econometric modeling of the U.S.-South Korean trade balances. 61 The causality analysis indicates that

Figure 7.2 U.S.-South Korea Trade Balance

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the real exchange rate and the U.S. macrovariables cause the South Korean macrovariables that in turn cause the bilateral balance. (This suggests that the U.S. policy emphasis on South Korean exchange rate policy might not have been misplaced.) Nonetheless, both the far greater size of the United States and the causally prior character of U.S. macropolicies imply that changes in U.S. macropolicies would have a more substantial impact on the bilateral balance than policy changes in South Korea. That is to say it is primarily U.S. macropolicy that drives trade conflict between the United States and South Korea. Young provides a view based somewhat more in South Korean perspectives.62 He argues that Korea is basically dirigiste with a bureaucracy committed to "optimal intervention" and to continued infant industry promotion. The South Korean public regards U.S. demands for trade liberalization as essentially predatory. Subject to U.S. pressure, South Korea liberalizes in a grudging, suboptimal (from its own standpoint), and piecemeal fashion to accommodate U.S. demands. Three things determine specific outcomes: the U.S. demands (which are taken as a function of South Korea's global and bilateral trade balance); macroeconomic conditions in South Korea, particularly South Korea's trade balance; and democratization. 63 In Young's view, strong growth and a trade surplus provide South Korean technocrats who would like to liberalize with more political room to do so.64 Conversely, democracy is seen as having adverse implications for liberalization, by increasing the political cost of the redistribution that accompanies liberalization, and possibly by subjecting the government to increased rent seeking by organized interest groups. In the end, however, Young puts the choice between more cooperative or more confrontational trade relations squarely on the United States. What is noticeable about these two views—one based on econometric modeling, the other on thoughtful analysis of trade relations—is how similar they are. Both emphasize trade balances as the spur for U.S. demands. Noland emphasizes U.S. macropolicy as the primary determinant of the balance. Young conversely emphasizes South Korean macroeconomic conditions as key to the process of accommodation in South Korea.

Institutional Factors These bilateral trade conflicts are sometimes intensified by considerable differences in policy formation and institutions. The United States is an immigrant society and has developed a political culture that puts high emphasis on procedural justice. This manifests itself in U.S. concerns over "fairness" in trade. The institutions of trade policy formation are relatively open and adversarial, reflecting U.S. political and legal culture. In contrast,

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South Korean policy formation has historically been more closed, with bureaucrats wielding considerable discretionary authority.65 Cultural differences may also be at work. A noted South Korean policymaker observed that "when a Korean sits at the bargaining table, he does so with a chip on his shoulder. His Confucian upbringing has taught him not to compromise on anything he believes to be right. What's more, the Korean public treats compromise as a sign of moral weakness or betrayal of national interest or both. Thus, Koreans tend to dig in their heels when it comes to negotiating." 66 The perspective of a U.S. Chamber of Commerce official was more critical: "Korea has been insincere. The Koreans negotiate as a means of delay until the other side either gives up or threatens to act. This method of negotiation, well known to Korean entrepreneurs, has cultural underpinnings." 67 Although trade disputes with South Korea do not figure prominently in U.S. politics relative to those with Japan or China, a negative image of South Korea's trade practices has begun to emerge. 68 South Korean restrictions on foreign automobile imports, for example, were featured in television commercials run by Representative Richard Gephardt during 1988, when he unsuccessfully sought the Democratic presidential nomination. Major U.S. newspapers have prominently covered informal bureaucratic obstruction of the implementation of trade agreements. The business sections of these papers carried on their front pages an incident in which South Korean trade negotiators allowed South Korean firms' legal representatives to secretly monitor and tape bilateral trade negotiations. All of these incidents contribute to a popular perception that South Korea is insincere about its trade commitments. A U.S. analyst who closely observes the situation in South Korea has written that "the combined effect of announcing liberalizations while withholding practical access has been to reinforce the impression that Korea is a place where agreements and even government commitments are not honored." 69 While some sectors of the U.S. public may believe that South Korea is two-faced in its trade dealings, South Koreans appear to believe (with some justification) that the United States is at once predatory and sanctimonious. The U.S. commitment to procedural justice appears to stop at the water's edge. The United States has a relatively poor record in conforming to negative GATT rulings, including rulings such as Section 337 that have been of direct interest to South Korea.

Trade Prospects for the Future Given the readily available grounds for conflict and relatively negative perceptions of each other, are the United States and South Korea likely to

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experience another episode of acrimonious trade tensions, as they did in the late 1980s? At least two factors suggest not. First, the Uruguay Round agreement and the establishment of the WTO should move a number of issues on the bilateral agenda and render remaining issues both comparatively less important and more susceptible to resolution. Second, if trade conflicts are driven by bilateral imbalances that in turn are largely a function of U.S. macropolicy and the real exchange rate, there is reason to be optimistic. Recent political developments in the United States indicate that the federal budget deficit is likely to continue to shrink (at least in the medium term), with positive implications for the U.S. external position. 7 0 Second, despite the problems generated by the 1997 financial crisis, over time the won is likely to appreciate in real terms. This is partly due to capital account liberalization and partly to South Korea's relatively high rate of productivity growth in the traded goods sector, at least in the long run. Thus from the U.S. perspective over the medium term, the two primary determinants of the bilateral imbalance are moving in a favorable direction from a trade conflict avoidance standpoint. 71 The fortunes of individual sectors offer yet another perspective. Although the macroeconomic determinants of the trade balance are subject to policy-instigated shocks and are difficult to predict except over relatively limited time frames, the underlying pattern of trade specialization evolves in a reasonably systematic manner. Noland reports projections of the South Korean pattern of trade for forty-six industries encompassing the whole of the trade goods sector. 72 According to this model, exports to South Korea in 2000 would generate 381,500 jobs. 7 3 Sectors with the largest export-related employment would be nonfuel primary products (178,500) and aircraft (38,000). Imports from South Korea would represent 781,300 jobs forgone. These would be concentrated in apparel (123,400), footwear (99,500), electronics (98,100), and fabricated metal products (85,000). The net employment loss between 1987 and 2000 resulting from trade changes would be 307,200 potential jobs. The largest trade-related employment gains would occur in nonfuel primary products (162,400) and aircraft (38,100). The biggest potential net losses would occur in apparel (87,300), fabricated metal products (82,400), and footwear (73,900). 74 It should be stressed that these figures refer to losses of potential jobs, and as such do not imply that any particular workers would lose their current jobs. 7 5 Nonetheless, the figures would appear to indicate that some U.S. sectors face potentially large adjustment costs as a result of South Korean import competition. Two mitigating factors are discernible, however. First, it is sometimes argued that intra-industry trade facilitates economic integration by reducing sectoral adjustment costs associated with a given expansion of trade; Noland found that the degree of intra-industry trade was negatively correlated with trade conflict between the United

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States and its trade partners. 76 In fact, as shown in Figure 7.3, according to the most commonly used index of intra-industry trade, U.S.-South Korea intra-industry trade in manufactures has risen fairly steadily over time, once shifts in the aggregate trade balance are taken into account. 77 Indeed, it is possible to disaggregate these changes into changes in the volume and direction of net inter-industry trade as well as the expansion of intra-industry trade. 78 This has been done for U.S.-South Korean manufactures trade for the period 1986-1994. The results indicate that the measured increase in intra-industry trade is the result of both an increase in intraindustry trade and a decrease in inter-industry trade (primarily because of a fall in South Korean exports to the United States in sectors of predominately inter-industry trade). This would appear to support the case that intra-industry adjustments should mitigate the displacement associated with the projected expansion in U.S.-South Korea trade. A second mitigating factor may be China. Similar analysis for China suggests that Chinese import penetration is larger and is likely to increase far more rapidly than that of South Korea. 79 (For example, China's share of the U.S. bicycle market increased from 14.6 percent in 1993 to 23.7 percent in 1994; in 1995 three U.S. manufacturers filed an antidumping suit against China.) However, much of this increase appears to be at the expense of third countries (such as South Korea) rather than U.S. producers, and the displacement of third country imports by China may contribute to improved trade relations with countries like South Korea. 80 Indeed, when a "constant market share" calculation is performed for South

Figure 7.3 U.S.-South Korea Intra-industry Trade Index

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Korean trade with the United States over the period 1988-1994, results indicate that U.S. consumption accounted for by imports from South Korea was actually $4.3 billion less than expected, and that U.S. exports to South Korea were $700 million higher than expected, supporting around 10,000 additional jobs in the United States. Taken together, these analyses suggest that South Korea is losing its competitiveness in the U.S. market in traditional net export industries to countries like China. An increase in two-way trade in differentiated manufactured products is compensating for this loss. The growth of intra-industry trade and the emergence of China may contribute to a lessening of bilateral trade tensions between the United States and South Korea.

Modalities How these developments will actually play out will be strongly conditioned on the international policy environment. As indicated earlier, the Uruguay Round agreement should contribute mightily to resolving potential disputes between the United States and South Korea. Beyond the Uruguay Round, countries will increasingly seek to harmonize what have traditionally been considered domestic policies such as tax policy and competition policy. Harmonized domestic business environments are characterized by a similar set of rules and institutions, and observed international flows of products and factors are the outcome of market exchanges emerging from this common environment. Interstate trade within the United States might be thought of as arising from a completely harmonized environment. The polar opposite case would be management, in which there is no attempt to create a common business environment, and observed international product and factor flows are simply the outcome of cross-border negotiations by government officials. Trade among centrally planned economies might be thought of as an extreme form of management; recent proposals for "managed trade" are a more moderate variant. The current WTO system, in which restrictions are placed on the use of border measures but little restriction is placed on more traditional "domestic" policies, might be viewed as an intermediate solution. In Lawrence's terminology the WTO would be classified as a regime of "shallow integration" and the regime of interstate trade within the United States as an example of "deep integration." 81 Even a successful WTO, however, would be unable to achieve deep harmonization; the membership of the WTO is simply too large and too diverse to take on deep harmonization issues. Consequently, efforts in this direction will be pursued either bilaterally, as in the President's Economic Initiative (PEI) and its successor,

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the Dialogue for Economic Cooperation; multilaterally through regional groupings (such as APEC); or multilaterally through clubs of like-minded members, such as the proposal for an OECD free trade and investment area. Bilateral initiatives such as DEC will undoubtedly continue in the future with the agenda largely set by the United States. South Korea's accession to the OECD is already paying off in removing irritants from the bilateral agenda. Developments in APEC could also have a considerable impact on bilateral relations. The APEC leaders meeting held in Bogor, Indonesia, in 1994 set out a vision of free trade and investment in the region by 2020, compatible with countries' WTO obligations. Exactly how this is to be accomplished has not yet been specified. There appears, however, to be broad agreement on an agenda for the medium term, which would include accelerating implementation of Uruguay Round commitments; producing an investment code that would go beyond Uruguay Round commitments; harmonizing customs procedures and standards, testing, and certification requirements; cooperating in environmental and infrastructural issues where there are international externalities; consultation on macroeconomic issues; and ultimately, reform of antidumping and competition policy practices. 82 This is a truly ambitious agenda, and if implemented could have a profoundly positive impact on U.S.-South Korea economic relations. Estimates of the impact of free trade in the Asia Pacific on South Korean real income growth range from 0.7 percent to 4.9 percent depending on the model and the scenario. The equivalent range of income increase for the United States is 0.03 percent of GDP to 1.1 percent. 83 Skepticism about APEC centers on whether such a diverse group of countries will truly be able to act in concert. There are concerns within the United States that APEC may circumscribe efforts to deal with nontraditional barriers in Asia, especially in China. Some Japanese observers fear that the organization may become a mechanism for countries in the region to gang up on Japan. Among developing countries of the region there are concerns that APEC may circumscribe their ability to pursue the economic development strategies of their choice. APEC's accomplishments thus far have been the establishment of the first pan-Asian summits—the first of which ironically held in the United States—and declaration by APEC heads of state of the goal of free trade and investment in the region. Progress toward this goal, however, at the Osaka and Subic Bay leaders meetings has been less than dramatic, and the organization has not yet moved forward substantially on these issues. The political weakness of the governments of the largest member countries is noticeable. APEC must now begin showing demonstrable accomplishments or be relegated to a mere talking shop.

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North Korea Prospective developments in North Korea constitute a final set of issues that may well confront the United States and South Korea. 84 The historical legacy both of Japanese colonialism and of Kim II Sung's ideology of selfreliance is a highly industrialized economy, more similar to some of the states of Eastern Europe or the former Soviet Union than to the more agrarian Vietnam or China. North Korea exhibits the usual problems of centrally planned economies (CPEs) exacerbated by the ideology of selfreliance and its attendant autarky. It was hit by a series of negative macroeconomic shocks in the late 1980s and early 1990s, and its failure to increase significantly either its exports or its ability to borrow from abroad forced it to accept reduced domestic output and absorption. There are now serious questions about the ability of the North Korean economy to sustain minimum survival requirements for its population. 85 In response to its current predicament the regime has begun some modest and hesitant reforms, most notably the establishment of a special economic zone, modeled after China's, in the extreme northeast of the country. Although politically contentious within North Korea, such tinkering is unlikely to be sufficient to reverse the secular decline of the economy. The North Korean leadership basically faces three broad options: they can adopt economic reforms in an attempt to reverse the economic decline, recognizing that reform may unleash forces that threaten the essential character of the political regime; they can hold their ground and try to ride out the current crisis, risking collapse; or they can, in Charles E. Lindblom's apt phrase, "muddle through," making ad hoc adjustments as circumstances dictate. Fundamental reform, however beneficial, is unlikely for both political and economic reasons. The alternative of doing nothing in the long run could put both the political survival of the regime and the biological survival of the population at risk. The most likely alternative is a period of muddling through, probably supported and encouraged by conditional material aid and technical assistance, which could lead to a wide range of eventual outcomes. Either successful gradual reform in North Korea or its reconstruction after collapse will require substantial external support. Speculating on the income levels that would be necessary to choke off mass migration, several studies have adopted the figure of 60 percent of South Korean per capita income as the level required. The Noland, Robinson, and Scatasta model generated a figure of roughly one-half to three-quarters of a trillion dollars as a comparative static estimate of the amount of capital inflow necessary to raise North Korean per capita income to this target level. Applicable to 1995, the figure roughly doubles every five years as the income gap between North and South Korea widens. 86 The obvious question is whether it is reasonable to expect capital inflows of this magnitude. The short answer is no. Suppose this process were

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started in the year 2000 and the cost were spread over ten years. This would imply implausibly rapid rates of growth in North Korea and implausibly large current account deficits for the combined Koreas. 87 One might ask, alternatively, how long it would take North Korea to reach the income target (60 percent of South Korean per capita GDP) if it maintained its maximum plausible growth rate. If this process had begun in 1995 and half of the capital transfers came from South Korea, North Korea would have achieved the income target in eighteen years, and the combined Koreas' current account deficit would have averaged a still very large 8 percent of GDP. As the onset of reform is delayed, and the initial gap between North and South Korean incomes widens, the target recedes into the distance. Under current trends, if the start of unification were postponed until 2000, it would take North Korea a full generation to reach the goal. It seems highly unlikely that officials could keep the population of North Korea contained for this long. It appears then that Korea will be unable to absorb capital fast enough for a rapid convergence in incomes between the North and South. 88 If the border is not or cannot be maintained, the alternative is significant population movement from North to South. Some international public capital should be available to ameliorate this situation. In addition to prospective Chinese support, the United States is already involved with North Korea through the nuclear deal known as the Agreed Framework. The World Bank maintains a special program for peace and sustainable development in the Occupied Territories in the Middle East; a similar program, scaled to the much larger North Korean population, would imply World Bank investments of $4.4 billion annually (though, realistically, this represents a much larger share of Bank resources than North Korea would be likely to receive). 89 Although the fund for the Occupied Territories may be sui generis, the United States could at the least play a constructive role by using its influence to see that developments on the Korean peninsula are attended to. In addition, North Korea and Japan have yet to settle postcolonial claims. Taking the 1965 settlement between South Korea and Japan as a base—and adjusting for changes in price levels, differences in population, accrued interest, etc.—one obtains a figure on the order of $12 billion. Given the current state of Japanese public finances, it is unlikely that the North Koreans will be able to extract this sum from Japan. Even if it were possible, the settlement would represent a mere drop in the bucket relative to what will be required. The United States and South Korea may find themselves cooperating on this issue for decades.

Conclusion U.S. and South Korean trade patterns are largely complementary. South Korea exports to the United States an increasingly diverse basket of manufactures,

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while the United States supplies South Korea with primary products, hightech goods and, increasingly, human capital-intensive services. In such a situation, trade expansion causes economic dislocation in the importcompeting sectors of each country. This is usually accompanied by demands for protection and international political friction. This pattern is likely to continue in U.S.-South Korea trade for the foreseeable future. South Korean imports will exert a depressing effect on incomes, output, and employment in a wide range of U.S. manufacturing industries. Conversely, imports from the United States will remain a threat to South Korean agriculture and to such emerging industries as chemicals and aircraft. Automobiles and financial services appear to be likely candidates for trade friction. Structural talks along the lines of the PEI and DEC would appear to be a permanent fixture in U.S.-South Korea negotiations. Election year politics and an administration that appears unusually sensitive to domestic political considerations may roil the waters in the short run. There are reasons for optimism, at least in the longer run, however. In the past, conflict has been played out in excessively bilateral and politicized fora. In the future, with democratization and growth, South Korea should begin to play a more prominent role in international organizations, and what have been largely bilateral issues may be submerged in more multilateral fora. The successful conclusion of the Uruguay Round and the establishment of the WTO should eliminate a number of issues from the bilateral trade agenda and aid in the resolution of others. APEC could have a similar impact. Analysis of the pattern of trade friction suggests that it is highly correlated with the magnitude of bilateral trade imbalances, and as long as each country (especially the United States) pursues sensible macroeconomic policies, the politically sensitive imbalances should remain modest. There is some evidence that intra-industry trade, which could ease the adjustment and defuse conflict, is growing, but this should not be overstated. U.S. problems with China may well deflect attention from South Korea. These factors provide the basis for cautious optimism about future U.S.-South Korea economic relations.

Notes 1.1 would like to thank Chi Zhang and Ligang Liu for research assistance, and Kim Elliott and Gordon Flake for helpful comments on an earlier draft without implicating them in the final product. 2. Marcus Noland, "Trade, Investment, and Economic Conflict Between the United States and Asia," Journal of Asian Economics 7:3 (1996): 435-458. 3. Exports bound for the United States as a share of national income are strongly correlated statistically with success in U.S. bilateral pressure on trade partners. Marcus Noland, "Chasing Phantoms: The Political Economy of USTR," International Organization 51:3 (1997): 365-388.

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4. Moreover, to the extent that South Korea "follows" Japan, it may encounter disproportionate barriers to its exports in foreign markets, though the evidence on this point is by no means unequivocal. See Thomas O. Bayard and Kimberly Ann Elliott, Reciprocity and Retaliation in U.S. Trade Policy (Washington, D.C.: Institute for International Economics, 1994). 5. See PECC, Survey of Impediments to Trade and Investment in the APEC Region (Singapore: Pacific Economic Cooperation Council, 1995), Table A.3. Yoo has analyzed the determinants of South Korean protection. Although results varied somewhat depending on econometric specification, he found that in general the degree of protection depended on factors affecting the "demand for protection," the "supply of protection," and the government's own bureaucratic objectives. In particular, protection was positively associated with demand factors such as the number of workers in an industry and the industry concentration ratio. Protection was positively related to share of output exported, and negatively related to share of output purchased by consumers, both reflecting domestic opposition to protection. The extent of protection was also related to the government's own agenda, with the agriculture, infant industries, and sectors with high import penetration ratios all receiving protection. Jung-ho Yoo, "Political Economy of the Structure of Protection in Korea," in Takatoshi Ito and Anne O. Kreuger, eds., Trade and Protectionism (Chicago: University of Chicago Press, 1993). 6. For an informative and highly accessible assessment of the Uruguay Round, see Jeffrey J. Schott, The Uruguay Round: An Assessment (Washington, D.C.: Institute for International Economics, 1994). 7. For a comprehensive description of these policies, see Namdoo Kim, Measuring the Costs of Visible Protection in Korea (Washington, D.C.: Institute for International Economics, 1996). 8. In 1989 South Korea agreed to improved access for orange juice, distilled spirits, and cherries; a disavowal of quantitative trade restrictions on sixty-two agricultural and fisheries products; and a phased removal of 243 other restrictions over the period 1992-1997. Imports of several products were subsequently restricted by phytosanitary barriers (e.g., pecans, strawberries) or customs clearance problems (e.g., grapefruit). In the case of beef, a GATT panel ruled in 1989, in response to a complaint initiated by the United States, that South Korea's beef quota was inconsistent with the GATT balance of payments exception. The following year the United States and South Korea agreed to a phased opening of the South Korean market beginning with a relaxation of the quota and followed by the establishment in 1993 of a buy/sell system linking certain large buyers directly with producers. The third phase of the beef market liberalization, involving elimination of all nontariff barriers and an end to state trading by 2001, was concluded as part of the Uruguay Round. Additionally, as part of its Uruguay Round commitments, South Korea agreed to phase out import restrictions on a variety of agricultural products of interest to the United States, including pork, chicken, oranges, orange juice, dairy and whey products, apples and apple juice, grapes and grape juice, and other fruit juices. At the same time, South Korea will be permitted to raise its "bound" tariff rates on these goods to levels not to exceed the domestic-foreign price differential. These tariffs will then be reduced by 24 percent of the base level over a ten-year period. 9. Kim, Measuring the Costs of Visible Protection in Korea. 10. United States Trade Representative (USTR), National Trade Estimates (Washington, D.C.: Government Printing Office, 1997). 11. Gale Johnson, "Integration of East Asian Agriculture into the World Trading Community," Conference on Economic and Regional Cooperation in Northeast Asia, University of Chicago, September 6-8, 1995.

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12. A different weighting scheme renders these figures not directly comparable to those cited earlier. 13. Ironically, research by Tarr suggests that the steel Voluntary Export Restraint (VER) has actually helped Korean steelmakers through the transfer of large economic rents. Rents are unlikely to exceed profits from exports forgone in the textile and apparel sector, however. Research by Trela and Whalley (1988) indicates that the elimination of the multilateral quotas alone would result in a 185 percent increase in South Korean textile and apparel export revenue. Complete freeing of the textile and apparel markets would lead to a 241 percent increase. Moreover, the mechanism for allocating quota rights internally imposes efficiency costs on the South Korean economy. Trela and Whalley (1991) estimate that when these domestic inefficiencies are taken into account, South Korea would experience a 525 percent increase in export revenue with a freeing of world textile and apparel trade. Although these figures are derived from a model calibrated on 1986 data, and South Korean competitiveness in these sectors has certainly declined, they nonetheless give an indication of the restrictiveness of the MFA. David G. Tarr, "Effects of Restraining Steel Exports from the Republic of Korea and Other Countries to the United States and the European Community," World Bank Economic Review 1:3 (1987): 397^118. Irene Trela and John Whalley, "Do Developing Countries Lose from the MFA?" NBER Working Paper No. 2618, National Bureau of Economic Research, Cambridge, 1988. Trela and Whalley, "Internal Quota Allocation Schemes and the Costs of the MFA," NBER Working Paper No. 3627, National Bureau of Economic Research, Cambridge, 1991. 14. "Core" NTBs imposed by the United States include tariff quotas; quotas, including bilateral; import licenses and quotas; prohibitions and embargoes; voluntary export restraints; orderly marketing arrangements; MFA arrangements; textile export restraints and quotas; antidumping investigations, duties, and price undertakings; countervailing investigations, duties, and price undertakings; and voluntary export price restraints. For its part, South Korea imposes global quotas and antidumping investigations, duties, and price undertakings. 15. Jung-ho Yoo, Sung-Hoon Hong, and Jae-Ho Lee, Korea's Industrial Protection and Distortion of Incentive System (in Korean) (Seoul: Korea Development Institute, 1993). 16. These results are pre-Uruguay Round. Presumably the impact of the Uruguay Round agreement will be both to reduce levels and to narrow the range of effective protection afforded the manufacturing sector in South Korea. Unfortunately, post-Uruguay Round estimates for South Korea do not exist, nor for that matter are there any recent estimates of effective protection for the United States. 17. The most infamous of these cases was the antidumping ruling against South Korean producers of photograph albums. The photo album market in South Korea is one virtually perfect competition among small producers, and it is difficult to believe that these producers could exercise any price discrimination. Nonetheless, U.S. producers filed a complaint in January 1985, and in March the U.S. International Trade Commission made a determination of injury. In June, the Department of Commerce made a preliminary estimation of a 4.04 percent dumping margin. The complainants did not accept this finding and refiled the dumping charge. Commerce then accepted, without investigation, the complainants' charge, and in October imposed a 64.81 percent dumping duty uniformly across all sixtyfour South Korean producers. South Korean exports to the United States of photo albums fell from $26.6 million in 1985 to $.3 million in 1986. The case came up for administrative review in 1989, but Commerce sustained the 64.81 percent dumping margin. Wontack Hong, "Bilateral Trade Relations: The U.S. Trade Policies

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Toward Korea." Paper presented at Second U.S.-Korea Academic Symposium on U.S.-Korea Economic Relations, Bloomington, Indiana, September 27-28, 1991. While it is difficult to comprehend how these atomized producers could maintain price discrimination, it is not hard to understand the sense of outrage felt in South Korea. 18. Taeho Bark, "Anti-Dumping Restrictions Against Korean Exports: Major Focus on Consumer Electronic Products," KIEP Working Paper No. 91-02, Seoul, May 1991, p. 55. 19. In May 1990, Korea's sole polyacetal resin maker, Korea Engineering Plastic (KEP), filed charges of dumping against DuPont, Hoechst Celanese of the United States, and Asahi Chemical. The Korean Fair Trade Commission ruled that KEP had been injured by dumping and the Office of Customs Administration estimated dumping margins of 58.2-92.2 percent for DuPont, 20.6-43.5 percent for Hoechst, and 31.0-107.6 percent for Asahi Chemical. The Customs Deliberation Committee met in July 1991 and affirmed the dumping ruling, but imposed far lower margins, apparently questioning the extent of injury in light of the facts that KEP's market share had grown from nil to 60 percent in two years, that it had doubled capacity, and that it was earning a high rate of return on capital. A GATT case was eventually undertaken which South Korea lost on the grounds that injury was not demonstrated. 20. Kenneth Flamm, Mismanaged Trade? Strategic Policy and the Semiconductor Industry (Washington, D.C.: Brookings Institution, 1996). 21. For an overview of Korean competition policies, see Edward M. Graham, "Competition Policies in the Dynamic Industrializing Economies," Working Papers in Asia Pacific Economic Cooperation 96-9 (Washington, D.C.: Institute for International Economics, 1996). 22. USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1995). 23. The June 1996 conviction of three senior KFTC officials for accepting bribes in return for favors has not strengthened the agency's image. Financial Times, June 13, 1996. 24. Hong, "Bilateral Trade Relations." 25. Discussion of the MOHW requirement that each importer of an identical product (e.g., the same brand of canned food in the same size container) go through a separate cumbersome registration procedure may be found in USTR, National Trade Estimates (Washington: Government Printing Office, 1995). The example of medical equipment standards that deviate from international norms, and the KCS practice of individually opening each device, subjecting them to possible contamination, is given in Daniel K. Tarullo, "U.S.-Korea Economic Relations," in C. Fred Bergsten and II Sakong, eds., Korea-United States Economic Cooperation in the New World Order (Washington, D.C.: Institute for International Economics, 1995). The U.S. medical equipment industry estimates that $200 million in sales are lost annually owing to these practices. 26. For stomach-turning details, see USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1997). 27. USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1997); American Chamber of Commerce in Korea [Amcham], Korea: U.S. Trade and Investment Issues 1996 (Seoul: Amcham, 1996). 28. The strange case of sausages is the most celebrated example. In March 1994, South Korea barred entry of a shipment of frozen heat-treated pork sausages, when the sausages were arbitrarily reclassified and the legal shelf life was reduced from ninety to thirty days. (The shelf-life system mandated by the government,

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itself an anachronism and practiced by few other countries, affects U.S. exports of fresh chilled beef and pork, frozen poultry, bottled water, raisins, and confectionery products.) This action was the catalyst for the filing of a Section 301 complaint by U.S. producers. As for the sausages themselves, the South Korean importer who was stuck with them unloaded them in China. The U.S. exporter was less lucky in a recent popcorn case. In 1995, an export shipment by a small U.S. producer was impounded for more than six months, then rejected on the grounds that it had high levels of e-coli bacteria. No test results were furnished to substantiate this judgment, and the exporter was denied the right to resubmit new tests indicating that there was no bacteria present. South Korean authorities also dismissed the argument that the high temperatures needed to pop popcorn would kill any bacteria. They eventually announced that it was the fault of the importer who had self-certified the absence of e-coli bacteria, though as it turns out, standards did not even exist for e-coli bacteria on popcorn. In the end, the importer was stuck with the popcorn and the exporter was out $50,000. USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1996). The value of time spent by government officials and private lawyers attempting to resolve this dispute undoubtedly exceeded the value of the shipment. USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1995), provides more specific examples. In 1993 a shipment of wheat was barred from entering the country when MOHW announced that it had found evidence of excessive levels of pesticide residue. Even when testing by seven laboratories in South Korea, Japan, and the United States found no evidence of pesticide residue, the ministry refused either to conduct joint testing with a U.S. government agency or to release the wheat for importation. To give another example, South Korean authorities often test imported fruit for insects that are not regulated or controlled in any way domestically; they also test for more than one hundred agricultural chemicals without any particular public health justification. These practices delay importation, thus contributing to deterioration (which ironically may be a potential public health concern), raising costs, and discouraging imports. South Korea has also introduced seemingly arbitrary and irrational standards for bottled water and chocolate, again raising costs and discouraging imports. 29. When the sausage issue initially arose in 1994, U.S. officials were unwilling to take the case to the GATT for fear that a U.S. victory in this case would hurt chances of congressional passage of the Uruguay Round, since critics were claiming that the WTO would be able to strike down U.S. health and safety laws. Once the Uruguay Round passed Congress, U.S. officials were willing to use the WTO to resolve the issue. 30. Hong, "Bilateral Trade Relations." 31. USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1997). 32. For a judicious discussion of these issues, see Amcham, Korea: U.S. Trade and Investment Issues 1996. 33. USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1997); Amcham, Korea: U.S. Trade and Investment Issues 1996. 34. In 1980, less than half of 5—digit Korean Standard Industrial Classification sectors were unconditionally open to foreign direct investment (FDI). In 1989, 79 percent of these sectors were open to FDI, 16 percent were conditionally open, and 5 percent were closed. Openness was highest in manufacturing (98 percent), lowest for agriculture (20 percent), and moderate in services, (62 percent). In 1994, 87 percent of these sectors were open to FDI, including 98 percent of manufacturing and 76 percent of service sectors.

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35. Tarullo, "U.S.-Korea Economic Relations." 36. These reasons include protection of national security; maintenance of public order or the protection of public health, morality, or safety; fulfillment of obligations relating to international peace and security; prevention of monopolistic or predatory practices in the domestic market; and violation of South Korea's Antitrust and Fair Trade Law. 37. For example, although the government eased regulations on foreigners' acquisition of land in 1995 and 1997, foreigners who were engaged in business activities other than the six specific financial services sectors still had to get the approval of municipal and provincial governments. A USTR official quoted in Elliott used the metaphor of "peeling an onion" to describe the process of investment liberalization in South Korea. Kimberly Ann Elliot, "From Super 301 to DEC: The Evolution of U.S.-Korea Trade Relations." Paper presented at Conference on Korea's Globalization and Korea-U.S. Economic Cooperation, Seton Hall University, South Orange, NJ, July 28-29, 1995. 38. The distribution sector is of considerable concern. Vertical integration in the retail sector (especially in automobiles and electronics), illegal under U.S. antitrust law, acts as a significant barrier to trade and keeps prices of imported products uncompetitively high. The South Korean government has announced a partial relaxation of restrictions on foreign investment in the wholesale and retail distribution system, though restrictions on floorspace and number of outlets remain. Restrictions on floor space and number of showrooms in the auto industry have been eliminated, as have restrictions on radio and television advertising time. More general restrictions on advertising remain, however, acting as an impediment to both U.S.-based advertising providers and the dissemination of information on new U.S. products. Some of these restrictions appear to violate the principle of national treatment. For details, see Amcham, Korea: U.S. Trade and Investment Issues 1996. 39. For example, purchasers of new cars are required to purchase subway bonds; when the amounts were increased in May 1990, the increase for buyers of imported cars was far higher than that assessed on the buyers of domestic models. The South Korean government has agreed to eliminate this practice as of October 1, 1997. 40. Inside U.S. Trade, August 29, 1997. 41. Under current law, South Korean banks are not allowed to hold title on cars as collateral on loans for auto purchases. As a consequence, some consumers default on the loans, and it is difficult for the banks to seize the cars. U.S. automakers argue that this has impeded the development of a car loan market and thus depressed demand for cars, especially luxury cars. 42. For a summary, see Amcham, Korea: U.S. Trade and Investment Issues 1996. 43. At the press conference announcing this decision, Deputy U.S. Trade Representative Jeffrey Lang observed that "in some cases [the MOU] is not being adhered to—in other cases, where it has been implemented, we have seen offsetting or countervailing measures which undo the benefits we had anticipated from the agreement." Inside U.S. Trade, October 3, 1997. According to another press report, some members of the Korean National Assembly accused the United States of trying to destabilize the country's automobile industry when it is already suffering severe problems, with the nation's third-largest producer, Kia, on the verge of collapse. Financial Times, October 3, 1997. 44. Ironically, Bayard and Elliott conclude that by and large South Korea did not deliver on the concessions made at this time. Bayard and Elliot, Reciprocity and Retaliation in U.S. Trade Policy.

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45. Amcham, Korea: U.S. Trade and Investment Issues 1996. 46. Although the remainder of this discussion emphasizes issues of primary interest to the United States, it would be an enormous mistake to regard the financial market liberalization issue as one principally of international economics. There is a strong case for domestic financial market liberalization for reasons analytically distinct from the international issues. For a discussion of these issues, especially the liberalization and prudential regulation of the South Korean banking system, see Marcus Noland, "Restructuring the Korean Financial System for Greater Competitiveness," Working Papers in Asia Pacific Economic Cooperation 96-14 (Washington, D.C.: Institute for International Economics, 1996). 47. See Daekeun Park, "Financial Opening and Capital Inflow: The Korean Experience and Policy Issues"; and Rudiger Dornbusch and Yung Chul Park, "Financial Integration in a Second Best World: Are We Still Sure About Our Classical Prejudices?" in Dornbush and Park, eds., Financial Opening: Policy Lessons for Korea (Seoul: Korea Institute for Finance/International Center for Economic Growth, 1995). 48. In September 1996, the Ministry of Finance and Economy proposed legislation to revise the Banking Act to end the current "rubber stamp" bank president selection committees and increase the role of outside nonstanding directors. Under the proposed system, the nonstanding directors will be authorized to recommend bank officers and decide on major managerial issues. Those working for the top ten big businesses would not be eligible to be outside directors. 49. Economist, July 20, 1996. 50. For example, in October 1995, the government announced that, in the case of direct investments abroad by South Korean corporations of $100 million or more, at least one-fifth of the funds must be raised at home, where the cost is higher. Economist, October 14, 1995, p. 44; November 11, 1995, p. 62; Financial Times, October 10, 1995. A year later, the government partially reversed itself, announcing that large corporations would be permitted to borrow foreign currency denominated loans from domestic banks to buy South Korean-made capital goods. Financial Times, October 10, 1995. 51. With regard to exchange rate management, in 1987 transactions in currency futures and options were added to forward contracts and swaps as a means of hedging exchange risk, and in 1989 underlying documentation requirements were eased to facilitate the market. At that time, in response to the growing bilateral trade deficit with South Korea, U.S. officials focused attention on exchange rate policy, the putative source of the rapidly increasing South Korean surplus. The U.S. Treasury, in implementing Section 3004 of the 1988 trade act, investigates whether the United States' trade partners are "manipulating their exchange rates for purposes of preventing balance of payments adjustment or gaining unfair competitive advantage in international trade." South Korea was accused of being an "exchange rate manipulator" in the first three Treasury reports; it was removed from this list in the fourth report in April 1990. The Treasury's position is flawed in that it does not discriminate between nominal and real exchange rates (nor between bilateral and effective exchange rates), and it confuses the means of exchange rate determination with the goal of maintaining the correct exchange rate for macroeconomic balance. Indeed, it is unclear how one distinguishes in practice between exchange rate management—practiced by the United States and other Group of Seven countries—and exchange rate manipulation, of which the Treasury accused Korea. (In fairness it should be noted that the United States initially attempted to resolve its dissatisfaction with South Korean exchange rate policy through the International Monetary Fund and was unsuccessful. Indeed, in 1985 the IMF was

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counseling greater currency depreciation than the South Korean authorities felt was desirable.) Historically the won was pegged to the basket of currencies that constitute the special drawing right (i.e., the currencies of the Group of Five major industrialized nations, whose respective weights in the basket are undisclosed), plus a "policy adjustment" factor. In reality, the policy adjustment factor has been predominant, as the won depreciated against all five currencies in the basket between 1984 and April 1987. See Bela Balassa and John Williamson, "Adjusting to Success: Balance of Payments Policies in the East Asian NICs" (rev. ed.), Policy Analyses in International Economics 17 (Washington, D.C.: Institute for International Economics, 1990). In 1990 a new exchange rate system, the market average exchange rate (MAR) system was introduced. Under the MAR system the midband won-dollar rate is calculated as an average of the previous day's transactions and then is allowed to float within officially proscribed margins around this rate. Thus the exchange rate floats on a limited basis and moves day to day according to market pressures. In 1991 the South Korean government began a process of gradually widening these bands with the expectation that as the bands are widened, a freely floating system will emerge. 52. U.S. Department of the Treasury, National Treatment Study Report to Congress on Foreign Treatment of U.S. Financial Institutes (Washington, D.C.: U.S. Treasury Dept., 1994). 53. The MFE added that it might abolish the ceiling entirely in 2000 if "economic circumstances" were appropriate. Financial Times, June 19, 1996. 54. In an attempt to invigorate the over-the-counter (OTC) market, the government announced that it will begin to allow foreign investors to purchase shares "directly" in addition to the current practice of investing "indirectly" through a mutual fund reserved for foreigners. The OTC market, established in 1987, has a yearly trading volume roughly equal to the daily volume on the Seoul stock exchange. Korea Newsreview, September 14, 1996. 55. Financial Times, August 3, 1996. 56. Financial Times, June 19, 1996; Korea Newsreview, June 22, 1996. 57. USTR, National Trade Estimates (Washington, D.C.: Government Printing Office, 1997). 58. C. Fred Bergsten and Marcus Noland, Reconcilable Differences? (Washington, D.C.: Institute for International Economics, 1993). 59. In addition to possibly aiding in the resolution of financial services issues, South Korea's decision to join the OECD has already eliminated the shipbuilding subsidy issue from the bilateral agenda. 60. Noland, "Trade, Investment, and Economic Conflict Between the United States and Asia"; and Noland, "Chasing Phantoms." As one South Korean policymaker observed, "Korea-U.S. trade frictions became serious in the second half of the 1980s as the U.S. twin deficits (trade and budget) expanded concurrently with Korea's widening surplus with the U.S." Okyu Kwon, "An Assessment of Korean Trade Policies and Trade Prospects with the U.S." Paper presented at Second U.S.Korea Academic Symposium on U.S.-Korea Economic Relations, Bloomington, Indiana, Sept. 27-28, 1991, p. 12. 61. For details of the model and its estimation, see the appendix of Noland, "Origins of U.S.-Korea Trade Frictions," in Jongryn Mo and Ramon H. Myers, eds., Shaping a New Economic Relationship (Stanford: Hoover Institution Press, 1993). 62. Soo-gil Young, "Korean Trade Policy," in Thomas O. Bayard and Soo-Gil Young, eds., Economic Relations Between the United States and Korea: Conflict or Cooperation? (Washington, D.C.: Institute for International Economics, 1989);

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Soo-Gil Young, "Korea-U.S. Economic Relationships in the 1990s: Conflict or Cooperation," in Bergsten and SaKong, Korea-United States Economic Cooperation in the New World Order. 63. It is perhaps indicative of the state of the GATT in the 1980s that multilateral institutions play no role in Young's description of these issues. 64. Interestingly, the lead U.S. negotiator in the DEC took an opposite view: "[A] reason for the less than expected progress in the DEC—and this is something of a paradox—was the recovery of Korea's economy . . . there was a great deal of momentum in favor of economic reform because Korea's economy was mired in a slump. As the economy picked up steam in 1994, however, domestic opponents to liberalization gained strength. Korea's cyclical recovery gave them ammunition to argue that more drastic economic reforms were not needed." Tarullo, "U.S.-Korea Economic Relations." 65. Referring to the period of conflict in the late 1980s, Soo-Gil Young bluntly stated that the "U.S. had a free-market economy, while Korea had a strongly dirigiste economy, with highly regulated markets and heavily protected producers." Young, "Korea-U.S. Economic Relationships in the 1990s," p. 73. 66. Kiwhan Kim, "The Political Economy of U.S.-Korea Trade Friction in the 1980s: A Korean Perspective," in Mo and Myers, Shaping a New Economic Relationship, p. 53. 67. Marion Paul Spina, Jr., "The Perspective of U.S. Businesses in Korea," in Mo and Myers, Shaping a New Economic Relationship, p. 182. 68. U.S. concerns about lack of transparency in Korean policy formation have been highlighted in the "austerity" or "anti-import" campaign begun in the spring of 1990. Purchasers of foreign autos feared tax audits, and some boutiques selling foreign-made clothing were closed in department stores while boutiques selling similarly priced domestically produced clothing remained open. Indeed, the definition of "luxury good" appears to be so elastic as to include even the simplest of foreign products, Tupperware. Perhaps the most infamous example of this was a comic book distributed by the National Agricultural Cooperative Federation (NACF, a quasi-governmental group) to around half a million school children, suggesting that imported food was poisonous and recommending that the children stop their mothers from buying imported food. In response to the NACF comic book the Korea Foreign Trade Association (KFTA) published its own comic book extolling the virtues of liberal trade policies. (Unfortunately the KFTA comic book does not appear to have received anything close to the circulation or attention of the NACF comic book, which therefore would have to be judged the winner in the comic book war.) Evaluating the austerity campaign, the U.S. Chamber of Commerce in South Korea concluded, "It has become increasingly clear that, at times, liberalization in Korea can mean absolutely nothing." In 1996, it was "déjà vu" all over again. As South Korea's current account deficit widened, President Kim Young-sam made an appeal for austerity. Although he explicitly indicated that purchasers of new cars would not be targets of tax audits, some government officials apparently interpreted the president's remarks as a signal to crack down on imports and acted accordingly. For an interesting essay on the issue of lack of transparency, and U.S. firms' coping strategies, see Hi-Taek Shin, "Politicizing Trade Issues and U.S. Business in Korea," in Mo and Myers, Shaping a New Economic Relationship. 69. Marion Paul, Spina, Jr., "The Changing Business Climate in Korea: Implications for American Firms," Korea's Economy 1995 (Washington, D.C.: Korea Economic Institute of America, 1995), p. 29. 70. The long-run prognosis for deficit reduction is far less certain.

