Washington Insights: April 2018

Editorial Staff

The pace of change was overwhelming in the final weeks of winter and the first month of spring. Moon Jae-in appeared to be in the driver’s seat, but he was counting on Kim Jong-un to keep the momentum building. Abe Shinzo was desperate to shore up relations with Donald Trump, rushing to visit the United States in mid-April, and succeeded at last in arranging the China-Japan-South Korea summit in May, with Moon Jae-in and Li Keqiang expected to attend. For a moment, Xi Jinping seemed on the margins of US-Korean diplomacy as Kim Jong-un’s summits with Moon and Trump were being planned, but Xi responded quickly by inviting Kim to Beijing for summit and offering to visit Pyongyang as early as June. Washington’s economic policy in Asia was in no less turmoil, rocked by key personnel changes in the Trump administration. What was voiced at one DC setting was almost instantaneously dated, as Asia-watchers struggled to keep up with rapid developments transpiring in the region. 

Japan’s Foreign Policy

Suddenly, expectations regarding Japan were shifting. Abe—the leader who had brought clarity, stability, and a special relationship with Trump to the forefront—had seen his support fall precipitously, his assumptions about Japan’s foreign policy collapse, and his relationship with Trump deteriorate sharply despite a new visit to Mar-a-Lago. Ties to Putin, whom Abe will meet in May, no longer drew much interest, while Japan’s failure to impose sanctions after the Skripal nerve gas poisoning in Britain aroused limited concern. Ties to Moon Jae-in were quite the opposite: there was no sign of any positive chemistry and this elicited much greater concern in Tokyo. Despite DC seminars on Japan, as often occur at the end of Japan’s fiscal year, almost all the oxygen had been sucked out of the air by urgent matters regarding North Korea, China, and Russia, and new uncertainties with South Korea.

Japan’s policy toward China drew some interest in DC. Having focused less on human rights than Washington, Tokyo is pleased that the State Department and other US human rights advocates have been sidelined. Yet, Tokyo’s patient, incremental approach may not be aligned with Washington’s, who see China’s influence growing rapidly through non-transparent means, corruption, and debt traps—what some even call a new colonization. Despite Abe’s pursuit of Xi Jinping, the more critical approach to China in DC views the two allies coalescing on a more urgent response, requiring a major infusion of funds as well as more support for civil society than the Trump administration provides without actions that alienate states on the southern rim of Asia. A “free and open Indo-Pacific” means no dependence on China, to the extent that it closes other options, and freedom of navigation along with other moves to prevent China’s “Monroe Doctrine.” For Japan, a suitable response focuses on a tight US alliance, active regional diplomacy, and an area denial strategy.

Since a Pax Sinica is unacceptable and Japan is constrained by domestic restrictions and lack of resources, Japan must concentrate on its alignment with the United States. One issue raised in DC is the inadequacy of readiness for cross-strait pushback as China grows more coercive. Warmth between Japan and Taiwan—as Tsai Ing-wen and Abe reinforce their closer ties after Japan’s support for Taiwan after the 1999 earthquake and Taiwan’s support for Japan in the aftermath of its 2011 earthquake—are constrained by China, more so now that Abe is keen on capitalizing on Xi’s cooperative spirit of late. DC analysts also noted that the left wing of the DPP and the right wing of the LDP were warming up to each other, something Abe should capitalize on. Yet, when one Japanese in the audience suggested that it is time for a Japanese version of the 1979 Taiwan Relations Act, there was pushback, pointing to the very different circumstances of today and for Japan, given its 1972 commitment to China and its historical legacy. It was also recognized that both sides hesitate in Japan-Taiwan relations, given pressure from the PRC. Without prospects for major change in direct ties, the best alternative seemed to be closer US-Japan coordination on cross-strait security, especially from the Japanese side.

China’s Strategy

Is China overreaching? One point of view is that it is a continental power intent on becoming a maritime power, raising the possibility that, similar to Japan in the 1930s-40s making quite the opposite transition, it was becoming overextended. Another view is that China has a vacuum to fill because a declining United States—no longer respectful of its allies in Asia—is leaving an opening. Yet, the US defense budget has just been given a shot in the arm, and retreat is far from the message heard in DC.

