America Can Buy Security for North Korea

Even for a regime known for its unpredictable behaviour, North Korea stunned many this week when it announced that its nuclear weapons programme was really just a means of saving money. Recognising that its million-strong conventional military forces are far too expensive, the hermit kingdom now claims that an atomic arsenal will allow it to ensure national security at lower cost.

In its own perverse way, North Korea may be on to something. Nothing can excuse its nuclear weapons programme. But the country is destitute and its huge army is one of the main reasons why. Too paranoid, or perhaps too proud, to cut its armed forces without some compensation, it now resorts to the argument Nato used throughout the cold war that a nuclear deterrent is cheaper than matching your adversary soldier for soldier. Unable to blackmail President George W.Bush into buying off his nuclear and missile programmes, Kim Jong-il now wants to use them to cut his defence budget.

The North Korean leader’s change of tack provides the US and its partners with an opening. They should test Pyongyang’s professed desire to cut military spending and fix its economy by helping it to do so.

In exchange for capping and then ending its nuclear programme, curtailing its missile and chemical weapons programmes, and cutting its conventional forces deeply, North Korea should be offered economic and security benefits. US sanctions should be lifted. Japan, South Korea, the US, Europe and the international financial institutions would provide about $2bn (1.7bn) ($1.2bn) a year in development aid (most of it in kind to prevent pilfering). China could assist its neighbour in developing special economic zones for entrepreneurial activity in a command economy. A peace treaty could then be signed and diplomatic relations established. North Korea would also have to release all Japanese kidnapping victims and begin a human rights dialogue akin to that that China undertakes with the outside world. South Korea and the US would make corresponding cuts in their military forces on the peninsula.

This plan should be implemented quickly. The nuclear crisis becomes more acute by the month. So does North Korea’s economic plight. It is now well into a second decade of economic decline. After an early history of respectable command-economy performance, it began to lose momentum in the 1970s. The demise of the Soviet Union and the associated loss of aid and favourable trade terms exposed North Korea’s failed experiment in communism combined with its juche tradition of self-reliance. By the beginning of the 1990s, any remaining hope of economic recovery under the communist regime had dissipated and the country was pushed to the brink of starvation.

North Korean leaders have not been able to solve the crisis. They have experimented with numerous reforms price liberalisation, special economic zones, limited business transactions with South Koreans and, only this month, allowing “farmers’ markets” to sell more goods but have done so tentatively and with little effect. Poverty-stricken, isolated North Korea is a long way from the more advanced market reforms undertaken by China or Vietnam. But modelling by the Institute for International Economics suggests that if North Korea cut its military and properly implemented limited market reforms the economy could grow by more than 50 per cent by the end of the decade.

Disarmament and economic recovery will be hard to achieve. But attempts to push the North Koreans along the path of reform have few downsides. And failure would help Washington rally more international support for tougher measures, including economic sanctions, a crackdown on North Korean drug smuggling and arms trafficking and perhaps even pre-emptive use of military force.

Success, admittedly, would help to keep a totalitarian regime in power. But the regime would have to change many of its ways. And the alternative the prospect of mass starvation of the North Korean people and proliferation of nuclear weapons by a rogue state on the brink of collapse is worse. China has come a great distance from the days of Mao Zedong without the overthrow of the Communist party. North Korea may still be able to travel a similar path.