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2008/10/30 10:57 KST
NORTH KOREA NEWSLETTER NO. 27 (October 30, 2008)


The U.S. and the DPRK need to continue building mutual confidence through bilateral cooperation and concessions in order to normalize ties between their two countries.

By Tae-Hwan Kwak, Ph. D.
(Former President, Korea Institute for National Unification/
Professor Emeritus, Eastern Kentucky University)

After the Democratic People's Republic of Korea (DPRK, or North Korea) agreed to grant access to inspectors to all declared nuclear facilities and undeclared sites based on mutual consent, the United States decided to delist the DPRK from its terrorism list in order to salvage a crumbling nuclear disarmament-for-aid deal that had seemed on the verge of collapse. The U.S. officially announced the delisting of North Korea and its new verification protocol with the DPRK on October 11, 2008.

   President Bush's decision reflected a more pragmatic effort to get the six-party process to move forward despite conservatives' criticism at home and abroad. A possible second nuclear test by North Korea reportedly played an important role in the Bush's decision. The six nations (the U.S., China, Japan, Russia and the two Koreas) must finalize and adopt the verification protocol between the U.S. and the DPRK at the upcoming six-party talks.

Political Significance of the Delisting

The DPRK, which was first placed on the U.S. terrorism blacklist in Jan. 1988 after the bombing of a Korean Air passenger jet in Nov. 1987, was finally delisted on Oct. 11, 2008 after 20 years. The DPRK welcomed the delisting, and immediately took action to resume the suspended disablement process at Yongbyon.

   Bush's decision immediately brought conservative criticism. Some said the U.S. had succumbed to North Korean brinkmanship. Former U.S. ambassador to the U.N. John Bolton called the verification measures "pathetic." Republican presidential nominee John McCain issued a notably skeptical statement about North Korea's commitment to a verification protocol, while Democratic presidential nominee Barack Obama called the deal a "modest" step forward in dismantling North Korea's nuclear program.

   South Korea welcomed the deal, while Japan expressed extreme anger at the U.S. decision. Japanese Finance Minister Shoichi Nakagawa called it extremely regrettable, because it left the abduction issue unresolved. Japan on Oct. 10 extended for another six months its economic sanctions against Pyongyang.

   The delisting was an important milestone in the denuclearization and U.S.-DPRK normalization processes, and it is likely to speed up the six-party process, contributing to mutual confidence-building measures between Washington and Pyongyang as well as tension-reduction in inter-Korean relations. In short, the delisting would bring about the completion of the second phase of disablement in the denuclearization process during Bush's term, and the new U.S. administration will engage in arduous negotiations with the DPRK over the dismantlement phase.

Delisting and Lifting U.S. Sanctions: Key to the DPRK's Economic Revival

One may argue that a new verification protocol will eventually allow all six parties to reap the benefits. The DPRK will clearly be the most obvious beneficiary. Symbolically, the delisting has opened the way for North Korea to be able to become a normal state in the international community. If North Korea wants to maximize the effect of the delisting, the DPRK must sincerely keep its commitment to denuclearize North Korea. Substantively, the delisting will provide an opportunity for the DPRK to join the International Monetary Fund (IMF), the World Bank, and the Asia Development Bank. The U.S. will no longer block the admission of the DPRK into any or all of them. The DPRK may qualify for long-term loans administered by these financial institutions.

   The delisting of North Korea and lifting of U.S. economic sanctions will certainly have a profound impact on the revival of the ailing North Korean economy. Since 1950, U.S. sanctions against North Korea have had a negative impact on its economy. The suspension of the Most Favored Nation (MFN) trade status -- a system imposed on September 1, 1951, that is still in effect -- made it impossible for North Korea to even consider exporting its products to the U.S. North Korea's spot on the U.S. terrorism blacklist also entailed a great many restrictions, including removal of North Korea's ability to borrow money from international financial institutions.

   It appears that the United States will sequentially lift its economic sanctions against North Korea, which include the following: (1) DPRK assets frozen under the Trading with the Enemy Act (TWEA); (2) Section 607 of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2008 prohibiting financial assistance or reparations to the DPRK, including direct loans, credits, insurance and guarantees of the Exim Bank or its agents; (3) The International Traffic in Arms Regulations (ITAR) denying U.S. licenses and other approvals for exports and imports of defense articles and defense services covered by UN Security Council Resolution 1718, destined for or originating in the DPRK; and (4) Section 307 of the Foreign Assistance Act requiring that the U.S. proportionate share for programs for the DPRK be withheld from contributions to international organizations funded by International Organizations and Programs account (with an exception for UNICEF).