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71. On the South Korean side, South Korea is likely to experience a secular decline in its growth rate from its current unsustainable level. It is not obvious how this will affect South Korea's external position, and a case could be made that South Korea's current account position could either secularly improve or deteriorate under these conditions. What one can say confidently is that the South Korean macroeconomic indicators are not unambiguously positive. 72. These were derived from an econometrically estimated multicountry model in which a country's commodity composition of trade is a function of national income, technology, and relative factor endowments. Marcus Noland, "Prospective Changes in the Commodity Composition of U.S.-Korea Trade," Impact of Recent Economic Developments on U.S.-Korea Relations and the Pacific Basin, Academic Studies Series, Joint Korea-U.S. Academic Symposium Volume I, 1990. For details of the model and its estimation, see appendix in Marcus Noland, Pacific Basin Developing Countries: Prospects for the Future (Washington, D.C.: Institute for International Economics, 1990). 73. These figures refer to the direct effects. Total (direct plus indirect) figures were not calculated because some significant differences in the trade and inputoutput industry definitions could have potentially propagated large errors throughout the calculation. 74. It should be reiterated that the calculations reported in this section are not predictions—rather they are simply computations of what would occur if the U.S. market share in the exports and imports of South Korea remained unchanged. This is a convenient assumption to use in making indicative calculations of this sort. It is not to say that these outcomes will in fact occur. There are clearly cases in which the constant market share assumption is unlikely to be fulfilled. The bilateral pattern of trade could change because of changes in third country markets—for example, because of differences in the growth rates of third country markets. The relative competitiveness of U.S. and South Korean producers, both relative to each other and relative to third country suppliers, could change. 75. Indeed, as U.S. imports are far more labor-intensive than U.S. exports, even balanced trade growth implies a loss of potential jobs. In fact, given the incremental increases in domestic consumption, in exports, and in normal turnover and attrition rates, it is possible that increases in import penetration on this scale would not generate significant involuntary unemployment. 76. Noland, "Trade, Investment, and Economic Conflict," pp. 435-458. Intraindustry trade refers to two-way trade in differentiated manufactured goods (such as automobiles). Inter-industry trade refers to trade in dissimilar products (i.e., cloth for wheat). 77. This index is: ITT = X , w j 1 - ( X - M j / 1 X-m\

],

where the subscript i refers to industry, w is the industry share in world trade, and X and M are exports and imports respectively. This index will be biased if aggregate (manufactures) trade is not balanced; see Bela Balassa, "Intra-Industry Trade Specialization: A Cross-Country Analysis," European Economic Review 30 (1986): H-\2. 78. Jayant Menon, "Japan's Intra-Industry Trade Dynamics," Journal of the Japanese and International Economics (forthcoming, 1998). 79. See Table 1 in Marcus Noland, "Implications of Asian Economic Growth," Working Papers in Asia Pacific Economic Cooperation 94—5 (Washington, D.C.: Institute for International Economics, 1994). In addition, the United States is likely to have continual political conflicts with China deriving from fundamental differences in political values; in contrast, South Korea has emerged as a stable democracy.

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Conflicts with China may simply make problems with South Korea appear less severe, by comparison, to U.S. policymakers. 80. Marcus Noland, "U.S.-China Economic Relations," Working Papers in Asia Pacific Economic Cooperation 96-6 (Washington, D.C.: Institute for International Economics, 1996). 81. Robert Z. Lawrence, "Developing Countries and Global Trading Arrangements." Seminar on Dynamics of International Markets and Trade Policy, El Escorial, Spain, July 8-12, 1991. 82. Eminent Persons Group, Achieving the APEC Vision (Singapore: AsiaPacific Economic Cooperation, 1994). 83. Office of National Assessments, "APEC Liberalization Gains," mimeo, Canberra, 1994; Greg Murtough et al., "APEC Trade Liberalization Post-Uruguay Round," AB ARE Conference Paper 94.31, Canberra, 1994; Jeffrey D. Lewis, Sherman Robinson, and Zhi Wang, "Beyond the Uruguay Round: The Implications of an Asian Free Trade Area," China Economic Review 6:1 (1995): 35-90. 84. For an overview of the North Korean economy and prospects for reform, see Marcus Noland, "The North Korean Economy," Joint U.S.-Korean Academic Studies 6 (1996): 127-178. 85. For an expanded treatment of these issues, see Marcus Noland, "Why North Korea Will Muddle Through," Foreign Affairs, July/August (1997): 105-118. 86. These figures are dependent on specific assumptions, most importantly (1) the amount of total factor productivity increase associated with economic reform and opening; (2) the extent to which capital would be used more efficiently in a marketized North Korea; and (3) the economic value of the existing North Korean capital stock after the economy was opened to international trade. The range of estimates in the text is based on alternative assumptions about these issues. These figures are generally in line with others produced using different methodologies. See Marcus Noland, Sherman Robinson, and Monica Scatasta, "Reforming the North Korean Economy," Journal of Asian Economics 8:1 (1997): 15-38, Table 5. 87. Marcus Noland, "Some Unpleasant Arithmetic Concerning Unification," Working Papers in Asia Pacific Economic Cooperation 96-13 (Washington, D.C.: Institute for International Economics, 1996). 88. This statement is based on the purely mechanical assumptions embodied in this exercise. A separate and important issue is the capacity of both North Korean and foreign investors to identify and implement the actual projects that would be financed by these inflows. This is probably a serious constraint on absorptive capacity. 89. It has been argued that an independent and poor North Korea would receive better treatment from the international lending agencies than a unified middle income Korea.

8 U.S. Public Opinion of the Two Koreas PHILIP J . POWLICK

Thirty years ago it would have been quite unlikely that a volume on Korea-U.S. foreign relations would have included a paper on U.S. public opinion. In the period roughly between the end of World War II and U.S. involvement in Vietnam, there existed what Ole Holsti has termed the "Almond/Lippman" or Realist consensus on the role of public opinion in foreign policy. 1 Scholars and policymakers alike tended to see public opinion on foreign policy matters as volatile and lacking in coherent structure. It was thus thought that public opinion should not, and did not, have much impact upon policy. With the beginning of dissent over Vietnam there arose a series of critiques of this position, ultimately culminating in a new consensus among most students of U.S. foreign policy that public opinion is stable 2 and structured. 3 Most important for the purposes of this chapter, it has come to be seen as having an influence upon both the making of foreign policy 4 and upon foreign policy outcomes. 5 If we thus accept that public opinion influences, or at least constrains, U.S. foreign policy, and if we are to gain a complete understanding of the factors that underlie U.S. policy toward the two Koreas, then an examination of U.S. public opinion toward North and South Korea is necessary. In this chapter I will begin with an examination of Americans' general attitudes toward Korea and Koreans, giving particular attention to their affective (or emotion-driven) attitudes and impressions. As will be shown, U.S. citizens generally have little specific knowledge of Korea. Thus, many of their opinions on issues involving Korea must necessarily be rooted primarily in their feelings toward and impressions of it. I then proceed to examine attitudes in specific policy realms, including economic and trade relations, the stationing of U.S. troops in South Korea, the willingness 187

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of the public to use U.S. troops to defend the South, and attitudes toward the North's recent nuclear program. In the final section I discuss the implications of these attitudes for U.S. policymakers and for the future of U.S. policy toward the two Koreas. Ideally, a study such as this would be based upon a complete and custom-designed national survey. Such a survey, however, is well beyond the author's present resources. Thus, this chapter is based upon the accumulation of a large amount of data from a variety of surveys conducted between 1970 and 1996. Some data were obtained from the Gallup American Public Opinion Index series and its associated collections of microfiched poll reports. Most of the data for this analysis were acquired through a new, searchable "Public Opinion" database marketed by the Roper Center for Public Opinion Research. One drawback of making secondary use of poll data is that some types of questions are either rarely asked or are asked only when an issue or event makes them salient. 6 Thus, at some points, data from the 1980s, and in a few cases even the 1970s, must be used to try to draw conclusions about contemporary opinions and likely reactions to future contingencies. Because Benjamin Page and Robert Shapiro have shown that U.S. public opinion, even on foreign policy issues, tends to be fairly stable over time, it is fairly safe to assume that attitudes expressed within the past ten to twenty years will resemble current public attitudes. 7 Nevertheless, the use of older data has been avoided whenever possible, and when not, allowance has been made for changes in time and context. Two other difficulties emerged in collecting data for this chapter. One was the relative scarcity of time series data. Most poll questionnaire items on specific countries are not repeated, as they typically relate to issues salient at a particular point in time. Some time-series data are available, however. The Chicago Council on Foreign Relations (CCFR), for instance, has conducted a major poll on Americans' foreign policy attitudes every four years since 1974, with a number of questions repeated over the entire series. One drawback of the CCFR polls for this chapter, however, is that the typical survey asks only three or four questions concerning Korea. Thus, CCFR provides time-series data, but on a very narrow range of questions. One further source of data has been particularly useful for this chapter. This is a series of polls conducted by Gallup for Potomac Associates in the 1970s and 1980s. Potomac publications document two polls (in 1980 and 1985) devoted solely to questions about Asia and Asian nations, including both North and South Korea, and a third poll devoted solely to questions on Korea (in 1978). Further data on Korea in the Potomac reports come from polls conducted in 1977 and 1979. The Potomac data include a particularly useful battery of basic attitude questions administered in the 1980 and 1985 surveys. The data from these polls will be drawn upon extensively in the early portions of this chapter. Unfortunately, no

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comparable surveys have been conducted since 1985—or at least none that are publicly available.

Perceptions of North and South Korea in the U.S. Public Knowledge

About

the

Koreas

The U.S. public generally pays little attention to Korea except when events thrust the peninsula into the headlines. Otherwise, most Americans perceive Korea as rather unimportant. For example, the "Koreagate" scandal of the late 1970s (involving illegal payments to U.S. legislators by South Korean lobbyists) temporarily increased attention to Korea among U.S. citizens. In 1978, 73 percent of respondents claimed to have heard or read about the scandal.8 As these events faded from the news, so too did recall of them; in 1979, self-reported knowledge of the affair had already declined to 61 percent of the public.9 Attention to Korea also peaked and receded during the 1994 nuclear weapons crisis involving North Korea. North Korea withdrew from the Nuclear Non-Proliferation Treaty (NPT) in March 1993, then suspended its withdrawal in June. Efforts to bring about North Korean compliance with the NPT continued for the remainder of 1993 and into 1994, but in early 1994, events had not yet proceeded to a crisis stage. In May 1994, Times Mirror pollsters asked the following question: "Do you happen to know the name of the country that is threatening to withdraw from the nuclear nonproliferation treaty?" Seventy six percent of those polled responded that they could not name the country, 4 percent stated the wrong country, and a mere 20 percent answered correctly. By June 1994, with the United States openly threatening the North with sanctions or worse, public attention skyrocketed. Times Mirror pollsters now found 27 percent saying they were following the North Korea story "very closely," with a further 33 percent following "fairly closely."10 Other polls revealed similar levels of attention.11 With the apparent settlement (or suspension) of the crisis that summer, the public's attention quickly receded, as apparently did memory of the crisis itself. In October 1994, a Nuclear Energy Institute poll asked people if they recalled any news during the past six months about "North Korea nuclear plants that the international community wants to shut down"; only 38 percent answered that they did recall such news. Thus, in the absence of immediate headline events—such as "Koreagate," the NPT crisis, and perhaps events such as the 1988 Olympics or 1979 assassination of South Korean President Park Chung-hee—the U.S. public's attention to Korea has remained at a very low level.

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Pwlick

Low levels of attention naturally lead to relatively low levels of knowledge. While recent poll data on specific knowledge are rather sparse, the series of surveys from the late 1970s and 1980s by Potomac Associates found low levels of knowledge about both Korea and most Asian countries as well. Table 8.1 presents Potomac poll data on Americans' self-reported knowledge about selected Asian nations. A majority claimed to know little or nothing about both South and North Korea; this was comparable to levels of knowledge reported for Taiwan, Thailand, Indonesia, and several other nations not included in Table 8.1. 12 This contrasts sharply, however, with self-reported knowledge of Japan and China. From the totality of the poll data available, it appears that the U.S. public assigns significantly more importance to Japan and China than to Korea. As we shall see, this difference leads to greater levels of attention to China and Japan, as well as to generally more positive attitudes toward each of these countries. When asked specific questions about the political systems in Korea, much of the public seems to know a surprising amount about the forms of government in both the North and South. When asked in 1978 if North Korea has a communist government, 65 percent said yes; when asked if South Korea had a communist government, only 16 percent said yes. 13 In 1980 and 1985, Potomac Associates asked people to identify the type of government in each country. Once again, a majority correctly cited the North as communist (58 percent in 1980 and 60 percent in 1985). In 1980, 60 percent cited the South as either military authoritarian or mixed civilian and military authoritarian; in 1985 57 percent gave these responses.

Table 8.1

T h e U.S. Public's Self-Reported Knowledge of Selected East Asian Nations

Question: I'm going to read a list of countries, some of which you may know a great deal about, some a fair amount, some not very much, and some nothing at all. As I read off the name of each country, please tell me how much you feel you know about it—a great deal, a fair amount, not very much, or nothing at all? Answers Country South Korea North Korea Japan China Taiwan Thailand Indonesia

Great Deal

Fair Amount

6 4 23 10 5 4 1

35 28 55 48 33 25 14

Source: Potomac Associates, July 1980.

Not Very Much 45 51 16 33 44 50 52

Nothing At All 12 15 4 7 15 19 30

Don't Know 2 2 2 2 3 2 3

U.S. Public Opinion of the Two Koreas

191

These responses are especially good when compared with Japan. Only 32 percent in 1980 and 35 percent in 1985 thought that the Japanese government was a democracy. That the U.S. public should have been so aware of the forms of government in Korea during the 1980s has probably not been advantageous to Korea's image in the United States, however. Although I am aware of no recent data comparable to those cited here, it is likely— given its inattention to Korea—that there are still sizable proportions of the U.S. public that would identify South Korea as an authoritarian regime. In other areas of factual knowledge about Korea, the U.S. public does not fare well. In 1979, only 28 percent of poll respondents thought (correctly) that South Korea was more advanced than the North; 14 percent thought the North more advanced, 23 percent thought South and North were about even, and 31 percent did not even venture a guess. 1 4 At the same time, South Korea was perceived (incorrectly) as only a minor trading partner with the United States by 53 percent of respondents (with a further 33 percent offering "don't know" responses). 1 5 In both 1980 and 1985, over 80 percent of poll respondents believed (incorrectly) that South Korea was a major recipient of U.S. economic aid. 16 Unfortunately, there are no recent data testing specific factual knowledge about Korea. However, decreases in the number of "don't know" responses to some general questions may signal a slight increase in awareness of Korea. CCFR polls from 1982 to 1994, for example, show a decrease in "don't know" responses to requests for an assessment of whether South Korea is a "vital interest" and to a South Korea "feeling thermometer." (See Table 8.6; note also the decreases in "don't know" responses in Table 8.9.) It is difficult to say, however, whether these decreases are a sign of increases in actual knowledge or if they simply reflect greater willingness to volunteer impressionistic opinions about Korea. Attitudes Toward South Korea The U.S. public usually perceives South Korea as a relatively unimportant country. This perception is, however, subject to the same event-driven forces that characterize changes in attentiveness. Table 8.2 presents the data from a useful time series of Chicago Council on Foreign Relations (CCFR) surveys. It shows that Americans assign a high degree of importance to both Japan and China, with great stability for both sets of attitudes; the single exception is in perceptions of China in 1990 in the wake of the Tiananmen Square violence. Attitudes toward Taiwan are remarkably stable in their ambivalence. South Korea, however, is highly volatile. The years 1982 through 1990 represent "typical" years for attitudes toward South Korea, in that no major news items during the survey years piqued the U.S. public's attention to or sense of the importance of South Korea. For these years, South Korea is seen as somewhat, though not terribly,

192 Table 8.2

Philip J. Powlick

U.S. Perceptions of the Importance of Selected Nations, 1978-1994

Question: Many people feel that the United States has a vital interest in certain areas of the world and not in other areas. That is, certain countries of the world are important to the U.S. for political, economic, or security reasons. I am going to read a list of countries. For each, tell me whether you feel the U.S. does or does not have a vital interest in that country.

Year 1978 1982 1986 1990 1994 Average

South Korea 61 43 58 49 65 55.2

Japan 78 82 78 79 85 80.4

Taiwan

Mainland China

53 51 53 46 49 50.4

70 64 61 47 68 62.0

Source: Chicago Council on Foreign Relations (CCFR), 1978-1994. Note: Entries are percent of respondents in public survey identifying each nation as one in which the United States has vital interests.

important and appears roughly comparable to Taiwan. (The average percent of those citing South Korea as vital in these "normal" survey years is 50 percent.) The years 1978 and 1994 show evidence of event-driven interest in South Korea and thus a heightened perception of its importance. In 1978, the Koreagate scandal was in full swing, and there was a great deal of public discussion about President Carter's plan to withdraw U.S. troops from the peninsula. In 1994, of course, the North Korea NPT crisis heightened attention to Korea.' 7 Thus the pattern of perceptions of South Korea's international importance is a general complacency that is occasionally elevated by unusual events. As the data presented here will show, the U.S. public held a clear, fairly stable image of Korea at least into the mid-1980s. Both Koreas were perceived as poor, economically underdeveloped, relatively unimportant nations, with the South being a major drain on the U.S. aid program, and with repressive governments in both the North and South. While this image of the North was and remains largely correct, economic and political developments in the South clearly have rendered this impression out of date. Nevertheless, it definitely persists to some degree. While the U.S. public often appears ambivalent about South Korea, largely because of inattention and lack of specific knowledge, an undercurrent of negative affect seems to make Americans less favorably disposed toward South Korea than toward most other Asian nations. Once again, the Potomac surveys of 1980 and 1985 are quite useful. Asked by the pollsters to name the two or three phrases or adjectives (from a list of eleven) that best described respondents' impressions of a given nation, the U.S. public's top responses for South Korea in 1980 and 1985

193

U.S. Public Opinion of the Two Koreas

were (respectively): Political Unrest (47 percent and 48 percent), Underdeveloped (39 percent and 42 percent), Crowded (33 percent and 37 percent), and Dirty (33 percent and 25 percent). This contrasts sharply with responses relating to Japan in 1980 and 1985: Industrialized (50 percent and 53 percent), Crowded (42 percent and 51 percent), Well Educated (38 percent and 45 percent), and Modern (30 percent and 33 percent). 18 Asked to rate nations' standard of living on a scale of +5 to - 5 , 53 percent of respondents in 1980 rated South Korea below zero. 19 Perceptions of the South Korean political system included a negative appraisal of the human rights situation there in the 1980s. Table 8.3 compares these perceptions with those toward Taiwan and mainland China. For both years listed in Table 8.3, Americans viewed South Korea in a slightly worse light than they viewed mainland China—a remarkable finding given that 60 percent of the public in each poll recognized China as having a communist government. Taiwan was viewed in a much more favorable light, even though its political system at the time was more comparable to South Korea's than was South Korea's to China's. Though awareness of the Park assassination and accompanying coup may have tainted 1980 attitudes, there is no event proximal to the 1985 survey that would explain the persistence of this gap between South Korea and Taiwan. Attitudes toward South Korea as an economic entity reveal a consistent pattern of perceived shoddy production, combined with a sense of economic threat to the U.S. economy. Table 8.4 lists respondents' ratings of the quality of goods produced in South Korea, Japan, Taiwan, and China. Clearly, no other Asian producer can approach the reputation of Japanese industry in the United States. When we examine South Korea, Taiwan, and China, we find a perception of mediocre to poor quality for all

Table 8.3

Attitudes Toward Human Rights Situations in South Korea, Taiwan, and China, 1980 and 1985

Question: Now I am going to ask you specifically your impression of the situation in various countries today as it concerns the human rights issue, that is, the degree to which the rights and liberties of their individual citizens are protected. What is your impression about the situation in [country] concerning human rights? 1980 Answers Very Favorable Somewhat Favorable Somewhat Unfavorable Very Unfavorable

1985

South Korea

Taiwan

China

South Korea

Taiwan

China

2 22 41 22

7 35 31 10

4 27 35 25

4 28 38 15

7 37 32 7

5 33 35 16

Source: Potomac Assoicates, 1980, 1985.

194 Table 8.4

Philip J. Powlick

U.S. Perceptions of Product Quality in South Korea and Other Asian Producers, 1980-1996

Source and Response Coding Gallup/CAW/t/&4 Today, 1996 Excellent Very Good Good Only Fair Poor Don't Know Opinion Research, 1988 Superior Good Not Very Good Poor Potomac, 1980 Very High Moderately High Moderately Low Very Low Don't Know

South Korea

Japan

Taiwan

China

1 6 31 33 14 15

13 32 35 13 4 4

1 6 29 37 20 9

1 7 31 36 17 8

2 36 45 17

25 58 12 5

1 30 49 20

n.a. n.a. n.a. n.a.

6 47 29 8 10

49 37 6 4 3

12 53 22 8 5

14 56 18 5 7

three nations. 20 Though South Korea seemed to be least regarded in 1980, it surpassed China and Taiwan by 1996. (The appellation "Made in Taiwan" is not greatly appreciated by the U.S. public.) But for all of the years listed in Table 8.4, differences between South Korea, Taiwan, and China are of relatively small magnitude; all are seen as second-rate producers— at least as compared with Japan—and this attitude appears to be fairly persistent. Although U.S. citizens do not perceive South Korea's productive capabilities in a favorable light, several polls during the late 1980s—a period of high public attention to issues of international trade and protection— showed that many of them viewed South Korea as an economic threat. A Harris poll in June 1988 found that 42 percent of the public felt that South Korea was a "tough and serious competitor against the United States in trade and industry." To some extent this anxiety over South Korea was fueled by what were seen to be unfair trade practices. In November 1987, Gallup found that 42 percent felt South Korean trade practices were unfair, compared with 29 percent reporting "fair," with a substantial number of "don't knows" as well (26 percent). 21 Similarly, a Times Mirror poll in 1989 reported 39 percent "unfair," 25 percent "fair," and 36 percent "don't know." 22 It should be pointed out, however, that this perception of unfairness was much lower for South Korea than for Japan, which country elicited many fewer "don't know" responses. All of the attitudes cited above contribute to a generally uncomplimentary set of affective attitudes toward South Korea. While Americans

195

U.S. Public Opinion of the Two Koreas

generally credit and sometimes debit Koreans with many of the stereotypes that are often assigned to Asians, attitudes toward Korea tend to be comparatively less complimentary. The Potomac studies of 1980 and 1985 are useful for examining affective attitudes. In these polls, respondents were presented with paired-opposite sets of adjectives and asked to indicate which adjective best applied to the people of specific countries. Partial results from these items are presented in Table 8.5. A close look at the paired responses in Table 8.5 indicates clearly that affect constitutes a large component of what these items are measuring. Note that for most countries, there are some shared Asian stereotypes such as "hardworking" and "disciplined." Note as well that the order of positive percentages in each pair is nearly always the same (Japan, China, Taiwan, the Philippines, South Korea, Vietnam). It is evident that the Americans polled here simply do not like Vietnamese; certainly one would be hardpressed to find objective evidence that the Vietnamese are significantly less hardworking, disciplined, or creative than members of the other nations listed. Clearly, as well, the U.S. public has a high level of respect for Japan; Table 8.5

Affective Attitudes in the U.S. Public Toward the People of Selected Asian Nations, 1980 and 1985 South Korea

Japan

China

Taiwan

1980 Items Hardworking Lazy

70 23

95 2

91 5

79 10

70 21

56 36

Creative Imitative

30 60

72 24

55 39

45 43

45 43

24 65

Straightforward Deceitful

46 43

64 28

55 37

65 19

69 17

23 65

Humble Arrogant

53 37

66 29

63 31

65 20

72 16

40 49

Loyal Treacherous

51 39

70 23

60 33

68 18

75 14

29 60

Disciplined Undisciplined

54 38

87 8

83 11

66 21

60 27

39 52

85 Items Hardworking Lazy

74 19

96 1

89 6

88 7

73 21

65 29

Creative Imitative

34 56

71 23

59 35

54 39

44 48

28 63

Straightforward Deceitful

51 39

66 28

56 35

68 23

63 29

23 70

Philippines

Vietnam

Source: Potomac Associates, 1980, 1985. Note: Entries are percentage of respondents who chose that adjective over its paired opposite as most closely describing the people of each country listed.

196

Philip J.

Pwlick

likewise, majorities in the surveys identify Koreans with hard work and discipline. However, large minorities see Koreans as deceitful, noncompetitive, arrogant, and treacherous, and a majority sees them as imitative. For almost all pairs in Table 8.5, South Korea scores much more negatively than any of the nations listed except Vietnam, still a very recent enemy when these data were collected. This was so in spite of thirty years of alliance with South Korea. The source of these negative feelings is not readily discernible from the data, however. The perception noted earlier that South Korea is poor and backward cannot alone account for these attitudes, as the Philippines and other countries as well were seen similarly in this region, but not others, in the Potomac surveys. Koreagate may be responsible for some of the "treacherous" and "deceitful" responses in 1980, but, given the speed with which the scandal was forgotten by the U.S. public, it cannot persuasively explain the persistence of negative attitudes in 1985. The Potomac Associates report for 1980 speculated that a history of political violence and repression underlay these attitudes. I am inclined to dismiss this, as such a history does not entirely distinguish South Korea from China, Taiwan, or the Philippines. The Potomac authors also speculated that the M*A*S*H television series was responsible for such negative affect. I am also inclined to dismiss this. While Koreans were often portrayed as poor and docile in M*A*S*H, it is hard to see how the U.S. public at large could conclude that Koreans are "deceitful" or "arrogant" from these programs. A cultural explanation is plausible—that is, that the U.S. public is somehow "turned o f f ' by some aspect of Korean culture. Without more data, however, this must remain purely speculative. Finally, we come to broad impressions as measured in more general attitude questions. Here we find a large degree of ambivalence in attitudes toward South Korea, but with slightly more negative than positive feelings. One source of data for assessing general attitudes of the U.S. public toward specific nations has been the Chicago Council's "thermometer" questions. These ask respondents to rate the degree of warmth or coolness they feel toward specific nations on a 0-100 scale (where 0 is coldest and 100 warmest). As Table 8.6 shows, feelings toward South Korea, Japan, and Taiwan have generally been stable. China's rating drops somewhat after the 1989 Tiananmen incident. Again, we see a fairly familiar pattern in each year's ratings. Japan is most highly regarded, with South Korea usually falling below most of the other Asian countries. In the bottom half of Table 8.6, we see very little polarization of attitudes toward South Korea. For each year, the modal response—about one-third of respondents—is 50 degrees, with nearly another third falling toward the middle, but leaning positive. Of the remaining third, however, there is a strong weighting toward the negative side in 1982 and 1986. Positive impressions of South Korea appear to rise in 1994, but it is unclear whether or not this improvement is an artifact of the increased attention that the NPT crisis

U.S. Public Opinion of the Two Koreas Table 8.6

197

Thermometer Ratings, Selected Asian Nations, Chicago Council Time Series, 1978-1994 Mean Thermometer Scores, 1978-1994 South Korea

Year 1978 1982 1986 1990 1994 Overall Mean

48 45 50 47 48 47.6

Japan 56 53 61 52 53 55.0

Taiwan

China

51 49 52 48 48 49.6

44 47 53 45 46 47.0

Philippines 3 n.a. n.a. 59 53 n.a. 56.0

Thermometer Rating Frequencies, South Korea Only, 1982-1994 b Year

0-30

1982 1986 1994

22 14 22

31—49 11 13 10

50

51-75

76-100

Don't Know

34 33 34

16 21 26

4 7 4

12 8 4

Source: Chicago Council on Foreign Relations (CCFR), 1978, 1982, 1986, 1990, 1994. Notes: a. The Philippines item was asked only in 1986 and 1990. b. Frequencies for 1990 are not available.

brought to the peninsula. In most years, we see a significant minority of respondents demonstrating negative affect toward South Korea, and a majority who appear either ambivalent or disinterested. This pattern is shown in several other polls as well. Table 8.7 shows favorability ratings for several Asian nations in polls conducted in 1980 and 1989. In 1980, the weight of opinion toward South Korea was negative and was lower than for all other countries mentioned but Vietnam and North Korea. Nevertheless, at that time most opinion toward South Korea fell into the " m i l d " categories. In 1989, ratings toward South Korea seemed to improve, though they remained more negative than those toward both Japan and (pre-Tiananmen) China. Even more than previously, however, overall opinion toward South Korea was uncertain. Another 1989 poll forced respondents to choose simply between favorable and unfavorable responses, resulting in 46 percent favorable and 49 percent unfavorable answers. 2 3 Polls after 1989 show somewhat less negative affect toward South Korea, but with no a c c o m p a n y i n g growth in positive affect. Instead, ambivalence toward the South seems to have increased. A survey conducted for Newsweek in 1994, for instance, asked people their general feelings toward South Korea, and found that 25 percent were "positive," 12 percent "negative," and 63 percent "neutral." 2 4 In sum, these data indicate overall that with respect to the U.S. public, South Korea is a nation about which people are indifferent and about which they seem content to know relatively little. South Korea is generally

198

Table 8.7

Philip J. Powlick

Favorability Ratings, Selected Asian Nations, 1980 and 1989 Favorable

Country (1980) South Korea North Korea Japan China Taiwan Philippines Vietnam

Unfavorable

Very

Mildly

Mildly

3 2 33 8 13 21 5

37 24 51 47 55 59 23

39 41 8 29 20 10 35

Favorable Country (1989) South Korea Japan China

Don't Know

Very 14 28 3 11 6 2 33

Don't Know

Unfavorable

Very

Mildly

Mildly

5 12 12

44 57 60

25 16 10

7 5 5 5 6 8 4

Very 8 7 3

18 8 15

Sources: Potomac, 1980; Gallup, March 1989.

perceived to be much less developed economically and industrially than it actually is and to be rather unimportant in the international context. While most survey respondents seem to feel neither especially warm nor cold toward South Korea, they tend to express more dislike of this country than of other Asian nations, excepting only clear, recent enemies such as Vietnam and North Korea. Attitudes

Toward

North

Korea

Not surprisingly, much less information is available about U.S. public opinion toward North Korea. What data are accessible point overwhelmingly toward negative attitudes. If U.S. citizens generally view South Korea as fairly unimportant, this is doubly so for North Korea. As with the South, however, salient events have periodically thrust the North into the public's consciousness and thus, at least temporarily, increased Americans' sense of its relevance. Usually the U.S. public is quite uninterested in North Korea. The data in Table 8.8 provide a picture of North Korea's place in the public's notion of foreign policy priorities during quiescent periods. Although the data make it clear that many respondents would like to get along with virtually every nation in the world, we see, once again, that South Korea occupies a second-tier status for most U.S. citizens. North Korea, however, falls well below even this level of interest or feeling of importance. The only nations ranking lower than North Korea in perceived importance are those about which the public seems to be even less aware, such as Malaysia. 25

199

U.S. Public Opinion of the Two Koreas

Table 8.8

Attitudes in the U.S. Public on the Importance of the United States "Getting Along" with the Koreas and Other Selected Asian Nations,

1978-1985

Question: When it comes to pursuing our interests all around the world, how important do you think it is for the United States to try to get along well with each of the following countries— very important, fairly important, not so important, or not important at all? North Korea Answers Very important Fairly important Not so important Not important at all Not so important/ not important at all Don't know/no opinion

South Korea

1978

1979

1985a

1978

1979

1985a

22 29 24 16

28 30 22 12

20 32 n.a. n.a.

26 36 22 8

35 34 20 6

28 45 n.a. n.a.

40 9

34 7

44 4

30 8

26 5

25 2

Ranking of Koreas with Other Nationsb North and South Korea Country Japan China Taiwan South Korea India North Korea Malaysia

1978

1985

86 77 72 62 65 51 n.a.

94 92 72 73 69 52 47

Source: Potomac Associates 1979, 1985. Notes: a. 1985 Potomac report does not list "not so important" and "not important at all" responses separately. b. Cell entries are total percentage of "very important" and "fairly important" responses.

Although North Korea ranks poorly in terms of the level of international priority it commands during normal times, during the 1994 NPT crisis it was perceived, as we shall see—or at least a nuclear-armed North Korea was perceived—as a major problem and threat in the United States. Data on U.S. perceptions of North Korea itself are rare, but the Potomac surveys provide some evidence from the 1980s. As seen in Table 8.7, the level of dislike toward the North was comparable in 1980 with dislike expressed toward Vietnam. In both 1980 and 1985, the ambivalence that largely characterized attitudes toward the South was not in evidence in attitudes toward the North. Those who viewed the North very unfavorably comprised 28 percent of 1980 respondents, and 30 percent in 1985. The total percentage of "unfavorable" responses for North Korea was 68 percent in 1980 and 69 percent in 1985, compared with 33 percent in both years for the South.

200

Philip J. Pffwlick

Beyond a general dislike of North Korea and awareness that it is a communist state, specific knowledge of the country appears to be sparse and subsumed by negative affect. When Potomac Associates asked people to rate the quality of life in several Asian nations in 1980, North Korea's rating exceeded only that for Vietnam, and was well below those for China, Indonesia, and India, all of which had a lower per capita GNP at the time. 26 Potomac also asked respondents to rate nations for political stability. Although some respondents seemed to be aware of instability in the South—54 percent said it was either moderately or very unstable—54 percent also said that North Korea was politically unstable! Besides the obvious ignorance of the nature of the Kim regime displayed here, it is affect that is most in evidence. North Korea is a disliked enemy state, and negative judgments based upon this fact have often driven U.S. opinion on specific questions regarding the North.

U.S. Public Opinion in Policy Domains South Korea-U.S.

Relations

Although the United States fought a war on behalf of South Korea, shares a mutual defense agreement with the country, and maintains thirty-seven thousand soldiers there, only about half of the U.S. public feels that South Korea is a friendly country. As seen in Table 8.9, in recent years, only 13 percent have identified the South as a close ally. To be sure, the trend in perceptions of Korea-U.S. relations have over time been somewhat positive. More U.S. citizens seem aware of these ties than was the case fifteen years ago, and more place the South in the allied categories.27 Nevertheless, there has also been a growth in the "enemy" category as well. Although the trend from 1982 to 1995 looks positive, it is still the case that about 40 percent of respondents in the 1990s identified South Korea as either an unfriendly country or as an enemy of the United States. Table 8.9 also presents comparable data for another ally, Japan. Japan starts the time series very strongly, but its status seems to decline over time as perceptions of economic competition increase. Whereas Japan begins the period well ahead of South Korea in U.S. public opinion, it ends only slightly ahead. What is most notable about the data for both South Korea and Japan is that perceptions of the closeness of these nations to the United States are much lower than the facts of formal alliance and U.S. troop deployments would suggest. Once again, negative affect explains some of the opinions regarding South Korea. For instance, in a 1982 poll, respondents were asked whether South Korea could be trusted as an ally; 43 percent said that South Korea could be trusted, 44 percent said that it could not, and 13 percent were unsure.28 (Japan was trusted by 66 percent of respondents in the same

U.S. Public Opinion

Table 8.9

of the Two Koreas

201

U . S . P e r c e p t i o n s o f R e l a t i o n s w i t h S o u t h K o r e a and Japan, 1982-1995

Perceptions South Korea Close Ally Friendly Neutral Unfriendly Enemy Don't Know Japan Close Ally Friendly Neutral Unfriendly Enemy Don't Know

Roper, 1982

Roper, 1985

Roper, 1987

Harris, 1994

Hanis, 1995

4 29 31 11 3 21

7 34 26 10 3 20

7 32 29 12 4 17

13 38 n.a. 29 11 10

13 43 n.a. 28 9 7

16 48 21 5 2 9

19 49 19 4 1 8

17 49 21 4 2 7

14 52 n.a. 23 7 5

14 48 n.a. 25 8 4

Sources: Roper, June 1982, December 1985, May 1987; Harris, February 1994, August 1995. Note: Harris polls for 1994 and 1995 did not provide a neutral response category to respondents.

poll.) In 1988, U.S. citizens were asked whether they would rate relations between the United States and South Korea as either "positive" or "negative": 43 percent said positive, 40 percent negative, and 17 percent were unsure. 29 To the extent that perceptions of U.S.-South Korea relations have improved in the United States, the public relations efforts of the South Korean government, foundations, and businesses may be at least partially responsible. The strategy for such efforts, however, has typically been to focus on elites, rather than the broader public. 30 These efforts may have pushed one segment of the U.S. public toward more positive feelings for South Korea, but a large segment of that public continues to display either ambivalence or negative affect. Thus a rather substantial portion of the public does not feel that South Korea is either a particularly important, trustworthy, or close ally. Economic

and

Trade

Issues

While economic and trade issues between South Korea and the United States have apparently not been considered salient enough by pollsters in recent years to justify administering survey questions, a small spate of such questions asked in the late 1980s helps to provide a reasonable indication of attitudes in this area. Questions asked at that time addressed two related themes: (1) Was South Korea trading fairly with the United States; and (2) if not, what should be done about it?