Japan has paid a small price to strengthen its diplomacy with China and to bring about the CJK summit in Japan. It has changed its posture on BRI at little cost, since projects are proceeding slowly and no specific commitments have followed. At a time of great unpredictability in the region, Japan has found a way to augment its voice, while quieting China over the history issue and the territorial dispute. Suddenly, bilateral relations no longer appear zero-sum. There was scant criticism of Abe’s improved ties with Xi as eyes on all sides were turned elsewhere.

After Moon Jae-in’s gamble toward Kim Jong-un had morphed into Trump’s gamble, but well before Xi’s invitation to Kim for the first summit, a DC discussion focused on Moon’s move. Some saw Moon as rushing ahead, when he has more to lose than Kim Jong-un, especially in light of the fear in Washington that Moon does not regard denuclearization as the first priority. Also, Korean voters going to the polls for local elections in June could find Moon’s diplomacy insufficiently balanced. Trump’s rush to join the summitry accelerated the timetable beyond what Seoul could have expected. It was easy to anticipate small steps that Pyongyang could take to draw appreciation from Moon—family reunions, more exchanges, openness to a new stream of humanitarian assistance—but flattering Trump by giving him the credit for bringing Kim to the table will not suffice if Washington and Seoul are at odds about relaxing sanctions. Even after Trump agreed to a summit with Kim in May, concern about US-ROK ties was evident.

In response to the Kim-Xi summit in late March, some saw a dramatically transformed landscape with great potential, while others saw trouble ahead likely to lead to polarization with Seoul in the middle. Russians and Chinese in DC anticipated a successful North-South summit in April, but warned that Washington could push Seoul to prioritize fast denuclearization, when that is a subject for Kim Jong-un to discuss with Trump, not with Moon Jae-in. The premise of such concern is that a deal presumes a gradual process of give-and-take, in which US guarantees are far-reaching, while Seoul should be offering substantial economic incentives and other carrots to win the trust of Pyongyang not dependent on denuclearization. Thus, the restoration of trust and resumption of economic ties, for which the Park administration is blamed, are prioritized in the hope that denuclearization will not proceed quickly before regional goals of Moscow and Beijing are being realized. If Washington worries about denuclearization to the point that war might be launched preventively, the other powers are insistent on a broad resolution of the crisis in a manner that alters the geopolitics of Northeast Asia.  By reasserting its principal role in finding any solution to the crisis, Beijing has reassured Moscow while worrying Tokyo and Washington that it intends to offer economic rewards by cutting back on sanctions without the sort of commitment to denuclearization that the United States and Japan had demanded. Alert to disarray on the US side in preparing for give-and-take diplomacy, Beijing has taken the reins. Meanwhile, Russian voices are heard to say that arms control is more realistic than any serious denuclearization and that Russia must welcome the North Korean foreign minister adequately to make sure that it is not marginalized in the diplomacy that is now gathering steam.

Trump-Kim Summit

Informed commentary about this anticipated summit in May was challenging, given the sense that both leaders were unpredictable without normal diplomatic channels of advice. Differences were heard on who is in the driver’s seat: Kim Jong-un, who opened the door to diplomacy and initiated ties with Moon Jae-in, later inviting Trump for a summit and paying a visit to Beijing to coordinate with Xi; Trump, who organized “maximum pressure,” being flattered from many sides that he had brought Kim to the negotiating table, and in May could, more or less, dictate terms for resolution of the longstanding crisis; Moon, who is regarded as seeking to play a broker’s role in the next stage, much as he is portrayed as orchestrating recent diplomacy; or Xi Jinping, who may have been slow off the mark as diplomacy started in 2018 but who holds the cards to turn the spigot of sanctions on and off. There is no roadmap for what is possibly to be announced in May as a US-DPRK deal, which Trump and Kim could each call a “win” for his side although the timing of the stages to follow is likely to await further diplomacy.

