North Korea: Nothing to Lose

Kim Jong-un, the youngest son of North Korean leader Kim Jong-il, reported to be his heir.

I've been waiting for events to develop in NK before blogging about it. It seems North Korea has upped the ante by cutting off all ties with Seoul. This came on the heels of the administration announcing joint US-S. Korean military exercises to be held on the peninsula, and telling the NYT that Kim Jong-il ordered the attack on S. Korean ship.  There's a bit of diplomatic wiggle room in NYT piece if needed, as administration officials are quoted as saying:

We can’t say it is established fact,” said one senior American official who was involved in the highly classified assessment, based on information collected by many of the country’s 16 intelligence agencies. “But there is very little doubt, based on what we know about the current state of the North Korean leadership and the military.”

Nonetheless, both the conclusion and the timing of the assessment could be useful to the United States as it seeks to rally support against North Korea. [emphasis added]

Another NTY op-ed today from Ian Bremer, president of the Eurasia group, points out that not only may North Korea be facing a leadership succession issue, but it's iron clad grip on society may be slipping. When the regime allowed some small scale capitalist experiments to begin in 2002, a black market for cell phones, radios, and other communication devices quickly burgeoned.  When North Korea tried to clamp down on these reforms last year, here's what happened:

South Koreans with connections inside North Korea reported black market hyperinflation, severe food shortages and pockets of serious civil unrest. The government quickly suppressed the protests and tried to appease public anger with emergency supplies of rice in the hardest-hit areas.

Then something extraordinary happened: The North Korean government backed down. It reopened private markets and again allowed transactions in foreign currencies. The prime minister issued a stunning and nearly unprecedented public apology. State planners were publicly humiliated. A few weeks ago, North Korea’s finance minister was executed by firing squad.

In other words, succession is only one of the problems facing the North Korean elite. The larger fear is that the state can’t isolate North Korea’s people forever, that only access to products from outside the country can ease chronic shortages, and that all this new market activity is raising public expectations the North Korean leadership can’t meet.

In April, the regime reportedly provided senior military officials with foreign cars to ensure their loyalty. That sounds a lot like the late East German leader Erich Honecker’s bid to reward his generals with weekend shopping trips to the West — a move that only whetted their appetite for more and hastened the country’s demise.

Did North Korean torpedo the Cheonan to manufacture a military crisis that might rally angry North Koreans to their government? Maybe. Would the attack create unity within the military ranks that might help smooth the succession process when Kim Jong-il finally dies? Perhaps. China and South Korea are right to worry that a North Korean collapse would flood both countries with sick and starving refugees.

But beyond the speculation, it’s starting to look like North Korea’s insecurity might be approaching a tipping point — raising the risk of another hostile act that might send North and South Koreans forces stumbling toward a shooting war that can only end in disaster for both.

There are few good options for the administration in this situation.  North Korea is already heavily sanctioned, has nuclear weapons, and its artillery ranged on Seoul, a city with a population over 10 million. Still, it looks like with this info deliberately given to the Times, the announcement of war games, and Hillary Clinton putting the yuan issue on the backburner in her meeting with China, the administration feels compelled to act since what North Korea did constitutes an act of war.   When the Bush administration hit the regime financially where it really hurt, North Korea came to the table and specifically tied its nuclear deal to the release of its funds held at Banco Delta in Macau.  I expect that if there is any new information on regime financial sources, the administration will try to find a way to sanction it.

China is key to this issue since they have direct ties to the regime. But it's unlikely they want to disturb the status quo since they share a border with North Korea. They don't want their refugees should North Korean society collapse, nor are they keen on seeing the peninsula unified under a capitalist-led South Korea. Plus, it's an issue where they are the primary facilitators that Washington has to go through. As such, they've been playing the issue down.  The Obama administration's bandwidth on foreign policy is full; human rights haven't been a pressing concern for it. After some angry exchanges and obligatory UNSC denouncement of North Korea, with such little information we have on North Korea, the administration may very well desire a return to the status quo as well.

In a Bloomberg interview with Henry Kissinger yesterday, the interviewer switches from the topic of the yuan over to North Korea about half way thru the interview. Here Kissinger remarks that North Korea "is one of the weirdest little regimes." He points out they do not produce anything, nor do they have an real trade.  The North Korean government cares only for regime preservation; everything it does should be viewed through this prism. It other words, if it helps strengthen the regime, North Korea has nothing to lose in stirring up another crisis short of war.