202

Philip J. Pmvlick

To be sure, U.S. citizens in the late 1980s were not as exercised about trade relations with South Korea as they were with Japan. A Times Mirror poll in January 1989 revealed that 63 percent of respondents thought Japan did not have a fair trade policy (with 15 percent giving "don't know" responses). Instead of a clear majority, a mere plurality (39 percent) thought South Korea was trading unfairly, with a whopping 36 percent saying they did not know whether South Korea was fair or unfair. 31 A Gallup poll in 1987 yielded similar results for South Korea: 42 percent unfair, 29 percent fair, 29 percent unsure or don't know. 32 Likewise, responses to a Newsweek poll regarding South Korean trade in 1988 were 39 percent unfair, 30 percent fair, 31 percent undecided. 33 Though never raised to Japan's perceived level of economic villainy in the late 1980s, South Korea was still viewed by many as a nation that used low labor costs to unfairly dump cheap goods into the U.S. market. In the late 1980s the U.S. public overwhelmingly favored increased tariffs or other retaliatory measures against Japan; in contrast, once again, only a plurality viewed South Korea in similar terms. A Roper poll taken in 1989 found that 63 percent believed the United States was "trading too much" with Japan; only 41 percent, however, thought the same of South Korea. 34 Such attitudes naturally led to support for tighter trade restrictions. A 1989 Times Mirror survey found 53 percent support for raising tariffs on Japanese goods, and only 36 percent favoring tariffs aimed at South Korea. Thirty percent favored keeping tariffs on South Korean goods as they were, 13 percent favored reducing them, and 21 percent had no opinion. 35 Such attitudes seem to have been relatively stable. A poll taken for Time in 1985 shows a very similar range of responses when people were asked which countries the United States should take "protective economic measures" against; taking such measures against Japan received 63 percent support, but measures against South Korea received only 47 percent support. 36 One final area of economic relations deserves a brief mention here: foreign aid. Although the United States long ago discontinued economic aid to South Korea, an interesting ambivalence on this theme emerges in the poll data. At various times—even after U.S. aid to the South had ended—the public was asked whether aid to South Korea should be cut or eliminated. In the late 1970s—in the wake of Koreagate and President Carter's efforts to condition aid on human rights—50 percent favored cutting off aid in one poll, 37 and 45 percent favored termination in another. 38 At the same time, however, a substantial plurality (47 percent, with 30 percent "don't know") thought that aid given to South Korea in prior years had been appropriate. 39 In 1990, years after economic aid had ended, the Chicago Council asked respondents about aid to South Korea and found 55 percent support for cutting or discontinuing such aid. 40 In a separate poll in 1995, 60 percent of respondents thought that foreign aid to South Korea

U.S. Public Opinion of the Two Koreas

203

had been a good policy. 41 Thus, although a significant portion of the U.S. public has considered South Korea to be an economic threat to the United States, retrospective approval for the U.S. role in the development of the South Korean economy has been demonstrated. The U.S.-South

Korea Military

Relationship

Military relations between the United States and South Korea take several forms. In this section, I will examine two aspects of that relationship: arms sales and the stationing of U.S. troops in the South. The U.S. public has for many years been generally unsupportive of military sales to foreign countries. Through the 1970s and 1980s, the Chicago Council's quadrennial polls showed only about one-third support for the sale of U.S. weapons to other countries. 42 Why this should be the case is somewhat unclear, since arms sales represent a boost to U.S. industry and balance of trade. Perhaps such sales are viewed as equivalent to the selling of U.S. technological superiority. It may also be possible that such sales are seen as entangling the United States with client regimes, such as in South Vietnam. For whatever reason, U.S. public opinion on weapons sales to South Korea specifically has been roughly in line with this general stance. Table 8.10 shows the responses to several questions on sales to the South. The Roper questions covering the period 1975-1980 show support for sales to South Korea during relatively uneventful periods (1975 and 1980)

Table 8.10 U.S. Attitudes on Military Arms Sales to South Korea, 1975-1990 Question: You may have differing opinions about selling arms and weapons to certain specific countries. Here is a list of some different countries. Would you go down the list and for each one tell me whether you think the United States should or should not sell arms to South Korea? Answers Should sell arms Should not sell arms Don't know/unsure

August 1975

November 1977

March 1978

August 1980

35 49 17

28 52 20

27 53 20

39 41 10

Question: Do you think the sale of military equipment to South Korea should be increased, decreased, kept about the same, or stopped altogether? Answers Increase Keep about same Decrease Stop altogether Don't know

1990 5 34 21 31 9

Sources: Roper, August 1975, November 1977, March 1978, August 1980; Chicago Council on Foreign Relations (CCFR), 1990.

204

Philip J. Powlick

at just over one-third of the public. The Chicago Council question in 1990 demonstrates the stability of these attitudes during such periods. However, during the years when Koreagate was salient (1977-1978), support levels were depressed to 28 percent and 27 percent, respectively. Unfortunately, this item was not repeated in the 1994 Chicago Council survey, so it is not possible to gauge whether the NPT crisis of that year would have temporarily elevated arms sales support levels. Given the general stability of these attitudes, however, it is reasonable to assume that a poll taken today on this question would yield results similar to those for the other "normal" years. The stationing of U.S. troops in South Korea is an area about which there is a great deal of contradictory data and few recent polls upon which to rely. In early 1977, President Carter announced his administration's intention to withdraw all ground troops from South Korea over the course of five years. The announcement created a great deal of political debate in the United States (and opposition from the South Korean government), and the plan was eventually abandoned. Because of the controversy over Carter's plan, a significant number of polls were taken on the issue in 1977 and 1978. Five polls from these years appear in Table 8.11, along with data from questions asked in 1974 and 1985. Table 8.11 presents contradictory data. While the Potomac data presented at the top of the table show a relatively stable degree of majority

Table 8.11

Support for U.S. Troop Withdrawal from South Korea, 1974-1985

Question: Should the commitment of U.S. forces in South Korea be increased, kept at the present level, or ended altogether? Answers Increased Kept at present Reduced Ended altogether Don't know

Answers Favor Withdrawal Oppose Withdrawal Not Sure/No Opinion

1974 5 54 23 12 6

1979

1978

9 49 16 17 9

6 49 17 17 11

1985 6 54 21 14 5

Gallup, March 1977 a

CBS/New York Times, July 1977 b

NBC News/AP, March 1978 c

40 38 22

34 52 14

61 27 12

Sources: Potomac, 1985; Gallup Poll, June 17-20, 1977; CBS/New York Times, July 19-25, 1977; NBC News/Associated Press, March 21-22, 1978. Notes: a. Question: "In general, do you favor or oppose this proposal: To withdraw U.S. troops from South Korea during the next few years?" b. "Do you think it is in the best interest of the U.S. to keep our ground troops in South Korea or do you think we should not keep them there?" c. "Do you favor or oppose the gradual withdrawal of American ground troops from South Korea?"

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support for maintaining U.S. troops in South Korea, the three other polls in the table show contrasting results. The Gallup, March 1977, poll suggests a high degree of ambivalence among the public, the CBS/New York Times data seem to reinforce Potomac's majority opposing withdrawal, and the NBC/AP poll of March 1978, shows a strong majority favoring withdrawal. Close examination of the question wording does not yield any obvious wording biases, although the phrase "gradual withdrawal" in the NBC/AP poll may have made withdrawal seem more attractive relative to the way it was presented in the other polls. Perhaps the best that can be said of these data is simply that the indecision among political leaders during the late 1970s is mirrored in the public. Strong opinion existed both for and against withdrawal. Given the bias of the U.S. political system in favor of the status quo, lack of strong or consistent public support for withdrawal probably doomed the Carter plan. It should be noted, however, that the Potomac data for this period do show that support for maintaining troops in South Korea was lower than for troops in either Europe or elsewhere in Asia. 43 Unfortunately, very few recent data are available on the question of U.S. withdrawal from South Korea. A few surveys in 1988 and 1989 asked respondents if they would favor withdrawal from Europe and South Korea (placed together within the questions) in order to reduce the federal budget deficit. Asked in this way, support for withdrawal was greater than opposition, but this is not a fair gauge of attitudes toward U.S. policy toward South Korea specifically. A more recent survey, a Ti'me/CAW/Yankelovich poll in September 1991, asked respondents whether, in light of the collapse of communism, they would favor "bringing U.S. troops home from Korea." Not surprisingly, given the wording of the question, an overwhelming number of respondents (73 percent) favored withdrawal. What is surprising about this item, however, is that other alternatives garnered less support than withdrawal from South Korea. Withdrawal from Europe, for instance, was favored by 57 percent—still a substantial proportion, but much less than the number favoring withdrawal from Korea. More surprising, only 66 percent of respondents favored "decreas[ing] spending on foreign aid." 44 That more of the public should favor withdrawal from South Korea than a reduction in U.S. spending on foreign aid suggests there might actually have been a significant decline in the level of support for a continued U.S. presence there. Given, however, the contextual phrasing of recent poll items on withdrawal, it is difficult to know whether such support has actually now reached plurality, majority, or consensus levels. Perhaps the best way to judge U.S. public opinion with reference to the U.S.-South Korea military relationship is to examine how people respond to questions about the propriety of actually using U.S. forces in South Korea.

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Defending South Korea Against Attack In the wake of the Korean War, the United States entered into a mutual defense treaty with South Korea (still in effect), which obliged the United States to respond with military force if South Korea were attacked by the North. Today, with or without this agreement, the continued presence of U.S. troops in the South virtually guarantees U.S. involvement should another war break out in Korea. Yet, over the course of the past twenty-five years, public support for the use of U.S. troops in the event of an invasion of the South by the North has been fairly low, except in unusual circumstances. In the immediate wake of Vietnam, U.S. popular support for military involvement anywhere in Asia was rather low. As seen in Figure 8.1, the first Chicago Council poll showed that only 14 percent of respondents favored, and 65 percent opposed, using U.S. troops in the event of an invasion of South Korea by the North. 45 This compares with 17 percent in favor and 59 percent opposed for a similar question on invasion of Taiwan. Roughly comparable results were seen in a Harris poll (with slightly loaded wording), which found 25 percent of the U.S. public willing to go to war if "the communists invaded South Korea." 46 A later Harris poll (July 1975), with an even more loaded question, pointed out that the United States had troops deployed and a commitment to defend South Korea; even so, only 39 percent supported—and 46 percent opposed— using U.S. military force in the event of an invasion. As the Vietnam syndrome has slowly eroded, support for U.S. defense of South Korea has incrementally climbed. As seen in Figure 8.1, timeseries data from three separate long-term sources all show a steady movement upward through the late 1970s and into the 1980s. 47 The apparent surge in support for the defense of South Korea seen in 1990 may be a result of heightened public attention to that country as a result of the Seoul Olympics. Because most of the other surveys examined here show that the Olympics had little effect on U.S. attitudes toward South Korea, this surge may simply be a slightly anomalous "spike" in the data. The data for late 1993 and 1994 (the Gallup points in Figure 8.1) show an interesting trend. Once again, we see how the nonproliferation treaty crisis created a temporary surge on concern over North Korea and, by extension, sympathy toward the South. Figure 8.2 shows this opinion sequence in greater detail. Before the development of the NPT crisis, opinion in 1991 shows what seems to be a "normal" degree of opposition to defending South Korea. In September and November of 1993, when the NPT situation had still not been widely reported, opposition to the defense of South Korea remained about double the level of support. As the situation became both more widely reported and serious, the gap narrowed considerably, until in June 1994, at the height of the crisis, a small plurality

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(but not quite a majority) supported U.S. defense of the South. 48 As we have seen elsewhere in this chapter, however, with the apparent—if perhaps temporary—resolution of the crisis late in June, many Americans seemed to quickly forget that it had occurred. By the time of the CCFR poll in October, a plurality once again opposed defending the South, and the number of "don't knows" was high. The reversal of the earlier trend suggests that U.S. opinion was returning to its usual lack of concern about South Korea. I am aware of only two polls since 1994 that have asked questions about an invasion of South Korea such as those discussed above. In September 1997, a poll conducted for the Pew Research Center found 35 percent public approval, versus 58 percent disapproval, for the use of U.S. forces in the event of invasion of the South by the North. 49 This level of support for defending the South is substantially below the levels elicited during the 1994 NPT crisis, but it is somewhat higher than the levels seen in most polls prior to 1994. An interesting study by University of Maryland researchers split its sample of respondents into two sets. 50 One set was asked first if they would favor "the U.S. intervening with military forces by itself, if necessary" to defend the South against an invasion from the North. Of this group 33 percent supported and 62 percent opposed U.S. intervention. The second set of respondents was asked if they would support U.S. participation in an effort to defend the South that was sponsored by the United Nations; 70 percent of the initial opponents (or 43 percent of the total sample) switched to supporting joint U.S.-UN intervention. The other half of the sample was asked comparable questions but in reverse order (i.e., support for multilateral intervention measured first, followed by an item testing support if the UN "declined to participate"). Support for unilateral U.S. intervention among this second set was lower than among the first—21 percent, as opposed to 33 percent in the first group. 51 In the second set, 44 percent of respondents would support multilateral but not unilateral intervention. The implications of these data are quite significant. Whereas most other poll items on U.S. military defense of South Korea suggest that public support for the use of U.S. troops would be difficult to achieve, if policymakers were to create an international coalition, such as occurred during the Gulf War, public support would likely climb significantly. Clearly, however, the public feels much less comfortable with a unilateral defense of South Korea.

The North and Nonproliferation During late 1993 and into 1994, several polls questioned the public about alternative responses to North Korea's potential development of nuclear weapons. Taken together, the survey results say more about the public's perceptions of threat and preferences in regard to diplomatic strategy than

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they do about attitudes toward North Korea. They do, however, suggest potential public responses to any future crisis involving the North. Prior to the NPT crisis, perceptions of threat from North Korea were minimal or nonexistent. A series of Times Mirror polls conducted in March 1990, February 1992, and January and September 1993 asked respondents which country presented the greatest danger to the United States. In none of the polls did more than 1 percent cite North Korea as a major threat. By December 1993, pollsters began to ask questions that began by informing respondents that North Korea was either suspected of or was actually developing nuclear weapons. With such question wordings, polls now began to register much greater public concern with a North Korean threat. By late spring 1994, the U.S. public was consistently listing North Korea as the most important foreign policy issue facing the United States 52 and as a major threat.53 Figure 8.3 documents responses from December 1993 to September 1995 to a question asked by the NBC News/Wall Street Journal polling unit. The question asked respondents to identify which of a list of six issues was the "most serious foreign policy issue facing the United States today." The three most frequently cited issues are charted in Figure 8.3. North Korea starts off high in Figure 8.3 and peaks during the summer months of 1994, the height of the NPT crisis. As the crisis fades from popular memory, however, concern with North Korea also fades quickly. Recent data confirm that the U.S. public continues to perceive little threat from North Korea with its nuclear program out of the headlines. Asked to choose the greatest threat to the United States from a list including North Korea, Iraq, Iran, China, Russia, and Cuba, only 7 percent chose North Korea. 54 (Iraq topped the list at 36 percent, China 25 percent, Iran and Russia tied at 11 percent.) Similarly, asked in early 1997 to pick the greatest threat to world peace, respondents cited "terrorism" as most threatening (32 percent), followed by "international crime and drug rings" (26 percent), "ethnic hatred" (15 percent), China (13 percent), Russia (4 percent), with North Korea selected by a mere 1 percent of the sample. 55 Given the lack of concern toward North Korea prior to its identification as a potential possessor of nuclear weapons, the sea change in U.S. opinion toward a North Korean threat demonstrates intense concern about nuclear proliferation. Other polls have found that nuclear proliferation is high on the U.S. public's list of perceived threats. For example, the 1994 Chicago Council poll found that 72 percent cited as a "critical threat" the "possibility of unfriendly countries becoming nuclear powers." 56 (See also Table 8.13.) If a nuclear North Korea is in fact seen as dangerous to the United States, what kind of steps would the public be willing to take to counteract this threat? Not surprisingly, given public reactions to other recent conflicts such as in Bosnia and Iraq, there is a strong public preference for negotiation and trade sanctions prior to resorting to the use of force. In separate

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polls in December 1993 and January 1994, NBC/Wall Street Journal pollsters found 87 percent support for "improving diplomatic and trade relations" if the North would agree not to build nuclear weapons and permit inspections; a Newsweek poll in June 1994 found 68 percent support for engaging in talks with the North in order to encourage inspections. Support for trade sanctions was also found in the December and January NBC/WSJ polls (78 percent and 69 percent, respectively) as well as in the Newsweek poll (76 percent support for tighter economic sanctions). 57 Support for military options was lower than for negotiations and sanctions, but was surprisingly high nevertheless. Even though there are many data available, the exact level of support for the use of force against the North is difficult to discern, largely because responses appear to have been highly sensitive to question wording. (See Table 8.12, which presents question wording and results from several contemporaneous polls.) As was the case on the question of defense of South Korea, support for a multilateral option, when presented, tended to be higher than for unilateral action. One Gallup poll in July 1994 (bottom of Table 8.12) split its sample, in a fashion similar to the Maryland study, posing a multilateral option to half the respondents. Support for the use of force with the multilateral wording was 47 percent, as opposed to 37 percent without. 58 (See also Time/ CNN, June 7 and June 17 in Table 8.12.) There also appears to be question sensitivity with regard to the apparent imminence of North Korea's acquisition of nuclear weapons. References to North Korea's "ability" or "capability" to build nuclear weapons generally elicited less support for military intervention than wordings suggesting the use of force to prevent the North from "obtaining" such weapons or to destroy the North's "nuclear facilities." Though it is difficult to discern an unambiguous pattern in the results displayed in Table 8.12, these data suggest that the U.S. public could have been moved to support military action against North Korea in 1994, if the threat from North Korea was posed properly. Had President Clinton been able to frame the public dialogue in such a manner as to elevate the degree of nuclear threat to the United States, 59 and had a consensus among elites developed, 60 public support would likely have followed. (Surveys of elites have consistently found greater support for military action to defend South Korea than has been the case for the general public.) If action against the North had been multilateral, it seems even more likely that support would have been forthcoming. Relations with North

Korea

As the data presented previously on attitudes toward Korea and Koreans suggest, the U.S. public is not particularly fond of North Korea. Though most people know very little about the North, its identification as an "enemy" state during the Cold War and as a "rogue" state in recent years

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has resulted in very negative attitudes. Nevertheless, there is evidence that the U.S. public is willing to support the establishment of more amicable relations between the United States and the North. Several poll questions in 1994 suggested the establishment of better relations with the North. Support for "improving diplomatic and trade relations" in return for the North's guarantee not to build nuclear weapons was at the 87 percent level in two separate polls. 61 A third poll just after the height of the NPT crisis contained a similar question; here 68 percent favored "normal diplomatic and trade ties" in return for termination of the North Korean nuclear program. 62 Even in the absence of a quid pro quo, support seems to exist for closer ties. In the Chicago Council survey of October 1994, 50 percent of the public supported, and 37 percent opposed, establishment of normal diplomatic ties with North Korea. (Forty-six percent supported normal relations with Cuba, and 37 percent supported normal relations with Iran.) These data suggest that the overwhelmingly negative attitudes toward North Korea that were evident in data from the 1970s and 1980s may be eroding, and that North Korea's image as an "enemy" may be fading in much the same way as attitudes toward Vietnam have moderated in recent years. 63

Implications for Future Events and Policies Thus far I have reviewed a great deal of data on popular attitudes toward North and South Korea in the United States. The "so what?" question remains. In this section I intend to discuss the implications of public attitudes toward Korea for future U.S. foreign policy, U.S.-Korean relations, and the range of options available to U.S. policymakers in future scenarios involving Korea. Before addressing specific implications, however, I want briefly to state my own assumptions about the role of public opinion in the formulation and implementation of U.S. foreign policy. In roughly the last decade, a large number of studies have emerged suggesting a much greater influence for public opinion than had previously been assumed. 64 More recent work has concentrated on describing the linkages between opinion and policy, as well as describing the conditions under which the public is more likely to influence policy. Thomas Graham, for instance, has found that plurality positions among the public have negligible effects on policy, majority opinion constrains it, and consensus may force actual policy changes.65 Others have described the importance of elite dialogues in arousing public opposition to policies.66 A comprehensive model by Powlick and Katz begins with the premise that policymakers prefer acquiescent to aroused public opinion and if possible will make policy without concerning themselves with public opinion. 67 Nevertheless, officials try to antici-

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pate the shape of public reaction to their policies. If opposition is expected, they may either—depending on the degree of opposition—proceed with implementation and engage in efforts to sway public opinion in their favor, or alter or abandon their preferred policy. In this model, when a policy is implemented, the public is most likely to be either uninformed or acquiescent, or both. The public may be aroused or "activated," however, if several conditions are met: (1) the major news media report on the policy or issue; (2) the resulting elite discussion includes vigorous debate and not merely consensus; and (3) the issue is presented in a manner compatible with the public's preexisting cognitive frames for understanding political issues. When these conditions are met and opposition arises, officials will actively seek to change public opinion through "public education" efforts. When such efforts fail, officials will then consider altering existing policy. In light of these theories and analyses, I assume that the public, which is typically not interested in Korea, will usually be acquiescent on policies involving the peninsula. In the absence of an arousal of public opinion, this will leave policymakers considerable leeway. However, the potential for public arousal does exist on many specific issues in relation to Korea, and as we have seen, when opinion is activated, it should at least constrain, if not force, the hand of U.S. policymakers. Given the degree of anti-Korean affect that has been expressed by the U.S. public, the probability that an aroused public opinion could either force policy changes or push the United States toward action is most likely higher than for issues involving other nations of roughly comparable size and importance. South Korea-U.S.

Trade Relations

In terms of U.S. public opinion, trade relations with South Korea constitute a very quiet front at the moment. South Korea's overall economic slowdown and the crisis caused by a foreign currency shortage required a $57 billion bailout led by the International Monetary Fund (IMF) in December 1997. There are no major conflicts, however, between the United States and the South over trade issues, except for the continuing disputes over the pace of Seoul's market opening in such areas as automobiles, information technology, and financial services. Nevertheless, the potential for public arousal against South Korea does exist. If, in response to an IMF-imposed low growth rate, the South Korean government chose to restrict imports and protect South Korean industries, significant friction between the South Korean and U.S. governments could develop. In this case, U.S. policymakers would likely be faced with public pressure for retaliation. During the last period of U.S.-South Korea trade disputes (in the late 1980s), a plurality of survey respondents thought that the South's policies were unfair and warranted protective U.S. tariffs. Since that time, conflict with Japan over trade has been salient and has created tremendous public

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and elite pressure for action. According to the Chicago Council poll for 1994, support for free trade among the public is at its greatest level since the CCFR's first poll in 1974. There also exists a very strong preference among elites for free trade. Yet both elites (80 percent) and the public (78 percent) overwhelmingly see Japan as an unfair trading partner. Public pressure regarding Japan has, of course, led the ostensibly "free trade" Bush and Clinton administrations to pressure Japan for greater market access and for export restrictions. Should a serious trade dispute arise between the United States and South Korea, public pressure for retaliation would thus be likely to develop. That attitudes toward Korea tend to be significantly less complimentary than toward Japan suggests that an antiKorean consensus in the United States might develop even more quickly than it has for Japan. The Stationing

of U.S. Troops in South Korea

There also exists a potential for public pressure for withdrawing U.S. troops from South Korea. This potential exists in part because of continuing pressure to reduce U.S. defense spending through reductions in foreign deployments. With the end of the Cold War, public pressure and resulting budget cuts reduced the size of the U.S. deployment in Europe from approximately 300,000 in the late 1980s to just under 150,000 today. Forces in South Korea, on the other hand, have been reduced only slightly (from about 40,000 to 37,000). The disparity between these rates of withdrawal has everything to do, of course, with the dissolution of a clear enemy in Europe. Although the Warsaw Pact no longer exists, North Korea and the Kim regime still do. How might public pressure develop for the removal of troops in South Korea? Two potential scenarios exist: cost cutting and loss cutting. Absent a complete collapse of the North Korean regime and incipient reunification, however, neither scenario seems very likely to force a change in current U.S. policy. A cost-cutting scenario is based upon the assumption that pressure for economy in government spending will persist for many years to come. If the current North Korean regime moderates its behavior, cuts the size of its military forces, agrees to abide by the Nuclear Non-Proliferation Treaty, and otherwise ceases to threaten the South, pressure for U.S. withdrawal could develop. That sufficient pressure could develop to force a withdrawal seems unlikely, however. According to the model outlined earlier, it would take an aroused public opposition to force a withdrawal from South Korea. Such opposition is likely only when there is significant contention among elites reflected in the news media. Aside from the occasional "wasting your money" stories popular in many media sources today, it is difficult to see how the public could become aware of the real possibility of withdrawal

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from the South as a means of saving dollars. It is especially difficult to see how sufficient public pressure could emerge to force withdrawal on a reluctant administration. Moreover, public pressure for withdrawal could be turned if it were argued that deployment in South Korea was necessary as a counter to a future Chinese threat (in much the same manner as continued U.S. deployment in Japan is justified). In contrast, if a U.S. president were to decide that withdrawal was desirable and the issue were placed on the agenda for public debate, widespread public approval would be the likely result. A loss-cutting scenario assumes a context wherein tensions in the Korean peninsula increase over the next few years. Were the North to begin to lash out—as some have speculated is likely if the government perceives its own imminent demise—its actions would in all probability receive significant coverage by the U.S. media. If these actions included terrorist assaults or other low-level attacks on U.S. soldiers or installations, pressure for both retaliation and loss-cutting withdrawal would develop in the United States. Significant levels of public support for either alternative could be mobilized by public education efforts. If a public perception developed that U.S. soldiers were being put at risk without a corresponding national interest to justify the risk, a consensus for withdrawal could emerge. It is equally plausible, however, that a consensus for retribution would also grow. Thus, on balance, although pressure for U.S. withdrawal in the near future is possible, it does not seem likely. Normalizing

North Korea-U.S.

Relations

If there are obstacles to normalizing diplomatic and trade relations between the United States and North Korea, they do not include the U.S. public. The survey data both during and after the 1994 NPT crisis showed that majorities of the public supported normalizing relations with the North. Though a small amount of vocal opposition emerged when relations with Vietnam were normalized in 1995, it was quickly muted amidst a public and elite consensus on the issue. So long as there are no new provocative actions or statements from the North, public support for normalization may be expected, although—as with Vietnam—a small degree of vocal dissent is likely. In the case of Korea, dissent would more likely center on issues such as nuclear weapons policy and the security of the South. In reality, with reference to normalization, U.S. public opinion is dependent upon the behavior of North Korea. If the North were to guarantee and follow through on compliance with the NPT, cease its attacks on defectors, cease infiltration operations in the South, and sign a peace treaty, political barriers in the United States to normal relations would effectively be removed, and modest amounts of humanitarian and development aid

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would correspondingly be forthcoming. The lack of effective opposition to recent U.S. promises of aid shipments supports this probability. Use of Force in a Future Nonproliferation

Crisis

The U.S. public tends to be concerned with nuclear proliferation in any country, whether it is North Korea, Pakistan, or Iraq. This concern has increased in recent years. In 1994, the Chicago Council poll found 61 percent of U.S. citizens citing "the possibility of unfriendly countries becoming nuclear powers" as a "critical" threat to the United States, more than any other danger cited. Table 8.13 lists the percentage of respondents citing as "very important" selected foreign policy goals in 1990 and 1994. For both years, nonproliferation is a major concern. Where the public ranks nuclear nonproliferation relative to other goals has implications for other areas of policy as well. Defending allies and promoting democracy rank very low, reinforcing the conclusion that normalization with the North will be supported by the public, and suggesting, as we shall see, that it might be difficult to find public support for defending South Korea against attack. The data in Table 8.13 show a clear, perhaps growing, preference in U.S. public opinion for self-interested policy priorities. Altruistic policies (for example, protecting weaker nations), or policies seen as benefiting the United States in only a secondary manner (for example, defending allies), are less favored than policies that strike closer to perceived direct U.S. interests such as protecting jobs. Nuclear nonproliferation appears to be an

Table 8.13

Public Opinion Rating of Foreign Policy Goals, 1990 and 1994

Question: I am going to read you a list of possible foreign policy goals that the United States might have. For each, please say whether you think that it should be a very important foreign policy goal of the United States, somewhat important, or not an important goal at all. Percent Citing as "Very Important" Answers Stopping the flow of illegal drugs into the United States Protecting the jobs of U.S. workers Preventing the spread of nuclear weapons Defending our allies' security Promoting and defending human rights in other countries Helping to bring a democratic form of government to other countries Protecting weaker nations against foreign aggression Helping to improve the standard of living of less-developed nations

1990

1994

n.a 65 59 61 58

85 83 82 41 34

28 57

25 24

41

22

Source: Chicago Council on Foreign Relations (CCFR), 1990, 1994. Note: n.a. = not asked in that year.

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issue that is perceived as bearing closely on U.S. interests. Indeed, in the wake of the war with Iraq, the spread of unconventional weapons of all kinds has been the object of increased public concern. The public's strong reaction to the 1994 NPT crisis with North Korea demonstrates how easily public concern can now be aroused by such issues. The willingness displayed by sizable segments of the public to support the use of military force in order to stop North Korea's nuclear program— significantly greater willingness expressed than for the defense of South Korea—suggests that public support for the use of force against the North could be activated once again. Were another crisis to develop between the United States and North Korea, a U.S. president could rapidly develop support for strong action if the fear of nuclear weapons were stimulated. Support for such action would be relatively easy to build, given the long and persistent negative affect that exists against North Korea, and also given the familiar "frame" of North Korea as a "rogue" state. This kind of appeal to public support would be much more effective than, for example, an appeal to free an oppressed people or to help reunite Korea. As Bruce Jentelson has shown, public support is much more likely to exist for military actions that attempt to restrain nations thought to be aggressively endangering U.S. interests than for policies seeking to engineer change in the political system of another nation. 68 The development of elite consensus for military action would also be likely, given that elites tend to rank nuclear nonproliferation as an even higher value than the public at large. 69 As shown previously, if an action were multilateral, support would almost certainly be forthcoming in another NPT crisis with the North. There seems little doubt that if a U.S. president were contemplating the use of force to stop the North's nuclear program, strong public support would either exist early on or could be developed through the building of an elite consensus and astute framing of the issues as one of nuclear threat. Sustained public support is likely to be conditioned, however, upon the type and endurance of military action. Responses to U.S. military actions during the 1990s have revealed a public willing to bear significant monetary but not human costs. If action against the North resembled actions against Iraq, with limited ground troop deployments and heavy use of airstrikes, public support would be most forthcoming. Were a protracted ground war to develop, public patience, as I will argue, would quickly erode. Employing U.S. Military Force to Defend South Korea While poll data over many years show that the U.S. public is reluctant to defend South Korea, the events of 1994 demonstrate that in a crisis involving the North, this attitude can—if only temporarily—be altered. Were an actual invasion of the South by the North to occur, the involvement of

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U.S. troops would be unavoidable, given their present deployment. As the shock of an invasion and of U.S. casualties were felt, the so-called "rally effect" 70 would almost certainly take hold, resulting in initial support for U.S. involvement in the conflict. Maintaining public support over a prolonged period would be significantly more difficult, however. The survey data examined in this chapter suggest a relatively quick erosion of support for a U.S. role. The data give evidence of a persistent reluctance to defend the South, a perception among the public that Korea is not very vital to U.S. interests, and an actual degree of antipathy toward South Korea among a segment of the population. A direct relationship between U.S. casualties incurred and public support for the first Korean War has been clearly shown. 71 That support did not erode faster in that conflict was no doubt due to the Cold War context in which it occurred. Without a global "communist menace" today, it is doubtful that U.S. policymakers could expect to sustain involvement in a protracted Korean conflict involving the use of U.S. ground forces. However, public support for the defense of South Korea might be developed if the issue were framed properly. If the war not only were presented as necessary to defend the South—a not very popular proposition among the U.S. public—but were framed as an offensive effort to battle the proliferation of unconventional weapons (as in the Gulf War), public support might be more forthcoming. According to Jentelson, as we have seen, public support for armed conflict tends to be higher when the perceived issue at stake is protection of important U.S. interests and not solely helping other people. 72 Clearly, the U.S. public views nuclear nonproliferation as an important U.S. interest. Thus, ironically, leaders and policymakers might develop greater support for an expanded conflict than for a limited one. Public support for the defense of South Korea might also be more long-lived if the effort were to be multinational. As demonstrated earlier, the public seems much more receptive to multinational uses of force than to unilateral ones. However, as the Korean War showed, the endorsement of the United Nations and the presence of limited numbers of non-U.S. troops will not indefinitely insulate policymakers from the development of opposition over time. Finally, it should be pointed out that elite support for the defense of South Korea has been considerably higher than public support in each of the quadrennial Chicago Council polls. 73 If an elite consensus on defending the South could be sustained during an actual conflict, the public debate usually necessary to activating public opposition would most likely be muted. Research on patterns of support and opposition to the Vietnam War have shown that public opposition did not become manifest until the initial elite consensus on the conflict had deteriorated. 74 Efforts by government

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officials to create and/or maintain an elite consensus on any potential U.S. military involvement in Korea would thus seem to be prudent. Korean

Reunification

To date, I am unaware of any public opinion data specifically addressing either the desirability of Korean reunification or whether the United States should be involved in efforts to reunify the peninsula. Thus, the speculations that follow are primarily surmise, based upon the totality of the data available on other issues relating to Korea. As we have seen, in the absence of crises or other salient events, the U.S. public tends not to be very attentive to Korean affairs. Events in Korea do not appear to U.S. citizens to be terribly important for the United States. It is thus unlikely that the public would show a great deal of interest in Korean reunification if such an event were to occur in the near future. To be sure, reunification would be a major news story, reported prominently in the media, and U.S. spectators would applaud the event. However, since the event itself would not be considered to be threatening in any way, it is unlikely that many in the public would be moved from their normal state of complacency regarding Korea. This complacency would be both useful and detrimental to U.S. policymakers. U.S. foreign policy officials usually prefer to operate outside the constraints imposed by public opinion. 75 As probable mediators or facilitators of reunification, U.S. diplomats would thus face very little in the manner of public constraint and would have a relatively free hand in any bargaining leading up to reunification. It would be after reunification that U.S. foreign policy officials would begin to feel constrained by the public. It is likely that, as was the case with the breakup of the Eastern Bloc in Europe, reconstruction and redevelopment aid would be sought by Korea. While the South could likely be counted on to direct substantial resources toward investment in the North, it could not carry the full burden alone, as the West has done in Germany. 76 The United States and Japan would be likely candidates to furnish additional resources. If the United States were to commit to a relatively small package of redevelopment aid (say, $100 million), substantial domestic opposition would be unlikely. This amount would probably be considered small enough by political elites and members of Congress that a vigorous debate of the kind necessary to arouse public opposition would not occur. In the absence of elite debate, given ongoing public inattention to Korean affairs, the public would be unlikely to notice or care about such aid. However, if a presidential administration sought or suggested a redevelopment aid package for Korea reaching into the billions of dollars, vigorous debates among members of Congress and other foreign policy elites

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would probably develop. As discussed earlier, the public expressed strong opposition to economic aid to South Korea even into the 1980s, several years after such aid had actually ceased. The public is also still largely unsupportive of military sales to the South, and most likely maintains some of the negative affect evidenced in data from the 1980s. An elite debate on a large package of aid to Korea would probably arouse public opposition, especially given the recent atmosphere of budget cutting and in light of the major aid cuts forced by recent Republican Congresses. Thus, although Koreans could expect from the United States a great deal of support for reunification in the form of advice and mediation, only modest financial assistance is likely to be feasible politically for U.S. leaders.

T h e Future of U.S. Public Opinion Toward Korea If the status quo on the Korean peninsula is maintained, the general disinterest and inattention toward Korea that characterize public opinion—with an undertone of negative affect—will likely persist. This is especially likely to be the case if the current pattern of news coverage of Korea is maintained. Although the U.S. public normally hears little about Korea, within the past year, media reports on South Korea have included strikes, defection from the North, and murder—not the kind of stuff from which positive feelings are developed. In deviations from the status quo, two scenarios might be considered. Were the North to resume its apparent efforts to build nuclear weapons, American interest in Korea would (as it did in 1994) skyrocket. On the one hand, this attention would likely lead to pressure for forceful U.S. action, including the use of force. An invasion by the North would also rekindle attention and initial support for defense of the South, but maintaining such support would be problematic. On the other hand, a reunified Korea would most likely fall completely off the U.S. public's "radar screen." There would be little support for large-scale aid, U.S. troops would probably be withdrawn, and one of the last vestiges of the Cold War would be gone. Korea would in all probability simply slip to the status of "one of those Asian countries," another Malaysia or Thailand, about which the public knows and cares little.

Appendix: Polling Data Sources Note: All data listed below are available via the Public Opinion electronic database of the Roper Center for Public Opinion Research, available through the Dialog on-line database system. ABC/Washington Post, February 10-14, 1989. ABC ¡Washington Post, June 23-26, 1994.

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CBS News, June 20-22, 1994. CBS/New York Times, July 19-25, 1977. Chicago Council on Foreign Relations (CCFR), 1974. Chicago Council on Foreign Relations (CCFR), 1978. Chicago Council on Foreign Relations (CCFR), October 29-November 6, 1982. Chicago Council on Foreign Relations (CCFR), October 30-November 12, 1986. Chicago Council on Foreign Relations (CCFR), October 23/November 15, 1990. Chicago Council on Foreign Relations (CCFR), October 7-25, 1994. CNN/USAToday, February 26-28, 1994. CNN/USAToday, February 23-March 3, 1994. Gallup, June 17-20, 1977. Gallup, December 1987. Gallup, February 28-March 3, 1989. Gallup, March 1989. Gallup, April 1989. Gallup/CAW, November 1993. Gallup (for Commission of European Communities), November 6-December 4, 1987. Gallup/CAW/USAToday, November 19-21, 1993. G&llup/CNN/USAToday, March 25-27, 1994. GMup/CNN/USAToday, May 20-22, 1994. Gallwp/CNN/USAToday, July 15-17, 1994. Gallup/C/VMUSAToday, July 17-19, 1994. Gallup/CAW/USAToday, November 19-21, 1994. GMup/CNN/USAToday, August 5-7, 1996. Gallup/Newsweek, February 3^4-, 1988. Gallup/t/SAToday, January 1994. Gallup/t/SAToday, March 25-27, 1994. Gallup/t/SAToday, June 1994. Harris, 1971. Harris, December 6-14, 1974. Harris, July 5-10, 1975. Harris, May 31-June 5, 1977. Harris, June 1-6, 1988. Harris, June 18, 1988. Harris, February 1994. Harris, April 4-7, 1994. Harris, August 31-September 3, 1995. Los Angeles Times, December 4-7, 1993. Los Angeles Times, July 23-26, 1994. NBC News/AP, March 21-22, 1978. NBC News/Wall Street Journal, December 14, 1993.

224 NBC News/Wall Street Journal, January 15-18, 1994. NBC News/Wall Street Journal, April 30-May 3, 1994. NBC News/Wall Street Journal, June 10-14, 1994. NBC News/Wall Street Journal, July 23-26, 1994. NBC News/Wall Street Journal, October 14-18, 1994. NBC News/Wall Street Journal, December 1994. NBC News/Wall Street Journal, January 1995. NBC News/Wall Street Journal, March 1995. NBC News/Wall Street Journal, June 2-6, 1995. NBC News/Wall Street Journal, September 16-19, 1995. Newsweek, February 22, 1988. Newsweek, June 17, 1994. Newsweek, September 25-29, 1996. Newsweek, January 17-18, 1997. Nuclear Energy Institute, October 1994. Opinion Research, March 2, 1988. Pew Research Center September 4-11, 1997. Potomac, April 4-17, 1978. Potomac, September 1979. Potomac, July 1980. Potomac, February 22-March 3, 1985. Roper, July 19-26, 1975. Roper, August 23-30, 1975. Roper, October 29-November 5, 1977. Roper, March 18-25, 1978. Roper, July 8-15, 1978. Roper, August 16-23, 1980. Roper, February 14-28, 1981. Roper June 5-12, 1982. Roper, October 29-November 5, 1983. Roper, May 29-June 3, 1984. Roper, March 23-30, 1985. Roper, December 7-14, 1985. Roper, May 16-30, 1987. Roper, August 22-29, 1987. Roper, July 1989. Time/CNN, June 7, 1994. Time/CNN, June 17, 1994. r/me/CAW/Yankelovich, September 19-21, 1991. Twie/C/VAYYankelovich, August 31-September 1, 1994. Times Mirror, January 1989. Times Mirror, March 1990. Times Mirror, February 1992. Times Mirror, January 1993.

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Times Mirror, September 9 - 1 5 , 1993. Times Mirror, January 6 - 1 3 , 1994. Times Mirror, May 12-15, 1994. Times Mirror, June 26, 1994. Times Mirror, July 12-25, 1994. Times Mirror (for Princeton), July 12-25, 1994. University of Maryland, November 18-25, 1995. Valley Forge Information Services (for Newsweek), November 3 0 - D e c e m ber 3, 1994. Washington Post, March 15-19, 1991. Washington Post, February 1991. Yankelovich, Skelley & White, March 1977. Yankelovich, Skelley & White, December 2 - 4 , 1981. Yankelovich, Skelley & White, October 5 - 7 , 1982. Yankelovich, Skelley & White, July 2 3 - 2 5 , 1985. Yankelovich, Skelley & White, September 17-19, 1985.

