Tentative Diplomatic Overtures
In the late 1980s and early 1990s Kim Il Sung lived to see the end of the cold war, the democratization of Eastern Europe, the transformation of China into a nation that was Communist in name only, and the col-lapse of the Soviet Union. He and his son Kim Jong Il, who by this time may have been making a large share of the decisions in Pyongyang, had many opportunities to adapt to the changing circumstances.
They occa-sionally showed signs that they were making rational adjustments—to normalize relations with Japan or to launch a Chinese-style free-market economic experiment. In the end their ultimate choice seems to always have been a continuation of old policies.
By means of very favorable trade agreements and loans that were not expected to be paid back, by 1988 the Soviet Union was giving North Korea the equivalent of $1 billion a year—a large fraction of the DPRK’s relatively small GNP. The Soviet Union was in serious economic trouble itself.
Gorbachev had decided by 1988 to seek expanded trade with South Korea, and he sent his foreign minister, Eduard Schevardnadze, to break the news to North Korea. Schevardnadze’s DPRK counterpart accused the Soviets of betraying socialism for money, but these sharp words did not change the Soviet decision. In 1989 the Soviet Union officially recognized the Republic of Korea.
In 1990 the Soviet Union’s military aid, investment, and trade with North Korea were sharply curtailed, and it announced that all future business would have to be conducted in hard currency. From this point onward the economy of the DPRK began to shrink (Bluth 2008, 38). In response North Korea made a series of tentative and for the most part inadequate diplomatic gestures beyond the communist world.
In 1988, already frustrated and furious at its abandonment by the Soviet Union, the DPRK took steps to normalize its relations with Japan. An important motivator for these moves seems to have been a desire for an immediate cash infusion in the shape of war reparations: Japan had earlier paid reparations to South Korea after normalizing relations with the ROK in 1965.
North Korea’s representatives insisted that Japan apologize both for its occupation of Korea and for the 45 years of abnormal relations after World War II; ultimately, the nego-tiations went nowhere. Around the same time North Korea took steps to establish a dialogue with South Korea. These meetings, too, went nowhere, largely due to North Korea’s unwillingness to compromise (Oberdorfer 2001, 223).
In 1990 Kim Il Sung announced a change in his position toward U.S. withdrawal of troops from South Korea, which he had always insisted should be immediate. As a further sign of a softening of its position toward the United States, North Korea responded to long-standing U.S. requests for the return of Korean War remains.
In the view of Don Oberdorfer, this would have been a good time for vigorous engagement with North Korea, in particular with respect to the country’s nuclear weapons program, but the United States was distracted by the buildup to the first Gulf War. Once again North Korea’s ambivalent diplomatic efforts bore little fruit.
In 1991, as an unexpected dividend of the end of the cold war, both the ROK and the DPRK were able to join the United Nations—their entry would earlier have been blocked by a veto. That same year the two countries signed a Joint Declaration on the denuclearization of the peninsula, an agreement that forbade both sides from testing, manufacturing, producing, receiving, possessing, storing, deploying, or using nuclear weapons and forbade the possession of nuclear reprocessing and uranium enrichment facilities.
In what seemed like a further step toward good world citizenship, in 1992 the DPRK signed a nuclear safeguards agreement with the International Atomic Energy Agency (IAEA), as it was obliged to do as a signatory of the Nuclear Non-Proliferation Treaty (NPT). Then, in 1993 North Korea refused the IAEA access to two suspected nuclear waste sites and announced its intention to withdraw from the NPT.
Whatever the motivation for this move, it got the attention of the United States. The confrontation between the United States and North Korea escalated; the rhetoric from Pyongyang included a phrase about turning Seoul into a “sea of fire” and the United States sent an aircraft carrier and a navy flotilla toward Korean waters. There were calls within the United States to bomb the nuclear development site in Yonbyon.
The defusing of the conflict came from a most unlikely source. Former U.S. president Jimmy Carter had years earlier received a mes-sage from Kim Il Sung, inviting Carter to Pyongyang. Now was the time to take the North Korean leader up on his offer. Carter was able to obtain promises from North Korea to decommission the nuclear site and rejoin the nonproliferation treaty if the United States led a coalition including South Korea and Japan in providing less dangerous light-water reactors and fuel oil supplies.
The Clinton administration, after grousing about Carter going off on his own, accepted the agree-ment and negotiations began in earnest between North Korea and the United States. Over the next two years the United States held direct talks with the DPRK and reached a series of agreements on nuclear matters, including the 1994 Agreed Framework.
Under the Agreed Framework the United States would ease economic sanctions against North Korea, the two would move toward full normalization of politi-cal and economic relations, North Korea would freeze its nuclear pro-gram and permit monitoring by the IAEA, the United States would help replace the DPRK’s graphite-moderated reactors with light-water reactor plants (less useful for weapons production), and until the new reactors were online the United States would provide North Korea with heavy fuel oil.
The Korean Electric Development Organization (KEDO) was estab-lished in 1994 to develop the new nuclear power generating facilities, and work began on the new site. The old site was closed down, the “hot” nuclear rods were removed and stored, and cameras were set up so that IAEA officials could monitor activities. The administration of U.S. president Bill Clinton (b. 1946), which faced an American con-gress reluctant to reward North Korea for good behavior, managed to push most of the cost of KEDO onto other countries. South Korea promised to pay for 70 percent of the cost and Japan for 20 percent.
The 1994 Agreed Framework broke down in the early 2000s during the administration of U.S. president George W. Bush, but the seeds of the problem were sown in the 1990s. Perhaps, with so many parties to the agreement and such mistrust between them, trouble was inevi-table. As long as the North Korean government remained secretive, it was difficult to be sure if it was fulfilling its commitments.
As long as the North Korean government was in dire economic straits, other governments would be tempted to withhold funds—as Japan and the United States eventually did—in order to extract further concessions or merely in the hope that North Korea would collapse.
In the early 1990s and since then, it has sometimes seemed that North Korea wishes to imitate the success of China’s forbidden forays into capitalism but is unable to. China had conducted a series of free-market experiments in the 1980s by creating Special Economic Zones (SPZs). In 1991, in the hope of attracting foreign investment, North Korea declared Rajin City and Sonbong County—an area on North Korea’s shared border with Russia and China—to be a Free Economic and Trade Zone (FETZ).
This free trade experiment still exists, and others have been added to it without causing any substantial changes either in the structure or the growth of the North Korean economy. Paul French, a journalist specializing in East Asian economic development, attributes the relative failures of such experiments to a fundamental lack of commitment and understanding by the DPRK leadership.
The DPRK authorities built virtually nothing; those who invested in Rajin-Sonbong found totally inadequate, or even non-existent, facilities in terms of water, power and other utilities to support their inward investments, while little or no official encourage-ment was given. Pyongyang’s history of defaulting on Western creditors since the 1970s did not offer foreign investors much incentive to trust the government either. Rajin-Sonbong, like Sinjui (another FETZ created more than a decade later) . . . was too little, too late. (French 2005, 87)
Additionally, while North Koreans would have benefited greatly from the employment opportunity Rajin-Sonbong might have provided, the DPRK consistently limits access to local labor out of fear that workers will be influenced by the West. The DPRK’s commitment to thought control takes precedence over economic development.