Abstract This paper analyzes the background and development of the Sun-Goon (military-first) diplomacy that is focused on guaranteeing the survival of North Korea’s socialist regime and preparing the diplomatic environment for the establishment of a strong and prosperous state in the future. Yet, military-first diplomacy will fail eventually, and the alternative measure that North Korea can take is to change its diplomatic strategy from Sun-Goon to Sun-Kyung (economy-first) through the 3 step-process suggested by the author. Also, contributions from the neighboring countries and the international community to this strategic evolution are crucial. North Korea pursues realism in certain extent, but it has not overcome the international system of the Cold War when evaluating the post Cold-War era and the political environment of the 21th century. However, if Pyongyang continues to promote military-first diplomacy, the evident consequences will be regularly imposed economic sanctions against the North Korea and deepening of domestic financial difficulties. Therefore, to survive and seek normal development, it is desirable for North Korea to abandon nuclear weapons (1st step), reform its regime and open its economy (2nd step), and turn toward pragmatic strategy for its diplomacy (3rd step). Lastly, a changeover in understanding that North Korean nuclear issue is not a matter of WMD and proliferation but political survival issue of Kim Jong-il regime is important. In addition, the efforts of the neighboring countries and the international community to co-evolve in their North Korea policy are required.         The full text in Korean is available here

Abstract This article is an attempt to find a way to transform North Korea into an advanced country. North Korea has long suffered from its rigidity, backwardness, and isolation. It is high time for total changes in the North Korean system. In the future, Pyongyang needs to escape its identity of a fortress state and become an amphibious state. The amphibious state's mission is to link and absorb the strengths of maritime powers and land powers. I assume that North Korea's evolution shall be a step-by-step process. The first stage is the period of decay in which Military First Politics still rules. In the second stage, North Korea undergoes a transition period in which the Pyongyang leadership makes an effort to discard its Military First line and adopt partial reforms. The last stage is characterized by a brave policy that emphasizes economic efficiencies and people's welfare. In this stage, North Korea will transform into a liberal and open society.   Key Words North Korea, an advanced country, a fortress state, an amphibious state       The full text in Korean is available here

EAI Fellows Program Working Paper Series No.24 Author Etel Solingen is Chancellor's Professor of Political Science at the University of California Irvine and Review Essay Editor of International Organization. Her most recent book Nuclear Logics: Contrasting Paths in East Asia and the Middle East (Princeton University Press 2007) is the recipient of the 2008 Woodrow Wilson Foundation Award for the best book on government, politics, or international affairs by the American Political Science Association, and of the 2008 APSA’s Robert Jervis and Paul Schroeder Award for the Best Book on International History and Politics.   Professor Solingen was Vice-President of the International Studies Association, President of the International Political Economy Section of ISA, and the recipient of a MacArthur Foundation Research and Writing Award on Peace and International Cooperation, a Social Science Research Council-Mac Arthur Foundation Fellowship on Peace and Security in a Changing World, a Japan Foundation/SSRC Abe Fellowship, a Center for Global Partnership fellowship, and Carnegie Corporation, USIP, Sloan Foundation, Columbia Foundation and other grants.   She is also the author of Regional Orders at Century's Dawn: Global and Domestic Influences on Grand Strategy (Princeton University Press 1998), Industrial Policy, Technology, and International Bargaining: Designing Nuclear Industries in Argentina and Brazil (Stanford University Press 1996) and editor of Scientists and the State (University of Michigan Press 1994).   Her articles on international relations theory, international political economy, comparative politics, institutional theory, comparative regionalism, democratization, and international security appeared in the American Political Science Review, International Organization, International Studies Quarterly, Comparative Politics, International Security, Global Governance, Journal of Democracy, Journal of Peace Research, Journal of Theoretical Politics, International Relations of Asia-Pacific, Asian Survey, and International History Review, among others. Her research has focused mostly on the Middle East, East Asia, Southeast Asia, Latin America, and the Euro- Mediterranean region.   She served as Chair of the Institute on Global Conflict and Cooperation’s Steering Committee between 2004 and 2008, and is the recipient of a 2002 American Political Science Association Excellence in Mentorship Award and a Distinguished Teaching Award from the University of California Irvine's Academic Senate (1995). This paper was submitted to "EAI Fellows Program on Peace, Governance, and Development in East Asia" supported by the Henry Luce Foundation based in New York. All papers are available only through the online database.     