Notes 1. Ole R. Holsti, "Public Opinion and Foreign Policy: Challenges to the Almond-Lippmann Consensus," International Studies Quarterly 36 (1992): 4 3 9 ^ 6 6 ; Public Opinion and. American Foreign Policy (Ann Arbor: University of Michigan Press, 1996). 2. Benjamin I. Page and Robert Y. Shapiro, The Rational Public: Fifty Years of Trends in Americans' Policy Preferences (Chicago: University of Chicago Press, 1992). 3. Eugene R. Wittkopf, Faces of Internationalism: Public Opinion and American Foreign Policy (Durham, NC: Duke University Press, 1990); Jon Hurwitz and Mark Peffley, "How Are Foreign Policy Attitudes Structured? A Hierarchical Model," American Political Science Review 81 (1987): 1099-1120. 4. Phillip J. Powlick, "The Attitudinal Bases for Responsiveness to Public Opinion Among American Foreign Policy Officials," Journal of Conflict Resolution 35 (1991): 611-641; Thomas W. Graham, The Politics of Failure: Strategic Nuclear Arms Control, Public Opinion, and Domestic Politics in the United States—1945-1980, Ph.D. dissertation, Massachusetts Institute of Technology, 1989; Ronald H. Hinckley, People, Polls, and Policymakers: American Public Opinion and National Security (New York: Lexington Books, 1992). 5. Benjamin I. Page and Robert Y. Shapiro, "Effects of Public Opinion on Policy," American Political Science Review 77 (1983): 175-190. 6. For example, there are many more items on withdrawal of U.S. troops in the late 1970s than in the 1990s, and very little on North Korea in most years, but a plethora of North Korea questions in 1994. 7. Page and Shapiro, The Rational Public. 8. Potomac Associates, Ralph Clough, and William Watts, The United States and Korea: American Attitudes and Policies (Washington, D.C.: Potomac Associates, 1978). 9. Potomac Associates, William Watts, George Packard, Ralph Clough, and Robert Oxnam, Japan, Korea, and China: American Perspectives and Policies (Lexington, MA: Lexington Books, 1979).

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10. Times Mirror, June 1994. 11. E.g. CBS News, July 1994; CNN/USAToday, March 1994. 12. A similar pattern is seen in a 1984 poll taken for Newsweek where respondents were asked to rate their degree of familiarity with specific countries on a 1 to 5 scale (where 5 was most familiar). The mean score for South Korea was 1.8, Japan 2.8, Taiwan 2.1, the Philippines 2.2, and Indonesia 1.4. Valley Forge Information Service, for Newsweek, November 1984. 13. On both of these items, however, about 30 percent stated that they did not know the correct answer. Potomac Associates, Clough, and Watts, The United States and Korea. 14. Potomac Associates, Clough, and Watts, The United States and Korea. 15. Potomac Associates, Clough, and Watts, The United States and Korea. 16. Potomac Associates and William Watts, The United States and Asia: Changing Attitudes and Policies (Lexington, MA: Lexington Books, 1980) and The United States and Asia: Changing American Perspectives (Washington, D.C.: Potomac Associates, 1985). 17. Note as well that, in spite of the boost in international respect which South Korea hoped to achieve through hosting the 1988 Olympic games, there is a sizable drop in Americans' sense of the importance of South Korea between 1986 and 1990. 18. Potomac Associates and Watts, The United States and Asia (1980); and their The United States and Asia (1985). 19. Potomac Associates and Watts, The United States and Asia (1980). 20. Note that the Potomac 1980 results appear to be somewhat inflated for all four of the producers listed. 21. Gallup, for Commission of European Communities, 1987. 22. Times Mirror, January 1989. 23. ABC/Washington Post, February 1989. 24. Valley Forge, 1994. 25. In general, respondents tended to rank nations about which they knew little rather low in importance. See Tables 8.1 and 8.2 above. 26. Potomac Associates and Watts, The United States and Asia (1980). 27. Care should be taken in comparing the results from the Roper and Harris time series. The presence of the "neutral" response in the Roper questions allows many to avoid choosing South Korea as either friendly or unfriendly. It is best to compare time trends between the two sets of poll data by using both of the extreme "close ally" and "enemy" responses, as well as the number of "don't know" answers given. 28. Yankelovich, Skelley & White, October 1982. 29. Harris, June 1988. 30. Jarol B. Manheim, Strategic Public Diplomacy and American Foreign Policy: The Evolution of Influence (New York: Oxford University Press, 1994). 31. Gallup, April 1989. 32. Gallup, December 1987. 33. Newsweek, February 1988. 34. Roper, July 1989. 35. Times Mirror, January 1989. 36. Yankelovich, Skelley & White, July 1985. 37. Yankelovich, Skelley & White, 1977. 38. Potomac Associates, Clough, and Watts, The United States and Korea. 39. Potomac Associates, Clough, and Watts, The United States and Korea. 40. CCFR, 1990.

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41. University of Maryland, November 1995. 42. CCFR, 1994; 1986. 43. Potomac Associates and Watts, The United States and Asia (1985). 44. Yankelovich, September 1991. 45. CCFR, 1974. 46. Harris, July 1971. 47. The generally higher figures seen in the Potomac data in Figure 8.1 are likely an artifact of the type of polls conducted. Both the CCFR and Roper polls that contain these items were global in scope, thus apparently depressing respondents' assessment of the importance of Asian countries. The Potomac polls were always devoted exclusively to Asia, and one Potomac poll (1978) was wholly devoted to questions on Korea. 48. Figure 8.2 lists the wordings for each poll's question. The wordings of these items are sufficiently similar, and lacking in biased or loaded phrasings, that direct comparison of the results from different polls should not be precluded. 49. Pew, 1997. 50. University of Maryland, November 1995. 51. The second question wording made it appear as if the UN had specifically declined to endorse intervention, apparently making unilateral intervention in the second scenario appear to be slightly less legitimate. 52. NBC/WSJ polls; see Figure 8.3. 53. Gallup/CNN/USAToday, May 1994. 54. Newsweek, September 1996. 55. Newsweek, January 1997. 56. That this threat was tied for first with "large numbers of immigrants and refugees coming into the U.S." is also an interesting result. 57. These responses also demonstrate the general ignorance of North Korea by most U.S. citizens. The likelihood of trade sanctions modifying the behavior of a nation preaching juche (self-reliance) as official state ideology was certainly low, at least in 1994. 58. It appears that if a multilateral use of force is not specifically posed in questions on the use of force, U.S. respondents will assume that unilateral U.S. force is being discussed. 59. Bruce W. Jentelson, "The Pretty Prudent Public: Post Post-Vietnam American Opinion on the Use of Force," International Studies Quarterly 36 (1992): 49-74. 60. Philip J. Powlick and Andrew Z. Katz, "Defining the Opinion/Policy Nexus: A Two-Way Model of United States Foreign Policy Linkage," Mershon International Studies Review 42 (1998): 29-61. 61. NBC/WSJ, December 1993; January 1994. 62. LA Times, July 1994. 63. The 1994 CCFR poll also found 58 percent of the public supporting normalizing relations with Vietnam. 64. See, for example, Graham, The Politics of Failure; Bruce Russett, Controlling the Sword (Cambridge, MA: Harvard University Press, 1989); and Powlick, "Attitudinal Bases for Responsiveness." For an overview, see Holsti, Public Opinion and American Foreign Policy. 65. Thomas W. Graham, "Public Opinion and U.S. Foregin Policy Making," in David A. Deese, eds., The New Politics of American Foreign Policy (New York: St. Martin's, 1994). 66. John R. Zaller, The Nature and Origins of Mass Opinion (Cambridge: Cambridge University Press, 1992); Benjamin I. Page, Who Deliberates? Mass Media in American Society (Chicago: University of Chicago Press, 1996).

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67. Powlick and Katz, "Defining the Opinion/Policy Nexus." 68. Jentelson, "The Pretty Prudent Public." 69. CCFR, 1990; 1994. 70. John E. Mueller, War, Presidents, and Public Opinion (New York: John Wiley & Sons, 1973). 71. Mueller, War, Presidents, and Public Opinion. 72. Jentelson, "The Pretty Prudent Public." 73. For each of its polls of the general public, the CCFR conducts parallel surveys of several hundred elites or "leaders," including educators, government officials, clergy, business leaders, and journalists. 74. Daniel C. Hallin, "The Media, the War in Vietnam, and Political Support: A Critique of the Thesis of Oppositional Media," Journal of Politics 46 (1984): 1-24; Zaller, The Nature and Origins of Mass Opinion. 75. Powlick and Katz, "Defining the Opinion/Policy Nexus"; and Powlick, "Attitudinal Bases for Responsiveness." 76. Nicholas Eberstadt, Korea Approaches Reunification (Armonk, NY: M. E. Sharpe, 1995).

9 Japan's Response to Changing U.S.-Korea Relations TSUNEO AKAHA

During the Cold War, Japan's alliance with the United States defined Tokyo's policy toward the divided Korea, and this served the ruling interests in Japan. Since the Korean War (1950-1953), Japan benefited from the absence of another violent conflict on the peninsula. For this the nation owed much to the U.S. military presence in the region in general and to the U.S.-Republic of Korea (ROK) defense pact in particular. The end of the global Cold War has not fundamentally altered Japan's policy toward the peninsula. Japan has welcomed the dramatically improved relationship among the United States, the former Soviet Union, and China and the generally favorable impact this has had on the political climate in Northeast Asia. However, the continuing tension along the 38th parallel, the suspected nuclear development in North Korea, and the growing debate in the United States and elsewhere in the Asia Pacific over Washington's security commitment in the region have heightened the sense of unease among foreign and defense policy analysts in Japan. In this brief analysis, I will examine Japan's perspective on recent developments and future prospects on the Korean peninsula, highlighting its perception of the changing U.S. policy toward the peninsula. My basic argument is that Japan's contemporary policy toward the peninsula is informed by three sets of factors: (1) Tokyo's overall foreign policy priorities, particularly maintenance of its close alliance with Washington and improvement of relations with South Korea; (2) its concerns regarding the peace and stability of Northeast Asia, especially stability on the Korean peninsula; and (3) domestic politics in Japan, which is complicated by the nation's past aggression against Korea.

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Japanese Prewar Imperalism Throughout history, Japan has perceived Korea either as " a dagger aimed at her heart" or as a convenient proximate invasion route and key to resource-rich mainland Asia. 1 In the late sixteenth century ( 1 5 9 2 - 1 5 9 8 ) , Toyotomi Hideyoshi decided to invade the Korean peninsula en route to conquering China. With the aid of the Ming China, however, the Yi Korea was able to force the Japanese into a stalemate and truce talks. Toyotomi Hideyoshi wanted the surrender of four southern provinces of Korea to Japan as a condition for peace. After he died in 1598, the Chinese and Korean standing armies, guerrilla forces, and Admiral Yi Sun-sin's "turtle ship" fleet pushed the invading Japanese armies out of the peninsula. Consequently, both the Ming and Yi courts rejected the Japanese demands presented at the peace talks. As Western imperialism reached the shores of Asia in the nineteenth century, China was forced to accept the establishment of colonial enclaves within its territory and the conclusion of unequal treaties. Japan quickly emulated the imperialist ways of the Western powers. In 1876, the M e i j i Japan imposed on Korea the unequal Treaty of Kanghwa. This caused a number of deep divisions in the Korean political establishment—between the enlightenment forces and the Confucian literati "defending orthodoxy and rejecting heterodoxy," between the Taewongun's clan and Queen M i n ' s clan, and among the pro-Chinese, pro-Japanese, and, later, proRussian court officials and scholars. The concomitant Sino-Japanese rivalry for control over the Korean peninsula became the major factor affecting Korean domestic and foreign policies. M a j o r domestic political upheavals followed, discrediting and weakening the Korean government domestically and providing the outside powers with a justification for openly meddling in Korea's internal affairs. 2 As the Sino-Japanese conflict over the issue of political control in Korea edged toward war in 1894, the British government recommended the division of the Korean peninsula between "South Korea" under Japanese control and "North K o r e a " under Chinese control. When both Japan and China rejected this recommendation, Britain proposed to neutralize the peninsula. 3 The ensuing war ended in Japanese victory. In the Treaty of Shimonoseki in 1895, China acknowledged the full independence of Korea, but Japan interpreted this as China's repudiation of its own suzerainty over Korea and, consequently, as a green light for Japan to treat Korea as a subordinate state. The rise of Japanese influence in Korea, following the Chinese withdrawal in 1895, threatened Russian interests and led to the escalation of Russian-Japanese tensions on the Korean peninsula. This prompted the Korean political establishment to seek neutral status for Korea as a way of escaping occupation by a foreign power and guaranteeing its independence.

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Japan quickly moved to deflect the Korean effort because a neutralized Korea would be an obstacle to Japan's imperialist ambition to become a dominant continental power in Asia. 4 For the same reason, Japan also rejected the Russian proposal in 1903 that Korea be divided along the 38th parallel into a Russian sphere of influence north of the parallel and a Japanese sphere of influence south of the parallel. Japan wanted the entire peninsula for itself. It also turned down a Russian proposal to establish a neutral zone north of the 39th parallel, and instead declared war on Russia in 1904.5 Japan's victory over Russia resulted in the Treaty of Portsmouth, in which Japan established itself as the dominant power over the Korean peninsula. 6 This was followed by Japan's annexation of Korea in 1910. Japan's militarist-imperialist expansion until its disastrous end in 1945 engendered among the Koreans and other Asian peoples deep anti-Japanese sentiments that affect the contemporary international relations of East Asia. Fifty years after the end of World War II, Japan's relations with its Asian neighbors are still linked, unavoidably and inexorably, to the history of Japanese aggression in the first half of the twentieth century. As this century approaches its end, Japan's past still haunts the international relations of Northeast Asia and severely constrains international cooperation toward the next century. In summary, Japan's behavior on the Korean peninsula during the first half of the twentieth century can be described as an extension of its imperial policy in the earlier centuries. Underlying Japan's historical behavior was its concern with the stability of the peninsula in general and its fear of a hostile regime in Korea specifically. Until its defeat in World War II, Japan sought this stability either through participation in great power rivalry or direct territorial control. It was the balance of power among the great powers that determined Japan's choice of approach. As I will point out later, Japan's concern with the peninsula's stability has not changed. What has changed (and fundamentally) since the end of World War II is the range of Japanese policy options.

T h e Cold War and Its Impact Northeast Asia has generally been one of the most difficult regions of the world for Japan's postwar foreign policy. The ideological conflict between the United States and the Soviet Union during the Cold War era virtually froze Japan's relations with its ideological adversaries, the Soviet Union, China, and North Korea. The superpower strategic stalemate in Northeast Asia, the political conflict between the United States and China (and even the Washington-Beijing rapprochement in the 1970s), the division of the Korean peninsula following the Korean War, and the division of China

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between the People's Republic and Taiwan were all beyond Tokyo's influence, much less control. Moreover, the Cold War severely constrained Japan's options and eliminated any possibility of reconciliation vis-à-vis China and the Soviet Union, historically the most important regional powers Japan has had to deal with. The Cold War also prevented the establishment of any multilateral cooperative institutions in Northeast Asia. All relations in the region, both political and economic, were severely restrained by the bilateral security alliances the United States and the former Soviet Union had established with their respective allies in this region. With U.S. encouragement and support Japan restored diplomatic relations and developed economic ties with other U.S. allies in Asia in the 1950s and 1960s. Ironically, however, the Cold War prevented the Japanese and their neighbors from squarely facing the imperatives of historical reconciliation. Because of a total lack of readiness among the Asians to enter into a multilateral alliance, particularly one involving the distrusted Japanese, the United States decided to pursue its containment strategy in Asia through a network of bilateral alliances. Japan was never accepted by its Asian neighbors as a trustworthy security ally. Despite the establishment of diplomatic relations in 1965, Japan and South Korea maintained an uneasy relationship under the Cold War tutelage of the United States. Since then, with anti-Japanese sentiments running high among the Koreans, prewar and Cold War legacies continue to frustrate Japan-South Korea relations and also prevent Japan-North Korea normalization. 7 Koreans' contempt and bitterness over Japanese colonial rule and military aggression have not disappeared. To a large extent, these feelings are a response to the seeming lack of remorse on the part of conservative Japanese politicians for the dark chapter in their nation's history. A full reconciliation between the two peoples has been prevented by a distorted and selective historical memory among the Japanese—evident in repeated public denials by politicians in Tokyo of their nation's past aggression against its Asian neighbors and in the Ministry of Education's attempt to purge Japanese textbooks of forthright accounts of Japanese atrocities in the past. Although the issue of war reparations was officially resolved in 1965, the question remains unanswered as to Japan's responsibility during the war for the forced prostitution of Korean women in the service of Imperial Army troops. Nevertheless, as Japan and South Korea seek to find a new framework for cooperation in post-Cold War Asia, signs of reconciliation, at least at the official level, have begun to emerge. On his visit to Seoul in November 1993, for example, Prime Minister Morihiro Hosokawa offered a public apology for Japan's colonial rule of Korea. Hosokawa and Korean President Kim Young-sam expressed their common desire to overcome the legacies of history and build a future-oriented bilateral relationship. 8 In his speech before the Japanese parliament on March 25, 1994, President Kim

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called for Korean and Japanese initiatives toward the construction of a multilateral framework for collective security in the Asia Pacific. Kim also expressed gratitude to the Japanese for their cooperation on the North Korean nuclear issue. At the same time that the South Korean leader reminded the Japanese of the need to take an honest account of the facts of history, he also urged the two countries to "put an end to the century-long history of disputes and discords" and to establish a "new relationship and to share the same dream for the future world." 9 Prime Minister Hosokawa reciprocated by stating that the two countries should squarely face the facts of history and make efforts to broaden and internationalize Japan-South Korea relations. The Japanese leader then pledged to promote a deeper mutual understanding through expanded human and cultural exchanges between the two countries. 10 In summary, it is rather obvious that the global and regional strategic environment during the Cold War prevented any assertive policy on the part of Japan toward the Korean peninsula. Japan's options were extremely limited. It is equally clear, however, that this generally satisfied Japan's postwar interests. As long as the United States' strategic and security interests dictated a pro-Japanese policy in Washington, Japan could maintain its low-posture foreign policy in general and stay out of such potentially explosive situations as the North-South Korean conflict. What is the impact, then, of the end of the Cold War on Japan's foreign policy and what implications will this have for its policy with regard to the Korean peninsula? I turn to this question now.

Japan's Foreign Policy Priorities Tokyo's current policy toward the Korean peninsula is informed by three sets of factors: (1) Tokyo's overall foreign policy priorities, particularly maintenance of its close security alliance with Washington and improvement of relations with South Korea; (2) its concerns regarding the peace and stability of Northeast Asia, especially stability on the peninsula; and (3) domestic politics in Japan. These factors generally dictate close policy coordination with the United States, close consultation with South Korea, and a cautious approach to North Korea. Economic factors are currently of limited importance, but they too work to support this general line of policy. Although normalization of relations with Pyongyang would likely prompt Tokyo to extend major economic assistance to economically beleaguered North Korea, the scale and pace of aid would also be dictated by Tokyo's overall foreign policy priorities. Japan's postwar foreign policy has been defined by an overarching goal: the maintenance of a stable, peaceful international environment in which to sustain its security and prosperity. This has dictated the evolution

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of Japanese foreign policy on three mutually reinforcing levels. First, Japan has defined its security alliance with the United States as the cornerstone of its overall foreign policy and has thus maintained close cooperation with the United States. This has meant overcoming the potentially disruptive effects of both political disagreements (e.g., the reversion of Okinawa to Japanese sovereignty) and economic friction (e.g., trade imbalances and sensitive industrial policies). Second, Japan has avoided involvement in international conflicts and instead focused its energies on economic development through international trade, particularly with the United States and other capitalist economies in the Asia Pacific. Tokyo's policy of conflict avoidance has clearly been compatible with the U.S. desire to keep Japan in its ideological fold and strategic orbit. Third, as a consequence, Japan has been able to limit its military capabilities to those minimally required for self-defense, enabling Japan to maintain a nonthreatening presence in the region. These basic features of Japanese foreign policy remain largely intact today. Although international demands for a more activist Japan have increased, the key elements of Japanese foreign policy continue to support the strategic, political, and economic interests of its ally, the United States, and are generally compatible with the interests of other countries friendly to Japan. Tokyo reaffirmed in 1996 that its security alliance with the United States would continue to be the cornerstone of its foreign policy in the post-Cold War era. Tokyo also continues to focus substantial foreign policy attention on developments in Asia. It is intent on expanding its role in regional security and is willing to share a greater burden in maintaining regional stability and sustaining the dynamic growth and interdependence of the region's economies. Tokyo is clearly cognizant of the legacies of its imperialist-militarist past, particularly its neighbors' apprehension about the political intent behind its increasingly assertive foreign policy in the region. To reassure the neighbors, Tokyo has clarified that it continues to base its regional policy, in descending order of priority, on close cooperation with the United States, on active participation in regional multilateral fora such as Asia Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations Regional Forum (ARF), and on further expanding its bilateral economic and political cooperation with its neighbors. A more recent development, which also complements Japan's effort to contribute to regional security, is the slowly growing security dialogue with Seoul, Beijing, and Moscow—a development that was either unnecessary or impossible during the Cold War years. Japanese foreign policymakers believe, as do their counterparts elsewhere in Asia, that in the aftermath of the Cold War, the Asia Pacific region faces both opportunity and danger. On one hand, it is blessed with the possibility of further international cooperation and economic growth; on the other hand, the potential for hegemonic rivalry looms, accompanied by

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uncontrollable and mutually damaging arms races among the major powers of the region, including Japan. To enhance the first of these possibilities, Japan is furthering its cooperation with the United States and other members of APEC in a gradual liberalization of trade and investment policies. With respect to the second possibility, the absence of any multilateral political—much less security—framework that could address security concerns and contain major power rivalry leaves Japan with no alternative but to continue to rely on its security alliance with the United States. Even though the Cold War rationale for the bilateral alliance has virtually disappeared, Japan and the United States recognize the importance of their security alliance for Japan's security, for U.S. interests in the region, and for the region's stability generally. 11

U.S.-Japan Security Alliance The direction of the U.S.-Japan security alliance in the post-Cold War era has important implications for Japan's policy toward the Korean peninsula. During the Cold War, the strategic policy of the United States dictated a close alliance with Japan. This in turn, as we have seen, provided the framework within which Japan pursued its overall foreign policy, including its policy toward the Korean peninsula. Japan's domestic debate was heavily influenced by U.S. policy toward the Soviet Union and China and by the U.S.-Japan security alliance. The changing economic fortunes of Japan and the United States during that time complicated but were not allowed to undermine their cooperation in the security realm. As long as the U.S. security commitment to Japan and U.S. policy toward the Korean peninsula remained unchanged, Tokyo's overall security policy could be anchored on its alliance with Washington, and its policy toward the Korean peninsula could be defined as a function of that alliance. The end of the Cold War, however, has dramatically changed the regional strategic environment—with Washington and Moscow forging a "partnership for peace," Moscow and Beijing developing a "strategic partnership," and Beijing and Washington approaching each other with a mix of cooperative initiatives and acrimonious claims and counterclaims. Consequently, U.S. strategic policy has become a moving target toward which Japan has to adjust its own policy. Since Washington's policy is discussed extensively by other contributors to this volume, I will focus first on the ongoing debate in Japan about its future security relations with the United States and, second, on Japan's view of the security environment surrounding the Korean peninsula. Most Japanese supporters of the U.S.-Japan security treaty believe that the bilateral alliance is in the national interest of both countries. They maintain that the U.S.-Japan security arrangement allows Japan to continue to

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limit its defense capabilities to those required for strictly defensive purposes and to maintain its nonmilitary policy in the region. This is essential, in their view, to allay their Asian neighbors' fears of Japanese remilitarization. They also recognize that the United States needs to maintain its bases in Japan not only to deter aggression against Japan but also to project U.S. military power throughout the Asia Pacific region where its trade and economic interests are growing. From their perspective, the security treaty allows Washington and Tokyo to maintain a mutually acceptable burden-sharing arrangement. Furthermore, Japanese supporters of the bilateral security treaty argue that the pact helps to contain the potentially destabilizing effects of trade and economic friction between the two countries. To them, the treaty is the symbol of a mutually beneficial political relationship. In sum, they believe that the treaty contributes to the peace and stability of the region. This view is widely held among both elites and the public. 12 The most passive reason for supporting the U.S.-Japan security alliance in the post-Cold War era is that neither country has found an alternative policy that would meet its security requirements currently or in the near to medium term. Tokyo continues to rely on Washington's security commitment as one of the two pillars of Japanese defense policy as long as the other pillar—the buildup of its own self-defense capabilities—remains constrained by political and financial considerations, as well as by international public opinion. 13 For its part, Washington finds no ally as reliable and willing as Tokyo in maintaining a credible U.S. presence in the Asia Pacific. Some Japanese are concerned, however, that domestic support in the United States for its policy of engagement in East Asia is fast waning, and that this could be exploited by some countries, including North Korea, to drive a wedge between the United States and its present-day allies such as South Korea and Japan. 14 Should Washington fail to reassure the Japanese, they warn, this could have serious implications for Japan's security policy. Some Japanese analysts accurately point out that U.S. policy in the Asia Pacific, as elsewhere in the world, is increasingly self-centered and driven by economic nationalism. They believe Washington wants to use its security commitments in the region and the region's growing reliance, in the post-Cold War era, on the U.S. military presence there as a lever to win concessions from its allies, such as trade concessions from Japan. 15 The increasing support that Tokyo provides as host nation for U.S. troops in Japan is coming under growing criticism by Japanese nationalists. 16 Even analysts favorable to the United States concede that the bilateral security treaty would lose its public support in Japan if Washington should press Tokyo to take actions that could jeopardize Japanese disavowal of collective self-defense, for example, Japanese-U.S.-South Korean joint military action against some contingency on the Korean peninsula. These concerns have led some Japanese to advocate a reduced Japanese reliance on the alliance with the United States and the development of

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a regional collective security system in Asia in which the U.S.-Japan alliance would be one part, albeit still the most important part. 17 Others see greater opportunities in a more explicitly strategic use of economic assistance to developing countries, including China. Some see an additional avenue for Japanese security policy in a more active participation in UN peacekeeping activities. Still others are calling on their government to take major arms control initiatives in both the nuclear and the conventional field and to undertake a closer security dialogue, including discussion of confidence-building measures, with South Korea, China, and Russia. 18 Some analysts boldly assert that the U.S.-Japan security treaty has outlived its strategic value for Japan and that Tokyo should seriously consider abandoning the treaty. 19 Although this view remains a minority view, the idea that the U.S.-Japan alliance needs to be supplemented by additional institutions of national and regional security measures is gaining support among Japanese security analysts. 20 Support for multilateralism found its way into a report on Japan's post-Cold War security policy that was submitted to Prime Minister Tomiichi Murayama in August 1994 by an advisory committee appointed by his predecessor, Morihiro Hosokawa, in February of that year. The so-called "Higuchi Report" appeared to place equal, if not greater, importance on developing a multilateral security framework in the Asia Pacific as on maintaining the U.S.-Japan bilateral alliance. 21 Amidst the increasingly animated national security debate in Japan, the Japanese government adopted in November 1995 a new National Defense Program Outline (NDPO), to replace its predecessor of 1976. 22 The new NDPO reaffirmed the centrality of the Japan-U.S. security treaty to the nation's security policy. In adopting the new defense outline, the Japanese government pointed to the end of the global Cold War and to growing expectations that the Japanese defense forces would assume responsibilities beyond the traditionally conceived national defense. Among the emerging roles envisaged by the document were provision of an effective response to major natural disasters and acts of terrorism. The defense forces were also seen as contributing to a more stable security environment through international peacekeeping activities and to international emergency relief activities. The new defense program outline called for enhancing the credibility of Japan-U.S. security cooperation and for building more rationalized, efficient, compact, and flexible defense capabilities in order to respond to Japan's own defense needs and to contribute to the building of a more stable international environment. 23 Among the security concerns noted by the new NDPO were regional conflicts and proliferation of weapons of mass destruction, including continuing tensions on the Korean peninsula. On April 17, 1996, Prime Minister Hashimoto and President Clinton issued a U.S.-Japan Joint Declaration on Security, reaffirming the bilateral

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security alliance as "the cornerstone for achieving common security objectives and for maintaining a stable and prosperous environment in the Asia-Pacific region as we enter the twenty-first century." 24 The two leaders agreed to review the 1978 Guidelines for U.S.-Japan Defense Cooperation. The review of the guidelines was completed in September 1997. On September 23, the U.S.-Japan Security Consultative Committee announced the results of the review and made public new guidelines to replace the 1978 predecessor. International reaction was mixed, with expressions of concern far outnumbering those of support. Chinese reaction was the most negative. The official English China Daily quoted a spokesman for the Ministry of Foreign Affairs as saying, "We believe that the practice of strengthening military alliances and expanding military cooperation run counter to the trends in . . . the Asia-Pacific region, which is witnessing relative political stability, sustained economic growth and an active security dialogue." A commentator in the official Community Party People's Daily asserted that the new guidelines were "unacceptable" if Japan and the United States attempted to "interfere in other regions using the excuse of 'the situation in areas surrounding Japan.'" 25 Reaction in Korea was subtler but nonetheless negative. A Dong-A Ilbo reporter stationed in Beijing noted that China was highly negative about the new guidelines and concerned that the United States and Japan were trying to expand their influence in the region and isolate China. Chosun Ilbo warned, "The Asian countries defined in the guidelines as neighbors of Japan are concerned that the Defense Cooperation Guidelines . . . may lead Japan to seek hegemony in Asia," and called on Japan to be "extremely careful that it not give the impression that expansion of its defense force operation area is the first stage of hegemony." The pro-business JoongAng Ilbo noted that U.S.-Japan cooperation for peace on the Korean peninsula would be positive if the guidelines concentrated specifically on strengthening the U.S. role in a defense against North Korea, but cautioned against giving Japan the impression that South Korea approved of its rise as a strong military power. Hankook Ilbo commented that the new guidelines had opened the door for overseas intervention by Japanese forces, including on the Korean peninsula, and warned that at the conclusion of an eventual conflict "Japan may demand to be treated as a party fully involved in it." 26 Even Japanese media were not satisfied that the U.S. and Japanese governments had done enough to allay international fears and concerns. The liberal Asahi Shimbun noted that South Korea reacted cautiously to Japan's role in the new guidelines despite Tokyo's efforts to obtain South Korea's understanding. The moderate Yomiuri Shimbun welcomed the new guidelines as a step forward toward improving the bilateral security system, noting that the end of the Cold War had not eliminated many destabilizing factors in East Asia, including the volatile situation on the Korean peninsula. 27

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A thorough examination of the guidelines is beyond the scope of this analysis. It will suffice to discuss here the implications of the new framework for Japan's policy toward the Korean peninsula. At the most general level, the guidelines define their aim as creating a "solid basis for more effective and credible U.S.-Japan cooperation" under "normal circumstances," "in case of an armed attack against Japan," and "in situations in areas surrounding Japan that will have an important influence on Japan's peace and security." The section "Basic Premises and Principles" states, "The rights and obligations under the [U.S.-Japan security treaty] and its related arrangements, as well as the fundamental framework of the U.S.Japan alliance, will remain unchanged." It also states, "Japan will conduct all its actions within the limitations of its Constitution and in accordance with such basic positions as the maintenance of its exclusively defenseoriented policy and its three non-nuclear principles." The most controversial issue surrounding the new guidelines is the illdefined meaning of "situations in areas surrounding Japan." LDP Secretary General Koichi Kato stated during his visit to Beijing in July 1997 that the new guidelines were not aimed at China. This was contradicted by the statement by Chief Cabinet Secretary Seiroku Kajiyama that a PRCTaiwan conflict would be included in this definition. Prime Minister Hashimoto told the Chinese leaders during their meeting in Beijing in September that the new guidelines were not targeted at "any particular area or country." In fact, the guidelines state, "the concept, situations in areas surrounding Japan, is not geographic but situational." Although the geographic definition remains unspecified, it is generally understood that contingencies on the Korean peninsula would qualify as "situations in areas surrounding Japan." 28 This becomes rather obvious when one examines the activities the guidelines call on Japan and the United States to undertake either in response to such situations or to prevent such situations from occurring. Anticipatory activities include information and intelligence sharing and policy consultations, diplomatic and other efforts to prevent further deterioration of the situation, use of a bilateral coordination center, and necessary preparations for ensuring coordinated responses. Once "situations in areas surrounding Japan" have occurred, Japan and the United States are expected to cooperate in (1) relief activities and measures to deal with refugees; (2) search and rescue; (3) noncombatant evacuation operations; and (4) activities for ensuring the effectiveness of economic sanctions. With respect to refugees, the guidelines state, "When there is a flow of refugees into Japanese territory, Japan will decide how to respond and will have primary responsibility for dealing with the flow and the United States will provide appropriate support." The annex to the guidelines provides examples of cooperative activities in this area: transportation of personnel and supplies to the affected area, medical services, communications and transportation in the affected area, relief and transfer

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operations for refugees, and provision of emergency materials to refugees. Japan's search and rescue operations envisaged by the guidelines are limited to those within Japanese territory and "at sea around Japan, as distinguished from areas where combat operations are being conducted." How Japan's search and rescue operations will be coordinated with those of the United States in and around the areas of combat operations remains a very difficult issue. It raises the legitimate question of whether Japanese actions might constitute an exercise of collective self-defense that is currently prohibited. As far as noncombatant evacuations are concerned, the guidelines state that each government is responsible for evacuating its own nationals from a third country to a safe haven. When necessary, however, Japan and the United States will coordinate in planning and will cooperate in carrying out their evacuations. For the evaluation of non-U.S. and non-Japanese noncombatants, the guidelines leave open the possibility that Japan may extend evacuation assistance to third country nationals. Japan and the United States are expected to cooperate in such areas as information sharing, communication, and transportation of noncombatants; use of selfdefense forces facilities and civilian airports and ports by U.S. aircraft and vessels for transportation of noncombatants; customs, immigration, and quarantine of noncombatants upon entry into Japan; and assistance to noncombatants in temporary accommodations, transportation, and medical services in Japan. 29 In the area of economic sanctions, the guidelines call on Japan and the United States to cooperate in information sharing and inspection of ships, based on UN Security Council resolutions. The guidelines further call on Japan to provide for temporary use by U.S. forces of self-defense forces facilities and civilian airports and ports, to lend rear area support, and to engage in bilateral operational cooperation. Japan's rear area support is expected primarily in Japanese territory, but the guidelines envisage the possibility of Japanese rear area support "on the high seas and international airspace around Japan which are distinguished from areas where combat operations are being conducted." This would be problematic in the very likely situation where unfolding contingencies would require a minute-by-minute redefinition of areas of military operations. According to the guidelines, examples of rear area support include medical treatment of casualties inside Japan, transportation of casualties inside Japan, and provision of medical supply. They also include support for security of U.S. facilities and areas, sea surveillance around U.S. facilities, security of transportation routes inside Japan, and information and intelligence gathering. Japan is also expected to provide rear area support in communications, including provision of frequencies and equipment for communications among U.S. and Japanese agencies. Other examples of rear area support include aid for port entry and exit by U.S. vessels; loading and unloading of materials at self-defense forces facilities

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and at civilian airports and ports; sewage disposal, water supply, and electricity inside U.S. facilities; and temporary increase of workers at U.S. facilities. Among the examples of U.S.-Japan operational cooperation are intelligence sharing; mine-sweeping operations in Japanese territory and on the high seas around Japan; information and intelligence sharing specifically on mines; maritime traffic coordination in and around Japan; and air traffic control and airspace management in and around Japan. 30 Finally, the guidelines expect Japan and the United States to develop a comprehensive mechanism for bilateral planning and for the establishment of common standards and procedures. This will involve not only U.S. forces and the self-defense forces but also other government agencies. Bilateral planning will include joint defense planning under normal circumstances to take coordinated actions in case of an armed attack against Japan and mutually cooperative planning under normal circumstances to be able to respond smoothly and effectively to situations in areas surrounding Japan. Tokyo and Washington will establish common standards for preparations for an imminent armed attack against Japan and for situations in areas surrounding Japan, as well as common procedures for coordinated U.S. and Japanese operations for the defense of Japan. Also envisaged is the establishment of a bilateral mechanism for coordinating the two countries' respective activities in case of an armed attack against Japan and in situations in areas surrounding Japan. The guidelines do not spell out what contingencies besides an armed attack against Japan would call for the expanded bilateral defense cooperation. 31 However, discussions in private circles have suggested the kind of contingencies defense planners may deal with under the new guidelines. Among the scenarios discussed among private defense analysts is a North Korean surprise attack on South Korea and taking of hostages. Some speculate that North Korea, realizing the changing balance of military capabilities in favor of South Korea, might move in to the north of the Han River and take hostages. According to this scenario, this would not pose a direct threat against Japan's national security, but it would require some response in Tokyo, especially if hostage taking involved Japanese nationals. 32 Another scenario involves low-intensity conflicts involving North Korea, including terrorist acts, assassinations, or some other destructive actions against the South, or even Japan. Another possibility entertained by some Japanese observers is a collapse of the North Korean regime, causing an exodus of refugees, defections, and rampant acts of terrorism and assassination. 33 In summary, Tokyo and Washington are committed to enhancing the effectiveness of unilateral and joint contingency operations within the framework of the bilateral security treaty. The development of the new guidelines for defense cooperation is a concrete step to respond to the growing concern that the United States may further reduce its military

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presence in the region and to the criticism that Japan and the United States are ill prepared to meet possible contingencies in the region. Most relevant to the present analysis is the fact that Japan and the United States consider the prospects of dangerous crisis on the Korean peninsula serious enough to warrant peacetime preparations, including joint defense planning and enhanced coordination.

