What’s that? You want the Sunshine Policy back? Good luck with that.
If Nate Silver is feeling humble these days, just let him try to predict who wins the next election in South Korea. In the 12 months between now and the time South Korea elects its next president, the ruling Saenuri party will probably break up. God willing, new candidates will emerge to supplant the dismal fare it has served until now. Divisions between the pro- and anti-Park Geun-hye factions may or may not heal. Ban Ki-moon may or may not run. If he runs, he may run with the Saenuri Party, a successor, or something entirely new. The left’s own divisions between Ahn Cheol-soo, Moon Jae-in, and a gaggle of far-left populists may not heal, either. The top candidates currently poll in the 20s.
Having said this, most observers of Korean politics suppose that the political left has the upper hand. Myself, I’m no Nate Silver, and I offer any prediction with low confidence, but I reckon they’re probably right. Over time, voters grow tired of presidents, their parties, and their policies. Memories of the opposition’s own failings fade, and the longer an opposition party is out of power, the more it can escape its record of governance and define itself by its promises — especially by the impractical, disingenuous, or absurd ones. Promises, of course, are almost always more appealing than the dreary realities of governance.
Because this is a blog about North Korea, my interest in South Korean politics mostly relates to the question of what North Korea policies a left-of-center government would actually implement. Wishful foreigners yearn for a return to the Sunshine Policy. And because I (obviously) don’t, I’d like to throw some December pond water on their hopes. Even if the left does win Korea’s presidency, the obstacles to picking up where Roh Moo-hyun left off in 2007, when he tried to turn South Korea’s most vital shipping lane into a neutral North-South “peace zone,” may be insurmountable.
At the heart of the problem is that North Korea has always been pay-for-play, and in recent years, a consensus has solidified in the U.N., the U.S., and (to a lesser extent) South Korea that paying has made matters worse, not better.
1. Only one man gets rich in North Korea
Without business, the Sunshine Policy would have been nothing but a plan to catapult money over the DMZ. Business was the paisley silk bath robe that clothed naked appeasement in the garb of a transformational philosophy. Business was what allowed Kim Dae-jung to market Sunshine as a plan to leverage greed to form relationships, entangling interests, and the gentle metastasis of soft power. “Good enough for us!,” said the Nobel Committee. One could have pointed out that the little gray men in Pyongyang are already sophisticated enough profiteers and money launderers to finance Kim Jong-il’s priorities. Or that Krupp, I.G. Farben, and Messerschmitt were capitalists, too. But the greatest flaw in Sunshine has always been the North Koreans.
You know who can tell you all about getting rich in North Korea? Naguib Sawaris, the recently deposed CEO of Orascom Telecom, whose stock tanked last year after North Korea confiscated half a billion dollars in profits from a cell phone network joint venture, and when it turned out that a bank Orascom set up in North Korea had ties to a North Korean bank that was sanctioned for proliferation financing.
Ask Nigel Cowie, whose Daedong Credit Bank was blocked by the Treasury Department for proliferation financing, and which was recently back in the news when it showed up in the Panama Papers. Or Hyundai Asan, Volvo, Yang Bin, David Chang and former Senator Robert Torricelli, Chung Mong-Hun, or Roh Jeong-ho, all of whom had tearful partings with their money and their reputations at the departure terminal of Pyongyang Sunan Airport.
Then, there is that last, great hope for North Korea’s slow capitalization — the so-called donju class, a class of traders who have leveraged their political connections to become wealthy (for North Korea) crony capitalists. After a series of high-profile defections, the regime started putting geographical limits on where they could operate, and recalled some of them from China entirely. It may soon a institute a formal taxation system for them, which would likely supplement (rather than replace) the current, informal system of kick-up payments to political patrons. As you might expect, the donju have always been vulnerable to shake-downs by the security forces, whose agents can easily extort them by accusing them of spying or disloyalty. At latest word, top officials have been muscling in on donju businesses, purging them for trumped-up political reasons and installing their own relatives and cronies as the new management. That’s the kind of development I’d expect to see if the effects of sanctions are driving resource competition, but it’s too early to make that connection.
