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Not there yet

The resolution of the nuclear issue can begin when sanctions are fully effective.
Mar 08,2018
One of the rules that apply to human behavior and decision-making is balance. When we eat, for instance, we try to strike a balance between the benefit of having another portion — such as satisfying hunger, pleasure and nutrition — and the cost — such as overeating, obesity and price. Carmakers stop production when the cost of producing a vehicle is greater than the gain. If the cost is less than the sticker price, it will continue to produce. In economics, profit is maximized when the marginal gain from adding a unit is equal to the marginal cost, and this balanced state is called an equilibrium.

North Korea has already passed the point where the marginal cost of nuclear and missile provocations is increasing. At the end of last year, it declared the completion of its nuclear development because it must have decided that the cost of additional nuclear and missile test would be greater than the gains. If North Korea resumes ICBM tests, sanctions will surely tighten. China may discontinue oil supplies, North Korea’s exports will be blocked, and North Korean workers dispatched abroad might have to return at once.

Moreover, the possibility of an American military intervention would grow. A nuclear test in the Pacific, an ICBM launch near Guam or Hawaii and progress in its atmospheric reentry technology will be considered provocations that cross a red line for the United States. Now, Pyongyang has few safe provocation options.

It is only natural that North Korea wants a breakthrough. Rather than giving up completion of its nuclear and missiles programs, it wants to shake up the sanctions and military pressure. It is desperate to save an economy in critical condition due to UN Security Council-imposed sanctions.

As time goes on, sanctions will further strangle the North Korean economy. The elite will grow discontent, the regime may be jeopardized. Sanctions need to be eased in order to keep the economy running. To limit Washington’s room for military options, Pyongyang wants to create a more engaged mood with Seoul and drive a wedge in the Korea-U.S. alliance. Pyongyang is acting on this strategic calculation.

North Korea wants to talk to the United States as a nuclear state by temporarily suspending nuclear and missiles tests. It must have made a similar argument when it sent a delegation to the South for the PyeongChang Olympics. If they had said that Pyongyang was willing to talk denuclearization, the Korean government would have informed the United States the “good news” right away, but it didn’t.

The South Korean delegation tha went to Pyongyang may have heard a slightly more advanced position from Pyongyang. North Korea’s official media said that there was a “satisfying agreement.” But it seems to be for a breakthrough to ease sanctions and pressure, and the possibility of North Korea’s regime fundamentally changing its stance on the nuclear aresenal is small. The resolution of the nuclear issue can begin when sanctions are fully effective and North Korea’s attempts to change the situation fail. We haven’t reached that point yet.

When the Korean delegation visited Pyongyang, the Korea-U.S. joint military exercises must have been an important topic. North Korea could have said that moving on with the joint military exercises as planned would lead to a deadlock in inter-Korean relations and lead to military provocations. Seoul needs to be clear on North Korea’s demands. The Korea-U.S. joint military drills are a deterrence against provocations, not the cause of them. If they are sacrificed for talks, North Korea will only focus on cracking the Korea-U.S. alliance. If the United States does not trust North Korea and considers South Korea unreliable, U.S.-North talks will become harder.

As economic situation depends on structural factors and market factors, the structure and situation should be separated in inter-Korean relations. North Korea cannot provoke as easily as before due to structural issues. The critical moment to lower the asking price for the denuclearization of North Korea hasn’t come. It seems that at least six to nine more months will be needed until sanctions have their desired impact. Talks should continue, but we need to wait while keeping up the sanctions. We want a true peace, not a false one.

Translation by the Korea JoongAng Daily staff.

JoongAng Ilbo, Mar. 7, Page 31

*The author is an economics professor at Seoul National University.

Kim Byung-yeon