Northeast Asia and Japan-Korea Relations Japan's security environment has undergone dramatic changes in the aftermath of the Cold War. In general, regional security threats to Japan have been defused, and political and economic relations have improved. However, the Korean peninsula remains a serious yet uncertain factor in Japan's security policy. Russia, Japan's main security concern during the Cold War, is no longer considered a threat to either Japan or the United States. Russia's army troops in its far eastern territories have been cut from 390,000 in 1989 to 190,000 in 1996, a 51 percent reduction. Its main surface fleet has been reduced by 45 percent, from 100 vessels to 55, and its submarine fleet by 57 percent, from 140 to 60 during the same period. Similarly, Russia's tactical aircraft deployed in its far eastern district now number a mere 900, a 63 percent drop from its 1989 level of 2,430. 34 There is much speculation about China's military power, but the general consensus in the United States and in Japan is that, with its burgeoning economic power, the nation poses potentially serious security questions in the region but is not an immediate military threat to its neighbors, including Japan. North Korea remains an uncertain, potentially dangerous security factor in the eyes of U.S. and Japanese defense planners. A simple quantitative comparison of military might between North and South Korea puts the North's troop strength at twice the level as that of the South, but the latter enjoys a substantial overall superiority, especially in view of its combined air and sea control capabilities. The South has an enormous qualitative superiority in air power. Add to this the U.S. military presence, and there is little likelihood of the North overrunning the South in a military conflict and posing a direct threat to Japan. Nonetheless, there are several sources of security concern to Japan: the future development of North Korea's nuclear capability, its development of ballistic missiles, the possibility of a suicidal attack by the North of the South, and the sudden collapse of the North Korean regime, triggering the evacuation of an unpredictable number of refugees. The threat of nuclear development has been defused, at least for now, by the U.S.-North Korea Agreed Framework and the Korean Peninsula Energy Development Organization (KEDO). Without outside assistance, North Korea's ability to develop missiles that could reach Japanese

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targets is limited, but the threat cannot be totally ruled out. The United States wants Japan to start a joint development of a theater missile defense system against such a threat, but Tokyo remains reluctant, in view of the enormous burden the program would impose on its already strained budget. The Japanese government remains concerned about the possibility of a North Korean surgical strike against South Korea, and Tokyo and Washington have jointly studied this possibility. However, the two governments have kept the contents of the study confidential and the likelihood of this scenario unfolding remains quite uncertain. More probable, albeit unpredictable, are scenarios of some political crisis forcing tens of thousands of North Koreans to flee their country to reach South Korea, China, Russia, and Japanese shores. The U.S. and Japanese governments have reportedly conducted a joint study of such scenarios but kept it off limits to the public. Not only does the Korean situation remain uncertain, but Japan's options remain seriously limited. During the Cold War, Japan was left with only one alternative, to establish diplomatic ties, as it eventually did in 1965, with the ROK and develop, albeit with a great deal of difficulty, this bilateral relationship according to the dictates of U.S. strategic policy in Asia. Closer Japan-ROK relations also benefited Japan in its postwar reconstruction and development. 35 On the other hand, the absence of diplomatic relations with North Korea in the postwar era occasionally complicated Japan's foreign policy toward the Korean peninsula. It did not, however, fundamentally affect Japan's overall foreign policy interests. The historical and Cold War animosities between Japan and the Democratic People's Republic of Korea (DPRK) did not prevent Japan's successful march toward its current economic superpower status, nor did they disrupt Japan's alliance with the United States. On the contrary, Japan's frozen relationship with North Korea helped to cement its alliance with the United States and to cultivate closer relations with South Korea. In the aftermath of the Cold War, Tokyo shares with Washington, Seoul, Moscow, and Beijing an interest in a stable Korean peninsula and in an end to the ideological and political conflict that continues to divide the North and South Koreans. 36 Tokyo wants to see a credible and stable rapprochement between Pyongyang and Seoul. If immediate reconciliation is difficult, Tokyo wants at least to limit the destabilizing consequences of an isolated and unpredictable Pyongyang. Tokyo has been concerned about Pyongyang's suspected nuclear development and about the uncertain succession to Kim II Sung's leadership in North Korea. A nuclear-armed North Korea (or a nuclear-armed unified Korea) would be a direct threat to Japan's security. 37 The Korean peninsula's nuclearization would also trigger a dangerous polarization in Japan, between the hard-core realists who would advocate a nuclear option for their own country under such circumstances and the pacifists who would continue to favor a nonnuclear policy. A nuclear Japan would fundamentally alter the

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strategic structure of Asia Pacific, with alarming consequences for all countries concerned. A deeply divided Japan would certainly be unable to forge a favorable stance toward Japanese-Korean reconciliation. Currently, however, the Japanese are firmly committed to their nonnuclear status and strongly desire a nuclear-free Korean peninsula. Tokyo wants to use what leverage it has in its normalization talks with Pyongyang to secure D P R K ' s unequivocal commitment to a nuclear-free Korean peninsula. Japan wants to see the implementation of the 1991 Pyongyang-Seoul agreement on a nuclear-free peninsula, including mutual inspection and verification. Japan supports and will continue to support the K E D O as long as it contributes to a nuclear-free Korean peninsula.

Japan's Policy Options vis-à-vis North Korea Japan's options vis-à-vis the D P R K are severely limited. Its earlier attempts to reach some accommodation with the DPRK have been frustrated by both Tokyo's relations with Seoul and internal division within Japan. There are three main factors that complicate Tokyo's approach to Pyongyang. The first complicating factor is the intermittent, start-stop quality of the talks between the ROK and the DPRK, since periods of impasse in the North-South dialogue can prevent any initiatives from Tokyo. For example, Tokyo had to wait until after the first round of high-level Seoul-Pyongyang talks in September 1990 before it could officially explore ways to establish diplomatic relations with Pyongyang. Immediately afterward, in that same month, a delegation of the Japanese Liberal Democratic (LDP) and Socialist parties to Pyongyang resulted in a joint declaration with the DPRK Workers Party, in which the two sides agreed that normalization and advancement of Japan-DPRK relations would serve the two peoples' interests and contribute to the peace and prosperity of Asia and the world. North Korea has since insisted that this declaration constitutes an agreement, that subsequent normalization talks with Japan are to be understood as a continuation of the three-party meeting, and, hence, that the two countries are bound by the contents of the declaration issued at that time. 38 Not to be tied legally to the terms of the joint statement, as well as to deflect Seoul's criticism that Tokyo was proceeding with normalization with Pyongyang against South Korea's interests, the Japanese government has insisted that the declaration represented an agreement between the political parties concerned and did not constitute the official position of the Japanese government. The resumption of high-level Seoul-Pyongyang talks in December 1990 prompted Tokyo to decide officially to engage Pyongyang in talks for the normalization of diplomatic relations, and the dialogue began in January of

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the following year. Also encouraging to Japan were the simultaneous admission of the ROK and the DPRK into the United Nations in September 1991 and the conclusion between Seoul and Pyongyang of a basic agreement and joint declaration on a nuclear-free Korean peninsula in December, as well as the ROK-China rapprochement in 1992. The second complicating factor is that Tokyo is not in a position to proceed with normalization talks with Pyongyang while North Korea is internationally isolated over the nuclear issue. Following Pyongyang's declaration in March 1993 that it would withdraw from the Nuclear NonProliferation Treaty (NPT), Tokyo consulted closely with both Washington and Seoul. A year later Japanese Prime Minister Hosokawa and ROK President Kim Young-sam agreed that the two countries would join the international sanctions against North Korea in response to Pyongyang's refusal to allow International Atomic Energy Agency (IAEA) inspections of nuclear facilities at Yongbyon. Tokyo was deeply alarmed by Pyongyang's announcement that it was withdrawing from the IAEA. Therefore, the Japanese government was relieved by the conclusion on October 21, 1994, of the U.S.-DPRK Agreed Framework. Tokyo pledged its support for the agreement and in March 1995 joined the KEDO. 39 Third, Tokyo and Pyongyang have their own bilateral issues to settle before they can establish diplomatic relations. At the most fundamental level, the two sides have a number of legal and jurisdictional disagreements. First, Japan wants to clearly establish the limits of North Korea's jurisdiction—which would affect the bilateral issues to be settled—whereas Pyongyang apparently fears that clear establishment of jurisdiction would justify the division of Korea. Second, Tokyo asserts that the 1910 treaty of annexation of Korea was legally concluded and therefore a legitimate treaty, but Pyongyang insists the treaty was null and void from the very beginning. Third, Japan cites the San Francisco peace treaty as an important consideration in the restoration of diplomatic relations with Pyongyang, but Pyongyang rejects this because it is not a party to the treaty. A more tangible issue relates to the nature and scope of Japanese compensations demanded by North Korea. In the 1990 three-party declaration, the LDP-Socialist delegation acknowledged that Japan should fully and officially apologize to the North Korean people. Furthermore, it alluded to North Korea's right to compensation not only for the suffering inflicted during thirty-five years of colonial rule but also for losses suffered after 1945 as a consequence of diplomatic recognition between Japan and the ROK. Pyongyang maintains that Japan should settle all issues of assets and claims as well as pay war reparations and compensations. Tokyo asserts, however, that Japan and North Korea were never officially at war and therefore Japan has no obligation to pay reparations and compensations. For example, Tokyo rejects Pyongyang's demand that it pay damages for its complicity in the Korean War. North Korea claims damages by

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virtue of Japanese support of the United States and South Korea during the conflict, but Japan insists that it simply acted in support of the UN and its members. Moreover, in restoring diplomatic ties with Seoul in 1965, Tokyo agreed to extend $500 million in economic assistance to South Korea in exchange for Seoul's renunciation of reparation claims; Tokyo does not want to make a conflicting deal with Pyongyang. An ill-defined compromise was reached on March 30, 1995, when the North Korean Workers Party and the official Japanese delegation, including LDP and Socialist representatives, concluded an agreement calling for the resumption of normalization talks with no preconditions. On the issue of compensations, the agreement vaguely stated that the two sides would settle their "unfortunate past." Another bilateral problem surfaced in February 1997, when it was reported that a high school student in Niigata might have been abducted by North Koreans earlier that year. Since then, at least seven other cases of abduction involving North Korean agents have been alleged, but North Korea has denied these charges and refused Tokyo's demand that Pyongyang investigate them. 40 Pyongyang has been more forthcoming with respect to Tokyo's demand that Japanese women who accompanied their Korean husbands' repatriation to North Korea in the 1950s be allowed to visit Japan. 41 In September 1997, the Japanese and North Korean Red Cross committees reached agreement on an arrangement for ten to fifteen Japanese wives to visit Japan. The agreement was made possible by the Tokyo-Pyongyang accord in August to resume diplomatic normalization talks as soon as possible. While attempting to normalize its relations with Pyongyang, Tokyo does not wish to jeopardize its relations with Seoul, much less its relations with the United States. Seoul remains extremely wary of any Japanese overtures toward Pyongyang, and Tokyo recognizes this. 42 Therefore, throughout the twists and turns of international relations surrounding the Korean peninsula, Tokyo closely consults with Seoul and Washington. For example, LDP Vice-president Keizo Obuchi visited Seoul shortly after the Tokyo-Pyongyang agreement in 1995 and reassured the South Korean government that Japan would continue to coordinate closely with Seoul and Washington. In a meeting between President Kim Young-sam and Prime Minister Ryutaro Hashimoto in Beppu, Japan, on January 25, 1997, the Korean leader reiterated that in its approach to North Korea, Tokyo should consult closely with Seoul as well as consider the progress of the four-power peace talks and North-South Korea relations. The Japanese leader pledged that Tokyo would cooperate closely with Seoul and Washington. 43 Tokyo also demonstrated its sensitivity to Seoul over the issue of humanitarian assistance to North Korea, after floods and draughts severely afflicted that country's food production in 1995-1997. In May 1995, for

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example, Tokyo delayed, until after consultation with Seoul, its decision to send its first humanitarian shipment of rice to North Korea. In August 1997, South Korea and the United States announced they would extend humanitarian assistance amounting to $26 million and $52 million, respectively; Japan then followed suit by announcing its plan to give $20 million worth of humanitarian food aid to North Korea. 44 In short, Japan's relations with South Korea serve as a major constraint on its approach to North Korea. Barring a major break in U.S.-South Korea relations, Tokyo will continue to consult closely with both Washington and Seoul before embarking on major initiatives toward Pyongyang.

Domestic Politics in Japan Japanese domestic politics also indicates continuity in Tokyo's policy toward Pyongyang. The end of the Cold War has eliminated the persistent ideological rift between the right and the left that characterized Japanese politics during those decades. This is most dramatically symbolized by the fall of the Socialists, the most important opposition party from the 1950s through the 1980s but one of the smallest opposition parties since the most recent parliamentary elections in 1996. The end of ideological politics in Japan has also meant a loss of strength for the once powerful Liberal Democratic Party, which lost its majority position in the House of Representatives in 1993 and in 1995 resorted to forming a coalition government with its erstwhile political adversary, the Socialists. As a result, there is now little ideological motivation in the foreign policy debate among the political parties, large or small, except for the Communists, who remain officially committed to the ideals of communism. 45 The de-ideologization of Japanese politics has two conflicting implications for Tokyo's overall foreign policy. On the one hand, the disappearance of the postwar left-right division has led to a declining role for political ideologues and rising influence for government bureaucracies in the making of Japanese foreign policy. Tokyo's international policy today is informed more by the pragmatic interests and risk-avoiding orientations of government bureaucrats than by change-seeking initiatives of individual politicians or political parties. The bureaucratic tendency toward risk aversion tends to result in an absence of major policy initiatives. The bureaucratization of foreign policymaking means, generally, that any major foreign policy shift will require consensus among the foreign, economic, and defense bureaucracies, particularly the Ministry of Foreign Affairs, the Ministry of International Trade and Industry, the Ministry of Finance, and the Defense Agency. It is a difficult and time-consuming task to forge a consensus on a major, controversial foreign policy issue. Therefore,

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bureaucratically dominated policymaking offers rather dim prospects for a major overall shift in Japanese foreign policy. On the other hand, the de-ideologization of Japanese politics may allow for greater flexibility in Tokyo's policy toward North Korea. Japanese prime ministers in the post-Cold War era should feel less constrained by ideological residues in the political parties that they represent. For example, it is not inconceivable that Prime Minister Ryutaro Hashimoto may contemplate major foreign policy initiatives if he feels these would enhance both his leadership credibility and Japan's foreign policy profile. In fact, there are indications that Hashimoto wants to establish a stronger prime minister's office, with independent policy review capability, than was the case under previous governments (excepting the tenure of Yasuhiro Nakasone—between 1982 and 1987—who undertook controversial steps toward strengthening the power of the prime minister's office in foreign policymaking). However, the current prime minister is focused more on domestic policy priorities, particularly in the area of administrative reform, than on foreign policy. Although he recently exhibited his leadership capability on the issue of U.S. bases in Okinawa, his primary concern in this case was political—that is, to control the potentially disruptive effects on the just reconfirmed U.S.-Japan security alliance of the Okinawans' demand for reducing the size of U.S. bases on their islands in order to ameliorate their impact on local communities. It is doubtful that the current prime minister will take major policy initiatives toward the Korean peninsula. Hashimoto is not likely to take the kind of political risks that the late Shin Kanemaru took when he tried to create an opening in the frigid Tokyo-Pyongyang relationship by leading, along with his Socialist counterpart Makoto Tanabe, the Japanese delegation to Pyongyang in 1990. 46 Moreover, given the dismal performance of the Socialists in post-Cold War Japanese politics, including the 1996 upper house elections, the Socialists are not in a position to play a leading role in forging a pro-DPRK policy in Tokyo. Some policy cooperation exists between the LDP and the Social Democratic Party, and with former SDP members who have joined non-LDP parties, but such cooperation is not likely to include a major departure in Japanese policy toward the Korean peninsula. A major foreign policy initiative toward the Korean peninsula is thus highly unlikely unless and until it is clearly dictated by substantial and unmistakable changes in the external environment—especially changes in U.S. policy toward the target area and a paradigmatic shift on the part of the foreign policy community in Japan. A recent example of the coincidence of external and internal changes is the visible shift in Tokyo's policy toward Russia in 1997. On July 24, 1997, Prime Minister Hashimoto made a policy speech to the Association of Corporate Executives calling for improvement in Japan-Russia relations in the political, economic, and

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security spheres. In the speech the prime minister articulated three principles to guide the bilateral relations: mutual benefits, mutual confidence, and long-term perspectives. The statement in effect delinked the two countries' economic relations from the bilateral dispute over the Northern Territories, which had prevented a genuine improvement in the overall relations between Tokyo and Moscow. Tokyo had received clear and unmistakable signals from Washington with reference to a policy shift toward Moscow. The U.S. policy of accommodation and cooperation with Russia was clearly indicated by Washington's Partnership for Peace initiative, its economic and technical assistance for Russian economic reforms, and its support for Russia's membership in the Group of 7 (now the Group of 8). Following the G-8 summit in Denver, Colorado, in 1997, the Japanese prime minister directed the foreign ministry to review its policy toward Russia. This coincided with a major change in the bureaucrats' thinking about Japan-Russia relations. Hashimoto's speech marked a political and psychological breakthrough. 47 Public opinion in Japan gives no indications conducive to a major policy shift toward the Korean peninsula. Public opinion will remain an insignificant factor, as there are no politically significant groups in Japan that can mobilize support for a dramatic change in their government's policy toward the Korean peninsula. There are Korean residents in Japan with North Korean ties who would stand to benefit from improved Japan-DPRK relations, but they are not in a position to mobilize the general public, let alone alter the Japanese government's policy.

The Limited Economic Factor Nor do Japan's current economic interests indicate any possibility of a major turnabout in policy toward the Korean peninsula. Japan's economic ties with South Korea are substantial. In 1995, Japanese imports from South Korea amounted to $17,269 million, making South Korea the third largest exporter to Japan, after the United States ($75,408 million) and China ($35,922 million). Japan was South Korea's second most important export destination that year, after the United States; Japanese exports to South Korea stood at $31,291 million. Japan was South Korea's most important source of imports. 48 In contrast, Japan's economic ties with North Korea are very limited. As Table 9.1 shows, Japan exported a mere $227 million worth of goods to North Korea and imported $291 million in 1996. For North Korea, however, Japan is an important trade partner. Japan is the largest importer of North Korean products and the second largest exporter to North Korea, after China. Much of the trade between Japan and North Korea is conducted by North Korean residents of Japan. 49

250 Table 9.1

Tsuneo Akaha

North Korea's Major Trade Partners, 1990-1996 (in U.S.$ millions)

Trade Partners Export to Japan China South Korea Russia Import from Japan China South Korea Russia

1990

1991

1992

1993

1994

1995

1996

300 125 12 1,047

284 86 106 171

257 156 163 65

252 297 178 39

323 199 176 40

340 64 223 16

291 69 182 29

176 358 1 1,668

224 525 6 194

223 541 11 227

220 602 8 188

171 425 18 100

255 486 64 68

227 497 70 36

Source: Constructed from Economic Research Institute for Northeast Asia (Niigata, Japan), ERINA Report 18 (1997): 75. Note: The figures for Russia in 1990 and 1991 are for the former Soviet Union.

It would be clearly against Japan's economic interest to alienate South Korea by improving its relations with North Korea at a pace or in a manner that South Korea would find objectionable. We may also examine Japan's role in multilateral economic cooperation involving North Korea. One such case is the Tumen River Area Development Programme, the project supported by the United Nations Development Programme (UNDP) to develop the border area of China, Russia, and North Korea—a project that is attracting increasing international attention in that it represents the first attempt at multilateral economic cooperation in postwar Northeast Asia. Historically significant, it symbolizes the thaw in Cold War hostilities in the region. Observers concur that Japan's participation is essential to the project's success; Japan could be a major source of capital and an important market for commodities to be produced in or shipped through the area targeted for development. However, Japan is currently a passive observer rather than an active participant, and officially holds an observer status in the project. According to Tokyo, the absence of diplomatic ties with North Korea prevents the Japanese government from providing direct assistance to the project. Tokyo sees no compelling reason for altering its cautious approach, as the project currently faces many formidable obstacles beyond Japan's control. The most important obstacle is the absence of a common strategic view among the participating countries regarding the political, security, and economic implications of the project. Beyond the basic agreement that the project requires both unilateral and joint investment of resources, the parties have divergent agendas and priorities. For example, the DPRK is evidently very concerned to attract foreign investments for its effort to develop the Rajin-Sonbong area. Pyongyang certainly has no intention of subordinating this goal to the Tumen River project. Even the establishment of a Free Economic and Trade Zone (FETZ) in the Rajin-Sonbong area in 1991 and Pyongyang's repeated invitation for

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international investments have so far attracted only a limited interest in Japan. 50 Although a number of Japanese firms—such as trading, construction, light manufacturing, and engineering companies—might be interested in business opportunities in the FETZ, they are not likely to venture into risky investments without a go-ahead from the Japanese government. In the early 1970s major Japanese trading companies invested in the construction of cement and other plants in North Korea, but they soon faced serious problems of unpaid bills. Almost $800 million in North Korean debts are outstanding today. 51 In conclusion, it would take a miracle for Tokyo to embark upon a major policy shift in support of political initiatives from Pyongyang at the risk of jeopardizing Japan's relations with either Washington or Seoul.

Conclusion The foregoing analysis leads to several conclusions. First, Japan's near-term policy toward the Korean peninsula will be dictated by its overall foreign policy goals, that is, to maintain a stable and peaceful international environment favorable to its peace and prosperity; to maintain its close alliance with the United States for its own security and for the peace and stability of the region; and to improve its relations with its Asian neighbors, including South Korea. Second, Tokyo will maintain close consultation with both Washington and Seoul. Tokyo will generally follow Washington's lead but also try to coordinate its policy with that of Seoul so as not to raise any suspicions in the ROK regarding Tokyo's political intent. Generally, Tokyo will be in favor of proposals to promote the peninsula's stability, but it will have serious doubts about the credibility of Pyongyang's initiatives. Third, once the Korean situation stabilizes and the international community, particularly the United States and South Korea, favor Japan's diplomatic normalization with North Korea, Tokyo may rather swiftly move toward reconciliation with Pyongyang. The Japanese government will likely announce a series of measures it will take to support efforts to open up North Korea to the international community. This will probably include offers of economic assistance through bilateral (Japan-DPRK) channels, through trilateral (Japan-U.S.-ROK) coordination, and through multilateral mechanisms (e.g., KEDO, the UN, the Asian Development Bank, and such other processes as the Tumen River area development project). Japan is also likely to request expansion of the Four-Party Talks to include Japan and Russia, to further multilateralize talks on the future direction of Korea. Divided or united, the Korean peninsula will remain a major security concern to Japan. Japan will continue to desire and support a stable peninsula

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across the Sea of Japan. Tokyo is painfully aware, however, that its influence and policy options are quite limited. As the United States becomes increasingly dependent on its allies' cooperation and support to maintain its military presence in the region, Tokyo will step up its efforts to shore up Washington's security commitment to Japan. Japan will also explore multilateral cooperative mechanisms to supplement its bilateral alliance with the United States. The alternative—a dangerous erosion of the credibility of U.S. security commitments in the region, a precipitous deterioration of the Korean situation, and hegemonic rivalries in Northeast Asia accompanied by multiple arms races among the region's powers—would in all likelihood push Japan onto a path of major remilitarization. Not only would such a prospect be frightening to Japan's neighbors who suffered at the hands of Japanese imperialists/militarists earlier in this century, but it would doom Japan's search for a peaceful place under the sun in the next century.

Notes 1. I wish to thank Alexander Mansourov of Columbia University for bringing to my attention some excellent studies of pre-war Japanese involvement in Korea. 2. The domestic upheavals included the Taewongun-inspired Military Mutiny of 1882, the pro-Japanese coup d'état of 1884, uprising of the Tonghak peasant army, controversial Japan-modeled Social and Administrative Reforms of 1894, and assassination of Queen Min in 1895. 3. In K. Hwang, One Korea Via Permanent Neutrality: Peaceful Management of Korean Unification (Cambridge, Massachusetts: Schenkman, 1987), p. 58. 4. Hwang, One Korea, p. 59. 5. Ki-baek Lee, A New History of Korea (Cambridge, MA: Harvard University Press, 1984), p. 306. 6. As a result of its victory over Russia, Japan also gained control of the southern half of Sakhalin and retained control of the entire Kurile Islands. In 1875, on the basis of the Treaty for the Exchange of Sakhalin for the Kurile Islands, Japan conceded all of Sakhalin to Russia in exchange for the entire Kurile chain. 7. The East-West conflict also delayed reconciliation between South Korea and the former Soviet Union and China until 1990 and 1992, respectively. Finally, despite the establishment of diplomatic relations in 1956, Japan and the former Soviet Union have failed to conclude a post-World War II peace treaty and harvest the potentially substantial economic benefits of normalized relations. 8. Asahi Shimbun, November 7, 1994, p. 1. 9. Asahi Shimbun, March 26, 1994, p. 3. 10. Asahi Shimbun, March 25, 1994, p. 9. 11. See Boeicho, Heisei 8-nendo Boeihakusho 1996 (1996 defense white paper) (Tokyo: Okurasho Insatsukyoku, 1996), pp. 81-88 and 96-130; The President of the United States, A National Security Strategy of Engagement and Enlargement (Washington, D.C.: The White House, February 1996), pp. 39^*0; Office of International Security Affairs, Department of Defense, United States Security Strategy for the East Asia-Pacific Region (Washington, D.C.: Department of Defense, 1995), pp. 5-8.

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12. For example, an Asahi Shimbun public opinion poll conducted in September 1996 indicated that 63 percent of respondents believed the bilateral security treaty contributed to the peace and security of Asia Pacific, in comparison with 24 percent who thought it did not. Asahi Shimbun, November 9, 1996, p. 8. 13. See, for example, Ichiro Ozawa, Nihon Kaizo Keikaku (A plan to reconstruct Japan) (Tokyo: Kodansha, 1993), p. 124. An English translation of the book was published as Blueprint for a New Japan: The Rethinking of a Nation (Tokyo: Kodansha International, 1994). 14. This concern is discussed in Christopher W. Hughes, "The North Korean Nuclear Crisis and Japanese Security," Survival 38:2 (summer 1996): 79-103. 15. See, for example, Fumiaki Nishiwaki, "Amerika no Reisengo Senryaku to Nihon no Anpo Seisaku" (U.S. post-Cold War strategy and Japan's security policy), in Masamori Sase and Satoshi Ishiwata, eds., Tenkanki no Nihon soshite Sekai (Japan in a transitional period and the world) (Tokyo: Ningen no Kagakusha, 1995), pp. 95-123. 16. See, for example, Kenji Suzuki, '"Omoiyari Yosan' wa Nichibei Anpo no Akashi ka Onimotsu ka" (Is the "sympathy budget" a proof of the Japan-U.S. security relations or a burden?), Chuo Koron (January 1993): 84-93. Two hundred and fifty billion yen, or about $2.2 billion, was budgeted for the host-nation support in FY 1994. 17. See, for example, Jitsuro Terashima, '"Shinbei Nyua' no Sogo Senryaku o Motomete" (In search of a comprehensive strategy for "friendship with the U.S. and joining Asia"), Chuo Koron (March 1996): 20-38. 18. See, for example, Hisao Iwashima, "Hanto o meguru Gunjiryoku Baransu: Beigun Purezensu no Ichi Kosatsu" (Military balance surrounding the [Korean] peninsula: A consideration of the U.S. military presence). A paper presented at the Kanazawa International Symposium Toward a Multilateral Cooperation in Northeast Asia, June 2-5, 1997, Kanazawa, Japan. 19. See, for example, Motofumi Asai, "Anpo no Seisan ga Hitsuyo, Beikoku ni Geigo Yameyo" (A revision of the [Japan-U.S.] security treaty is necessary. Stop flattering the United States), Asahi Shimbun, October 22, 1992, p. 9. 20. See, for example, Takehiko Kamo, "'Shinrai Taikoku' Nihon e no Michi" (The road toward a "trust power" Japan), Ushio (May 1996): 76-85. Kamo is critical of what he terms the "status-quo thinking" that informs the Nye Report (discussed below) and urges Japan to develop a post-Cold War strategy involving broader, nonmilitary U.S.-Japan cooperation, engagement of China in international affairs, and multilateral private-level communications involving North Korea. 21. See interview with the chief author of the report, Professor Akio Watanabe of Aoyama Gakuin University, in "Anpo o Tou" (Questioning the [U.S.-Japan] security treaty), Asahi Shimbun, June 14, 1996, p. 7. 22. See "Heisei 8-nendo Iko ni kakeru Boei Keikaku no Taiko ni tsuite" (On the defense program outline for fiscal year 1996 and thereafter), Defense Agency, November 28, 1995; "Heisei 8-nendo Iko ni kakeru Boei Keikaku no Taiko ni tsuite (Shiryo 1)" (On the defense program outline for fiscal year 1996 and thereafter [document 1]), Defense Agency, November 1995; "Heisei 8-nendo Iko ni kakeru Boei Keikaku no Taiko ni tsuite (Shiryo 2)" (On the defense program outline for fiscal year 1996 and thereafter [document 2]), Defense Agency, November 1995; and '"Shin Boei Taiko' ni tsuite," Defense Agency, n.d. 23. The new NDPO envisages a reconfigured and smaller Ground Self-Defense Force (GSDF), the total number of personnel to be reduced from the present 180,000 to 160,000, including a newly established 15,000 rapidly deployable reserve force. Major changes planned for the Maritime Self-Defense Force (MSDF)

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include reorganization of escort flotillas from the present ten regional/district units totaling thirty ships to seven units of twenty-one ships altogether, an increase in the number of mine-sweeping units from one to two, reconfiguration of ground patrol units from the current sixteen units to thirteen units, and reduction of tactical aircraft from about 220 now to about 170. The 1995 document also envisages a restructured Air Self-Defense Force, with the fleet of tactical aircraft to be reduced from the present number of about 430 to about 400, including about 300 fighter aircraft. 24. Office of Assistant Secretary of Defense, News Release "Completion of the Review of the Guidelines for U.S.-Japan Defense Cooperation," New York, September 23, 1997, p. 1. 25. These commentaries are reported in the digest of international media reaction to the new guidelines distributed by the U.S. Information Agency. See "Northeast Asia Peace and Security Network Special Report, October 6, 1997," Berkeley, California. For the concept of "the situation in areas surrounding Japan," see the discussion that follows. 26. Northeast Asia Network, October 6, 1997. 27. Northeast Asia Network, October 6, 1997. 28. Asahi Shimbun, September 24, 1997, p. 15. 29. These activities are noted as examples of cooperation in the annex to the guidelines. 30. See annex to guidelines. 31. Under the 1978 guidelines, Japanese and U.S. defense planners conducted joint studies of contingencies involving a Soviet invasion of Hokkaido and a Middle East conflict posing a direct threat to Japan, but details were not made public. 32. For a discussion of this scenario, see Toshiyuki Shikata, "What Should We Do in Contingencies?—Japan's Crisis Management System Questioned," Gaiko Forum, June 20, 1996, pp. 120-127, reported in FBIS Daily Report, June 20, 1996 (FBIS-EAS-96-133). Shikata is a professor at Tokyo University and a former commanding general of the Ground Self-Defense Force. 33. For an example of Japanese discussion of possible contingencies involving North Korea, see the roundtable discussions by Atsuyuki Sassa, former director of the Cabinet Security Affairs Office; Shunji Taoka, Asahi Shimbun staff writer; and Takashi Higaki, freelance journalist, appearing in Ronza, August 1996, pp. 10-19, reported in FBIS Daily Report, July 17, 1996 (Ffl/S-EAS-96-138). 34. Although Russia's defense budget jumped from 384 billion rubles in 1992 to 80,185 billion rubles in 1996, the incredibly high inflation (1,830-fold increase during this period) puts the real defense budget at about 1,800 billion yen, or one-third of Japanese defense spending. See Iwashima, "Hanto o meguru Gunjiryoku Baransu." 35. In fact, the outbreak of the Korean War in 1950 and U.S. procurement in support of its intervention in the conflict brought to Japan the major boost the country needed for its postwar recovery. 36. See Tsuneo Akaha, "Japan's Security Policy in the Posthegemonic World: Opportunities and Challenges," in Tsuneo Akaha and Frank Langdon, eds., Japan in the Posthegemonic World (Boulder, CO: Lynne Rienner Publishers, 1993), pp. 99-100. 37. See Yasuhide Yamanouchi, "Japan's Security Policy and Arms Control in North East Asia," IIGP Policy Paper 59E (Tokyo: International Institute for Global Peace, June 1991); Ryukichi Imai, "Expanding the Role of Verification in Arms Control," IIGP Policy Paper 59E (Tokyo: International Institute for Global Peace, February 1992); and Ralph A. Cossa, The Major Powers in Northeast Asian Security, McNair Paper 51 (Washington, D.C.: Institute for National Strategic Studies, National Defense University, 1996), p. 30.

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38. For example, Kim Yong-sun, secretary of the Korean Workers Party Central Committee, told reporters in April 1996, "The agreement for resumption of DPRK-Japan talks which was adopted this time made it clear again that the talks for normalization of DPRK-Japan diplomatic relations which will be held in the future is a continuity of the DPRK-Japan intergovernmental talks which had been held according to the historic three-party joint declaration on DPRK-Japan relations which was adopted by the Workers Party of Korea and the Liberal Democratic Party of Japan and the Japan Social-Democratic Party in September 1990. Therefore, the DPRK-Japan intergovernmental talks for normalization of diplomatic relations in the future should be a resumption and continuity of talks which had been held according to the three-party joint declaration. In this sense, the form of the document is not a declaration but an agreement." (Yong-sun Kim, "March 30 Agreement on Resumption of DPRK-Japan Normalization Talks Has Binding Force," Korea Report, April 1995, pp. 4-5.) 39. Japan was expected to contribute $1-1.2 billion, or 25-30 percent of the estimated $4 billion in total cost of the installation of light-water reactors to replace the graphite-moderated reactors. 40. Asahi Shimbun, April 5, 1997, p. 3. 41. An estimated 1,800 Japanese women accompanied their North Korean husbands to North Korea during the period of 1955-1984. Asahi Shimbun, September 10, 1997, p. 1. 42. Cossa, The Major Powers in Northeast Asian Security, p. 32. 43. Asahi Shimbun, January 26, 1997, p. 1. See also Asahi Shimbun, October 11, 1997, p. 2. 44. On August 23, South Korea announced it would give an additional $10 million in humanitarian aid to North Korea, including food, medicine, and agricultural equipment. Asahi Shimbun, August 24, 1997, p. 1. 45. The recent increase in the Communist Party's popularity among Japanese voters reflects not their ideological support of the communists but rather their disgust with the mainstream politicians who appear to be more interested in "politics," that is, gaining or staying in power, than in effectively managing the nation's affairs, most importantly in steering the country out of its current economic recession, the deepest and the longest that Japan has experienced since the immediate postwar years. 46. Reinhard Drifte, Japan's Foreign Policy in the 1990s: From Economic Superpower to What Power? (New York: St. Martin's Press, in association with St. Antony's College, Oxford), p. 64. 47. Japan and Russia in Northeast Asia: Building a Framework for Cooperation in the 21st Century. Report of the Workshop in Tainai, Niigata, 29-30 July 1997 (Niigata: Economic Research Institute for Northeast Asia, 1997), pp. 2-3. 48. Summary constructed from Japan 1997: An International Comparison (Tokyo: Keizai Koho Center, 1997), p. 56, and from Economic Research Institute for Northeast Asia (Niigata, Japan), ERINA Report 18 (1997): 74. 49. Asahi Shimbun, October 9, 1997, p. 11. 50. Asahi Shimbun, July 18, 1996, p. 6. 51. Asahi Shimbun, September 28, 1997, p. 8.

10 China's Response to Changing Developments on the Korean Peninsula GEORGE T . YU 1

China's national interests and foreign policy objectives toward the Korean peninsula historically and contemporarily have been multifarious, ranging from protecting the security of the Chinese "core" in the context of the premodern Asia Pacific regional tributary system of international relations—with Korea as a member of the Sinic world—to supporting North Korea as a fellow member of the rapidly dwindling communist bloc, and engaging South Korea as a source of capital and technology in its urgent pursuit of development and modernization. In the decades following World War II, China's policy toward and relations with the Korean peninsula remained comparatively "structured" until the 1980s. Support for North Korea was based upon common membership in the communist bloc, while opposition to the South was founded upon the latter's alliance with and dependency upon China's once foremost adversary, the United States. Heralded by the Korean conflict, the Cold War between the Soviet-led communist world and the U.S.-led allies sealed China's Korea policy for the next thirty years, from the 1950s through the 1970s. With China's introduction of the dual policies of economic reform internally and "open policy" externally, the collapse of the Soviet bloc, and the emergence of the new Russia, China's Korea policy witnessed a major transformation in the 1980s. These developments accelerated in the 1990s, when China established formal diplomatic relations with South Korea in August 1992, while still maintaining "correct relations" with North Korea. On occasion, recognition of both Koreas placed China in a perplexing position; this difficulty for China is not likely to lessen, short of either major reforms and/or the fall of the North or Korea's reunification. 2 Even reunification, however, may pose new problems, for example, the presence on 257

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China's border of a potentially highly nationalistic Korea supported by the United States. What drives China's Korea policy, North and South? What are the costs and benefits of China's policies? And how has China adjusted and responded to the changing international political, economic, and security situation on the Korean peninsula? The argument of this study is simple. Now China is accorded a level of international recognition as an emerging regional power with global aspirations, based upon not only geopolitical considerations but also its economic performance and future developmental promise. China's dramatic domestic development could well be maintained, furthering its rise as a regional and global power. The impact of China's domestic development upon international relations will remain critical, especially in the Asia Pacific region. For the near term, China's policies toward and relations with the Korean peninsula will be influenced by the interaction of China's domestic economic goals with the regional and international environment, which in turn would affect China's overall foreign policy and international status. Given these initial conditions, how does China view the changing relationship between the two Koreas and the United States? On one hand, partly because of its adoption of the principles of peaceful coexistence, China has revealed limited concern for the ebb and flow of adjustments to these essentially bilateral relationships as long as its economic, foreign, and security policy objectives have been met. For example, although the South's economic and political maturation—and its resulting boost in confidence—have significantly affected its relations with the United States, this shift did not alter until the late 1990s the mutually beneficial synergy developing with China. South Korea's economic turmoil of 1997 introduced, however, a new and unknown element to its relations with China. The South's appeal as a source of capital and as an economic partner lessened. With South Korea's economic and international stature reduced as a result of economic difficulties, China's role on the peninsula was enhanced, as was North Korea's position against the South. Nevertheless, whatever the near- and long-term consequences of the South's economic crisis and their influence upon Chinese relations with the two Koreas, China's interest in and concern for the South and the Korean peninsula will remain unchanged. As a "good neighbor," South Korea is too important for China not to maintain positive relations, politically, economically, and in the security area, with or without the promise of immediate economic benefits.