Or, you could ask most North Korean farmers. Remember those agricultural reforms that amounted to a transition from collectives to sharecropping? The ones that, for most of 2012, were briefly the next great Pyongyang Spring? The reality of that is “not so much.” Some farmers say they aren’t getting the surpluses they were promised and that they’re suffering as much as ever. I know some people take a contrary view and believe that these reforms really are being implemented. Maybe they are in a few places, depending on local conditions and corruption, but the evidence mostly refutes claims of broad-based agricultural reform.
Or, you could ask anyone foolish enough to invest in Kaesong before Park Geun-hye finally shut the whole smarmy boondoggle down in January, after North Korea’s fifth nuclear test. When Kaesong was first set up during the Roh Moo-hyun years, its cheap labor was supposed to attract hordes of international investors and draw North Korea into the global economy. It never quite worked out that way. For years, the investors suffered under North Korea’s politically driven unilateral expulsions, suspensions, arrests, threats of interference, and summary “wage” and tax increases. None of this could have been reassuring to potential investors. It didn’t help matters when, in 2011, President Obama signed an executive order that essentially excluded anything made in Kaesong (or anywhere else in North Korea) from being imported into the United States, the world’s biggest export market.
In 2013, Kim Jong-un unilaterally expelled the South Korean managers and employees from Kaesong. They didn’t return for six months. Park Geun-hye shut it down it again in January, and Kaesong has been closed for almost a year. Given the risks of arbitrary interference, confiscation, and taxation — not to mention obliteration — you have to ask yourself who’d be foolish enough to invest in Kaesong if it reopened tomorrow. It’s like building a resort hotel on top of an active volcano. Of course, Seoul knew all along that Kaesong was a risky investment, so it reassured investors with generous subsidies and risk insurance. Kaesong investors are still fighting with Seoul over their government insurance payouts. For anyone to consider returning to Kaesong now, the insurance and subsidies would have to be extremely generous, which is a perfect segue to our next reason.
2. U.N. and U.S. Sanctions
I’ve long argued that because South Korea never really knew how Kim Jong-il or Kim Jong-un spent their Kaesong money, those no-questions-asked payments arguably violated the U.N. sanctions that have been in force since October 2006. For years, Seoul insisted that the money was all given to the workers in the form of wages — a very dubious claim — and that taxes were paid to a local North Korean committee that had nothing to do with nukes. For political reasons, the Bush and Obama administrations never pushed the issue, but they weren’t comfortable with Kaesong, either. Even during the Obama administration, how Pyongyang spent its Kaesong income was a problem for the Treasury Department.
Then, in January, after North Korea’s fourth nuclear test, Park Geun-hye’s government did something incredible — it said that yes, indeed, North Korea was using Kaesong money for nukes all along. Was this an admission that South Korea was knowingly funding the North Korean nuclear program and violating U.N. sanctions all along? These were logical questions — logical enough that Seoul backed off and said that Kaesong money could be funding nukes as far as it knew. The difference hardly matters, of course, if you read Resolution 1718, which requires member states to “ensure” that their payments are not diverted to WMD programs. Of course, Seoul could never ensure that. When I called them out on that, they sat on their hands, stared at the ceiling, and whistled. But the admission of 2016 means that Seoul can’t just go back to catapulting $100 millon a year into Pyongyang without “ensuring.” This isn’t just a problem for Kaesong; it’s a problem for any engagement program that pays money into Pyongyang’s bank accounts.
Not that it would be hard to avoid that problem, mind you. All they’d have to do would be to get Pyongyang to agree to take its payments in food, or let Seoul pay it by funding the long-underfunded humanitarian work of the World Food Program. Stop laughing.
Three U.N. Security Council resolutions later, there has never been less doubt that Kaesong cash is contrary to U.N. sanctions. In March, the Security Council specifically addressed public and private support for trade in North Korea, but left some wriggle room for Seoul to pretend that Kim Jong-un absolutely, positively couldn’t possibly use Kaesong earnings for nukes (as it had insisted, however incredibly, for years). This month, the Security Council approved much more restrictive language:
“32. Decides that all Member States shall prohibit public and private financial support from within their territories or by persons or entities subject to their jurisdiction for trade with the DPRK (including the granting of export credits, guarantees or insurance to their nationals or entities involved in such trade), except as approved in advance by the Committee on a case-by-case basis; [UNSCR 2321]
You will note that a U.N. Committee could, in theory, agree to authorize export credits, insurance, and other support. Of course, the first thing the 1718 Committee will want to know is who the South Koreans are dealing with, where the money is going, and how the South Koreans know it won’t be used for nukes. The North Koreans will never agree to that kind of transparency, of course. And if they don’t, they may find Ambassador Nikki Haley unwilling to support them in making that case to the 1718 Committee. Would a left-wing South Korean government try to go around the U.S. and get China’s support for a Kaesong waiver? After all, China might want a waiver of its own for Rason. They could try, but only at the risk of doing more damage to their relations with the United States. Which are likely to be strained as it is.