The Trump gambit to meet with Kim Jong-un without preliminary talks to iron out aspects of an agreement opened the gates to outcomes undesirable to Washington: 1) US unilateralism gave a green light to Chinese unilateralism, undermining the coordination achieved in dealing with the North; 2) optimism about a resolution to the nuclear crisis with no clarity about the terms, made it easier for Beijing and Moscow to proceed on terms they find appealing, relaxing sanctions at an early opportunity; and 3) the absence of clarity about US plans boosted optimism in Seoul on what it could achieve through its earlier summit with Kim Jong-un, having satisfied Trump with a quick agreement on modestly modifying KORUS FTA while he did not seem to prioritize close consultations on diplomacy with Pyongyang. Instead of Washington being in the driver’s seat in late March and early April, it was left to watch as others pushed their own agenda (although Tokyo could only wait weeks for the Abe-Trump summit to occur.) The mixed messages of first hastily accepting a summit without any groundwork and then appointing the most inflammatory hawks to manage foreign policy and the summit only aroused confusion.

One point of view—typical among Russians and some Chinese—held that pressure was not a factor of any consequence in Kim Jong-un’s decision to turn to diplomacy. Rather he had achieved his military aims and was negotiating from strength, which is what Moscow had sought. The 2017 Sino-Russian roadmap called for a double freeze, and now Kim was taking a soft line by not demanding a quick suspension of military exercises as he sought to establish a framework for bilateral negotiations. Yet, some argued that those could not go far without moving to a third phase of progress on a multilateral security framework in Northeast Asia. Left unstated is the argument that such a framework requires a weakening of the US alliance system and the US presence in the region, which will be demanded by Pyongyang in accord with both Chinese and Russian wishes. There is confidence that Pyongyang, at last, has the clout to get Washington to accept this outcome in return for gradual reduction in its capacity to strike the US mainland. If Kim is now tolerant of another round of military exercises, the assumption is that they will be less provocative, not rehearsing an attack on the North, as a reciprocal sign of goodwill. Kim is taking the initiative, getting Moon—and then Trump—to agree, saying the North is capitulating but actually from alarm that it has to act to avert the new threat. Yet, a misreading of Kim’s understanding of “denuclearization” bodes poorly for a deal Trump could accept. Given what are assumed to be Kim’s thinking and his strong position—sanctions are of no consequence—incompatible negotiating stances are expected. Even if a vague starting point was acceptable to both sides, supporting denuclearization and leaving it to others to proceed on the details, a slow process would follow, in which Pyongyang would demand sanctions relief and Washington would insist on faster elimination of ICBMs and nuclear weapons and verification.

The compromise suggested in this approach is to satisfy the US side on ICBMs in stages, making it less threatened and without the North losing its main means of deterrence, while, in stages, offering ample rewards to the North. There would be no full denuclearization since there is no way to guarantee North Korea’s security. As talks bog down, security assurances would become the central theme. Claiming to be a “neutral observer,” Russia with its open channels to the North could be key to forging a six-party security system as the outcome that works best. Yet, this optimal scenario from one side’s thinking is far from the planning of the US side as well as from the Japanese side, which would feel betrayed by US focus on the ICBM issue and empowerment of North Korea while its threat capacity toward Japan would be undiminished. Although Seoul would take a soft line on advancing talks, it too would be at odds with this “America first” position. Indeed, Moscow and Beijing would likely take pleasure in an outcome that splits Washington from its allies, serving their geopolitical goals.

When Trump added his economic threat to Moon Jae-in to Xi Jinping’s threat, the vulnerability of South Korea was on full display. China had been sanctioning it over THAAD for two years, while Trump was threatening sanctions over softness to North Korea in the coming months. For both partners of South Korea, pressure over an undesirable security choice manifested itself in economic terms. The situation was not much better for Seoul’s third economic partner Japan, whose public opinion could turn hostile given the “hate Korea” atmosphere in some circles and refrain from buying Korean products. Policy toward North Korea was tinged with danger.

