Lee’s North Korea Policy (1)

A protester holds defaced posters of North Korean leader Kim Jong-il during a rally against North Korea’s nuclear program in Seoul, March 1. The slogan in Korean reads: “Abolish North Korea’s Nuclear Program.” / AP-Yonhap

By Leonid Petrov

Just days after his inauguration as the President of South Korea, Lee Myung-bak faces an important decision. The so-called ``pragmatic'' approach to North Korea, which was formulated and promulgated during his election campaign, is now going to be implemented.

What will be the short- and long-term consequences of President Lee's North Korea policy?

Even before Lee moved to the Blue House in Seoul, many people in Asia and beyond associated his ascendance to power with the potential deterioration of inter-Korean relations.

If not a complete freeze, a serious cooling may be awaiting the fragile North-South Korean cooperation. Some political groups have found his conservative stance and rhetoric disturbing, while others have welcomed the fresh approach.

The war of words on what policy toward North Korea is more effective has been going on between the two camps: the supporters of unconditional engagement and the pragmatic conservatives.

It is likely that debate will continue because a solution to the issues regarding the Democratic People's Republic of Korea (DPRK) is still nowhere in sight. (The DPRK is North Korea's official name.)

Lee's criticism of the Sunshine Policy of his predecessors is concentrated on the ``unilateral appeasement,'' which the two previous governments allegedly pursued in their relations with Pyongyang.

Initiated by Kim Dae-jung in 1998 and continued by Roh Moo-hyun until last month, this policy has been based on the principle of almost unlimited help to North Korea.

Also dubbed an ``ATM policy'' (where the North would turn to the South only when it needed some cash) it cost a fortune to South Korean taxpayers and attracted negative attitudes from the ROK's strategic partners, chiefly the United States and Japan.

Paradoxically, even North Korea was suspicious of this policy and repeatedly denounced it as a subversive trick aimed at implanting capitalism and destroying socialism in the DPRK.

One can endlessly list the shortcomings of the Sunshine Policy but compared with its extreme alternatives ― open confrontation and war ― it seemed to be working and even achieved plausible results.

When it was first formulated 10 years ago, hardly anybody expected that North Korea would survive this long. Nor did many people expect that the zones of inter-Korean cooperation would start clustering along the Demilitarized Zone (DMZ) with cars, buses, and trains crossing it on a daily basis.

The growing air and maritime traffic between South and North Korea is another achievement of the Sunshine Policy.

What can be done better to achieve more? President Lee is set to push for his own ``Vision 3000'' policy toward the North.

It is designed to provide conditional economic assistance to the DPRK over the next decade with the purpose of helping boost its per-capita national income to $3,000 (currently the North's per-capita income is estimated as $1,800).

Assuming that the country's economy starts growing at 10 percent annually, it can achieve $3,000 per-capita income in less then 10 years. In the meantime, South Korea could provide the North with a comprehensive package in five major sectors ― industry, education, finance, infrastructure and welfare.

For example, in the case of industry, the South can cultivate 100 North Korean companies that could export goods worth more than $3 billion. In education, the South can assist the North by training 300,000 industrial workers and investing about $40 billion through an international development fund.

No doubt Lee's Vision 3000, if implemented, would turn North Korea's economy into an export-driven one.

However, the conditionality of this plan is built on the premise that the Joint Statement adopted at the fourth round of the six-party talks on September 19, 2005, in Beijing must be completely implemented before any developmental and financial aid is offered to North Korea.

This is called a ``complete and flexible approach'' and is supposed to serve as an incentive in inducing the North to scrap its nuclear programs.

In other words, the issue of denuclearization turns into the primary policy goal, which is set to dominate other policies and regulate the speed and nature of inter-Korean cooperation, including South Korean investments in North Korea's existing and future special economic zones.

The new administration in Seoul plans to divide all inter-Korean cooperation projects into three categories according to their importance and cost. For instance, it has promised that humanitarian aid (in the form of rice, fertilizer, medical equipment, forestation and environmental support) will be continued.

Second category projects, which include commercially viable ventures directly benefiting the South (such as development of natural resources, cooperation in transport and communication) will be saved but regulated by the new Inter-Korean Cooperation Fund.

Suspended will be projects requiring significant financial investment, among them reconstruction of the dilapidated North Korean infrastructure and the creation of a special ``peace and cooperation zone" in the West (Yellow) Sea.

Almost everything that Kim Jong-il and Roh Moo-hyun agreed upon at the October 2007 inter-Korean summit falls into this ``third category.'' As does, the key development plan aimed at the construction of an economic center in and around Haeju, the North Korean port city about 75 kilometers west of Gaeseong.

Experts believe that the modernization of Haeju and the creation of the West Sea Economic Center would be the second largest project after the Gaeseong Industrial Complex.

It is conceivable that a proper feasibility study did not precede the signing of this multi-billion dollar agreement. Honoring or postponing this deal is now in the hands of the Lee administration.

A delay or cancellation will certainly prompt protests from Pyongyang, which is probably expecting the earliest implementation of the 2007 summit agreements, and will leave a deep scar of mistrust on inter-Korean relations in the future.

Among other things likely to seriously aggravate relations with the North is the plan to reconsider an earlier agreement with Washington that Seoul would resume wartime operational control of its own military by 2012.

Despite the agreement reached by the previous government, President Lee has hinted at the possibility that, should North Koreans further delay the complete and verifiable dismantlement of their nuclear weapons program, South Korean military forces might remain under U.S. war-time command even after this date.

Leonid Petrov is a research associate at the Research School of Pacific and Asian Studies, Australian National University in Canberra. He can be reached at leonid.petrov@anu.edu.au.