U.N.S.C.R. 1718: Who Won, Who Lost (Kim Jong Il Unplugged, Part 13)

John Bolton: Winner. I’d like to hear John Bolton’s critics deny that, as with Resolution 1695, he has wrung far more effectiveness from the U.N. than we had come to expect. Not only should we confirm this man, pronto, we should clone him. Madeleine Albright never got results like these.

The United States: Winner. We got everything we really wanted here:

• help constricting Kim Jong Il’s financial arteries
• the right to search his ships and planes.
• an embargo on the purchase and sale of heavy weapons and WMD components.
• something to hurt Kim Jong Il and his loyalists — the ban on luxury goods.
• the real capacity to investigate, monitor, and enforce all of the above, including pursing them to Iran.

You don’t have to take it from me, either.

The United Nations: Winner (With a Caveat). Every time we go back to the U.N., we reenforce the expectation that we’ll go back next time. Bush made that decision, and by passing something fairly tough, the U.N. preserves this as a plausible policy option.

On closer examination, however, the U.N.’s role as executor of its own resolution is limited to a compliance monitoring committee. It is not acting as peacekeeper, enforcer, or (thank God) accountant. Execution is left to the navies and air forces of a more limited group of nations that are members of the Proliferation Security Initiative. The U.N.’s own role was merely one of delegating authority to more effective institutions. In a sense, you could describe it as a consensual devolution of the U.N.’s role, or, as John Bolton described it, “In a way, it is a kind of codification of the PSI, specifically with respect to North Korea.”

Still, this gives the U.N. a more important role than it seemed to be headed for, and by passing a tough resolution, it has preserved its relevance.

Japan: Big Winner. Japan seems to have had almost as much pull as one of the P-5. Key provisions, such as the compliance monitoring committee, appear to have been put in pursuant to its demand. Its navy will play a major role here, and under a cloak of U.N. legitimacy, which will make South Korea’s predictably silly comparisons to the Rape of Nanking seem even sillier. In fact, the South Koreans have only North Korea to blame for Japan’s reemergence as a world power.

South Korea: Loser. It will now be required to “ensure” that its Kaesong and Kumgang funds aren’t being spent on WMD’s, which it can’t do unless Kim Jong Il opens Bureau 39’s books to South Korean auditors. Not a chance. And already, South Korea is trying to lie its way out of complying:

South Korea’s Unification Ministry, which handles inter-Korean affairs, indicated the sanctions would not affect a tourism venture and a joint industrial complex in the North, saying the “projects have nothing to do with the weapons of mass destruction program.”

Critics have urged the South Korean government to halt the two projects, saying that funds may be diverted for the North’s nuclear weapons program.

Once again, however, it looks like UniFiction got ahead of facts. At the same time, the Foreign Ministry “welcomed” the resolution and promised to implement it “in good faith,” and the cabinet as a whole still hadn’t decided what its policy or its interpretation of 1718 would actually be:

It is still unclear how the resolution will affect South Korea’s initiative for joint ventures with its communist neighbor.

“Seoul will take appropriate measures in line with the resolution,” Foreign Ministry spokesman Choo Kyu-ho told Yonhap News Agency by phone.

Suh Choo-suk, senior presidential secretary for security affairs, and other senior officials held a meeting earlier in the day to evaluate the ramifications of the resolution on inter-Korean relations and economic projects and come up with the measures.

South Korea is considering holding a higher-level meeting to be presided over by the office of Prime Minister Han Myeong-sook or the presidential office Cheong Wa Dae, according to officials.

Han, for her part, called North Korea’s test “an unpardonable provocative act which threatens stability in Northeast Asia and global order.” That’s pretty stong language for this government. Uri Party leader Kim Geun-Tae, trying to position himself to the left of everyone including the preserved corpse of Kim Il Sung, insisted that Kaesong and Kumgang would continue unaffected. On top of this South Korea will have to reconsider its refusal to join the Proliferation Security Initiative. So the only conclusion you can really draw from all of this is that the ruling party is in a state of mass confusion. Think: chicken farm under mortar fire.

This, despite having its man confirmed as U.N. General Secretary. Although he had just been confirmed, Ban Ki-Moon should have had some pull with his fellow ambassadors vis-a-vis positions he might take over the next five years, but it didn’t work that way. Ban’s utter pliability and spinal deficiencies served Uri well on its infamous North Korea human rights absentions, but it denied Ban the ability to protect Kaesong, Kumgang, and other unifiction projects. And while it might have been willing to stand up to the United States on those issues, it will have much more trouble standing up to the U.N.

China: Big Loser. China has historically seen itself as the motherland of all surrounding states in Asia, and that’s particularly so for North Korea, which depends on China for its survival. Many analysts have already noted how North Korea’s missile and nuke tests have humiliated China, and the fact that so many of them have said it makes it all the more true. This was obviously a bitter pill for the Chinese to swallow.

China is uncomfortable with the possibility of the U.S. interdicting ships near its coasts, though Bolton has said he expects most inspections would be performed at ports.

The U.S. ambassador said North Korea’s apparent nuclear test “had to have been humiliating to China. After all of the efforts they’ve made over the years to protect North Korea from international approbation, for the North Koreans in the face of all that to test had to get quite a reaction in Beijing. And I think we’re still seeing that play out.”