Even then, of course, Kaesong has always been a dollar operation — the North Koreans want dollars — and Executive Order 13722 makes dollar-denominated transactions for labor exports by North Korea sanctionable. Investors would probably run and hide, and even a general license from the Treasury Department is probably only good until the next nuke test. The uncertainty of President Donald J. Trump might be the last straw, but let’s not get ahead of ourselves.
3. Human Rights
The last time the United States had a Republican president, its Special Envoy for Human Rights in North Korea was Jay Lefkowitz, who called Kaesong “material support for a rogue government, its nuclear ambitions, and its human rights atrocities.” Strong words, but at the time, one could have dismissed them as a Republican, “neocon” view. Indeed, by 2007, it wasn’t even clear whether Lefkowitz, a decent and well-meaning man who nearly resigned his post in principle, even spoke for his President, who had turned back toward appeasing Kim Jong-il as the Iraq surge consumed all of his diminished foreign policy capital.
To many people around the world, Kaesong looks a lot like slave labor. No one ever knew how much of their own “wages” the workers actually receive. Concern about North Koreans’ labor rights has grown in recent years. It’s now high enough to have merited an expression of “concern” in the latest U.N. Security Council Resolution. Marcus Noland recently made a specific proposal that employers at Kaesong agree to an ethical code of conduct. Employers would come under strong public pressure to agree, but Pyongyang would resist, obviously. Wage theft is their whole game at Kaesong.
Paradoxically — unless you’ve lived there, of course — South Koreans probably care less about human rights in North Korea than people in almost any other civilized country. But South Koreans care intensely about global opinion. If they see that the world is looking down at them for exploiting North Korean workers, that will impact domestic public opinion and public policy to a greater degree than it has in the past (which, admittedly, wasn’t much).
4. The U.S. has turned away from Sunshine.
In 2007, the standard liberal response to criticisms like Lefkowitz’s was that only engagement with the North Korea would really change it for the better. That view persists, but it no longer predominates. I can’t cite a better example than Max Fisher’s 2014 takedown of Kaesong and the Sunshine Policy at Vox:
But it turned out that North Korea was just exploiting the Sunshine Policy as a con. The greatest symbol of this was the Kaesong Industrial Complex, a big production center just on the North Korean side of the border, where South Korean companies and managers contract with North Korean workers. The idea was that this daily contact would ease cultural tension and that the shared commercial interests would give the countries a reason to cooperate. In practice, though, the North Korean government stole most of the workers’ wages, big South Korean corporations exploited the ultra-cheap labor to increase profits, and North Korea didn’t ease its hostility one iota. [Max Fisher, Vox]
I could have written those words myself. Fisher then noted that “[t]he Sunshine Policy ended in 2007, correctly rejected as a failure by South Korean voters.” The fact that South Korea’s sophisticated, powerful, and well-funded lobby was no longer defending Sunshine also cost it much of its American support. In the past, U.S. administrations have been strongly influenced by Seoul’s view, but that pattern may not hold when Donald Trump is President (but more on that in a moment).
Since then, the American consensus on Sunshine Policy projects like Kaesong has shifted immeasurably. Just count the votes for the North Korea Sanctions and Policy Enhancement Act. Bernie Sanders would have been one of them had he not been campaigning in New Hampshire at the time.
You can’t attribute that shift to any one event; it was the cumulative effect of Pyongyang reneging on deal after deal, testing nuke after nuke, its attacks on South Korea, and its refusal to take Barack Obama’s outstretched hand. By 2013, it was clear that congressional staff of both parties were interested in ways to exert more pressure. Then came the U.N. Commission of Inquiry Report in 2014, the work of the U.N.’s long-absent liberal conscience. To many conservatives, the report confirmed what they’d long believed, but the report’s impact on liberals who dominate human rights NGOs would be difficult to overstate. After that, some liberal groups added their substantial organizational savvy to lobbying for passage of the NKSPEA. By the time North Korea conducted its fifth nuclear test in 2016, both the House and the Senate were ready to pass it.
