Tuesday, May 31

US-Korea-China: Pundita attempts to teach Global Village Math to the mules in Washington

On June 10 South Korean President Roh Moo-hyun will meet with President George W. Bush in Washington for a one-day 'working' visit. This will be to discuss ways to bring North Korea back to the Six-Party Talks and strengthen the Seoul-Washington alliance. The alliance, if not in tatters, is at a low point; this is despite the help Seoul has given Washington in the war on terror, which includes providing the second-largest contingent of Coalition troops in Iraq.

The meeting can't come soon enough for Pundita because it's past time for the Congress, the Bush administration and the State Department to confront the fact that South Korea, not China, is the real power broker in negotiations with North Korea. To see this one must look past the trade figures--China is North Korea's biggest trading partner--and focus on the offshoring situation.

South Korea is the only country that does legal offshoring in North Korea (versus offshoring factories that make or process contraband). That's the real story behind the Sunshine Policy or rather how the policy works out in practice.

South Koreans are copying the strategy that Westerners use, whereby you turn a poor nation into an industrial plantation and work the Natives for a pittance, then export and sell for domestic consumption the manufactured products at a good profit under your company name.

The South Korean government has invested USD multimillions in building up North Korea's Kaesong Industrial Park, where three South Korean companies have begun operation during the past six months. Twelve other companies are scheduled to start up by the end of the year. South Korea, which is North Korea's second-largest trading partner, is also pressing ahead with agreements for new road and rail links to help boost trade over the heavily fortified border.(1)

South Korea likes the North for a plantation for the same reasons American businesses like China for a plantation. It represents a slave worker population that has no choice but to work for starvation wages and doesn't demand OSHA standards, vacation time, sick days or rest periods.

As a South Korean shoe manufacturer put it, "We have lots of reasons for wanting to do business in North Korea; the labor costs are lower than in South Korea or China and a North Korean worker pretty much does what he is told...stronger relations with North Korea is also good for South Korea's future. The last thing we want is for them to be our enemies."(1)

However, Washington is basing their assessment on North Korea's trade with China. Trade between the two countries nearly doubled between 2002 and 2004 to $1.39 billion. This makes China North Korea's largest trading partner, which is a major reason Washington wants to pressure China into taking a more proactive role in the Six Party Talks.

In an interview with Larry King aired on CNN on Monday, Vice President Dick Cheney said that China could have a big impact on reviving the multilateral talks with North Korea because it shares North Korea's longest border and is its chief trading partner.

Cheney also said that "The Chinese need to understand that it's incumbent upon them to be major players [in resolving the US standoff with North Korea over nuclear weapons]."

Yet he admits that this argument has to this date failed to budge the Chinese, who do not want to impose sanctions or other economic pressure on North Korea. The Chinese say want they want to resolve the dispute through "continuing dialogue."

"To date, you know, those talks have not produced much," Cheney said, in what is the understatement of the year.

His analysis ignores that South Korean trade with the North increased by 58% in the first three months of this year to $170 million, compared to the same period last year, according to South Korea's Unification Ministry. North Korea's trade with Russia grew faster over the same period, from $80.7 million to $218.4 million. (1)

These trade numbers will leapfrog with more offshoring production in the North in the coming year. So the China trade figure is deceptive when used as a measure of the power that China has over North Korea. Right now, South Korea is holding the high cards, although Kim Jong-il has seen the advantage of playing Seoul against Beijing.

Beijing's great interest at this time is in limiting Japan's power. Seoul has sided with Beijing and Pyongyang in opposing Japan's bid for a seat on the UN Security Council. The alliance against Japan is much broader than the UN issue. Both Koreas and China have serious issues with Japan, which have deep historical roots and which have come to the fore in recent years. Beijing is heavily promoting anti-Japan sentiment in China in advance of a possible military showdown over Taiwan. (Japan is a strong ally of Taiwan.) And Seoul's relations with Tokyo are the worst since relations started up again in the 1960s.

As for Seoul's relations with the USA, you don't have read the English-language press in South Korea for many days to realize that Seoul has encouraged anti-US sentiment at home while promoting pro-North Korea sentiment. A recent poll taken in Korea found that 39% of Koreans consider the United States the greatest enemy of the ROK, with North Korea coming in at 33%.(1)

I interject that is why John Bolton recommended going around the Seoul government and taking the US case against North Korea directly to the South Korean people--a sound recommendation that has been ignored and overshadowed by complaints regarding his strong language about Pyongyang.

So the way it stacks up, South Korea wants to do big business with North Korea. If China plays along, China receives support from Seoul for their case against Japan and the United States. Thus, Beijing would be foolish to apply pressure to Pyongyang because that would anger Seoul.

For their part, Seoul would be foolish to push for North Korea to open up to the outside because that would give businesses in other countries the opportunity to set up plantation factories in NK. That would take away a trading edge from South Korea.

Kim Jong-il is fine with keeping the country closed because if it opens up it's only a matter of time before large numbers of North Koreans learn what he's been up to for decades. North Korea is not China; it's only got about 22 million people and it's roughly the size of Mississippi. It's a little bitty country, which means it wouldn't take many hopping mad citizens to bring down the government.

The rationale for the Six-Party Talks is that the countries that have the most to lose from North Korea developing nuke weapons should be involved in negotiations about the North's weapons program. Pundita fails to understand the reasoning. Pyongyang obtained much of their nuclear weapons technology and materials from China and Russia, didn't they? So obviously, China and Russia are not all that concerned about a nuke threat from North Korea.

As for Japan, they already have China's nukes trained on them. I'm sure they don't want to see North Korea with nuke armed missiles, but their biggest problem is China. In any case, the argument that China is worried enough about North Korean nukes to lean on Kim Jong-il doesn't hold water.

As for South Korea, no matter what they tell the US government, all their actions during recent years with regard to North Korea parallel the actions of US citizens with regard to China. I seem to recall we fought a civil war that was mounted in part to outlaw slave labor. But when it comes getting cheap goods made by a bunch of Chinese thousands of miles away, hey, slave labor is okay. If the slavemaster is selling nuke technology to any regime that comes down the pike, if it's offshoring heroin and meth factories in every despotic country it can find, that's not our problem either.

That's also how the South Koreans feel about their neighbors to the north. They take their lead from the world's superpower nation. If we do it, it must be okay. So maybe Bolton could warm up for his talks to the South Koreans by first talking to the American business community and consumer.

None of the above speaks to the Crime, Inc. aspect of North Korea's business, which has an offshoring component. But all that for another day, except to note that Seoul swears they have stopped North Korean contraband from passing through their largest port. Pundita already believes in the Tooth Fairy, Tinkerbell, leprechauns and the Gold Dinar Fairy. That's enough irrational hope for any one adult to entertain.

Despite U.S. Attempts, N. Korea Anything but Isolated by Anthony Faiola,
Washington Post Foreign Service, Thursday, May 12, 2005; Washington Post, Page A18.


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