China reiterated it would not conduct any inspections and called for caution.

“China strongly urges the countries concerned to adopt a prudent and responsible attitude in this regard and refrain from taking any provocative steps that may intensify the tensions,” China’s U.N. Ambassador Wang Guangya said.

North Korea: Big Loser. Even if you think North Korea’s disengagement is studied, you can’t believe they can be happy with the domestic or financial consequences this could have. I increasingly lean toward there being a less rational explanation for why North Korea does what it does, and in that regard, the Marmot has put up one of his best posts ever, drawing a comparison I’ve wanted to write about but never did — the Shinto genes of North Korean ideology (I have written about the Shinto / fascist genes in South Korean ideology). If the North Koreans really think that they can accomplish their objectives by “using the force,” the implications are incredibly scary. On one hand, you might not want to rile them, except that if you don’t get in their way, they’re determined to gather strength for the Great Gotterdammerung.

So what will this cost the North Koreans?  According to the CIA World Fact Book, North Korea exported $1.275 billion in 2004, and imported $2.819 billion worth, in the same year. In South Dakota, this is known as “eating like a sparrow and shitting like a goose.” It’s either unsustainable or inaccurate. I vote for the latter both, after having read the thoughts of former State Department official and Illicit Activities Initiative head David Asher. Asher broke it down this way:

In 2003 the DPRK ran a trade deficit of at least $835 million and that if more broadly measured to exclude concessionary trade with the ROK was more like $1.2 billion. Even making a very bold estimate for informal remittances and under the table payments for that year, the DPRK probably ran a current account deficit of at least $500 million. Moreover, North Korea’s accumulated trade deficit with the ROK and China alone since 1990 is over $10 billion. North Korea has not been able to borrow on international markets since the late 1970s and has at least $12 billion in unrepaid debt principal outstanding. Yet, until recently – at least – it has managed to avoid self-induced hyper-inflation (which should have occurred given the need to reconcile internal and external monetary accounts, even in a communist country). Instead, the street stalls in Pyongyang and other North Korean cities seem to be awash in foreign made cloths, food, and TVs and the quality of life of the elite seems to have improved. What’s apparently filling the gap and accounting for the apparent improvements to the standard of living for the elite? The short answer as I see it: Crime. And if I am right, then the criminal sector may account for as much as 35-40% of DPRK exports and a much larger percentage of its total cash earnings (conventional trade profit margins are low but the margin on illegal businesses is extremely high, frequently over 500%).

Breaking this down further, citing both Asher and Balbina Hwang (from 2003, using figures for 2001), who put North Korea’s total GNP at $15.7 billion in 2001. Remember, these are just estimates:

• Missile sales — approximately $560 million. Gone. Missiles are not easy things to hide.
• Legit exports — $650 milion. Scratch the substantial percentage of this that was with Japan ($200M?), and remember that the North Koreans won’t have legitimate trade to cover for the $300 million worth of dope they sell in Japan each year.
• Dope — probably $500 million. Asher’s figures are more current than Hwang’s. Asher doesn’t give a precise estimate for North Korea’s dope income, but if you add the estimate of $300 million it makes that way in Japan alone to the Pong Su seizure in Australia ($150M), you can conservatively estimate $400-$500 million per year. That’s not far off from Hwang’s estimate of $500 million to $1 billion. Expect that to be curtailed sharply.
• Cigarette smuggling — $500 to $700 million.
• No estimate is available for what North Korea earns through conflict diamond and ivory smuggling, but that will probably also fall.
• Remittances, mainly from Japan — $100 million. Gone.
• Counterfeiting — $15 million or so. This will be somewhat harder to stop, although most customs services have dogs that can smell currency. Usually, the movement of bulk cash is an indicator of money laundering, tax evasion, or the evasion of transaction reporting requirements.

If we find any of that on the ships we search, we certainly aren’t going to just let it go. In a matter of days, the regime has lost several major sources of income. It’s hard to say exactly how much, but it could easily be half, and it could be more. Then, consider that North Korea also will have much more trouble recouping its earnings, because of growing financial restrictions on its bank accounts, which tend to be dual-use (legal and otherwise).

How will we enforce this in practice? Bolton is probably right that we would prefer to do most of the interdiction of North Korea’s traffic in port. Incidents like this seizure in a Taiwanese port will become more common. What if the North Koreans decide to go non-stop from Nampo to Bandar-e-Abbas? Then we can expect to see a series of naval skirmishes on the high seas.

The big crisis will come when the North Koreans try to fly non-stop from Pyongyang to Tehran. Would we really shoot down the airplane that might be carrying fissile plutonium, and might have had its cargo switched to schoolkids under cover of darkness or weather?

The ban on luxury items will certainly not mean a coup in the short term. The regime can weather this for a while. The gifts are probably a way of buying the loyalty of party members over the longer term, as they rise through the ranks. It’s unlikely that we’ll see much tangible effect from it for a few years. Over the long haul, Kim Jong Il, like any other Machiavellian prince, would rather be loved than feared. This will make it much harder for him to be loved.