Reform and Open Policy The introduction of China's new agricultural and industrial reforms, the opening—albeit sluggish—of the Chinese market to foreign suppliers, and

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259

the introduction of foreign capital, management style, and technology in the late 1970s and early 1980s have had a profound impact upon China's development. Beginning with agricultural reforms, including the household responsibility system and free markets, and followed by urban industrial changes, the once stagnant Chinese economy has been gradually transformed into a dynamic growth-oriented market economy. President Jiang Zemin, at the Fifteenth Chinese Communist Party Congress in September 1997, promised further reforms, including privatization in "new forms of public ownership that could promote growth." A popular phrase from a recent U.S. presidential campaign, "It's the economy, stupid," points not inappropriately to the emphasis placed upon the new economic policy in China's transformation to an emerging regional and global power. A critical component of China's new economic policy is the opening of markets to attract foreign participation in China's economic development. Put differently, the success of the new economy is linked to and dependent upon outside capital and technology. Securing external support to develop China has become a primary objective of Chinese foreign policy. South Korea itself became an object of Chinese economic foreign policy in the 1980s, 3 though full diplomatic relations between China and South Korea were not established until August 1992. Prior to formal bilateral relations with the South, China had to settle its relations with North Korea. The Democratic People's Republic of Korea (DPRK) established diplomatic relations with China on October 6, 1949, shortly after the founding of the People's Republic of China on October 1. China-North Korea political relations and friendship were "forged in blood" with China's participation in the Korean War, beginning October 1950, in common opposition against "American imperialism." 4 The period between the Korean armistice of 1953 and the mid-1980s witnessed continued mutual support between China and North Korea, including exchange of visits by government leaders as well as economic and military delegations. Many cultural, economic, and trade agreements were also concluded during this period. China's relations with North Korea began to change following the Soviet Union's/Russia's policy change toward the DPRK. With the end of the Cold War in the late 1980s, the Soviet Union had no reason to continue supporting the North; the new Russia had every reason to develop cooperative links with South Korea in anticipation of much needed investments. By reducing its support for North Korea, Russia also demonstrated to the West that it no longer sought to maintain the Cold War international structure. Such policy shifts in Russia allowed China to follow suit. Moscow's policy change toward the Korean peninsula had a profound impact upon Beijing. First, once Russia manifested its new policy, including formal recognition of South Korea, China too became free to establish

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diplomatic and economic ties with the South. Second, the new Russian policy relieved China from the burden of providing costly support to North Korea, although correct relations were continued since the North remained geopolitically vital to China and constituted one of the few remaining communist states. Finally, it permitted greater Chinese leverage over North Korea, since the North now had to depend more on China. Concurrently, however, it allowed China to widen its "distance" from North Korea, thereby lessening the possibility for the latter to drag China into another war. In the 1990s, China's symbolic support for North Korea continued much as before, influenced by its belief that political stability would be assured with the assumption of power by Kim Jong-il in 1997 following the required three-year mourning period. The DPRK was required to make adjustments in its economic and foreign policies in order to reflect post-Cold War realignments and the ascendancy of China's economic development imperatives. Nevertheless, it was expected that Pyongyang would above all maintain a stable relationship with China. The most critical facilitator of Beijing-Pyongyang relations was China's interest in the stability of the Korean peninsula and the entire region of Northeast Asia. 5 At the international level, China declared its support for the DPRK's goal of leading the Korean reunification. Through 1987, China stated unequivocally that it had neither diplomatic ties nor any bilateral relations with South Korea. 6 To the extent that the spirit of this policy remained unchanged, its purpose was largely to save face for the North and to uphold the semblance of ideological unity. Beijing sought, nonetheless, to refashion its Stalinist protégé, providing inspiration via Deng Xiaoping's 1992 tour of Guangdong province, in which he urged economic reform. 7 Pressured by its own fiscal constraints in underwriting bloated state-owned enterprises and struggling to reverse the centrifugal drift of the provinces, however, Beijing could not afford the burden of propping up the Pyongyang regime, which hitherto had been shouldered by Moscow. 8 Ironically, this situation posed an opportunity for China to increase its leverage over North Korea, since the latter now had no choice but to deepen its dependence on China, even for diminished levels of political and economic support. China's diplomacy toward South Korea, enabled by the collapse of communism in Eastern Europe in 1989 and the former Soviet Union's normalization with the South in 1990, led to the establishment of full diplomatic relations in August 1992. A report by Foreign Minister Qian Qichen to the Chinese Communist Party's central foreign affairs group suggested that recognition would not only assure the South's economic support, but also provide foreign policy cover in its relations with the North, Taiwan, and the United States. 9 Having been caught unawares in 1991 by China's support of simultaneous entry to the United Nations by the two Koreas—

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a tacit shift from the one-Korea to a two-Korea policy—Pyongyang became even more resigned to its weakened position after China-Republic of Korean (ROK) normalization. Its subdued response was to hint that it might drop its demand for inspections of U.S. bases in the South in the ongoing negotiation over Pyongyang's nuclear weapons program as well as delay high-level talks with the South. A primary objective of China's new relationship with South Korea was the promise of economic benefits. China was not to be disappointed. During the first five and one-half years of Sino-South Korean economic relations, from 1988 through the first five months of 1993, a total of 631 cases of direct South Korean investments in China totaling over U.S.$600 million were approved. 10 Investment sectors ranged from textiles/apparel ($70 million) and chemicals ($14 million) to nonmetallic minerals ($15 million) and machinery/equipment ($17 million). Trade also grew rapidly from $2,142 million in 1989 to $4,233 million during the first half of 1993.11 In 1992, South Korean exports included steel/metal ($858 million), machinery ($185 million), chemicals ($520 million), and electric/electronics ($209 million), and imports from China included agricultural products ($1,239 million), minerals ($519 million), and textiles ($813 million). Since 1993, both South Korean investments in and trade with China have continued to increase. Although North Korea's trade with China also grew during this period from U.S.$565 million in 1989 to $905 million in 1993, the trade deficit also rose from $239 million to $381 million. But from 1993, trade began to decrease to $646 million in 1994 and $592 million in 1995. 12 In 1993, Chinese exports of foodstuffs were about $146 million, and North Korean exports came to only about $12 million. Coal showed similar figures, with Chinese exports remaining steady at over $80 million, and North Korean exports continuing their slide to below $2 million. Definitely, North Korea's economic reliance upon China had deepened. The South Korea-China two-way trade, by comparison, has become many times more valuable to Beijing. Pyongyang-Beijing trade continues to be composed largely of raw materials, foodstuffs, energy, and some steel products, in contrast to the more technologically advanced trade between Seoul and Beijing, which includes machinery and electronics. 13 While North Korea delays its own economic reforms and experiences considerable economic difficulties requiring international food and other assistance, various levels of government and industry have been establishing linkages between South Korea and China. Although Beijing would like to see a more productive North Korea, it has appeared content with a level of assistance and trade just sufficient to maintain a correct relationship and be a major influence over the North. In its attempt to diversify its sources of foreign technology and capital investment, China found an excellent instrument in South Korea to

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counter the dominance of Japanese sources, resulting in lowered costs. For South Korea, which has had to deal with wage increases surpassing productivity gains, the availability of less expensive but fairly productive Chinese labor gave its chaebols an opportunity to restructure production operations. Like Hong Kong and Taiwan before it, which have developed regional economic zones in close proximity to the mainland, South Korea began its efforts by shifting the production of such basic commodities as textiles. This shift is reflected in both the foreign direct investment and import figures cited earlier. Unlike other developing countries including South Korea, which were often forced to struggle against more technologically advanced economies, China was able to extract, by its sheer weight and status as the rising regional power, ever higher commitments from South Korea. This was clearly illustrated by the chaebols' competition for licenses to set up auto production in China. Prime Minister Li Peng could also rely on this leverage on his official visit to the South in January 1995—through the signals he sent in official talks and site tours emphasizing industrial cooperation, most notably in aviation industries. 1 4 In all likelihood, China and South Korea will continue to forge a normal and peaceful relationship with each other, based heavily upon economic cooperation. The 1997 South Korean economic turmoil has introduced an element of uncertainty to the future of South Korea-China relations. Clearly, South Korea's image as a successful industrial developmental model has suffered a blow, and its role as a supplier of capital for investment has been somewhat undermined. In the short term, the economic appeal and utility of the South to China might be quite doubtful. But China's need for South Korean capital and industrial products is unlikely to diminish, and, assuming South Korea's timely recovery, the economic factor in South Korea-China relations could regain primacy. The importance of economics in the beginning and subsequent development of South K o r e a - C h i n a interaction cannot be overstated. It was China's economic needs and South Korea's ability to meet those demands that enabled the establishment of formal political ties. South Korea's political gain was North Korea's loss. In this sense, the South's economic woes begun in 1997 could lessen its value to China.

The Beijing-Seoul-Washington Triangle China's growing interaction with South Korea has its roots in more than just economics. As we shall see, political and strategic considerations have been key factors—namely, concern with China's role as a secondary player in the China-Soviet Union (Russia)-United States triangle. 1 5 China has sought a new lever, South Korea, to deal with the United States, as the end

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of the Cold War has further reduced China's strategic importance. On a larger plane, in the context of the changing Asia Pacific international environment, formal linkages with South Korea improved China's standing with other Asian countries and enhanced its overall international posture. 16 They have also helped facilitate China's policy of pursuing regional stability. China had viewed the Korean peninsula as a Cold War battleground between the former Soviet Union and the United States. 17 But the Cold War ended on the peninsula with the establishment of Chinese and Russian relations with South Korea in the early 1990s. Although the South's strategy of nordpolitik has certainly resolved numerous security concerns, new questions have emerged. The rigid national security apparatus that had been organized around an anticipated invasion from the North has been transformed by "the emergence of a broad range of interest groups [that have] exerted formidable pressure on the regime through a variety of means." 18 Concerning the Agreed Framework between the North and the United States, from which the South was excluded, diverse opinions have surfaced. 19 It must be kept in mind, however, that from their perspective the Chinese were primarily concerned with the stability of the peninsula, whose interest was served by their nominal ally not developing an offensive nuclear capability. Discord between the United States and the South notwithstanding, China was content with the results of negotiation between Pyongyang and Washington over the nuclear issue. Meanwhile, North Korea's relations with Japan and the United States have steadily improved. The United States' "peaceful development" policy toward the DPRK brought alarm to both Beijing and Seoul. No longer did the United States regard and treat the DPRK purely as an adversary. Perhaps in light of China's threat of a UN Security Council veto of any economic sanctions against North Korea for its violation of International Atomic Energy Agency (IAEA) regulations, the United States abandoned the strategy of confrontation and instead pursued a peaceful resolution to the question through engagement. As one Chinese source stated, "the U.S. would like very much to have North Korea join the Northeast Asian strategic framework so that it [the United States] can hold the leading position on the Peninsula." 20 But the DPRK is likely to resist U.S. "threats" despite the superpower's growing influence in its calculations. Indeed, one Chinese observer compared United States-DPRK relations to a train that is likely to stay on track but whose journey will be of the stop-and-go variety.21 China's perception of its own relations with the United States is only marginally more favorable than its view of U.S. interaction with the DPRK. 22 China has attributed the difficulties of China-U.S. relations to the conflicts and frictions created by the United States, rooted in both "American public opinion and policy making bod[ies]." The list of difficulties is long, including disputes over textile products, China's sale of missile technology to

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Pakistan, prison labor products, human rights, intellectual property rights, sale of nuclear power equipment to Iran, and the Taiwanese leader Li Tenghui's visit to the United States. These and other problems have ensured that relations "will be in a volatile and tortuous manner for quite a long period." 23 According to China, the role of the United States may have a potentially negative impact upon the Korean peninsula in particular and upon Asia in general. 24 First, U.S. policy toward China could lead to a redivision of Asia Pacific into competing camps, reminiscent of the Cold War era. Second, noncooperation between the United States and China could work as an unsettling factor on the Korean peninsula, complicated by North Korea's nuclear weapons development. As an extension of this possibility, destabilization of the Korean peninsula could affect relations across the Taiwan straits and even exert indirect influence on such faraway places as Bosnia and Iraq. On the positive side, China has a keen eye on the benefits that may accrue from its cooperation with the United States, especially in security affairs on the Korean peninsula. In effect, China has accepted the need for a U.S. military presence on the peninsula: "Cooperative Sino-American relations ought, indeed, to permit America to maintain a robust, effective military force in Asia at relatively low cost and reduce the chances of North Korea nuclear development and destabilization of the Korean peninsula." 25 For China, the situation on the Korean peninsula is both reassuring and troubling. On one hand, Chinese policymakers discern a number of positive factors. First, China does not regard the peninsula as currently unstable. To ensure the continued success of economic reform and open policy, China desires continued peace and stability on the peninsula. Moreover, in this regard, China recognizes that the resolution of the North-South Korean problem requires the assistance of the United States and other non-Korean actors, even though China has "respected the sovereignty of the DPRK." 26 Second, China rejects Korean unification via force. "The key to peaceful reunification is direct dialogue between the North and the South." 27 In this context China also expects the DPRK and the United States to implement the nuclear framework agreement. Third, China has perceived the need for mutual recognition. The two Koreas became members of the United Nations in 1991, and by 1995 127 countries had established diplomatic relations with both Pyongyang and Seoul. For its part, "China's good neighborly relations of friendship with both the DPRK and ROK will expand." 28 Fourth, China recognizes the importance of trade, with both the DPRK and South Korea. The development of threeway commercial relations among the parties has been encouraged as North-South relations have improved. China believes that the three-way relationship will have a major impact upon the economic development and cooperation of Northeast Asia.

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On the other hand, China has injected into the Korean question its own domestic/international concerns, namely, the "one China" issue. China has noted that both the DPRK and South Korea recognized but one China, the People's Republic of China. China supports the reunification of the Korean peninsula; it also supports the concept of mutual noninterference in the others' internal affairs. A more troubling and critical factor in China's policy toward the two Koreas is China's relations with the United States. The United States' continuing disputes with China over human rights, trade, and other issues, plus its deep suspicion of the emergence of China as a potential hegemon, is likely to impact negatively upon the peace and stability of the Korean peninsula. China is equally distrustful of U.S. policy along "China's periphery regions." Nevertheless, as we have seen, it has recognized and accepted the positive role of a continued U.S. military presence on the Korean peninsula, subject to China's assent. It therefore recognizes opportunities for China-U.S. cooperation. One manifestation of Sino-U.S. cooperation was President Jiang Zemin's visit to the United States in the fall of 1997. Although the leaders of the two countries debated human rights and other differences, President Jiang must have found no difficulty in President Clinton's answer to the question of a U.S. military presence in Asia. Clinton's reply could have been uttered by Jiang, too—namely, the U.S. presence contributes to "meeting common security threats" and constitutes "a stabilizing factor." 29

Asia's N e w World Order: T h e N e w Regionalism The fall of the Soviet Union and the end of the Cold War radically transformed world politics; the socialist world lost its "nuclear umbrella" as well as its moral and economic benefactor. In the Asia Pacific region, however, changes in international relations had actually already begun in the 1960s with the widening Sino-Soviet conflict and the beginnings of U.S.-China rapprochement in the 1970s. China sought to chart its own foreign and domestic policies, independent of external constraints. As students of China's Korea policy have noted, a factor in China's interest in the Korean peninsula has been the close historical relationship between China and Korea, linked to China's central role in the premodern system of Asia Pacific regional international relations. 30 Korea's place and role in the traditional system was well defined as a tributary state within the Sinic orbital structure. The tributary relationship was built on recognition of China's paramount status in moral, political, economic, and military domains. 31 Acknowledgment of China's leadership position by the tributary states

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required China, in return, to provide largesse and on occasion security assistance to members of the China-centered family of nations. China did not enjoy absolute dominance over the Asia Pacific region. Consider, for example, Japan, which over time became only tangentially a member of the traditional Asia Pacific system. Nevertheless, given the unique political philosophy of China, the fundamental objective of government was to set in order the whole known universe; the Chinese emperor, as the Son of Heaven, was to be the supreme ruler of humanity. The China-centered system of international relations was shattered with the coming of the West in the nineteenth century. Such Western powers as Britain, France, the United States, and others, joined later by Japan, replaced the traditional system with a new structure, based upon the individual and collective industrial and military strength of the new powers. China entered the era that became known as the century of humiliation; China lost its preeminent role and became only one among the many weak nations of the world. China was not to reemerge as a regional power until after World War II. Although the founding of the People's Republic of China in 1949 brought back, as one student of Chinese history has written, the "old dream of universal empire, [and] the glory of being the Middle Kingdom in East Asia," 3 2 China's aspirations were constrained, in large part because of the East-West conflict. The bipolar division of Asia Pacific resulting from the Cold War limited China's rise in international stature. Political military constraints on China set the tone of its security policy toward the outside world. Adopting in essence a realist perspective, Chinese security planners stressed an antihegemonic policy once the People's Republic of China was born. This opposition to hegemonism was the guiding principle not only in the era of containment by the West but also throughout the years of Sino-Soviet rift. The end of the Cold War, the collapse of the Soviet Union, U.S. disengagement from Asia, and Japanese reluctance to assume a leadership position in the region have at long last provided China with an opportunity to assume a greater role in Asia's new world order, especially in East and Southeast Asia. The Korean peninsula has offered China one such opening, given its location at the traditional geopolitical confluence of four world powers. Proactive leadership has promoted China's goal of constraining U.S. post-Cold War hegemonic aspirations. 3 3 In light of the Clinton administration's shift from a fixation on human rights toward engagement—as embodied in Secretary of State Albright's mantra that "no one issue should hold hostage vital Sino-American relations along the full range of issues"—it appears that Beijing has positioned itself as an essential pivot country, especially in regional affairs. China has not hesitated to proclaim its reemergence as well as its impact upon and role in the Asia Pacific region, including the Korean peninsula. 34

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First, it was the founding of the People's Republic of China in 1949 that brought about the initial changes in Asia Pacific international relations. Japan leapt forward in economic development and then the four mini dragons followed. The Asia Pacific region took on a "new look" with China's emergence in the 1990s as an economic powerhouse. Second, China's rise, together with the growing economic strength of the other Asian countries, has transformed the region's international politics, from one of domination by a single superpower to multiplicity and coexistence. China, of course, recognizes the preponderance of U.S. power in the Asia Pacific region; the United States is the number-one country in national strength, given the size of its economy, its military capabilities, and its scientific and technological base. Third, the individual and collective economic strength of the Asia Pacific political entities is growing. China, it is predicted, will witness by 2010 a major increase in its aggregated national strength, "enabling [it] to have a greater impact and play a more unique role in the world." 35 Fourth, China's development will not threaten the interests of others, but Beijing will seek the establishment of "a new type of state-to-state relationship characterized by equality, good-neighborliness, and mutually beneficial cooperation." 36 The improving Sino-Russian interaction was seen as an example of the future cooperative pattern of Asia Pacific international relations. Finally, China saw its economic development as a model for all of Asia Pacific and a powerful guarantor for "regional peace and stability." There can be no question that China saw its role as central to the region. With regard to the Korean peninsula, China has pursued and supported relaxation of tension while playing a major role in ensuring stability. It was in this context that Beijing accepted the April 1996 proposal by Washington and Seoul for the Four-Party Talks—China, North and South Korea, and the United States—as a forum for establishing peace and security on the Korean peninsula. 37 The proposal implied that the Korea question could not be settled without Chinese input. More important, however, it recognized China's importance as an Asia Pacific power together with the United States and Japan. The Four-Party Talks to bring the Korean War to a formal end had a tortuous beginning. Initial discussions were held in New York in March 1997, and a following meeting in Beijing in June. Preliminary talks began in New York in August, but it was not until November that an agreement was reached to hold formal talks in Geneva beginning December 9, 1997. 38 As in the past, the negotiation with Pyongyang moved at a snail's pace; the first-ever conference of the four parties to the Korean War ended only with an announcement to hold a second meeting in March 1998, which in turn produced no substantive agreement. Nevertheless, the meetings constituted a giant step forward that at long last may help resolve the Korean conflict.

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With the conclusion o f the three-year mourning period for Kim II Sung, Seoul became anxious to resume an inter-Korean dialogue. 3 9 In March 1996, South Korean Foreign Minister Kong, in a meeting with Chinese President Jiang Zemin, requested China's intercession to bring Pyongyang back to the table and dissuade the North from excluding the South in its attempt to sign a peace treaty with Washington. Secret talks continued between the two Koreas concerning the four-way talks, with the North seeking aid and food supplies in exchange for its attendance. What remained clear, however, was that China was loath to allow the North a free rein with its foreign policy, given the potential for destabilization on the peninsula that such actions might encourage. China's position on the Four-Party Talks can be discerned from a combined overall assessment of international politics in regard to the Korean peninsula, Chinese domestic and foreign policy objectives in general, and the role o f outside powers, including the United States. In light o f these factors, a number of points are worth reviewing before examining China's perception of the talks themselves. For example, the Korean peninsula is viewed as "the most important potential hot spot in East A s i a . " 4 0 Although trade and other forms of interaction have increased between the North and South, "fundamental differences between the two sides remain serious." Furthermore, the two Koreas are heavily armed, each with a large concentration of military forces, and Seoul's apprehension over Pyongyang's nuclear program—though somewhat abated now—has further aggravated the tensions. In addition to the predicament of military confrontation, the two Koreas face serious internal economic and political problems. Thus both have needed to and will continue to focus on their respective domestic agendas. Moreover, external powers, especially the United States, have adopted "practical" policies of seeking to maintain peace on the Korean peninsula; indeed, since the ending of the Cold War the United States has tried to develop relations with the D P R K in the interest of security, economic needs, and the promotion of democracy. 4 1 The United States recognizes that any outbreak of hostilities on the peninsula would constitute a "serious blow" to the region's and its own economic security. China too has pursued peace and stability on the Korean peninsula. China considered its normalization of relations with the South as contributing to the stability of the peninsula, just as improvement in relations between the North and the United States was a "breakthrough" in NorthSouth relations. Above all, China has advocated a peaceful settlement to international disputes through bilateral and multilateral dialogue, cooperation, and interaction. Concomitantly, it recognizes that reunification o f the two Koreas can neither be imposed from without nor achieved by force; only through direct dialogue between the North and the South can peaceful unification be realized.

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Finally, China regards as "unlikely" an outbreak of hostilities on the Korean peninsula, given the interest, intervention, and pressure of external powers who all favor the status quo. In short, it is in China's interest that peace and stability be maintained between the two Koreas whether through coexistence or reunification. Regarding the four-party conference specifically, China has accepted it as a useful mechanism for achieving peace on the Korean peninsula. 42 China accepted the invitation to the Four-Party Talks when it was first presented in 1996: as a party to the Korean armistice agreement, it was natural that China should be a member of such talks leading to a permanent peace treaty. China even explained that North Korea's delay in agreeing to the talks resulted from a need to "study" the proposal. From China's perspective, despite agreement in principle with regard to the talks, there obtains considerable substantive and political distance among the parties. 43 First, misperceptions on each side remain significant. Although in recent years communication has improved between the North and the United States, the latter still sees North Korea as the region's most unstable regime and a potential source of conflict, and the North views the United States, through its continued military presence on the peninsula, as manifesting an aggressive Asian strategy. Hence North Korea and the United States still look upon each other as a threat. Concurrently, the well of distrust runs deep between North and South Korea. Each regards the other as posing a threat—the North as a potential invader, the South as an economic power that could absorb the North. These views are irrelevant to China and stem in large part from the two parties' refusal to accept the true meaning of peace—that is, that the mechanism for peace is different from that of an armistice. China thus calls for more confidence-building measures, especially in the military and security sectors. In addition to these misperceptions and fears, the various parties have arrived at the talks from different positions. Prior to the April 1996 South Korean-United States proposal for holding the Four-Party Talks, North Korea had proposed a peace agreement with the United States—in 1994 and again in 1996—to "improve relations with the United States and secure peace on the Korean peninsula." These proposals demonstrated that North Korea was opposed to the South's participation in the peace process and mechanism. On the other hand, the joint South Korea-United States FourParty Talks proposal was the South's answer to any North Korea-United States initiative. Furthermore, South Korea regards the Four-Party Talks primarily as a structure to enable direct negotiations between the North and the South, with China and the United States serving in a supervisory role. Given their suspicions of each other and their divergent relationship to the origin of the talks, it was not difficult for China to conclude that the two Koreas hold very different positions on the meaning of the Four-Party

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Talks. The question is whether the two sides will change their attitudes as the talks progress. Only time will tell. China is aware that the discussions will inevitably include issues of importance to North Korea-United States and South Korea-United States relations. These include, for example, the issue of the military demarcation line between the North and the South and the question of continued U.S. military presence on the Korean peninsula. China also expects that the four parties will handle a variety of other issues, including increased food aid to the North and a range of alternatives to improve North Korea-United States relations. These confidence-building measures are regarded as necessary for the success of the talks, bilateral and multilateral, within the framework of the four-party discussions. China is generally optimistic with regard to the Four-Party Talks, seeing them as a new beginning for the Korean peninsula, although predicting several years of hard-fought negotiations. China has also cautioned the North and the South against using internal political and economic developments, such as changes in political leadership and economic turmoil, as excuses for self-serving domestic policies that may cause unrest in the other side. Such policies would only bring negative consequences to both the North and the South. Overall, it is clear that China supports the FourParty Talks. They hold the promise of assuring peace and stability on China's borders while allowing China a formal role in the future of the Korean peninsula.

Conclusion The Korean peninsula constitutes a unique study of contemporary Chinese domestic and foreign policies, with implications for the future direction of China's national growth, for the linkage between China's domestic development and foreign policy, for peace and stability on the Korean peninsula and the related role of external powers, and for China's emergence as a regional and global actor. The Korean peninsula could be seen as one of the last holdovers from the Cold War era: North Korea, one of the few remaining communist states with a Stalinist-type economy, in confrontation with South Korea, a successful democratizing regime with a flourishing market economy. However, although in the Korean context the immediate Cold War structure remains, the larger bipolar configuration no longer exists. That is, the two Koreas may continue to stand against each other, but the backers of the two parties—the primary actors in the Cold War, including China, Japan, the Soviet Union/Russia, and the United States—have either reduced or withdrawn their respective support while engaging in diplomatic, economic, and other relations with both Koreas. 44 This has left the two Koreas

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with less independent leverage, prompting each by necessity to communicate with the other, to seek accommodation with major powers, and to redefine their respective international roles. It is in this context that China's relations with the two Koreas become important. Based on the historical and current factors presented in this chapter, I am able to draw several conclusions about the significance of, and perhaps prospects for, these relations. First, not since the founding of the People's Republic of China in 1949 has China enjoyed an extended period during which it has been free from direct or indirect foreign aggression or threats thereof. China's peripheral regions, including the Korean peninsula, are no longer being used either as actual staging bases or as proxies to attack against China. Indeed, in the wake of the withdrawal of Russian support from North Korea, China has been able increasingly to take advantage of the North's greater dependency for its own ends. For the first time since the nineteenth century, China is experiencing greater control of its periphery (to the discomfort of the periphery states) and hence of its security. However, a rising China should not be confused with a new regional imperial or hegemonic China, at least in the near term. 45 China's drive for internal economic modernization, its need for a peaceful and stable international environment, and the role of Japan, Russia, and the United States in Asia all limit China's ability to become a regional hegemon. Nonetheless, this is not to deny China's aspirations of regaining its former glory and becoming a superpower. Second, since 1978, China has been pushing a major economic development drive, with the goal of transforming China into a modern nationstate by the twenty-first century. As part of this long sought pursuit, China has searched for and welcomed external capital and technology in the framework of its "open policy." China's need for capital and other resources has coincided with South Korea's search for new markets, investment opportunities, and lower-cost production sites. China have every reason to develop cooperative interaction with South Korea. Specifically, South Korea's much needed capital and technology have been able to substitute for and compete with Japanese resources and investment in servicing China's economic modernization. Since the South sees China as a new economic frontier, there is mutual benefit in the relationship. For China, the linkage between domestic developmental requisites and foreign economic policy could not be more direct and transparent. Third, China's foreign economic policy also impacts upon its general foreign policy of championing both regional and international peace and stability. Peace on the Korean peninsula is essential for China, the region, and the world. Clearly, China requires international stability for its domestic development and for attracting foreign participation in its economy. Hence, China not only supports the relaxation of regional tensions but also promotes global stability.

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According to China, its peaceful stance has been the polar opposite to that of the United States, which, as the sole remaining superpower, is perceived by China as having instigated and supported discord. In the event of a renewal of the Cold War, a redivision of Asia Pacific into competing camps could destabilize not only the Korean peninsula but the entire region, including the Taiwan straits, as well. Such a development, in China's view, would be the sole responsibility of the United States, the only power that possesses the military force projection capability to handle a security situation of this magnitude. As we have seen, however, despite some Chinese foreign policy analysts' view that the United States is primarily interested in the maintenance of its own hegemonic position—and despite the political muscle South Korea has gained from economic success—China realizes that the continued stationing of U.S. forces in South Korea is essential to regional stability, thus permitting its own economic modernization to proceed. Lingering in the minds of Chinese planners is also the potential threat of a rearmed Japan. Until the distant prospect of Korean reunification is realized, which apparently to the Chinese is an internal matter, China will look unfavorably at any sudden reconfiguration of the United States' bilateral relationship with either Korea. Fourth, China has seen its own bilateral interaction with the North and South increase. Given the triangular cooperative economic relationship among China and the two Koreas, the North can finally cease its foot dragging in such projects as the proposed Tumen River Special Economic Zone—a project that should contribute to the development of the entire region. Clearly, China would play a leading role in a comprehensive economic relationship. Cooperation of this sort could set the stage for achieving the stability of the Korean peninsula via a multilateral forum, including the participation of China, the two Koreas, and the United States. China is prepared to accept a limited multilateral platform in the security arena on the Korean peninsula. It has acknowledged the need for a U.S. security presence in the resolution of the North-South Korean problem. However, U.S. involvement in Korea and the region is to be framed within the context of Sino-U.S. relations—that is, in consultation with, if not with approval of, the Beijing government. In short, the future military role of the United States in Korea and the Asia Pacific must not threaten China's security interests. Fifth, nowhere is China's interest in the Korean peninsula more clearly manifested than in its support for, participation in, and expectations for the Four-Party Talks intended to bring peace to the two Koreas. The talks, for China, bring together several critical issues: (1) recognition of China's regional role, including its special interests in the Korean peninsula; (2) focus on the important linkage between China's domestic policy

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and foreign policy, for example, attracting allies to service internal economic needs in the primary pursuit of China's domestic developmental goals; (3) the commonality and intersection of interests between China and the United States, bilaterally and in Asia more generally; and (4) a demonstration of China's further integration into the international system. Finally, China's role on the Korean peninsula has critical implications for the international politics of the Asia Pacific region. We will consider two effects. First, China's economic growth, fueled by internal economic reforms and sustained by external resources, has transformed China into one of the world's fastest growing economies. In the process, China has sought and formed numerous economic partnerships; through 1997, the China-South Korea relationship was among the most successful. It is possible that this growing economic interaction has created a new pattern of economic regionalism, with China as a center in the Asia Pacific. Consider, for example, the growth in importance of trade and investment taking place among Asia Pacific countries as opposed to that carried out with those outside the region. Given China's human and material resource base, the potential advantage, over time, for China's economic development is overwhelming. The second effect of China's role on the Korean peninsula in relation to the Asia Pacific generally relates, as we have seen, to the reemergence of China's historical stature—that is, a reclaiming of the "glory of the Middle Kingdom." Since the 1842 Treaty of Nanjing, China has long sought to regain its former central role in the region, yet economic, military, and other weaknesses have denied this. In the 1990s, as a consequence of economic development, relative internal political stability, and other internal and external factors, China has begun to recapture some of its former glories. A new regional distribution of power is emerging in the Asia Pacific region, with China at the core. China's role in the new Asia Pacific regionalism is certain to increase, though just how much it shall increase remains uncertain. Korea may be but the first of many instances in which China may seek, nay, demand, recognition of its central role in the region.

Notes 1. I am appreciative of the research assistance of Mr. Greg Esdale. 2. Consider, for example, the defection of North Korea's Hwang Jang-yop while visiting Beijing, who had been in charge of international relations of the Korean Workers Party in February 1997. 3. Jae Ho Chung, "Sino-South Korean Economic Cooperation: An Analysis of Domestic and Foreign Entanglements," Journal of Northeast Asian Studies (summer 1990): 101-115.

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4. Foreign Relations Historical Division, Ministry of Foreign Affairs, People's Republic of China, Zhongguo waijiao gailan 1987 (Survey of China's foreign relations, 1987) (Beijing: World Knowledge, 1987), pp. 45-48. 5. On this general theme, see, for example, Ruisheng Cheng, "The Future of War and Peace in East and South Asia," CCIS International Review 4 (July 1997): 44-62. 6. Ibid. 7. See Weixing Hu, "Beijing's Defense Strategy and the Korean Peninsula, Journal of Northeast Asian Studies (fall 1995): 50-67. 8. Between 1987 and 1990, the North's trade deficit with the Soviet Union ran between $700 million and $1,000 million, only to collapse to about $100 million in 1991. In contrast, the deficit with China peaked at only around $400 million in 1991, falling to a little over $200 million by 1994. Chinese imports increased from $304 million in 1987 to $457 million in 1994, with a concurrent decline in exports to China, from $215 million in 1987 to $180 million in 1994. See Nicholas Eberstadt, "China's Trade with the DPRK, 1990-1994: Pyongyang's Thrifty New Patron," Korea and World Affairs (winter 1995): 665-685. Further, following the breakdown of talks in November 1992 in which China had sought exact payment in hard currency rather than barter, a 650,000-ton shipment of crude oil, about onehalf of China's usual total yearly shipment and one-third of the North's yearly need, was suspended. See F5/S-China, February 22, 1993, p. 11. 9. See Samuel Kim, "Chinese and Russian Perspectives and Policies toward the Korean Reunification Issue," Korea and World Affairs 18:4 (winter 1994): 695-729. 10. Jang Won Suh, "South Korea-China Economic Relations: Trends and Prospects," Journal of Northeast Asian Studies (winter 1994): 21-36. 11. Suh, "South Korea-China Economic Relations." 12. Nicholas Eberstadt, "DPRK Import and Export Data." Paper presented at the conference sponsored by the Forum on Korean Affairs, Northwestern University, March 14, 1997. 13. Eberstadt, "DPRK Import and Export Data," pp. 674-675. 14. See Fß/5-China, January 10, 1995, p. 9. 15. Hong Liu, "The Sino-South Korean Normalization," Asian Survey 33:11 (November 1993): 1083-1094. 16. Yuetong Yan, "China's Security After the Cold War," Contemporary International Relations 3:5 (May 1993). 17. Meihua Yu, "The Situation on the Korean Peninsula and an Analysis of China's Policy," Xiandai guoji guanxi (Contemporary international relations) 10 (October 20, 1996): 34-38. 18. See Chung-In Moon, "The Political Economy of Security on the Korean Peninsula in the Regional Context," in Andrew Mack, ed., Asian Flashpoint: Security and the Korean Peninsula (Canberra: Allen & Unwin, 1993), pp.113-136. 19. Prior to the agreement many felt that the United States was taking too hard a line against the North (see Washington Post, April 24, 1994). Officials came to criticize the U.S. approach and sought to undermine its efforts (see Washington Post, October 9, 1994). Such an open discord has become more likely due to the decreased actual threat posed by a weakening North, allowing policy planners in Seoul to assert their independent line. 20. Zhenji Jin, "The Korean Peninsula—World in 1997, "Contemporary International Relations 7:1 (January 1997): 23-25. 21. Yu, "The Situation on the Korean Peninsula," p. 36. 22. See Huasheng Zhao, "New Frame of Sino-Russian-U.S. Triangular Relations," SIIR Journal 2:3 (November 1996): 16-26. 23. Zhao, "New Frame."

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24. See, for example, the lead essays in Guoji xingshi nianjian 1966 (Survey of international affairs 1996) (Shanghai: Education, 1996). 25. Zhao, "New Frame," p. 19. 26. Zhao, "New Frame," p. 19. 27. Cheng, "The Future of War and Peace in East and South Asia," pp. 44-62. 28. Zhongcheng Li, "World Politics—World in 1997," Contemporary International Relations 1:1 (January 1997): 1-5. 29. New York Times, October 30, 1997, p. A14. 30. See, for example, Xiaoxiong Yi, China's Korea Policy: Change and Continuity (Washington, D.C.: The American University, 1993). 31. See John K. Fairbank and S. Y. Teng, "On the Ch'ing Tributary System," Harvard Journal of Asiatic Studies 6:2 (June 1941): 135-246. 32. See, for example, Immanuel C. Y. Hsu, China's Entrance into the Family of Nations (Cambridge: Harvard University Press, 1960). 33. See Jianwei Wang and Zhimin Lin, "Chinese Perceptions in the Post-Cold War Era," Asian Survey 31:10 (October 1992): 902-917. Xinbo Wu, in "Changing Roles: China and the United States in East Asian Security," Journal of Northeast Asian Studies (spring 1996): 33-56, suggests that China's foreign policy has become less based upon such balance-of-power concerns in light of its drive for economic development. Xiaoxiong Yi, in "China's U.S. Policy Conundrum in the 1990s," Asian Survey 34:8 (August 1994): 675-691, goes so far as to suggest that Beijing has downgraded its role from that of a global to a regional power, content to secure economic and political security with such actions as maintaining relations with its traditional ally, the DPRK, in order to prevent disruptive military conflict. 34. For a recent example, see Shiliang Zhan, "Prospects for Asian-Pacific Security in Early 21st Century," CCIS International Review 3 (July 1996): 19-31. 35. Zhan, "Prospects." 36. Zhan, "Prospects." 37. For one set of views of the Four-Party Talks, see the essays in The Korean Journal of National Unification 6 (1997). 38. The discussion had to overcome several "obstacles," including North Korea's demand that the United States withdraw troops from the South as a precondition for the talks and the problems posed by the defection of two North Korean diplomats, including the North Korean ambassador to Egypt, in August 1997. Meanwhile, the United States promised to provide North Korea with an additional $15 million in food aid. 39. See Ffl/S-China, March 22, 1996, p. 28. 40. Cheng, "The Future of War and Peace in East and South Asia." 41. Yousheng Lu, "Features of U.S. Asia-Pacific Strategy in the Post-Cold War," Xiandai guoji guanxi (Contemporary international relations) 10 (October 20, 1997): 9-13. 42. Shaohua Yu, "Development of the Situation on the Korean Peninsula and Its Prospect," Guoji wenti yanjiu (International studies) 4 (1977): 11-16. 43. Yu, "Development of the Situation on the Korean Peninsula." I have used this article extensively to represent China's views on the four-party conference. 44. Given that the second stage withdrawal of U.S. troops is being held in abeyance pending resolution of the nuclear issue, and given the Clinton administration's policy commitment to the U.S. presence in Northeast Asia, relative to the North, the South has been given a broader window within which to adjust to the demands of its patron for greater burden sharing. 45. David Shambaugh, "Chinese Hegemony over East Asia by 2015?" The Korean Journal of Defense Analysis 9:1 (summer 1997): 7-28.

11 Conclusion: Implications of Pyongyang's Political-Economic Change T O N G W H A N PARK

Understanding the North Korean Puzzle The analyses presented so far suggest that irrespective of the differences in approaches, the most central variable in the Washington-Seoul-Pyongyang triangle is North Korea. The future of Pyongyang will sway in one way or the other not only the future of the triangular relationship but also that of Northeast Asia. Predicting the direction of North Korea's development is, however, an extremely demanding task: we know so little about the country. There is hardly any mystery about North Korea's physical attributes— its size, military capability, wealth—or even its political system and ideology. Hidden from outsiders are its internal political situation and decision calculus. Put differently, what are the thoughts of North Koreans, especially their leaders? Restriction of access to outsiders contributes to the puzzlement, as does behavior by North Korean rulers that often defies expectation. Their foreign policy behavior since the end of the Cold War has particularly baffled Western observers. Contrary to widespread speculation that North Korea would soon follow in the footsteps of the former East Germany, North Korea still exists—although it is struggling—despite the passing of its founder, Kim II Sung, in 1994, and despite a dire economic crisis accompanied by a critical food shortage. What can we make of this country? Is North Korea an abnormal state run by a rogue regime such that its modus operandi is impossible to fathom? Is it an airplane flying out of control and destined to crash? Or, is it just another closed system, pushed to the corner, desperately trying to survive? Lacking hard data on how important decisions are made in Pyongyang, analysts come up with diverse observations and answers. Since 277

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we have to depend on fragmented pieces of information available through human sources, mostly defectors, it is inevitable that our assessments should reflect the different perspectives from which we approach the question. To remedy the problems caused by a shortage of data, it is about time that we started thinking about North Korea from a North Korean viewpoint, or at least from the viewpoint of its own power elite. An absence of reliable information about North Korea's goals, plans, and intentions need not be cause for despair. Judging from the pattern of past behavior, we may be able to construct a rough sketch of North Korea's intentions, that is, if we try to put ourselves in the shoes of Pyongyang's policymakers. 1 In addition to the assessment of its foreign policy intentions, the task of foretelling the political economic change that North Korea will undergo should include considerations from Pyongyang's standpoint. As it is difficult to discern a North Korean perspective, however, the best that can be attempted is a simulation with as few external biases as possible, recognizing of course that such an approximation will need to be refined against the unfolding reality. Combining that simulated picture of a North Korean perspective with a picture of the perspectives of other actors in Northeast Asia, we can synthesize a likely projection of Pyongyang's politicaleconomic direction. Investigating the determinants and dynamics of such a change will then enable us to assess its implications not only for the Washington-Seoul-Pyongyang triangle but also for the entire region of Northeast Asia.

Scenarios of Political-Economic Change in North Korea 2 At the speed with which the global system has been changing since the late 1980s, it may be foolhardy to predict what might happen to North Korea in, say, the next five years—the period within which, many commentators argue, a Copernican transition is to occur on the Korean peninsula.3 For instance, as with the fall of the Berlin Wall in 1989, it is virtually impossible to foretell when and how the two Koreas will be unified. In part to overcome the intractable nature of making precise forecasts, many analysts have undertaken the exercise of scenario building for the future of North Korea. By exploring the possible scenarios of change, one can evaluate the likelihood of each while preparing for whichever contingencies may occur. It must be noted at the outset that, by nature, a scenario is but a rough projection of North Korea at a certain future point in time. As such, its main focus is not necessarily on the dynamics of how North Korea will get there from here. With this caveat in mind, let me present four prototypical

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scenarios of change for Pyongyang. 4 Without any presupposition that these scenarios may form a conceptual scale or ordering, they are: (1) disintegration of the regime and society (the East German model); (2) change of regime and the emergence of a development dictatorship (the 1960s South Korean model); (3) gradual reform toward economic liberalization without regime change (the Chinese model); and (4) continuation of the status quo. Scenario 1: Disintegration

of the Regime and Society

Although the East German model of disintegration is undoubtedly the most dreaded outcome for Pyongyang's leadership, who will thus try to avoid it at all costs, it cannot be ruled out as a possibility. North Koreans know there is no guarantee that history will not repeat itself. Their deepening isolation in a rapidly changing international environment makes fear of absorption by the South all the more realistic. From Seoul's perspective too, absorptive unification may not be a totally welcome development. The estimated cost of unification, running into hundreds of billions of dollars, could be a secondary problem compared with the social chaos resulting from a massive migration of Northerners into the already crowded South. West Germany was far richer and better prepared for unification, and even so Germany has been suffering heavily in the aftermath of that event. A new, integrated Korea might even become ungovernable. Despite some arguments that it does not matter much whether absorption comes sooner or later, 5 South Korea is hardly ready for it either now or in the near future. One can thus sense an emerging consensus about the undesirability to both Koreas of an absorptive unification. It must be noted, however, that such a consensus on the peninsula will have only limited impact upon the longevity of the North Korean regime and society. South Korea's implicit policy of assisting the North should certainly help lower the probability of the latter's immediate collapse, but it alone cannot be a sufficient condition for Pyongyang's continued survival. Although we cannot accurately determine the probability of North Korea's disintegration, it does not appear insignificant, given the socioeconomic indicators available to outside observers. 6 Two general observations can be made about Pyongyang's attempt to prevent disintegration. To prolong North Korea's viability as a nation, Pyongyang's leaders are expected to adopt a variety of measures for tighter social control. Simultaneously, they will try to squeeze maximum mileage out of external factors, including, among others, Seoul's inability to absorb the North and the apparent interest of the four major powers in the maintenance of the status quo on the Korean peninsula. How successful Pyongyang will be is a question that remains to be answered.