From the perspective of most Americans, North Korea is deeply unpopular and we shouldn’t be supporting it economically. From the perspective of most Korea watchers of all tribal affiliations, Kaesong was a closed enclave, disconnected from broader North Korean society that delivered no visible dividends of peace, reform, or openness.
5. South Koreans have turned away from Sunshine
Throughout his presidency, Barack Obama was personally popular while his foreign policy was generally unpopular — throughout his second term, it usually polled between 10 and 20 points underwater. Park Geun-hye typically found herself in the opposite situation. Although her overall approval rating was seldom over 50 percent, her North Korea policy was popular until the final weeks of her presidency.
In fact, it’s likely that Park’s tough-minded North Korea policy was the one issue that buoyed her poll numbers at all for the latter years of her presidency. Her hard-nosed handling of the first Kaesong shutdown, which lasted from April to October of 2013, was popular with voters. In August 2015, shortly after Park “resolved” the land mine crisis with what amounted to an agreement to fight another day, her popularity soared 15 points to 49 percent, her highest rating since the 2014 Sewol Ferry disaster. Not until late September, when the scandal that destroyed her presidency first hit the headlines, did popular support for Park’s North Korea policy fall below 50 percent in a Gallup Korea poll. Even then —
As to whether North Korea is a partner with which dialogue and compromise is possible, 30.5 percent made positive replies, up from 28.7 percent last year. The share of respondents who said they felt threatened by North Korea’s nuclear weapons also fell from 84 percent to 79.5 percent. [Korea Times]
That was the first time public approval of Park’s North Korea policy fell below 50 percent since she took office in early 2013. In the same poll, Park’s personal approval rating was 31 percent. Yet support for reopening Kaesong fell to just 47 percent, and support for resuming Mt. Kumgang tours was almost exactly 50 percent. If Park fatigue affected those numbers, the long-term popularity of Sunshine may be even lower. And of course, if either side of the debate were to gain a credible standard-bearer, the numbers could move a few points up or down.
Those numbers are consistent with data showing a long-term trend away from sympathetic, ethno-nationalist views of North Korea, toward a grouchy, introspective don’t-tread-on-me nationalism. In other words, this isn’t 2002 anymore. At best, the political gain to be had from proposing a new Sunshine Policy is a wash. It may become a net negative if North Korea launches a major provocation soon (spoiler: it will). And if the Trump administration makes clear that South Korea has to pick a side — ours — Koreans may not view Sunshine as a good bet in uncertain times.
Of course, South Koreans have mood swings, just like Americans. Some of them just want things to go back to what they’ve been for the last 20 years. To them, North Korea has been a quiet crisis for decades. Why, from their perspective, can’t it just go on as a quiet crisis? Why shake things up instead of letting things go on as they always have? Why not buy their silence for just a little longer? I understand that sentiment, but good luck buying Kim Jong-un’s silence when he’s nuked up and poised to achieve the hegemony that was the lifelong ambition of his father and grandfather. Pyongyang has never allowed things to go on quietly for long, and when North Korea has provoked recently, South Koreans have increasingly demanded military retaliation. And of course, Kim Jong-un will soon pose a direct nuclear threat to the United States, which changes everything.
6. Donald J. Trump
The other day, I predicted that if the left wins Korea’s next presidential election, it would be on a collision course with Donald Trump over North Korea policy. It’s still too early to predict exactly what Trump’s policy will be, but does this look like a soft-line, pro-engagement cabinet to you? Yeah, me neither. As I’ve said before, Trump’s voters want a tough guy, and Trump wants to be admired by his voters. That’s why I’ve always been more worried that Trump would go kinetic than that he’d sell out to the North Koreans. And if North Korea gets to the point of reaching the U.S. with an ICBM or submarine-launched missile, no South Korean president is going to get a veto on his response to that. Past U.S. presidents have been surprisingly deferential to Seoul’s policy preferences. Don’t expect that to continue if Kim Jong-un can range the U.S. with a nuke.