Walking the Tightrope

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The North's recent announcement does put South Korean President Roh Moo Hyun's government in a bind. Seoul is deeply committed to its policy of economic engagement with Pyongyang. Since October 2002, it has transferred at least $900 million in cash, products and services to the North, according to government figures and Hyundai Asan, a company involved in joint North-South industrial projects. This year's transfers—if a planned donation of 500,000 tons of fertilizer goes ahead—will likely be at least $350 million. The new Kaesong industrial park, just north of the Demilitarized Zone, is the most visible symbol of economic cooperation between the two countries. In late 2004, the first of what South Korea hopes will be 2,000 factories built over the next 15 years—all funded by South Korean companies—started churning out stainless steel cookware, called "unification" pots, in Kaesong. Although the partnership is an uneven one—the sophisticated stainless steel is made in the South and then shipped to Kaesong, where North Korean laborers shape it and screw on the pot handles—delighted souvenir hunters in Seoul have been snapping them up since they went on sale.

Still, unification pots could become a scarce commodity. After meeting in Washington with members of Bush's national security team last week, South Korean Foreign Minister Ban Ki Moon said economic engagement with the North would be reduced to a "humanitarian level" until the nuclear question is resolved. (The U.S. is also continuing food aid to starving North Koreans, despite the crisis.) But the policy shift—which would have been a major one—was fleeting. A day later, the South Korean Unification Ministry official in charge of the Kaesong project, Cho Myung Kyun, seemed to contradict Ban, saying "no particular decision has been made on the project yet" and that companies planning to invest there should assume it's business as usual.

Washington's long-standing military alliance with Seoul means it still has some influence with the Roh government, and hashing out a common diplomatic tack on the nuclear issue, while tricky, may be achievable. The bigger problem for the U.S. is likely to be China, which has a history of doing exactly what Bush says he will not do: reward North Korean intransigence. When the nuclear crisis was heating up in the summer of 2003, China's Vice Foreign Minister, Dai Bingguo, visited North Korea to persuade Pyongyang to attend six-party talks. Shortly after Dai returned to Beijing, Pyongyang announced that China had promised a new aid package. That is precisely what the Bush Administration does not want to happen now.

Still, Washington is sending signals to the North that if it comes back to the six-party talks unconditionally, negotiations conceivably could yield real benefits for Pyongyang in the form of security guarantees from the U.S. and a host of economic rewards. State Department spokesman Richard Boucher said last week that "staying away is a problem for North Korea," but there will be "benefits that they might anticipate from solving [the nuclear] issue." But U.S. officials concede that it's going to take time to get the five other participants—Japan and Russia being the other two powers—to come up with a unified approach that will cajole Kim out of his defiant crouch. For now, both publicly and privately, the Bush Administration is playing good cop, insisting it simply wants to return to the six-party format, that diplomatic and economic goodies await North Korea at the end of those talks, and that any military option is out of the question. Boucher last week even knocked down the idea that the U.S. is pressuring China and South Korea to cut back on their economic aid to the North. "That would have to be for each nation to decide [itself]," he said. That message certainly would have played well in Seoul and Beijing. The problem for the U.S. Administration is, it also probably went down pretty well in Pyongyang. Strangulation is out. Sugar, anyone?