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Scenario 2: Regime Change and the Rise of a Development Dictatorship One critical lesson the North Koreans must have learned from the German experience is that once you open the floodgate, there is no stopping the flow. German unification is likely to have left a lasting impression in the minds of both the leaders and the masses in North Korea, reaffirming the resolve of leaders to keep the country closed for as long as possible, and indicating to the masses that unification might not necessarily bring shortterm gratification. For this reason alone, one cannot expect a sudden opening of the North Korean society. But will North Korea be able to remain unchanged forever? The answer to this question is a cautious "no," because pressures for change are mounting at a phenomenal rate. How, though, will North Korea respond to the forces of change without inviting a disaster? One possible solution is replacement of the current regime in Pyongyang with a different one— a government more responsive to changing times and to the rising demand of the masses for greater well-being. A new regime in Pyongyang definitely seems a higher probability than the total disintegration of the North Korean society. Perhaps it might come as a prelude to North Korea's opening. The questions to be addressed in this scenario include the groups and individuals who will constitute the driving force behind the new government, and the types of policies they will adopt toward inside and outside. Since the military is the only group believed to have the ability to hold the nation together, either it or a group it supports is most likely to seize power. Upon gaining control of the Korean Workers Party, Pyongyang's new power elite may or may not retain Kim Jong-il as leader. Should they feel it desirable to retain a symbol of continuity, they may keep him as a figurehead. Policies of the new regime in Pyongyang will definitely be concentrated on the theme of economic growth. Though ironical, the new elite's model of national reconstruction is likely to resemble that of the late Park Chung-hee's "development dictatorship." 7 Park's use of economic development as a legitimating instrument for his 1961 coup d'état and ensuing authoritarian rule in the South would be relevant to the new government in the North. Emulating Park's strategy, Pyongyang can be expected to seek foreign loans and investment in earnest. The only difference from Park's model would be the maintenance of a more disciplined garrison state. The North will try to block the influx of "corruptive ideas" from outside by erecting a protective wall around its masses. The new regime may still champion socialism, but socialism will be used as an ideology for social control, not a mechanism for economic management.

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Scenario 3: Liberalizing Reform Without Regime Change It goes without saying that Kim Jong-il will try to avoid the first scenario and even the second unless he remains in charge of the transformation to a development dictatorship. As an alternative, then, Kim or Pyongyang's power elite may find it necessary to launch some liberalizing reforms, albeit at a carefully measured pace. There are two compelling reasons that could persuade them to accept this line of thinking. First, Kim Jong-il may soon realize, if he has not done so already, that unless he takes the initiative, the North Korean regime and even the society itself may eventually become a casualty of domestic and external pressures for change. Hence, an initiative in the direction of improving people's standard of living is called for—rather than the traditional method of invoking a doctrinal solidarity in the face of internal or external challenge. Second, Pyongyang's leaders may calculate that they can control the pace of economic liberalization and lessen the danger of an East German-style disintegration. Factors supporting this observation include South Korea's reluctance and inability to take over a shattered North, North Korea's fear of absorption into the South, and an international environment that seems to favor gradual improvement rather than radical change in North Korea. In order to avoid the first two scenarios, it appears that Kim Jong-il may well have to adopt some programs of limited economic liberalization. If executed properly as in the case of China, the reform may help increase the longevity of his rule. It is in a sense fortunate that the late Kim II Sung in his own way cut a small opening in this direction. His schemes to build ties with the West included a nuclear weapons development program that brought Washington to Pyongyang's door. That he agreed to hold a summit meeting with the South Korean president must also be considered significant in this regard, though his death halted those developments. Essentially, the late father gave a blessing for the son to introduce reforms; if and when the latter feels that he can withstand the resistance sure to come from conservative hard-liners, he may be able to start implementing reform measures. Scenario 4: Continuation of the Status Quo Though hardly innovative, the maintenance of the status quo must also be counted among possible developments in North Korea. In all probability this is the option North Korean leaders want most. Contrary to a common belief that North Korea may disappear in about five years if nothing is done to prop it up, Pyongyang's leaders may feel that, having muddled through into the twenty-first century, North Korea will continue to survive without overhauling its political-economic structure.

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This scenario is the antithesis of the first one, which stipulates North Korea's disintegration. The difficulty for observers of North Korea is that the two are equally plausible. If anything, the persistence of the status quo has a high probability because Seoul has not been in a position to exercise influence on Pyongyang. Since 1993 South Korea has been undergoing political changes of a revolutionary scale. After thirty-two years of military authoritarian rule, a reform-minded civilian president began the task of dismantling the old order, against quiet but stiff resistance from the established forces. His reform programs had barely begun to take root in South Korean society when Kim Young-sam's term ended in February 1998, and a new government was formed under Kim Dae-jung. Kim Dae-jung's victory in the December 18, 1997, election meant not only the first peaceful transfer of power in South Korea's fifty-year constitutional history but also the ascension to power of the first president from the Honam area (the southwest of the country), whose inhabitants had felt discriminated against by previous regimes. During its first few years, the Kim Dae-jung administration will be preoccupied with the double challenge of economic recovery and national reconciliation. The financial crisis of 1997 led to a $57 billion bailout orchestrated by the International Monetary Fund (IMF), resulting in a painful restructuring of South Korea's economy. Whether South Koreans can weather this storm will determine the nation's international stature in the twenty-first century. In the political arena, Kim Dae-jung faces the daunting task of winning over the 60 percent of voters who did not choose him in the ballot box. Moreover, he will have to work with the majority party in the legislature by forging issue-based cooperation. The opposition has shown few signs of cooperation, despite Kim Dae-jung's plea for support during the first year of his presidency. Clear evidence of noncooperation was the opposition's refusal to confirm Kim's appointed prime minister to the National Assembly, thus forcing Kim to launch his cabinet headed by an acting prime minister. How soon Kim Dae-jung will be able to break the opposition's majority position will be the key to his success as president. For Pyongyang's leaders, beleaguered by domestic and external woes, the challenges facing South Korea could mean a temporary respite; while the South is busy with domestic transition, the North can maneuver itself to an advantageous position in dealing with foreign powers. The North Korean regime can also use this period for internal consolidation, especially through a reshuffling of the party and military hierarchy. At long last, Kim Jong-il may have found an opportune moment to inherit the mantle of power from his late father. It is not a coincidence that Kim began recently to assume the positions left vacant by his father's death. He became general secretary of the Korean Workers Party on October 8, 1997, two days before the celebration of the party's founding. With the election of a new president in the South, Kim Jong-il is now expected to follow suit by taking the state's presidency in the near future.

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That the four surrounding powers do not want an abrupt shift in the status quo will provide Kim with additional maneuvering room in foreign policy. For evidence, we need to look no further than Pyongyang's uncompromising behavior at the negotiations for the Four-Party Talks. Until the second preliminary session, North Korea had reiterated its position that the agenda should include a permanent peace agreement between Pyongyang and Washington along with withdrawal of U.S. troops stationed in Korea—precisely the items that the United States and South Korea were not prepared to concede. Only after food aid was promised for 1998 did Pyongyang agree to attend the first formal meeting of the Four-Party Talks held in Geneva on December 9, 1997. It was obvious at the Geneva talks that Pyongyang was exploiting the international climate by blocking any substantive progress. Lest it lose this important forum of negotiation with the United States, however, North Korea did agree to hold the second plenary meeting of the Four-Party Talks in March 1998. As expected, there was no agreement among the parties at this meeting either.

What Is the Most Likely Scenario? Preferences of the Regional

Players

If each of the four scenarios is feasible in its own way, which one is most likely? This is a very difficult question with no straightforward answer. Even the approaches to the question can be diverse and complicated. One way to explore an answer is to begin with an examination of which scenario would be preferred most by each of the regional players, including the two Koreas. If there appear some areas of convergence, it may be possible to make a tentative judgment that the scenario with the highest convergence in preference is somewhat likely because the respective players will invest their energy for its realization. The most immediate problem with this approach is how to measure the preferences. With sufficient time and resources, a database may be built, using such instruments as content analysis and collection of event data. Content analyzing the statements made by the leaders will produce information about a country's policy orientation, and event data compiled over an extended period of time will yield a pattern on a country's foreign policy behavior. Unfortunately, such data are not available for this study.8 The second best option is then to use an informed judgment about the preferences. Based on the discussion so far, a very subjective assessment can be made, as shown in Table 11.1. A cursory look at the table reveals one area of definite convergence: disintegration of North Korea (Scenario 1) ranks lowest in the preference scale of all six regional actors. The numbers reflect the presumption that there exists a regional consensus against North Korea's collapse. Aside

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Table 11.1 Four Scenarios and Preferences of Six Regional Actors

Country North Korea South Korea United States Japan China Russia

Scenario 1: Disintegration

Scenario 2: Regime Change

Scenario 3: Reform Without Regime Change

Scenario 4: Status Quo

4 4 4 4 4 4

3 2 3 3 2 2

2 1 1 1 3 3

1 3 2 2 1 1

Note: Numbers in the table are preference ordering from 1, for most preferred, to 4, for least preferred.

from the scenario of disintegration, however, preferences tend to be mixed. W h e n the preference rankings of each scenario are added across six nations for the purpose of comparison, the sums are 24, 15, 11, and 10 for Scenarios 1 through 4, respectively. Clearly there appears a break between 24 and the rest of the summed scores. The second least preferred scenario in terms of aggregate scores is Scenario 2, North Korea's regime change with the emergence of a development dictatorship. It is my conjecture that South Korea, China, and Russia would rank this as their second most preferred, and that the United States and Japan would rank it third. W h y ? One might speculate that the alignment among the three countries sharing a border with North Korea derives from a shared desire for stability over anything else. Beyond this, however, South Korea's ordering deviates f r o m those of China and Russia as indicated in their third preferences. Perhaps China and Russia believe that a development dictatorship led by the military (Scenario 2) would mean a longer period of stability on the peninsula, and that liberalizing reforms undertaken by the current regime (Scenario 3) might hasten North K o r e a ' s collapse. This would explain Scenario 3 as their third choice. In contrast, the third preference for South Korea would be the status quo (Scenario 4), with its inherent danger of war. Seoul's leaders may assume that a development dictatorship in the style of Park Chung-hee would help Pyongyang control its population while deepening its economic dependence on the South, resulting in a reduced likelihood of war. Given their geographic distance f r o m North Korea, the United States and Japan may not share South Korea's sense of urgency regarding the war potential hidden in the status quo—thus they prefer Scenario 4 to Scenario 2. One may even hypothesize that Washington and Tokyo perceive the possibility of some short-term leverage within the fluidity of the status quo. That the South Koreans may prefer a military dictatorship in the North to the maintenance of the status quo could be a controversial statement,

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especially because Seoul's official posture seems to support Pyongyang's soft landing through liberalizing reforms. Deep inside the South Korean psyche, however, the fear of a North in chaos may well weigh more heavily than the continued division of the peninsula. Turning to the question of how the North Koreans rank Scenario 2, they might place it third in preference ordering—along with the United States and Japan. This oddity can be explained in two ways. First, Kim Jong-il will try to prolong his hold on power no matter what; a military dictatorship in which he would play at best as a figurehead would not be palatable to him. Second, Kim Jong-il will have no choice but to begin opening the economy, and he may be confident about containing the spillover effects of economic liberalization. Thus, the Pyongyang regime may bet that it can survive liberalizing reforms while Seoul, Beijing, and Moscow may think otherwise. Moving to the top half of the preference ordering, Scenarios 3 and 4 are virtually tied at the top: the sum of preference ranking for all six nations shows that reform without regime change (Scenario 3) has a score of 10 and the status quo (Scenario 4) a score of 11. Despite the closeness in total scores, the compositions of the scores are quite dissimilar: In the table, South Korea, the United States, and Japan assign the top rank to Scenario 3; North Korea, China, and Russia assign it to Scenario 4. In addition, the status quo has two second-place rankings, by the United States and Japan, whereas reform without regime change has just one secondplace ranking, by North Korea. What do these divergences mean, especially since the old ideological divide seems to be splitting Scenarios 3 and 4? Will the dominance of one scenario lead to the demise of the other? Would it be impossible to combine the two such that the status quo, militarily speaking, on the peninsula could be maintained while economic reforms are introduced in the North? The difficulty in this case is twofold: we are dealing with an uncertain future, and, moreover, the first preferences are clearly split. In the instance where all members in the system, including North Korea, have an identical preference, as in the avoidance of Pyongyang's disintegration, it may be expected that they will cooperate to achieve it. In contrast, a division among them implies a gap between preferences and likely developments. The key to unlocking this difficulty, I believe, can be sought in the dynamics of change specific to this situation. Dynamics of Interaction Among the Sources of Change

Change means a deviation from the existing situation. It is a dynamic process that takes place over time; through change, North Korea would reach the state described in a scenario. Among many different ways to analyze change, one most relevant to our study is to use the source of change as a differentiating factor. Standing out in this context are two kinds of

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change: one that evolves without conscious decisions of an actor and another that results from a goal-oriented action. From this perspective, change should be measured on the two dimensions of time and goal. Imagine a canoe ride down the winding rapids. Without any human effort, in a matter of moments, the canoe moves away from its original position, hence a change. Paddlers steering the canoe can also change its position—this time, from the path that would otherwise have been determined solely by the current. These two changes are different and should be treated as such; the source of the first change is physical environment, and of the latter, deliberate human effort. To the second category of change produced by the canoeists' goal-seeking behavior, we may add one caused by a third party on the bank with a rope. The presence of the third party in readiness is a source of potential change; the actual act of rescue represents that of real change. When analyzing North Korea's future, we need to take into account all these sources of change. If the current trend continues without any radical policy shift, change will still occur over time. The difference between North Korea's present state and its future position if governing winds do not shift may be named the "Type I" change. With an all-out effort at survival made by Pyongyang's leadership, however, North Korea will most likely find itself in yet another position at that same future time. This deviation from present conditions can be labeled the "Type Ha" change. Last, shifts in North Korea's future caused by the actions of outside agents can be called "Type lib" changes. What would each of these changes look like—for instance, in the next five years? This question has been an extremely difficult one to answer. In attempting it here, we shall take as our point of departure the Type I change: North Korea's future if no drastic measures are taken from within or without. As we saw from the survey of possible future scenarios, no consensus is evident in this regard. We may surmise from the lowest preference ordering given to North Korea's disintegration, however, that the prevailing view is that a "crash landing" is likely if North Korea is left alone. In particular, this has been the presumption of the U.S. government during the last several years, especially since the signing of the Agreed Framework in October 1994.9 On the other side of the spectrum, however, are voices who argue that North Korea will not collapse easily, but muddle through for quite a while as Romania did in the 1980s. 10 Moving to Type Ha changes, we may note that Pyongyang has made it clear that it will not exclude any possible measure from its menu of choices to preserve the state and the regime. Having set its highest goal on survival, does North Korea seek any change? Its past behavior reveals that survival may not necessarily require a change in direction. In truth, such change may be anathema to the kind of survival Pyongyang's leaders are

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pursuing at this point—the continuation of a closed socialist regime with minimal reforms. It may not matter to them if their actions have a delaying effect only and are unable to prevent the eventual transformation to a capitalist economy. What matters is what they apparently seek; they are known to be persistent, as shown in their ability to uphold the longest running dictatorship in the twentieth century. Now, let me try to combine Type I and Ha changes for the purpose of illustration. Should the North Koreans believe that the most likely Type I change is disintegration or crashing, their policy would reflect efforts at its prevention. If, however, they felt confident that they could muddle through, they may allow some minor adjustments to their foreign economic policies. Although it is difficult to delineate at this time what these adjustments may be, they would most likely include policies of very limited opening and liberalization. From the table of preferences, it can be inferred that for now Pyongyang's utmost concern is with the maintenance of the status quo while avoiding a collapse. As to the possible Type lib changes, all surrounding powers seem to be poised to throw a rope to the North. Even in South Korea only some diehard conservatives are advocating a hands-off policy, hoping that North Korea will meet a quick end. Citizens of surrounding nations may not necessarily have a particularly favorable disposition toward North Korea, but they are aware of the cold reality of power politics. Though Japan and China may have different attitudes toward the Korean situation, both are averse to a unified Korea, believing it could be a destabilizing factor in Northeast Asia. Still an influential regional actor, Russia shares this view with the other two Asian giants. As the only country that may not actively oppose Korean unification, the United States, it is safe to assume, would not feel uncomfortable with a divided but stable peninsula. The South Koreans, unlike the surrounding powers, tolerate the division because they want to avoid an armed conflict and because they are not ready to shoulder the astronomical cost of a German-style absorptive unification. Let me try to put Type I together with Type Ha and lib changes, again for illustration. Should the assessment of North Korea and the surrounding powers converge on its disintegration if left alone, Pyongyang's chance of survival without a policy change would, ironically, be great. Such an appraisal would create an atmosphere of fear in the region about the devastating effect of North Korea's collapse, and push the surrounding nations to offer assistance. Should their assessments diverge, on the other hand, then the picture becomes somewhat complex. If North Korea foresees disintegration but the surrounding powers believe it will survive with minimal changes, North Korea will not be able to attract as much attention as it might in the case of converging assessment on disintegration. In the opposite case, that is, if the North Koreans believe in the possibility of muddling

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through but the surrounding powers envision Pyongyang's impending doom, North Korea could demand and get the maximum possible support. The last alternative is a converging assessment on muddling through. In this case, North Korea would be treated as a normal country, and the business of international relations would be conducted according to established norms. As we have seen, the preference table shows that at present disintegration is the least preferred scenario for all six regional powers. Assuming broad agreement on Pyongyang's collapse if left alone, what do these powers want in place of its disintegration? According to the table, North Korea, China, and Russia prefer the status quo as most desirable. South Korea, the United States, and Japan put reform without a regime change at the top of their wish list. With these considerations, we are now ready to construct a picture of Type I, Ha, and lib changes pooled together as shown in Figure 11.1. Type I change will most likely be the disintegration of North Korea, and Type Ha will be Pyongyang's all-out efforts at maintaining the status quo. Type lib change will be divided into two categories: the Western camp, led by the United States, will attempt to bring about reform in North Korea without radical political change (Type Ilb-i); China and Russia will formulate policies to help maintain the status quo (Type Ilb-ii). Consequently, the most likely form of change for North Korea will be affected by how Type I and II changes play each other out. In this equation, two factors are presumed to remain relatively constant: disintegration as the expected Type I change and Type Ha efforts by Pyongyang to resist the Type I change. Type lib factors will thus be the critical determinant of North Korea's political-economic change—specifically, the manner in which the capitalist camp of South Korea, Japan, and the United States engage the former ideological adversaries, China and Russia. Should the former three hold sway, North Korea will probably demand and receive a Figure 11.1 Action/ Inaction

Types of Change Location of Actors

Actors

Change

Type

Disintegration

Type I

. North Korea _

Status Quo

Type Ha

. Southern Triangle ~

Reform Without Regime Change

Type Ilb-i

Northern - Triangle Minus North Korea

Status Quo

Type Ilb-ii

Inaction Action

. Inside. Outside

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compromise package, in which it would dictate the terms of glasnost and perestroika while the surrounding powers guarantee its military security. In case of stalemate between the two camps, however, North Korea will continue its present policy of "containing South Korea while approaching the United States." This is a bottom-line strategy for Pyongyang because a surrender to Seoul would mean almost certain absorption, whereas "approaching" Washington could at a minimum result in an international solution for the North Korean problem. Regardless of whether such reasoning is right or wrong, the strategy is highly rational from the perspective of Pyongyang, which puts the highest premium on survival.

Implications for the Region and for the Washington-Seoul-Pyongyang Triangle The future of Korea boils down to, then, a struggle for power between the two camps. The bloc consisting of South Korea, Japan, and the United States has so far been leading in the game of influence. In fact, since the end of the Cold War, the other camp has been in no position to contest the military and economic superiority of the West. More important, U.S. hegemony, along with financial support from Seoul and Tokyo, offers Pyongyang its best chances for maintaining the status quo and for preventing collapse. Clearly, Pyongyang's leaders must know the shared preference of South Korea, Japan, and the United States for a soft landing with liberalizing economic reforms. They must also be aware that such reforms may be a kind of "Trojan horse" or "poisoned apple." The painful fact, however, is that their erstwhile patrons do not have the ability either to withstand the pressures coming from the Western camp or to match the assistance it offers. If anything, China and Russia may want to ride the bandwagon themselves and exploit Washington's policy of engagement and enlargement toward Pyongyang. As Washington seeks their diplomatic support in dealing with North Korea, it should be willing to reward Beijing and Moscow with economic payoffs. Nevertheless, there is one thing that Pyongyang can be certain of: China and Russia will stand by the North Korean regime to prevent any radical changes on the peninsula. That is saying a great deal, considering what has happened to the former Leninist regimes in East Europe. This analysis yields, therefore, a somewhat sanguine tentative prognosis for the impact of Pyongyang's political-economic change on Northeast Asia. Though it does not erase the possibility of North Korea's implosion or explosion, it highlights the possibility of a constructive resolution of the North Korean dilemma—namely, North Korea's transition into a more normal state without disturbing the international environment. Despite this

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upbeat prediction for the region as a whole, however, can we make a similar assessment for the Washington-Seoul-Pyongyang triangle? Here the answer is less simple, since the two Koreas are still locked in a state of confrontation, and the United States appears to be playing one Korea off against the other. Placing itself at the apex of the triangle, Washington is likely to continue to play the role of an arbiter or "controller" between the two Koreas, especially insofar as these latter two tacitly condone that role. It thus becomes important to examine, finally, the implications of the most likely scenario of Pyongyang's change upon inter-Korean relations— reform in North Korea without a regime change. Although many topics deserve serious analysis in this regard, three are of immediate concern: (1) the nature of Pyongyang's opening and Seoul's contribution thereto; (2) the possibility of continued revolutionary agitation in the South; and (3) the probability of armed conflict. It is one thing to say that North Korea will undertake some economic reforms under the watchful eyes and protective cover of the capitalist camp in the region. But it is quite a different matter to delineate the specific type of reform. The puzzle is whether Pyongyang will emulate Beijing. My guess is that the North Korean leadership will not feel confident enough to follow China's path wholeheartedly. China is in no danger of disintegration, and its leaders do not have to worry about a regression to Maoism. In contrast, North Koreans have reason to genuinely fear an East German-style collapse. At the same time, it appears that they are not ready to give up cultist rule by the Kims. One could say that Kim Jong-il would find it difficult to become a Deng Xiao-ping. Pyongyang's leaders are also likely to be aware of the economic as well as social reasons behind China's promotion of its pockets of development. With limited resources it made economic sense for the Chinese to concentrate industrialization in selected coastal zones. Such concentration provided them with an additional benefit of containing the undesirable side effects associated with rapid economic growth. Consequently, North Korea's reform will be limited in scope and unobtrusive in approach: limited in order to minimize structural shock to the economy, and unobtrusive in order to maintain social control. Cho Myung-chul, a former professor at the Kim II Sung University, has remarked that the greatest threat to Kim Jong-il is not any opposing political bloc but a sense of estrangement among the people, who have suffered for half a century and are still faced with poverty and famine. In this context, Kim's highest priority will be earning more foreign currency. His policies will emphasize development of light industries for consumption and exportation, increasing production of weapons for export, incentives for foreign investment, support for primary product production for domestic use and export, and tourism. Along with new investment in these areas, Kim will have to expand investment in the industries that have already been generating foreign currency, including nonferrous metals, construction

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material, and some machinery. 11 It is encouraging to note that all these are areas in which South Korea can make a significant contribution. A s long as North Korea maintains tight control over its pockets of industrialization, cooperation can be effective, as shown in the light-water reactor project and a few joint venture projects for consumer goods production. Increasing economic cooperation between the two Koreas does not necessarily mean that the North will change its attitude toward the South, especially with regard to its united front strategy for a socialist revolution in the southern half of the peninsula. The Korean Workers Party constitution still contains the clause to that effect, and, moreover, it is a known secret that Pyongyang maintains a sizable network of agents in the South. Former party secretary Hwang Jang-yop made a clear reference to its presence, in fact, upon his defection. Pyongyang has no compelling reason to disband such a network in the South. Pyongyang's leaders have nothing to lose from its operation, and they cannot be coerced to give up an instrument whose value may increase in the future. Though it may sound paradoxical, Pyongyang's gradual opening will require increased service from the network. A s the opening will promote a two-directional information flow between the North and the South, Pyongyang will need more human intelligence with which to sort through the flood of data. Last, let me turn to the possibility of an inter-Korean armed conflict while limited reforms are taking place in North Korea. The basic premise of the soft-landing strategy is that it would help prevent Pyongyang from launching a southward invasion out of desperation. North Koreans themselves have repeatedly stated that if they will have to go under, they will drag South Korea along. Is this a politics of terror aimed at "extorting" more aid from the West or a genuine threat of military action? With reforms and economic growth, will Pyongyang give up this posture? A s in any pair of nations locked in confrontation, military balance on the Korean peninsula hinges on a number of components interacting in a complex manner. These include combatants and noncombatants in active duty and reserve, weapons systems and deployment, defense expenditure, the structure of alliance, and a commitment to defense. In the Korean situation, there are two additional, rather unique, factors that have been instrumental in the maintenance of deterrence. One is the vulnerability of Seoul and the other the presence of U.S. troops. Seoul's location just twenty-five miles south of the Demilitarized Zone (DMZ) makes it virtually impossible to protect from initial artillery attacks. Even with modern antibattery guided weapons, the greater Seoul metropolitan area could not escape damage that would wreak havoc in the area where about a third of the South Korean population makes their living. To counter the physical impossibility of shielding Seoul, South Korea's only option is to use the U.S. card—that is, an attack on Seoul would force Washington to launch a massive retaliation by the U.S.-South Korea combined forces.

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Korean deterrence thus hangs precariously on the balance between Seoul's vulnerability to a preemptive attack by Pyongyang and the U.S. commitment to mass retaliation. The former is a physical fact that cannot be changed, whereas the latter functions as a state of mind. Given this configuration, each side has been trying to decrease the deterrence capability of the other. Pyongyang has consistently demanded the withdrawal of U.S. troops, which might weaken Washington's resolve to come to the aid of Seoul. By the same token, South Korea has been trying to persuade the North to move back its forward deployed forces, to the north of the Pyongyang-Wonsan line. Since the city of Seoul obviously cannot be relocated, the alternative is to move North Korea's artillery tubes, rocket launchers, and short-range missiles out of range. Neither side has budged, however, as any concession would mean a serious erosion in its ability to deter. The 1991 withdrawal of U.S. tactical nuclear weapons from the Korean peninsula was thus seen as making a significant dent in the deterrence relationship. Though the removal was carried out in the global context of nuclear arms control, it had Seoul's strategists worried. Just as Cold War-era deterrence on the European plains was based on the doctrine of retaliation—with tactical nuclear weapons facing Warsaw Pact tanks—tactical nukes were considered the ultimate keepers of peace on the Korean peninsula. Imagine the psychological impact of their removal on the South Koreans when no corresponding change (as had occurred in Eastern Europe) was forthcoming on the other side of the DMZ. 1 2 This does not mean, however, that the balance has tipped to give Pyongyang an edge in case of war. Pyongyang must know that Seoul and Washington possess more than enough fire power to obliterate the North. There is no doubt that the Gulf War against Iraq should serve as a telling reminder to Pyongyang. Hence, a conventional attack by the North is highly unlikely as long as the U.S. security umbrella over the South remains intact and Washington props up the Pyongyang regime with economic assistance. But what about other possibilities, including civil agitation in the South? If such agitation developed into full-scale guerrilla war, what would be South Korea's response? This poses a dilemma for Seoul's decisionmakers. In response to guerrilla war, South Korea may be compelled to launch all-out war against the North. It is unclear, though, whether the United States would go along with such a decision and whether China would sit idly by. Furthermore, there is the question of North Korea's nuclear weapons. Politically, the nuclear weapons issue has helped North Korea engage the United States without changing its juche posture. Militarily, these weapons will make the United States and South Korea think twice before starting a conventional war against the North. Whether there is proof that Pyongyang has usable nuclear devices is irrelevant; the suspicion thereof is sufficient as a deterrent.

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This is what makes unconventional war such a troubling issue. Should the North launch a conventional attack, the combined forces of the United States and South Korea would be free to retaliate. But could they respond with a full-scale war against the North in the case of a civil war in the South, even if it were staged by Pyongyang's special forces and sympathizers? Most probably not. It is difficult to know whether, when, and under what circumstances Pyongyang would exercise this option. As long as North Korea maintains its viability and its current regime continues to succeed in dealing with the West, Pyongyang may merely hold this card tucked in its sleeve. Even when things do not go their way, North Korea's leaders will make an extremely careful decision about inciting civil unrest in the South. After all, what is important to them is the possession of such an option: it may be far more valuable unused than used.

Conclusion My analysis points to one direction as the most likely development on the Korean peninsula. North Korea will be able to survive and even to undertake limited reforms with assistance from the Western camp led by the United States. As in the past, Pyongyang will often add a touch of "irrationality" to its foreign policy behavior, not only to attract external attention but also to keep its society under control. The diplomacy of brinkmanship has to date produced settlements beneficial to North Korea—for example, the light-water reactor deal and food aid. We can hardly expect Pyongyang to give up a practice that has worked in its favor. This is particularly so now that it seems the United States has finally figured out how to negotiate with North Korea, even though this has meant at times leaving South Korea in the dark. From Seoul's standpoint, what would be the best way to handle such a development (North Korea's survival with Western assistance) on the Korean peninsula? A tit-for-tat reaction to Pyongyang's every move has not been effective, as the North Koreans do not want to treat their southern counterpart as the primary partner in dialogue. In the meantime, Seoul's attempts to influence Washington in dealing with Pyongyang have succeeded only partially and at high costs. No wonder there is a call from a portion of Seoul's elite for a reappraisal of foreign policy toward both Pyongyang and Washington. If a reactive foreign policy has been wasteful, they claim, perhaps it is time to move away from it. 13 Since the most likely scenario of change for North Korea is reform without a regime change, it is unthinkable that Seoul will be spared a central role in Pyongyang's economic reconstruction. Although Seoul has to supply aid to Pyongyang, however, does it have to do so under pressure from North Korea or the United States? Succumbing to Pyongyang's

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threats or accepting Washington's demand that South Korea pay for the price of peace should not be the main determinant of Seoul's foreign policy. I am not advocating idealistic futility here. Instead, South Korea's foreign policy needs to be shaped by a level-headed calculation of costs and benefits from the perspective of long-term national interests. The nation outlives politicians, and foreign policy should not be held hostage to the political needs of a particular administration. 14 Consequently, the best policy for Seoul is to leave its options open as long as the main stage is occupied by Washington and Pyongyang. The time will come when Seoul can play a proactive role in inter-Korean relations.

Notes 1. It is often claimed that Pyongyang's erratic behavior is beyond analysis from its track record. As discussed below, however, I would contend that North Korea's policies based on the national goal of survival have been quite consistent. While they may appear unconventional, these policies have helped North Korea ride the turbulent tides of the early 1990s and will continue to do so. 2. This section is based on Tong Whan Park, "Political Change and Conventional Arms Control in Korea," in Young Whan Kihl, C. I. Moon, and D. I. Steinberg, eds., Rethinking the Korean Peninsula: Arms Control, Nuclear Issues and Economic Reformation (Washington, D.C.: Georgetown University Asian Studies Center, 1993), pp. 53-71. 3. The selection of a five-year time frame in this analysis is, of course, arbitrary and based upon a purely subjective speculation. Major changes in North Korea and inter-Korean relations may come much sooner than that or may be delayed beyond it. 4. These scenarios are to serve only as prototypes for political economic change in North Korea. In fact, there may emerge a possibility not included in the list as well as some hybrids that combine the features of two or more scenarios. 5. One proponent of this argument is Nicholas Eberstadt, an economist at American Enterprise Institute. For more details see Eberstadt, "Hastening Korean Unification," Foreign Affairs 76:2 (March/April 1977): 77-92. 6. Hwang Jang-yop, a former secretary of the Korean Workers Party, has repeatedly warned that North Korea's economy is on the verge of collapse and the military is poised to take over power. The highest ranking North Korean official ever to defect, Hwang has delivered the same message over and over since his arrival in Seoul in early 1997. 7. It is possible that a development dictatorship may be sought by whoever holds power in Pyongyang. A change of regime, more precisely the removal of the current leadership, will most probably be accompanied by such a dictatorship. 8. The author has constructed one such database on South Korea's foreign policy behavior covering the period of 1960 through 1986, under the auspices of the KORUS Project at Northwestern University. The data required for the present study, however, would have to cover all six regional powers and the period since the late 1980s. 9. The scenario of North Korea's crashing if left alone was held by U.S. policymakers even before the Agreed Framework. What has changed since the signing of the Agreed Framework appears to be Washington's attitude about a hard landing.

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Prior to the Agreed Framework, U.S. officials reportedly told their South Korean counterparts not to be "stingy" with the cost of light-water reactors "because these will become yours after North Korea's impending collapse." After the Agreed Framework, however, their posture seemed to have changed; they asked Seoul to supply food aid to Pyongyang "because a North Korean collapse will bring chaos to you." These quotations are from the author's private conversations with Seoul's diplomats, who asked to remain anonymous. 10. Marcus Noland, "Why North Korea Will Muddle Through," Foreign Affairs 76:4 (July/August 1997): 105-118. Robert A. Scalapino also holds a similar view that North Korea will struggle along, but he sees an eventual collapse of the system. 11. Chosun llbo, September 24, 1997. 12. Roh Tae-woo, South Korean president at that time, is still blamed for making a declaration that there was not a single nuclear weapon in South Korea, which was then confirmed by the United States. If he had to accept Washington's decision to withdraw tactical nuclear weapons (except for the air-based ones), critics argue, Roh should have demanded a quid pro quo to make up for the loss. 13. The Kim Young-sam administration has been criticized for using foreign policy as a tool of domestic politics. Not wanting to appear left out in the Pyongyang-Washington negotiation, Seoul's bureaucrats and politicians had to pay a price for seeming to be included in the game. 14. It is worth noting that the Kim Dae-jung administration appears to be taking a business-like approach to Pyongyang. A good example was its handling of the "fertilizer talk" held in Beijing in April 1998. Opened at the request of North Korea, which is in dire need of fertilizer for the upcoming planting season, the meeting was a showcase at which Pyongyang wanted to maintain the old way of "getting something for nothing" from Seoul. South Korea disagreed and demanded that fertilizer aid would be linked to a phased progress in reuniting the two countries. Pyongyang refused and even threatened that its military would not approve of Seoul's demands. Despite the fact that it was the first direct talk between the two Koreas in four years, Seoul did not buckle under Pyongyang's pressure.

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. 1996. "U.S.-China Economic Relations." Working Papers in Asia Pacific Economic Cooperation 96-6. Washington, D.C.: Institute for International Economics. . 1997. "Chasing Phantoms: The Political Economy of USTR." International Organization 51:3, 365-388. . 1997. "Why North Korea Will Muddle Through." Foreign Affairs (July/ August): 105-118. Noland, Marcus, Sherman Robinson, and Monica Scatasta. 1997. "Reforming the North Korean Economy." Journal of Asian Economics 8:1, 15-38. OECD. 1997. Development Co-operation 1995. Paris: OECD. Office of National Assessments. 1994. "APEC Liberalization Gains." Mimeo. Canberra. Park, Daekeun. 1995. "Financial Opening and Capital Inflow: The Korean Experience and Policy Issues." In Rudiger Dornbusch and Yung Chul Park, eds., Financial Opening: Policy Lessons for Korea. Seoul: Korea Institute for Finance/International Center for Economic Growth. Pearson, Charles K. 1994. "The Asian Export Ladder." In Shu-Chin Yang, ed., Manufactured Exports of East Asian Industrializing Economies. Armonk, NY: M. E. Sharpe. PECC. 1995. Survey of Impediments to Trade and Investment in the APEC Region. Singapore: Pacific Economic Cooperation Council. Quinones, C. Kenneth. 1997. "The Agricultural Situation in North Korea." Korea's Economy 1997. Washington, D.C.: Korea Economic Institute of America. Rubin, Marc. 1996. "North Korea's Trade with the USSR and Russia, 1972-1995." Unpublished paper. Washington, D.C.: U.S. Bureau of the Census, International Programs Center. Schott, Jeffrey J. 1994. The Uruguay Round: An Assessment. Washington, D.C.: Institute for International Economics. Shin, Hi-Taek. 1993. "Politicizing Trade Issues and U.S. Business in Korea." In Jongryn Mo and Ramon H. Myers, eds., Shaping a New Economic Relationship. Stanford: Hoover Institution Press. Spina, Marion Paul, Jr. 1993. "The Perspective of U.S. Businesses in Korea." In Jongryn Mo and Ramon H. Myers, eds., Shaping a New Economic Relationship. Stanford: Hoover Institution Press. . 1995. "The Changing Business Climate in Korea: Implications for American Firms." Korea's Economy 1995. Washington, D.C.: Korea Economic Institute of America. Tarr, G. David. 1987. "Effects of Restraining Steel Exports from the Republic of Korea and Other Countries to the United States and the European Community." World Bank Economic Review 1:3, 397^-18. Tarullo, Daniel K. 1995. "U.S.-Korea Economic Relations." In C. Fred Bergsten and II SaKong, eds., Korea-United States Economic Cooperation in the New World Order. Washington, D.C.: Institute for International Economics. Trela, Irene, and John Whalley. 1988. "Do Developing Countries Lose from the MFA?" NBER Working Paper No. 2618. Cambridge: National Bureau of Economic Research. . 1991. "Internal Quota Allocation Schemes and the Costs of the MFA." NBER Working Paper No. 3627. Cambridge: National Bureau of Economic Research. United States Department of the Treasury. 1994. National Treatment Study Report to Congress on Foreign Treatment of U.S. Financial Institutions. Washington, D.C. United States Trade Representative (USTR). Annual, 1995, 1996, and 1997. National Trade Estimates of Foreign Trade Barriers. Washington, D.C.: Government Printing Office. Also available through www.ustr.gov.

302

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Winiecki, Jan. 1988. The Distorted World of Soviet-Type Economies. Pittsburgh, PA: University of Pittsburgh Press. Yoo, Jung-ho. 1993. "Political Economy of the Structure of Protection in Korea." In Takatoshi Ito and Anne O. Kreuger, eds., Trade and Protectionism. Chicago: University of Chicago Press. Yoo, Jung-ho, Sung-Hoon Hong, and Jae-Ho Lee. 1993. Korea's Industrial Protection and Distortion of Incentive System (in Korean). Seoul: Korea Development Institute. Young, Soo-Gil. 1989. "Korean Trade Policy." In Thomas O. Bayard and Soo-Gil Young, eds., Economic Relations Between the United States and Korea: Conflict or Cooperation? Washington, D.C.: Institute for International Economics. . 1995. "Korea-U.S. Economic Relations in the 1990s: Conflict or Cooperation?" In C. Fred Bergsten and II SaKong, eds., Korea-United States Economic Cooperation in the New World Order. Washington, D.C.: Institute for International Economics.

The Nature of Public Opinion on Foreign Policy Issues Holsti, Ole R. 1992. "Public Opinion and Foreign Policy: Challenges to the Almond-Lippmann Consensus." International Studies Quarterly 36:439-466. . 1996. Public Opinion and American Foreign Policy. Ann Arbor: University of Michigan Press. Hurwitz, Jon, and Mark Peffley. 1987. "How Are Foreign Policy Attitudes Structured? A Hierarchical Model." American Political Science Review 81:1099-1120. Jentelson, Bruce W. 1992. "The Pretty Prudent Public: Post Post-Vietnam American Opinion on the Use of Force." International Studies Quarterly 36:49-74. Mueller, John E. 1973. War, Presidents, and Public Opinion. New York: John Wiley & Sons. Page, Benjamin I., and Robert Y. Shapiro. 1992. The Rational Public: Fifty Years of Trends in Americans' Policy Preferences. Chicago: University of Chicago Press. Russett, Bruce. 1990. Controlling the Sword. Cambridge, MA: Harvard University Press. Wittkopf, Eugene R. 1990. Faces of Internationalism: Public Opinion and American Foreign Policy. Durham, NC: Duke University Press. Zaller, John R. 1992. The Nature and Origins of Mass Opinion. Cambridge: Cambridge University Press.