   When these four sanctions against the DPRK are lifted step-by-step as North Korea's denuclearization moves forward, it will reap economic benefits as a normal state in the international financial community. Nonetheless, the U.S. has emphasized that other sanctions imposed on North Korea, including all U.N. sanctions, will remain in place.

Key Obstacles to Denuclearization and U.S.-DPRK Normalization Processes

Pyongyang's sincere implementation of the verification protocol in the third phase of dismantlement will pave the way for the denuclearization process and normalized relations between the U.S. and the DPRK. All measures contained in the verification protocol will apply not only to North Korea's plutonium-based program but to any uranium enrichment and proliferation activities as well.

   Three key obstacles to North Korea's denuclearization process need to be removed. First, an accurate assessment of North Korea's plutonium production has yet to be fully produced. North Korea handed over to the U.S. some 18,000 pages of documentation from their nuclear facilities at Yongbyon, but actual inspections and sampling are required to verify this data.

   Second, the U.S. made significant concessions by dropping its objections to several key issues: access to undeclared sites, North Korea's uranium enrichment nuclear activities and its proliferation connections with Syria -- all of which will require further arduous negotiations at future six-party talks.

   For example, North Korea's 2006 nuclear weapon test site is not on the declared list of nuclear facilities. Obtaining "mutual consent," the only means by which inspectors will be allowed to see unlisted sites, will be a very difficult deal to make in this case, and likely in many others. The qualifying phrase, "based on mutual consent," implies that the DPRK reserves the right to modify or, in the worst case, nullify some provisions of the verification protocol.

   Third, the DPRK has agreed in principle to give up its nuclear weapons, but the new U.S. administration will need to negotiate this issue with North Korea. The DPRK will not easily give up its existing nuclear weapons because they have served as a means of strengthening Kim Jong-il's leadership and defending his system against external threats. Chairman Kim has repeated his position that he would give up nuclear weapons in return for U.S. abandonment of its hostile policy toward the DPRK. However, as long as the DPRK continues to hold its nuclear weapons, Washington is unlikely to normalize its diplomatic relations with Pyongyang.

   One may argue that the cost for the U.S. of removing Pyongyang from its blacklist is modest. Japan tried hard to keep Pyongyang on the U.S. list, as long as the abduction issue remains unresolved, but it reluctantly went along with Washington. As for the prospects for the implementation of the new verification measures, one can only express cautious optimism. The completion of the disablement phase of North Korea's denuclearization may have a better chance of materializing during Bush's term. However, no one can foresee the future of the dismantlement phase in the denuclearization process, which will be a key issue to be resolved by the new U.S. administration.

Prospects for the U.S.-DPRK Normalization Process

There will be a long and bumpy road ahead to complete denuclearization and the normalization of U.S.-DPRK relations. The U.S. and the DPRK need to continue building mutual confidence through bilateral cooperation and concessions. The implementation of the verification protocol at the third phase of dismantlement certainly remains a hazardous challenge. As discussed above, an accurate amount of plutonium production, the enriched uranium program and the nuclear proliferation activities will be major issues yet to be resolved.

   The six-party process will most likely collapse unless verification measures are implemented. It appears that the DPRK is unlikely to break up the six-party framework. Chairman Kim will take a pragmatic approach to the verification regime for the survival and prosperity of his regime. With North Korea's sincere implementation of the six-party agreements, the U.S.-DPRK normalization process will continue in the future.

   Some argued that President Bush's hostile policy toward the DPRK had led Pyongyang to adopt its brinkmanship as a bargaining tool for negotiating with Washington. But if North Korea wants its regime to survive, it is the best policy for Pyongyang to normalize relations with the U.S. and Japan, thereby obtaining economic assistance to the ailing North Korean economy. Thus, Chairman Kim needs to make a strategic decision to cooperate with the U.S. and other six party members in order to realize the complete denuclearization of the Korean Peninsula.

   With North Korea's nuclear disablement phase moving forward, now is an opportune time for Seoul and Pyongyang to again engage in "smile diplomacy," thereby reducing the hostile relationship between the two. South Korean President Lee Myung-bak needs to take a bold initiative to send a friendly signal to Chairman Kim to break the current inter-Korean deadlock. It is desirable that the two Koreas play key roles in resolving the Korean question through inter-Korean mutual confidence-building measures and cooperation.