Kim’s pivot to economy

The rhetoric and glare of the June 12 summit aside, one must discern what pushed North Korean leader Kim Jong-un and US President Donald Trump to fly to Singapore for a day of handshakes, meetings and a joint agreement for peace and security in the Korean Peninsula.

To Kim, a rapprochement with the United States will open economic opportunities for his country’s market reform. As for Trump, denuclearization in the peninsula will allow the United States to reshape its military power in the region and upgrade its containment arc against China, especially in contested waters.

The road to the summit dates back to May 8, 2016, when Kim, addressing the Korean Workers’ Party (KWP) which he chairs, said Pyongyang will normalize ties with erstwhile hostile states. North Korea, he said, will not use nuclear arms unless threatened by a nuclear power. He then launched a five-year economic plan to boost energy power, basic industries and farm production.

Achieving a nuclear deterrent after a series of tests amid harsh economic sanctions, Kim said last April 21 that he was dropping the Byungjin policy of joint economic development and nuclear armament in favor of shifting gears toward the economy. The new strategy was not his alone; it had the unanimous support of the KWP Congress.

Building on its Juche self-reliant economy, North Korea has in fact adopted market reform in the last decade, including encouraging a building boom in Pyongyang and the now-defunct Kaesong Industrial Zone, a joint venture with Seoul. Market reforms tapered off, however, due to harsh sanctions, with the economy managing a 1-percent GDP.

Lately, Kim had revealed plans to open special economic zones for foreign investors—a goal realizable only by easing foreign sanctions and having a peace deal with South Korea and the United States. Initiating a detente, Kim signed at the April 27 summit with Seoul’s Moon Jae-in the Panmunjon Declaration establishing a peaceful and nuclear-free Korean Peninsula. The agreement also led to the freeing of three Korean-Americans accused of spying, and the demolition of the Punggye-ri nuclear site. Kim made sure his gambit was backed by China and South Korea after a series of diplomatic swings, and was also welcomed by Japan and Russia.

In his joint agreement with Trump, Kim reaffirmed his commitment to full denuclearization of the peninsula, while Trump pledged security guarantees to Pyongyang. The agreement, however, is a template yet to be fleshed out by both countries’ negotiators in a series of talks that may last for months or longer.

To sustain the momentum, the talks must resolve differences on what denuclearization means. To the United States, denuclearization is complete, verifiable and irreversible, and refers only to North Korea. The latter, however, expects it to cover the entire peninsula, including the United States’ nuclear umbrella in Seoul. Pyongyang had called its nuclear weapons “a treasured sword of justice… and are not bargaining chips.” For his part, Trump said economic sanctions will be lifted only after Pyongyang denuclearized.

The path to a final peace agreement replacing the 1953 truce in the Korean Peninsula and a nonaggression pact will be long, tough and tortuous. A headway will depend on both sides meeting midway. In freezing its nuke program, Pyongyang is set to dismantle more test sites, but it may opt to keep its 15 nuclear arms—a highly contentious issue. Flexibility may mean putting its ICBMs, which can hit the US mainland, out of action — if the United States reciprocates by, apart from suspending war games, reducing its troops and removing its THAAD antimissile system in the south.

Complex as it is, the bilateral talks begun by Trump and Kim must involve China, North Korea’s major trading partner, which has called for a “freeze to freeze” track, as well as South Korea, Japan and Russia. Asian analysts say that, strategically, market reform will reap economic benefits for North Korea as well as investments from the United States and Beijing, which have long exhorted Pyongyang to shift to the market reform model practiced by other major countries.

The United States will use any economic leverage to unlock political reform in socialist North Korea — a geopolitical plot Pyongyang should anticipate. Reduced tensions in the peninsula will also allow the Pentagon to reconfigure its military power as it confronts the rising Chinese maritime competition.

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Bobby M. Tuazon is director for policy studies of CenPEG and teaches at the University of the Philippines.