The Effect of Public Opinion on Foreign Policy Graham, Thomas W. 1989. The Politics of Failure: Strategic Nuclear Arms Control, Public Opinion, and Domestic Politics in the United States—1945-1980. Ph.D. dissertation, Massachusetts Institute of Technology. . 1994. "Public Opinion and U.S. Foreign Policy Making." In David A. Deese, ed., The New Politics of American Foreign Policy. New York: St. Martin's Press. Hinckley, Ronald H. 1992. People, Polls, and Policymakers: American Public Opinion and National Security. New York: Lexington Books.

Selected Bibliography

303

Page, Benjamin I., and Robert Y. Shapiro. 1983. "Effects of Public Opinion on Policy." American Political Science Review 77:175-190. Powlick, Philip J. 1991. "The Attitudinal Bases for Responsiveness to Public Opinion Among American Foreign Policy Officials." Journal of Conflict Resolution 35:611-641. Powlick, Philip J., and Andrew Z. Katz. 1998. "Defining the Opinion/Policy Nexus: A Two-Way Model of United States Foreign Policy Linkage." Mershon International Studies Review 42:29-61. Sobel, Richard, ed. 1993. Public Opinion in U.S. Foreign Policy: The Controversy Over Contra Aid. Lanham, MD: Rowman & Littlefield.

Public Opinion Toward Korea Potomac Associates, Ralph Clough, and William Watts. 1978. The United States and Korea: American Attitudes and Policies. Washington, D.C.: Potomac Associates. Potomac Associates, William Watts, George Packard, Ralph Clough, and Robert Oxnam. 1979. Japan, Korea, and China: American Perspectives and Policies. Lexington, MA: Lexington Books. Potomac Associates and William Watts. 1980. The United States and Asia: Changing Attitudes and Policies. Lexington, MA: Lexington Books. . 1985. The United States and Asia: Changing American Perspectives. Washington, D.C.: Potomac Associates. Reilly, John E., ed. 1995. American Public Opinion and U.S. Foreign Policy. Chicago: Chicago Council on Foreign Relations.

Japan and the Korean Peninsula Akaha, Tsuneo. 1993. "Japan's Security Policy in the Posthegemonic World: Opportunities and Challenges." In Tsuneo Akaha and Frank Langdon, eds., Japan in the Posthegemonic World. Boulder, CO: Lynne Rienner. Cossa, Ralph A. 1996. The Major Powers in Northeast Asian Security. McNair Paper 51. Washington, D.C.: Institute for National Strategic Studies, National Defense University. Drifte, Reinhard. 1995. Japan's Foreign Policy in the 1990s: From Economic Superpower to What Power? New York: St. Martin's Press, in association with St. Antony's College, Oxford. Economic Research Institute for Northeast Asia. 1997. Japan and Russia in Northeast Asia: Building a Framework for Cooperation in the 21st Century. Report of the Workshop in Tainai, Niigata, July 29-30, 1997. Niigata: Economic Research Institute for Northeast Asia. Hughes, Christopher W. 1996. "The North Korean Nuclear Crisis and Japanese Security." Survival 38:2, 79-103. Hwang, In K. 1987. One Korea via Permanent Neutrality: Peaceful Management of Korean Unification. Cambridge, MA: Schenkman Books. Imai, Ryukichi. 1992. "Expanding the Role of Verification in Arms Control." IIGP Policy Paper 59E. Tokyo: International Institute for Global Peace. Lee, Ki-baek. 1984. A New History of Korea. Cambridge, MA: Harvard University Press.

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Office of Assistant Secretary of Defense. 1997. "Completion of the Review of the Guidelines for U.S.-Japan Defense Cooperation" (News Release). New York, NY: Office of Assistant Secretary of Defense. Office of International Security Affairs, Department of Defense. 1995. United States Security Strategy for the East Asia-Pacific Region. Washington, D.C.: Department of Defense. Ozawa, Ichiro. 1994. Blueprint for a New Japan: The Rethinking of a Nation. Tokyo: Kodansha International. The President of the United States. 1996. A National Security Strategy of Engagement and Enlargement. Washington, D.C.: The White House. Shikata, Toshiyuki. 1996. "What Should We Do in Contingencies?—Japan's Crisis Management System Questioned." Gaiko Forum (June): 120-127. U.S. Information Agency. 1997. "Northeast Asia Peace and Security Network Special Report." Distributed by NAPSNET (October 6), Berkeley, CA. Yamanouchi, Yasuhide. 1991. "Japan's Security Policy and Arms Control in North East Asia." IIGP Policy Paper 59E. Tokyo: International Institute for Global Peace.

China and the Korean Peninsula Bundy, Barbara K., Stephen D. Burns, and Kimberly V. Weichel, eds. 1994. The Future of the Pacific Rim: Scenarios for Regional Cooperation. Westport, CT: Praeger. Cotton, James, ed. 1995. Politics and Policy in the New Korean State: From Roh Tae-woo to Kim Young-sam. New York: St. Martin's Press. Eberstadt, Nicholas. 1995. "China's Trade with the DPRK, 1990-1994: Pyongyang's Thrifty New Patron." Korea and World Affairs (winter): 665-685. Lu, Yousheng. 1997. "Features of U.S. Asia-Pacific Strategy in the Post-Cold War." Xiandai guoji guanxi 10 (October 20): 9-13. Shambaugh, David. 1997. "Chinese Hegemony over East Asia by 2015?" The Korean Journal of Defense Analysis 9:1 (summer): 7-28. Yi, Xiaoxiong. 1993. China's Korea Policy: Change and Continuity. Washington, D.C.: The American University Press. Yu, George T., ed. 1997. Asia's New World Order. New York: New York University Press. Yu, Meihua. 1996. "The Situation on the Korean Peninsula and an Analysis of China's Policy." Xiandai guoji guanxi 10 (October 20): 34-38. Yu, Shaohua. 1997. "Development of the Situation on the Korean Peninsula and Its Prospect." Guoji wenti yanjiu (International Studies) 4:11-16.

The Contributors

Tong Whan Park is director of the Forum on Korean Affairs at Northwestern and associate professor of political science at Northwestern University, Evanston, Illinois. He is also an adjunct research fellow at Korea Institute for Defense Analyses, Seoul. His research interest centers on international relations and Northeast Asian politics. He has contributed to many scholarly journals on both sides of the Pacific as well as numerous edited volumes. As a founder of the Council on U.S.-Korean Security Studies, he has written extensively on the security of the Korean peninsula and the role of the United States, including an edited volume in Korean, U.S. Forces in Korea and Their Strategic Missions. Robert A. Scalapino is Robson Research Professor of Government Emeritus, former director of the Institute of East Asian Studies, and former editor of Asian Survey, University of California, Berkeley. He is a member of the American Academy of Arts and Sciences and a trustee of the Asia Foundation, Pacific Foruiji, and the Atlantic Council. He has written numerous books and articles on Asian politics, international relations, and foreign policy. Most recent books include Modern China and Its Revolutionary Process (with George T. Yu); Asia and the Road Ahead; The Foreign Policy of Modern Japan; and a monograph, The Last Leninists: The Uncertain Future of Asia's Communist States. Patrick M. Morgan is a specialist in national and international affairs. He holds the Thomas and Elizabeth Tierney Chair in Peace and Conflict Studies and is a faculty member in the Department of Politics and Society at the University of California, Irvine. One of the founders of the Council on U.S.-Korean Security Studies, he writes frequently on East Asian security matters. He is also the author or editor of a number of books, including, 305

306

The Contributors

most recently, Regional Orders: Building Security in a New World, with David Lake. His other books on security include Deterrence: A Conceptual Analysis; Strategic Military Surprise; and with Edward Kolodziej, Security and Arms Control (two volumes). Michael J. Mazarr is editor of the Washington Quarterly and director of the New Millennium Project at the Center for Strategic and International Studies in Washington, D.C. He holds B.A. and M.A. degrees from Georgetown University, where he now teaches on an adjunct basis in the School of Foreign Service, and a Ph.D. from the University of Maryland School of Public Affairs. He is the author of numerous essays on the Korean peninsula and in 1995 published the book North Korea and the Bomb: A Case Study in Nonproliferation. Nicholas Eberstadt is a researcher with the American Enterprise Institute for Public Policy Research in Washington, D.C., and with the Harvard Center for Population Studies in Cambridge, Massachusetts. He has served as a consultant to a number of internationally oriented organizations, including the World Bank and the U.S. Bureau of the Census, and is currently on the Board of Advisers of the National Bureau for Asian Research. Marcus Noland is a senior fellow at the Institute for International Economics and a visiting professor at the Johns Hopkins University. He was a senior economist at the Council of Economic Advisers in the executive office of the president of the United States, and has held research or teaching positions at the University of Southern California, Tokyo University, Saitama University, the University of Ghana, and the Korea Development Institute. He is the coauthor, with Bela Balassa, of Japan in the World Economy; the author of Pacific Basin Developing Countries: Prospects for the Future; coeditor, with C. Fred Bergsten, of Pacific Dynamism and the International Economic System; and coauthor, with Bergsten, of Reconcilable Differences? Resolving United States-Japan Economic Conflict, all published by the Institute for International Economics. He has also written numerous scholarly articles on international economics. Philip J. Powlick is currently visiting assistant professor of political science at Denison University in Granville, Ohio. He has taught previously at Allegheny College and DePauw University. He has written several articles and papers exploring the relationship between U.S. public opinion and the making of U.S. foreign policy. Tsuneo Akaha is professor of international policy studies and director of the Center for East Asian Studies at the Monterey Institute of International Studies, Monterey, California. He received his Ph.D. in international relations from the University of Southern California in 1981. He has taught at the University of Southern California, Kansas State University, and Bowling

The Contributors

307

Green State University, Ohio. In 1995-1996 he received a Fulbright-Hays fellowship and was a visiting professor at Seikei University and a visiting scholar at the University of Tokyo. In addition to numerous journal articles, he is the author of Japan in Global Ocean Politics, coeditor of Japan in the Posthegemonic World, and editor of Politics and Economics in the Russian Far East: Changing Ties with Asia-Pacific. George T. Yu is professor of political science and director of the Center for East Asian and Pacific Studies at the University of Illinois at UrbanaChampaign. His publications include Party Politics in Republican China, China in Transition, China's African Policy, Modern China and Its Revolutionary Process (with Robert A. Scalapino), and Asia's New World Order.

Index

abductions, 24 ADB. See Asian Development Bank Agency for Defense Development (ADD), 109 Agreed Framework (Oct. 1994), 67; Chinese position, 263; as conditional engagement, 79, 83; criticisms of, 92; economic prosperity, 80-81; effectiveness of, 8, 93; Japanese position, 245; light-water reactors, 84, 89, 104, 121; negotiations, 8, 59, 102, 26-27; oil deliveries, 89, 104, 121; U.S.-North Korean economic relations under, 104, 119, 121; U.S. strategies, 86. See also North Korean nuclear program Agreement on Reconciliation, NonAggression, and Exchanges and Cooperation (1991), 25 agricultural products, 150-151, 157, 177«8, 247 Ajami, Fouad, 79 Akaha, Tsuneo, 12, 229, 306-307 Albright, Madeleine, 266 Allen, Horace, 18 "Almond/Lippman" consensus, 187 American Chamber of Commerce in Korea (Amcham), 158, 159, 161 Annexation of Korea Treaty (1910), 245 APEC forum. See Asia Pacific Economic Cooperation forum

appeasement, 81-82 Appenzeller, Henry G., 18 arms control, 55 Arms Control and Disarmament Agency (ACDA), 135 ASEAN. See Association of Southeast Asian Nations Asahi Shimbun, 238, 253-12 Asian Development Bank (ADB), 10, 142, 146n51, 251 Asia Pacific Economic Cooperation (APEC) forum: Japanese role, 234, 235; U.S. role in Asia, 18; U.S.-ROK trade issues, 11, 148, 153, 173 Asia-Pacific Peace Committee, 35 Asia Pacific regionalism, 13, 173; Chinese role, 265-267, 273; multilateral security system, 237 Association of Southeast Asian Nations (ASEAN), 18, 65; Regional Forum (ARF), 234 asymptomatic nuclearization, 111-113 Australia, 65, 106 automobiles, 159-160, 181n38, 181n39, 181«41, 262 banks, 162, 165, 182n48 Bark, Taeho, 154-155 Berlin crisis, 46, 47 Blix, Hans, 27, 85, 88 Blueprint for Financial Liberalization and Market Opening, 162, 163

309

310 bond markets, 163-164 Bosnia, 68, 264 Bosworth, Stephen, 27 "buy American" laws, 158 Canadian Atomic Energy Agency, 109 Carter, Jimmy, 7, 21; human rights, 202; troop withdrawals, 192, 204-205; visit to North Korea {1994), 27 CCFR. See Chicago Council on Foreign Relations Central Intelligence Agency, 85 centrally planned economies (CPEs), 174 chaebols, 30, 34, 156, 165, 262 Chang Myun, 20 Cheney, Richard, 87 Chicago Council on Foreign Relations (CCFR), 188, 191, 196, 202, 203-204, 210, 214, 216, 220 China: Agreed Framework, 263; armed forces modernization, 54; Asia Pacific regionalism, 13; Cold War era, 1-2; Cultural Revolution, 17; economic policy, 258, 271; FourParty Talks, 5, 267-270, 272-273; hegemonism, 266, 272; historical links to Korea, 265-266; Japanese relations, 237, 266; Korea after reunification, 61, 257, 260, 264-265; Korea policy, 257-258, 271-273, 289; as military threat, 242; nuclear weapons, 101, 106, 114; Russian relations, 235; sanctions against, 55; Taiwanese relations, 65, 68, 260, 262; Tiananmen Square incident, 191, 196; U.S. extended deterrence in, 53-55, 64-65; U.S.-Japan security alliance, 238; U.S. relations, 235, 260; Washington-SeoulPyongyang Triangle, 13 China Daily, 238 Chinese-North Korean relations: Chinese economic aid, 33, 131; Cold War era, 257, 259; cooling of, 55; trade, 125, 126, 261, 274n8 Chinese-South Korean relations: Cold War era, 252n7; establishment of, 245, 257, 259, 263; improvement in, 110; investment, 261-262, 271;

Index South Korean economic crisis, 258; trade, 261 Chinese-U.S. relations: Chinese views, 263-264, 265, 272; possible conflict, 62-63, 217; South Korea as lever in, 262-263 Chochongryon (Chosen Soren), 21, 34, 129 Cho Myung-chul, 290 Chosun llbo, 238 Chun Doo-hwan, 108, 109 Clinton, Bill, 79, 212, 265 Cold War, 1-2, 17-18, 46-48, 252n7 COMECON, 125 Commerce, U.S. Department of, 155, 178nl7 communications-information revolution, 15 communist hegemonism, 77 compellence, 107 conditional engagement, 79 containment, 26, 53-55, 63, 82 Council for Security and Cooperation in the Asia Pacific (CSCAP), 37 Council of Mutual Economic Assistance (CMEA), 125 Court of International Trade, 155 customs procedures, 156-157 DEC. See Dialogue for Economic Cooperation Demilitarized Zone (DMZ), 291 democracy: Korean reunification under, 81; and predator states, 77, 80; in South Korea, 22, 31; U.S. commitment to, 56, 71-19 Deng Xiaoping, 260, 290 development dictatorship, 280, 284-285, 294n7 Dialogue for Economic Cooperation (DEC), 156, 157, 159, 173, 176, 184«64 Dong-A llbo, 238 dynamic random access memory (DRAM), 155 East Asia: economic situation, 46; multilateral security arrangements, 65-66, 68-69; U.S. deterrence in, 46-48, 49-52, 63-66, 69; U.S. foreign policy toward, 2-3; U.S. troop reductions, 66-67

Index Eberstadt, Nicholas, 9-10, 119, 306 Economic Planning Board (EPB), 155 employment, 170, 185«75 equity participation, 158-159 Europe, 2, 4 5 ^ 6 , 4 8 ^ 9 European Union, 18, 28, 49 evacuation of noncombatants, 239, 240 expansionism, 77, 82 extended deterrence, 8; in China, 53-55, 64-65; in Europe, 4 5 ^ 6 , 48-49; failure of, 69« 1; history of, 44—48; in Japan, 49-50, 64; justifications for, 51-57; Nixon doctrine, 109; in North Korea, 57-60; post-Cold War objectives, 48-51; purposes of, 44; in Russia, 49, 65, 92; in Taiwan, 50; types of, 43-44; in a unified Korea, 60-63; U.S. economic interests, 52-53 FDI. See foreign direct investment FETZ. See Free Economic and Trade Zone financial markets, 161-166, 182-46 foreign direct investment (FDI): in China, 261-262, 271; by Japan, 34; in North Korea, 34, 104, 121; by South Korea, 165, 182n50, 261-262, 271; in South Korea, 158-159, 164-165, 180«34, 181«37 Forum on Korean Affairs, x-xi Four-Party Talks: Chinese position, 5, 267-270, 272-273; Japanese role, 251; North Korean preconditions, 13wl, 275/i38, 283; Russian role, 251; value of, 4-5, 37 France, 109 Free Economic and Trade Zone (FETZ), 23, 34, 174, 250-251, 272 Gallup polls, 202; American Public Opinion Index, 188 G-8 summit, 249 General Agreement on Tariffs and Trade (GATT), 150; Agreement on Technical Barriers to Trade, 157; intellectual property, 161, 169 General Association of Korean Residents in Japan, 21, 34, 129 Generalized System of Preferences, 152

311 General Sherman, 18 geopolitics, 15-18 Gephardt, Richard, 169 German reunification, 113, 279, 280 government procurement, 158 Graham, Thomas W., 214 gravity models of trade, 122, 143«8 Green, Marshall, 20 Group of 8, 249 Guam Doctrine, 20 Guidelines for U.S.-Japan Defense Cooperation, 238, 239 Gulf War, 82, 292 Hankook Ilbo, 238 Harris poll, 206 Hashimoto, Ryutaro, 237, 238, 246, 248 hegemonic stability, 51, 98 hegemonism, 77, 266, 272 hermit kingdom, 15 Higuchi Report, 237 Holsti, Ole R„ 187 Hong, Wontack, 157 Hong Kong, 34, 262 Hong Sung-hoon, 154 Hosokawa, Morihiro, 232-233, 237, 245 hostages, 241 Hulbert, Homer B., 18 humanitarian aid, 121, 130, 246-247 human rights, 21, 193, 202, 264, 265 Hunziker, Carl, 29 Hwang Jang-yop, 273«2, 291, 294n6 IAEA. See International Atomic Energy Agency imperialism, 79-80 India, 101, 106 Indonesia, 65 inspections, nuclear, 86-89, 93, 104 Institute for Disarmament and Peace, 35, 40« 15 insurance, 164, 165 intellectual property, 158, 161, 169, 264 International Atomic Energy Agency (IAEA), 25, 85, 88, 104; Agreement for the Application of Safeguards, 109 International Commodity Trade Database, 125, 144/j17

312 International Development Association (IDA), 10 International Investment and Business Forum, Rajin-Sonbong {1996), 34 International Monetary Fund (IMF), 30, 126, 163, 165, 182/151, 215 International Programs Center (IPC), 125 International Standard Industrial Classification (ISIC) index, 153 intra-industry trade, 148-149, 170-171, 185«76 investment, foreign. See foreign direct investment Iran, 90; Chinese arms sales, 55, 264; North Korean trade, 57, 126, 135 Iran-Iraq war, 135 Iraq: North Korean trade, 57, 126; nuclear proliferation, 218; as predator state, 77-78, 90, 94; sanctions against, 101, 107; U.S.China policy and, 264 isolationism, 15, 18 Japan: Agreed Framework, 245; asymptomatic nuclearization, 111-113, 114; Chinese relations, 237, 266; Cold War era, 1-2, 231-233; defensive nature of military, 234, 235-236, 253/i23; domestic politics, 247-249; FourParty Talks, 251; future role in Korea, 7; Korea policy, 229, 233-235, 244-247, 251-252; Korean view of, 232; Korean War role, 245-246, 254«35; Liberal Democratic Party (LDP), 244, 245, 247, 248; North Korean security threat, 57, 242-245; nuclear weapons, 111-113, 114, 243-244; occupation of Korea, 83, 230-231; payments for light-water reactors, 255/i39; prewar imperialism in Korea, 83, 230-231; Russian relations, 248-249, 252n7; sanctions enforcement, 239, 240; security alliance with the United States, 234, 235-242, 253nl2; Socialist Party, 244, 245, 247, 248; South Korean relations, 20, 243, 244, 246-247; trade with North Korea, 249-251; trade with South Korea, 249; U.S.

Index extended deterrence in, 49-50, 64; U.S. foreign policy, 236; U.S. troop reductions, 67; Washington-SeoulPyongyang Triangle, 12-13 Japanese-North Korean relations: Chochongryon remittances, 21, 34, 129; financial settlement, 142, 175; normalization, 251, 255«38, 263 Jentelson, Bruce, 219 Jiang Zemin, 259, 265, 268 Joint Declaration of the Denuclearization of the Korean Peninsula (1992), 25, 88, 104, 108 JoongAng Ilbo, 85, 238 juche, 23, 103, 129, 134, 174 Kajiyama, Seiroku, 239 Kanemaru, Shin, 248 Kanter, Arnold, 88 Kato, Koichi, 239 Keohane, Robert, 80 KGB and North Korean nuclear weapons, 85 Kim Dae-jung: economic reforms, 30, 166, 282; election of, 24; U.S.-South Korean relations, 32 Kim II Sung: death of, 7, 24, 27, 277; foreign trade, 128; juche philosophy, 103, 174; Korean War, 83; living standards, 23; nuclear weapons, 101; succession issues, 243, 268, 281; visit to Beijing, 109 Kim Jong-il: economic reforms, 281; Four Power Talks, 283; as leader, 35, 260, 280, 290; nuclear weapons development, 100, 102-103; succession process, 24, 282 Kim Namdoo, 150 Kim Young-sam: automobile imports, 160; corruption, 32; economic crisis, 24, 184«68, 282; Japanese-South Korean relations, 232-233, 246; North-South summits, 27; nuclear issues, 110, 245; submarine incident, 28 Kim Yong-sun, 88, 255«38 King Kojong, 18 Kong No-myong, 268 Korea (Korean peninsula, unified Korea): Americans in, 18; Chinese historical links, 265-266; Cold War era, 1-2, 270; division of, 19;

Index geopolitics, 15-17; history of U.S. relations with, ix-x, 7-8; Japanese occupation, 83, 230-231; as nuclear state, 62, 243; U.S. as stabilizer in, 5-6; U.S. treaty of amity and commerce (1882), 18. See also North Korea; South Korea Korea, Democratic People's Republic of. See North Korea Korea, Republic of. See South Korea Korea Development Bank, 165 Korea Electric Power Company, 27 "Koreagate" scandal, 189, 192, 196, 202, 204 Korean Fair Trade Commission, 155, 179nl9 Korean Foreign Trade Association (KFTA), 184«68 Korean Peninsula Energy Development Organization (KEDO), 27-29, 110, 117nl3, 121; Japanese role, 242, 244, 245, 251 Korean War, 1,18; armistice agreement (1953), 5; effect on U.S. policy, 19-20; Japanese role, 245-246, 254/z35; North Korean view of, 83; public support, 220; Russian role in, 39nl0 Korean Workers Party: Asia-Pacific Peace Committee, 35; Japan-North Korean relations, 244; presidential succession, 24; regime change, 280; revolt in the South, 291; Sixth Congress, 128; U.S. delegation meeting, 88 Korea Trade and Investment Promotion Agency (KOTRA), 122 Kratzer, Myron B„ 109 Kryuchkov, Vladimir, 85 Lawrence, Robert Z., 172 Lee Hoi-chang, 24 Lee Hyong-chol, 28 Lee Jae-ho, 154 light-water reactor (LWR), 84, 89, 104, 121, 255n39 Lindblom, Charles E„ 174 Li Peng, 262 Li Tenghui, 264 low-intensity conflicts, 241 M*A*S*H, 196

313 Mazarr, Michael J., 8, 75, 306 militarism, in predator states, 78 mirror statistics, 125-126, 143nl3 missile development, 25 missing in action (MIA) troops, 25 Monroe Doctrine, 17 moral commitment, 17 Morgan, Patrick M., 8, 43, 305-306 Multifibre Arrangement (MFA), 153 Murayama, Tomiichi, 237 Nakasone, Yasuhiro, 248 National Agricultural Cooperative Federation (NACF), 184n68 National Defense Program Outline (NDPO), 237, 253«23 nationalism, 78 NATO. See North Atlantic Treaty Organization Nazism, 77 NCND policy. See neither confirm nor deny policy negative security assurance, 105 neither confirm nor deny (NCND) policy, 105, 113, 114 Newsweek, 197, 202, 212 Nixon, Richard M„ 20 Nixon Doctrine, 109 Noland, Marcus, 9, 10-11, 122-123, 147, 167-168, 170, 306 nontariff barriers (NTBs), 150, 153-154, 178«14 nordpolitik, 22, 263 North Atlantic Treaty Organization (NATO), 48, 56 Northeast Asia Cooperation Dialogue, 37 North Korea: arms exports, 135; assessment of, 277-279; capital absorption by, 175, 186«88; capital investment, 132-134, 290-291; Chinese policy options, 284-285, 287-289; Cold War era, ix-x, 1-2; collapse of, 26, 35-36, 174, 241, 279, 283, 286-288; development dictatorship in, 280, 284-285, 294n7; economic reform, 34—35, 174, 281, 285, 289-290; extended deterrence in, 57-60; external subsidies for, 129-132; food relief, 121, 130, 246-247; foreign debts, 132, 146«50; foreign direct investment (FDI), 34, 104, 121; Free

314 Economic and Trade Zone (FETZ), 23,34, 174, 250-251,272; infiltration of the South, 21; irrationality of, 59, 72«30, 293, 294« 1; isolationism, 15; Japanese policy options, 244-247, 284-285, 287-289; Japanese relations, 142, 243-245, 251, 255n38, 263; joint venture laws, 23, 34, 128; military strength, 36; Natural Economic Territories (NETs), 33-34; nonproliferation treaty ratification, 85, 104; nonproliferation treaty, withdrawal from, 25, 90, 189, 245; non-Soviet bloc exports, 137-140, 144n20; as predator state, 8, 75-76, 91-92; Russian policy options, 284-285, 287-289; sanctions against, 10, 104, 119-120, 124, 136, 141, 227n57, 245, 263; Seoul as vulnerable to attack by, 291-292; shortages, 33; as Sino-Soviet client state, 16-17, 84, 129; soft landing scenario, 36-37, 60, 289, 291; South Korean policy options, 284-285, 287-289, 293-294; Soviet arms exports, 134-135; Soviet collapse, 23; special economic zones, 23, 34, 174, 250-251, 272; status quo, future for, 281-283, 285; threat to Japan, 57, 242-243; trade development, 126-129; trade patterns, 122-123, 124-126, 143n9, 143nl2; trade with Japan, 249-251; trade with the Soviet Union, 274n8; trade with Taiwan, 126; Tumen River Area Development Program, 33-34, 174, 250, 272; U.S. attitudes toward, 11, 198-200; U.S. policy options, 284-285, 287-289. See also Chinese-North Korean relations; Four-Party Talks; Japanese-North Korean relations; Korean Workers Party; U.S.-North Korean diplomacy; U.S.-North Korean economic relations North Korean nuclear program: Chinese views, 264; defensive versus offensive power, argument for, 102-105; development of, 84-86; diplomacy of terror, argument for, 101-102; domestic considerations,

Index 100; future of, 93-94; inspections, 86-89; international considerations, 100-101; Japanese view, 86; motives for, 83-84, 99-100, 292; reprocessing facility, 85; as survival tool, 6; U.S. public opinion, 11, 189, 199, 209-212, 213, 218-219. See also Agreed Framework; nuclear proliferation North Korean-South Korean relations: death of Kim II Sung, 27; espionage by the North, 291; fertilizer talks, 295nl4; guerrilla warfare, 292-293; negotiations, 244; submarine incident, 28, 60; trade levels, 34 NPT. See Nuclear Non-Proliferation Treaty Nuclear Energy Institute, 189 Nuclear Non-Proliferation Treaty (NPT): Chinese adherence, 55; extension of, 99, 101; North Korean ratification, 85, 104; North Korean withdrawal, 25, 90, 189, 245; South Korean ratification, 109 nuclear proliferation, 56, 99. See also Agreed Framework; North Korean nuclear program; Nuclear NonProliferation Treaty nuclear weapons: asymptomatic nuclearization, 111-113, 114; based in South Korea, 83, 86-87; Chinese, 101, 106, 114; as deterrent to predators, 80; Japanese, 243-244; in the post-Cold War world, 98-100; strategic value of, 105-108; in a unified Korea, 62, 243. See also Agreed Framework; North Korean nuclear program Obuchi, Keizo, 246 Occupied Territories, 175 official development assistance (ODA), 131 oil, 89, 104, 121 Okinawa, 234 Olympic Games, Seoul (1988), 206, 226nl7 Organization for Economic Cooperation and Development (OECD): free trade and investment areas, 165, 173; North Korean trade,

Index 136-137; South Korean membership, ix, 6, 29-30, 164; U.S.-South Korean trade disputes, 148 Organization for Security and Cooperation in Europe (OSCE), 49 Page, Benjamin I., 188 Pakistan, 55, 106, 218, 264 pan-Arabism, 77 Park, Tong Whan, 1, 8-9, 97, 277, 305 Park Chung-hee: assassination of, 189; development dictatorship of, 280; nordpolitik, 22; North Korean assassination attempt, 21; nuclear weapons development, 109; U.S.-South Korean relations, 20; U.S. withdrawal from Vietnam, 40« 12 partnership for peace (U.S.-Russia), 235, 249 People's Daily, 238 Pew Research Center, 209 phytosanitary requirements, 157, Mini, positive security assurance, 105 Potomac Associates, 188, 190, 196 Powlick, Philip J., 11-12, 187, 214, 306 predator states, 8; characteristics, 75-79; decline of, 79-82; and democracy, 77, 80; domestic, 94«1; economic collapse as incubator of, 94«7; economics of, 77; Iraq as example, 77-78, 90, 94; irrationality of, 59, 72«30; militarism, 78; North Korea as example, 8, 75-76, 91-92; reformed predators, 91-92; U.S. foreign policy toward, 90-91 President's Economic Initiative (PEI), 172, 176 priority foreign country (PFC), 161 product quality, 193-194 protectionism, 12, 194 Pueblo incident, 21 Qian Qichen, 260 Queen Min, 230, 252«2 rally effect, 220 Reaganomics, 167 Realist consensus, 187 rear area support, 240-241 refugees, 239-240, 242

315 regionalism, 13, 173, 237, 265-267, 274 reparations payments, 142, 245-246 reunification: Chinese policy toward, 61, 257, 260, 264-265; as a democracy, 81; extended deterrence after, 60-63; international lending agencies and, 186«89; mass migration, 174-175; nuclearization following, 113-115; South Korean views, 279; U.S. public opinion on, 12, 221-222 Revolution in Military Affairs (RMA), 62 Rhee, Syngman, 19-20 Richardson, Bill, 29 RohTae-woo, 108, 109-110, 295«12 Roper Center for Public Opinion Research, 188, 202 Roper poll, 202, 203 Rosecrance, Richard, 80, 82 Russia: Chinese relations, 235; Cold War era, 1-2; as Far East military power, 242, 254n34; Four-Party Talks, 251; future role in Korea, 7, 61; Japanese relations, 248-249, 252«7; Korea policy, 259-260, 289; North Korean nuclear program, 84-85; North Korean trade, 127; South Korean relations, 110, 252n7, 263; superpower rivalry, 98-99; U.S. extended deterrence in, 49, 65, 92; U.S. relations, 235, 249; Washington-Seoul-Pyongyang Triangle, 12, 13«2. See also Soviet Union Russo-Japanese War, 231, 252n6 sanctions: against China, 55; against Iraq, 101, 107; against North Korea, 10, 104, 119-120, 124, 136, 141, 227«57, 245, 263; against South Korea, 160; Japanese enforcement, 239, 240 sausage dispute, 157, 179n28, 180n29 Scalapino, Robert A., 7-8, 15, 305 Schumpeter, Joseph, 79-80, 94«4 Scranton, W. B., 18 search and rescue operations, 239, 240 semiconductors, 155, 161 service industries, 158-159 Shapiro, Robert Y., 188

316 shelf-life restrictions, 157 Sino-Japanese War, 230 Sino-Soviet dispute, 16, 266 Snyder, Jack, 80 social construction, 81 Solarz, Stephen, 21 South Korea: anti-import campaign, 184«68; Antitrust Act {1980), 155, 181«36; Chinese relations, 245, 252n7; Chinese-U.S. relations, 262-263; Cold War era, ix-x, 1-2; defense of, 206-209, 219-221; democracy in, 22, 31; dependence on U.S. protection, 16, 106, 107; economic crisis of {1997), 24, 30, 165-166, 215, 258, 262; foreign direct investment by, 165, 182n50, 261-262, 271; foreign direct investment in, 158-159, 164-165, 180n34, 181«37; French nuclear agreement, 109; guerrilla war in, 291, 292-293; Japanese relations, 20, 243, 244, 246-247; military strength, 32-33; Ministry of Agriculture, Forest, and Fisheries (MAFF), 157; Ministry of Finance and Economy (MFE), 162, 183*53; Ministry of Health and Welfare (MOHW), 157, 179n25; North Korean attack, 241-243, 291-293; North Korean infiltration of, 21, 291; protectionism by, 12, 194; Russian relations, 110, 252«7, 263; sanctions against, 160; spent fuel reprocessing, 108, 109; Taiwan relations, 63; trade with Japan, 249; UN defense of, 209, 220, 246; U.S. arms sales, 202-203; U.S. attitudes toward, 191-198; U.S. economic aid, 202-203, 221-222; U.S.-Japan security alliance, 238; U.S. military strength in, 67, 73«42, 216-217; U.S. troop withdrawals, 12, 19, 21, 194, 204-205, 275n44. See also Chinese-South Korean relations; North Korean-South Korean relations; U.S. public opinion; U.S.-South Korean diplomacy and military relations; U.S.-South Korean economic relations South Korean nuclear option: asymptomatic nuclearization,

Index 111-113; debate over, 8, 97; delivery systems, 113; denial of nuclear technology, 108-111; deterrence versus compellence, 105-108; power politics and, 114-115; public opinion, 115-116; U.S. attitude, 108-109, 112, 116 Soviet Union: arms exports to North Korea, 134-135; collapse of, 23; trade with North Korea, 274«8. See also Russia Standard International Trade Classification (SITC), 125 stock markets, 163, 183n54 strategic partnership (Russia-China), 235 Super 301 law, 160 Taft-Katsura agreement {1905), 19 Taiwan, 34; Chinese relations, 65, 68, 260, 262; North Korean trade, 126; president's U.S. visit, 264; South Korean relations, 63; U.S. extended deterrence in, 50 Tanabe, Makoto, 248 tariffs, 151-153 Team Spirit exercises, 25-26, 32, 59, 87-88 terrorism, 241 Time, 202, 205 Times Mirror, 189, 194, 202, 210 tourism, 161 Toyotomi Hideyoshi, 230 trade balances, 167-168 Treaty of Kangwha {1876), 230 Treaty of Nanjing {1842), 273 Treaty of Portsmouth {1905), 231 Treaty of Shimonoseki {1895), 230 Treaty on Nonproliferation of Nuclear Weapons. See Nuclear NonProliferation Treaty Tumen River Area Development Project, 33-34, 174, 250, 272 two-regional-war standard, 66-67 Underwood, Horace G., 18 United Nations: defense of South Korea, 209, 220, 246; economic aid programs, 251; International Commodity Trade Database, 125, 144« 17; nuclear safeguards resolution {1996), 27; two-Korea membership, 25, 245, 260

Index

United Nations Development Programme (UNDP), 250 United Nations Security Council, 28; Resolution 255, 105; sanctions resolutions, 240, 263 University of Maryland, 209, 212 Uruguay Round, 10, 150, 151-152, 153, 155, 159, 164, 172-173 U.S.-Chinese relations. See ChineseU.S. relations U.S. foreign policy: toward China, 264; constraints on, 86; toward East Asia, 2-3; European focus of, 2; geopolitics, 17-18; Japanese view of, 236; toward North Korea, 38, 82-90; toward predator states, 90-91; twoKorea approach, 4 U.S. International Trade Commission, 178nl7 U.S.-Japan Joint Declaration on Security, 237-238 U.S.-Japan Security Consultative Committee, 238 U.S.-North Korean diplomacy: carrotand-stick approach, 83, 84, 86; Chinese views, 263; peace agreement proposal, 269; South Korean objections, 59, 71 «29; U.S. public opinion, 212, 214 U.S.-North Korean economic relations, 9-10; commercial trade contacts, 121; North Korean views, 123-124, 143nl0; sanctions, 10, 104, 119-120, 124, 136, 141; trade outlook, 122-124, 140-142; under Agreed Framework, 104, 119, 121; U.S. economic aid, 142; U.S. public opinion, 201-203 U.S. public opinion: attitudes toward North Korea, 11, 198-200; attitudes toward South Korea, 191-198; defense of East Asia, 56; defense of South Korea, 206-209, 219-221; in the future, 222; knowledge about the Koreas, 189-191; North Korean nuclear crises, 11, 189, 199, 209-212, 213, 218-219; polling sources, 188-189, 222-225; relations with North Korea, 212, 214; reunification of Korea, 12, 221-222; role in foreign policy, 187; South Korean economic and trade issues,

317 201-203, 215-216; South Korea-U.S. relations, 12, 200-201, 203-209; U.S. troops in South Korea, 216-217 U.S.-South Korean diplomacy and military relations: Bush era, 25; Carter era, 21, 22; Kennedy era, 20; political similarities and differences, 31-32; Reagan era, 22; Security Consultative Meeting (SCM), 87; U.S. public opinion, 12, 200-201, 203-209 U.S.-South Korean economic relations: agriculture, 150-151, 157, 177«8; anti-dumping laws, 154-155, 178/il7, \19n\9\ automobile imports, 159-160, 181«38, 181/i39, 181 «41; Chinese exports and, 171-172, 185«79; competition policies, 155-156; complementary nature of, 147, 175-176; customs procedures, 156-157; exchange rates, 182n51; financial markets, 161-166, 182«46, 183«54; future prospects for, 169-173, 185n74; government procurement, 158; institutional factors in trade conflicts, 168-169; intellectual property rights, 158, 161; investments and services, 158-159; nontariff barriers, 153-154, 178«14; sanctions, 160; sausage dispute, 157, 179m28, 180/j29; South Korean protection components, 177n4; South Korean trade barriers, 29, 147-148, 150; standards, testing, and certification requirements, 157; tariffs, 151-153; tourism, 161; trade balances, 167-168, 185«75; trade patterns, 10-11, 30-31, 149; U.S. domestic trade laws, 160-161; U.S. public opinion on, 201-203, 215-216 U.S. Trade Representative (USTR), 147, 158, 159 victimization syndrome, 77, 87 Vietnam: hard currency exports, 138-139, 141; reunification, 113; U.S. extended deterrence in, 47, 49, 65 Vietnam syndrome, 206

318 Vietnam War, 18, 109; U.S. public opinion, 220; U.S. withdrawal, 40« 12 voluntary export restraints, 153, 178nl3 war, 78-79 Washington-Seoul-Pyongyang Triangle: Chinese response, 13; future of, 290; Japanese response, 12-13; Russian response, 12, 13«2; "2.5 party" relationship, 3-4 Weapons Exploitation Committee, 109 Wendt, Alexander, 81

Index World Bank, 142, 175 World Trade Organization (WTO): DRAM case, 155; establishment of, 11, 150; as regime of shallow integration, 172-173; sausage dispute, 148, 180«29 Yi Sun-sin, 230 Yomiuri Shimbun, 238 Yongbyon reactor, 84-85, 88, 93, 102 Yoo Jung-ho, 154 Young, Soo-gil, 168 Yu, George T„ 13, 257, 307 Yusin system, 20

About the Book

In the present international climate, the Korean peninsula is central to restructuring political and economic relationships in Northeast Asia. As the sole remaining global superpower, the United States plays a significant role in this reconfiguration, mediating conflicts and managing challenges that often originate in North Korea. This collection provides a cogent assessment of the new triangular relationship involving the United States and the two Koreas, as well as the broader dynamics among all of the regional actors. The authors also address the development of nuclear capabilities in both Koreas, changing economic ties in the region, U.S. public opinion about Northeast Asia, and Chinese and Japanese reactions to the new structure in international relations. Throughout the book they emphasize military security and economic prosperity—two key interests that will determine the future of the Korean peninsula. Tong Whan Park is director of the Forum on Korean Affairs at Northwestern University.

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