South Korean Foreign Policy

Some who see Moon in the driver’s seat trace his initiatives back to his visit to the Eastern Economic Forum, where he explained “Northern Diplomacy” to Putin, then to October 31, when Seoul made a statement announcing the “three noes,” which opened the door to a summit with Xi Jinping in December, and finally to quiet contacts with North Koreans that resulted in Kim Jong-un making a conciliatory New Year’s Day statement and then Winter Olympics diplomacy. What had appeared to be an impasse with potential to end in war was artfully redirected toward talks. In DC exchanges, however, there was concern that Moon was overreaching, as progressives had done in 1998-2007 and Korean conservatives had also done in their later diplomatic initiatives. Given the wide gap between Trump and Kim Jong-un, the cold shoulder given to Moon when he visited Xi in Beijing, and the lack of ROK leverage, Moon’s approach appeared to be a longshot that could end badly. This seemed likely given the conflicting logic of the various sides to talks.

North Korea’s Strategy

One Washington panel explored four dimensions of North Korea’s strategy: public relations, diplomacy, economics, and military. Although the PR strategy since January has been effective, including portraying Kim Jong-un in an entirely new light as a statesman, conveying an image of modernity for example by luring South Koreans to train for the Olympics at a newly developed ski resort, and showcasing female envoys, the South Korean public is divided with suspicions—on the conservative side especially. The US public may not be susceptible to the same hype, but it is inclined to given Trump the benefit of the doubt on the key question of denuclearization. Thus, the PR campaign has achieved its likely goal, paving the way to a full-court diplomatic press.

The diplomatic track has been effective too, taking advantage of Moon Jae-in’s eagerness for it to go forward and Donald Trump’s vanity to take full credit and proceed with alacrity without testing the waters step by step. It aims to raise North Korea’s status—giving Kim Jong-un the aura of a statesman. DC audiences also heard that it is directed also at gaining recognition as a nuclear state, even if that must be realized circuitously by first agreeing that denuclearization is acceptable. A third goal is the removal of sanctions, which is likely to occur more rapidly than Trump anticipates once the floodgates have been opened by diplomacy. Given Kim Jong-un’s desire to celebrate on September 9 the 70th anniversary of the founding of the DPRK and the desire of Trump to claim an historic victory in advance of the November US elections as well as Moon Jae-in’s hope for electoral success in June, the stars are seemingly aligned for brushing aside lingering problems in order to celebrate early success.

The North Korean Economy

One subject of sustained interest was the state of the North Korean economy. If it was stable despite the deepening bite of sanctions, then Kim Jong-un’s sudden interest in diplomacy was more likely to be driven by confidence in ICBM capabilities or fear of war than by desperation over economic conditions. The evidence is sketchy, but GDP growth in 2016 was considerable and signs of Pyongyang’s relative prosperity and rural gains from relaxation of central planning were highlighted. Even if growth has stagnated, workers in some industries left with little to do, and foreign trade down sharply, the exchange rate and price of rice were still not registering the expected effects of an economic squeeze. Among major trade partners, first Japan had cut ties after the abduction issue aroused the nation, then South Korea had responded to attacks in 2010 and later to provocations in 2016, and finally China had joined in tough sanctions from 2016 with accelerated pressure in 2017. By the end of 2017 the channels of normal trade were almost dry, leaving ship-to-ship illicit transfers on a much smaller scale than the prior trade in coal, textiles, non-ferrous metals, and, to a degree, oil. Seeing what was coming, Kim Jong-un may have opted in January to pursue diplomacy. Opinions differed on the role of economics.

Apart from the impact of sanctions on policymaking in Pyongyang, other economic themes were raised. Is the spread of markets and loss of direct state control a harbinger of a society changing from below, as occurred in China in the 1980s? Yet, few thought that would play a role in the unfolding diplomacy. Was China’s economic pressure proof of North Korea’s need for less economic dependence on China and readiness to make major concessions to others? Yet, the Kim-Xi summit confirmed that China is in the driver’s seat, able to boost economic ties in proportion to its aims being satisfied. Just as China controls the economic spigot, it holds the key to the diplomatic process. One DC speaker referred to North Korea’s economic changes as “reform without opening.” It may be developing a hybrid economy in place of the centralized planned economy, but limits to that suggest that China still has the deciding voice, maneuvering to ensure that North Korea remains a buffer without regime change, even as it is nudged to see multilateral diplomacy with China at the pathway to escape from the sanctions.

#China-Japan-South Korea summit #inter-Korean summit #Kim-Xi summit #Pax Sinica #Trump-Kim summit