North Korea Pushes the West's Buttons

With the United States and North Korea on the threshold of striking a new deal under which Pyongyang would halt its development of nuclear weapons in exchange for aid and diplomatic normalization with the US and eventually with Japan, North Korea is back at its old tricks, throwing up last-minute demands that opposing negotiators are unwilling to meet.

The Beijing talks foundered on the fifth day with North Korea demanding a huge amount of oil -- as much as 2 million tonnes, according to reports quoting Japanese and other sources. Neither the US nor South Korea appears willing to meet the demand, and the Japanese delegation specifically said Tokyo wouldn't provide aid unless Pyongyang is forthcoming on the issue of abductees snared off Japanese soil decades ago by North Korean agents.

The US position also remains tough, judging by the statement of US negotiator Christopher Hill, who said the US is in principle ready to provide fuel oil, but only on condition of a full-scale denuclearization made possible through "disabling" North Korea's Yongbyon reactor, not a temporary freeze.

This is the last day of the talks and if no agreement is reached today, they will be delayed until after the lunar New Year.l Even if the talks close for the Lunar New Year holidays, however, the North is expected to agree to form several working-level groups to discuss further details on aid and reactor issues.

The aim is to push the North into implementing the 19 September 2005 Joint Statement, which provides for dismantling its nuclear weapons program as a condition for receiving economic aid and diplomatic recognition. It was signed by all six countries represented at the Beijing talks – the US, Russia, China, Japan, and North and South Korea. The so-called six-party talks have been in progress since August 2003.

This is a kind of grand bargain, and the North appears willing to consider it. South Korean officials call it a “comprehensive package deal” that spares Pyongyang from a potential military conflict with the US and also provides an opening for it to emerge from isolation, economic collapse and potential regime implosion.

Given the current demands over oil, optimism as usual is tempered by the fact a series of on-again off-again deals with North Korea have yielded little since the 1994 Agreed Framework, which came undone in 2003.

With the US under pressure due to civil war in Iraq and a nuclear showdown with Iran, the approach to the north represents a diplomatic softening by the Bush administration on at least one front.

At unpublicized talks in Berlin in mid-January, US Assistant Secretary of State Christopher Hill and North Korea’s vice foreign minister Kim Kye Gwan hammered out the outline of an agreement, according to US and South Korean officials. It is underpinned by specific compensatory moves to benefit Pyongyang for every step taken in the process of taking down the weapons programs reactor freeze, opening suspect nuclear facilities, inspection and verification by International Atomic Energy (IAEA) inspectors.

In steps, Pyongyang would receive incentives, including a written security guarantee (that the US would not invade the North or seek its regime collapse). Eventually a treaty would be signed ending the continuing state of war between the two Koreas and replacing the current armistice agreement signed in 1953. Full diplomatic relations are envisioned between the US and North Korea in the future.

At the start of this process, though, the North is asking for half a million tonnes of heavy oil as the price for freezing its 5-megawatt reactor in Yongbyon. The US would respond only on firm assurance that it would lead to a total, irreversible and verifiable shut down of all nuclear facilities, not just a freeze on the Yongbyon reactor.

So far, the North has given no public response. It has only said it remains willing to halt the reactor’s operation. How essential that is to halting its entire nuclear effort is unknown, however.

In addition to this, the North has another 50-megawatt reactor under construction in Taechon near Pyongyang, an isotope laboratory, a plutonium reprocessing facility and a newly-added facility for uranium enrichment.

The US is wary of the fuel-for-freeze deal lest it repeat the mistake committed under the 1994 under Agreed Framework. Then the North received half a million tonnes of heavy oil each year for keeping the Yongbyon reactor “frozen.” However, the deal collapsed in 2003 when the US caught the North secretly switching to a uranium-based bomb program. Soon after, Pyongyang re-fired the reactor to extract more plutonium from fuel rods to produce nuclear devices.

As an added incentive, the US also is considering lifting financial sanctions on some of the US$24 million in North Korean accounts at Macau’s Banco Delta Asia. The US pressured the bank to freeze the accounts in 2005, accusing Banco Delta Asia of laundering illegitimate money for Pyongyang. This has been the main excuse for the North’s refusal to return to the six-party talks over the past 13 months but now US officials have agreed to sift through records to see if some of the North’s 50 accounts hold any “legitimate” money.

The two sides have agreed on separate, working-level talks between treasury officials, with the first round having already taken place in Beijing. As a result, the US will reportedly free about US$13 million. These include one account holding US$4 million in the UK-invested Daedong Bank of North Korea, and another US$8 million held by the British-American Tobacco Co.

The Berlin talks represented a departure for Washington, which has a professed policy of avoiding direct talks with the North. Officially, the Bush administration has stuck to the six-party format to disallow the North from engaging in protracted negotiations. The new willingness to engage directly comes after the resignations from the Bush administration of hardliners such as UN ambassador John Bolton and Defense Secretary Donald Rumsfeld.

US Secretary of State Condoleezza Rice appears to have been taking a more flexible approach in recent weeks in the face of the worsening chaos in Iraq and another looming nuclear crisis with Iran. Even as the US talks directly to the North on the sidelines, the center-stage negotiations continue under the six-party format, so that the issue of Korean peninsular denuclearization remains the common interest of all regional powers including Japan and Russia.

But the outlook on the final accord remains tough. Ever a hard bargainer, Pyongyang demands a simultaneous sequencing of the dismantlement process: an arrangement it calls word-for-word, action-for-action. At each stage US will be offering compensatory steps: a written statement of security guarantee in exchange for a freeze; economic aid (oil and food) for opening of the existing or potential nuclear program; diplomatic normalization for IAEA verification; and signing of a peace treaty on dismantling the entire program.

For its part, the US insists on a total, irreversible and verifiable dismantling of all nuclear facilities, including four to six bombs the US suspects the North may have already produced from available plutonium. It wants explicit wording to this effect in the draft agreement now in circulation by China.

This is easier said than done, for it will mean the end of Kim Jong Il’s entire nuclear program, developed over the last three decades at a ruinous cost to his economy. Expecting him to come clean on all nuclear assets may be tantamount to expecting a free election under his rule.

But this is clearly a win-win formula for all parties concerned. North Korea secures an economic lifeline plus diplomatic normalization while the US sustains nonproliferation. With a more stable Pyongyang regime, China avoids a nightmare scenario of millions of North Korean refugees flooding into its territory in the event of collapse. Moscow presumably has no problem envisioning a more peaceful neighbor so long as it doesn’t require providing more oil to a perpetually poor one.

There is one serious road block on, though. Tokyo insists on resolving the emotional issue of the 13 Japanese citizens the North abducted for espionage training. Five have returned, but the North claims the rest have died. Tokyo believes they are still alive and wants them back.

It stands as a major impediment because Japan holds the key to the North’s future economic rehabilitation. As it once did for South Korea, Japan is capable of offering billions of dollars in payment for its colonial rule of the North. Without resolving the question of abductees, there is scant chance of Tokyo moving forward on rapprochement. This is why the US and South Korea have taken the additional burden of urging the North to settle this question as amicably as possible.