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Asia Society: North Korea Inside Out: The Case for Economic Engagement

Chairs: Charles Kartman, and Susan L. Shirk
Director: John Delury
October 30, 2009


A report from an independent task force convened by the Asia Society Center on U.S.-China Relations and the University of California Institute on Global Conflict and Cooperation argues in favor of economic engagement with North Korea that could change North Korea's "confrontational foreign policy" and its own "self interest."

The United States should adopt a long-term strategy of economic engagement with North Korea. North Korea's attitude toward the world is closely related to the underlying structure of its domestic political-economy: a closed, command economy that favors the military and heavy industry and is isolated from the sweeping economic and political changes that have transformed the Asian landscape in recent decades. Encouraging a more open and market-friendly economic growth strategy would benefit the North Korean people as a whole and would generate vested interests in continued reform and opening, and a less confrontational foreign policy.

In other words, economic engagement could change North Korea's perception of its own self-interest. China's economic transformation stands as an important precedent, showing how a greater emphasis on reform and opening can have positive effects on foreign policy as well. Economic change has the potential to induce and reinforce the D.P.R.K.'s peaceful transition into a country that can better provide for its people's welfare and engage with other countries in a non-hostile manner.

Economic engagement should be a central part of U.S. strategy in dealing with Pyongyang, and is complementary to the current focus on solving the nuclear issue. Sanctions have a role in defending the U.S. against risks of proliferation, but they have not and cannot provide a long-run solution to the North Korean problem. Combining targeted sanctions with robust engagement, as the Obama administration is attempting to do with Iran and Burma, offers the best hope of changing the motivations and the actions of states that presently take a hostile stance toward the U.S. and the international community.

The first section of the report, "Case for Engagement," identifies a number of potential benefits to the U.S. and its allies of economic engagement with the D.P.R.K. The most fundamental is that it would encourage the gradual transformation of the D.P.R.K.'s political economy and foreign policy, with direct benefits to international peace. Economic engagement opens space for the Korean people to have greater contact with outsiders, and vice versa; it also reinforces changes that are already taking place from the ground up. An active economic engagement policy would bring the long-term strategic approach of the U.S. into alignment with those of its allies and partners, who maintain much more extensive economic ties to North Korea than does the U.S.

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