Economic sanctions have often been considered the best alternative to the use of military force. However, academic and policy debates regarding the effectiveness of sanctions on Iraq, Iran, Libya and the DPRK have not been settled. There are significant discrepancies in the literature that addresses sanctions more generally, beyond the realm of nuclear proliferation. For instance, a study by Hufbauer, Schott, and Elliott (1990) found that sanctions were partially effective in 40 out of 115 cases (34 percent) between 1914 and 1990. By the latter part of the 1990s the literature appeared to return to the theme that sanctions/boycotts alone often fail to deliver the desired change in behavior. Pape (1997) found that only 5 of the cases listed in Hufbauer et al. (1990) met his definition of success, labeling all the rest “indeterminate.”   Examples of presumed failures include the DPRK (1990s, early 2000s), Cuba, Iraq, Libya, Pakistan, and others. Pape’s conclusions joined a number of earlier studies (Galtung 1967, Doxey 1980, Knorr 1975) similarly skeptical of the effectiveness of sanctions, but were at odds with other, more optimistic studies in the late 1980s and early 1990s (Baldwin 1985, Martin 1992, Cortright and Lopez 1995). Some scholars (Elliott 1998, Baldwin 1998) argued that coding the effects of sanctions dichotomously--as either a success or failure--was a mistake given the many cases where the outcome was a mix of success and failure. Most cases, in other words, fall somewhere in the middle ground between absolute non-compliance and total compliance.   Much of this literature addressed sanctions rather than positive inducements, for the most part and at least until recently. The developing perception that sanctions were ineffective fueled interest in positive inducements, particularly economic inducements, as a tool of influence. In their study of engagement policies by South Korea, Taiwan, and China, Kahler and Kastner (2006) found preliminary confirmation that (1) Conditional strategies (linking economic ties to changed behavior in the target state) are less likely to succeed when the initiating state is a democracy and that (2) Transformative strategies (unconditional reliance on economic interdependence to transform the foreign policy goals of the target state) are more likely to succeed when a broad consensus exists in the initiating state.   The experience of Northeast Asian states with the DPRK is particularly critical because of the extensive use of positive inducements. How have Northeast Asian states responded to the nuclearization of the DPRK? What differences might one discern in those responses? What are the sources of those differences? What mix of positive and negative inducements was applied in each case? What follows is a very preliminary overview (prior to the conclusion of field research) of the evolving mix of sanctions and positive inducements by Japan, China and South Korea in connection to the DPRK’s nuclear program.   I. Japan’s Dilemma: DPRK Nuclearization and the racchi jiken   Many consider Japan to be the most likely target of the DPRK’s unconventional capabilities. Neorealist theories would predict such circumstances to constitute the most crucial driver in Japan’s response to the DPRK’s nuclearization, leading it to counter it with nuclear weapons of its own. Yet, contra neorealism, the most important driver in Japan’s policies on this issue does not seem to have been a push for nuclear weapons but a domestic debate over Japanese citizens abducted by the DPRK (racchi jiken) in the 1970s. This adds to a long list of anomalies for neorealist theory. Beyond that, to the extent that Japan’s policies vis-à-vis DPRK nuclearization have evolved in the last 15 years or so, they have largely shifted from the positive to the negative inducements end in the spectrum of instruments of statecraft. And the racchi jiken have been central to this shift.   Following the end of the Cold War, Japan and the DPRK held several rounds of “normalization talks” in the early 1990s. Japan also delivered 300,000 tons of rice to the DPRK after the death of Kim Il Sung and in 1995 Prime Minister Murayama Tomiichi expressed remorse and apologized for Japan's colonial rule and atrocities during World War II on the 50th anniversary of the end of that war. At this time Japan’s DPRK policy had engagement as its long-term goal as part of the Agreed Framework and to reassure an anxious South Korea. Domestic pressures over Nihonjinzuma (reparations) and the DPRK’s abductions of Japanese citizens remained a powerful barrier to normalization but did not thwart the general trend towards engagement at this point.   The DPRK launched its first salvo, literally, as part of its road to nuclearization, on August 31, 1998, in the form of a Taepodong-1 missile over Japan. Premier Obuchi expressed deep worries, adding that “Japan's people are extremely anxious” and that Japan needed a better “warning system” and its own satellite. Kan Naoto, the DPJ opposition leader, endorsed this idea. Mori Yoshiro, secretary general of the ruling LDP argued that “if the firing was intentional, it's quite fair to say that a war could have broken out.” Deputy Cabinet Secretary Hurukawa Tejiro, in charge of inter-ministerial talks on the DPRK, allegedly raised the possibility of banning all financial remittances, freezing assets of pro-North Korean organizations in Japan, and suspending trade and all visits. However MOFA remained concerned with the DPRK’s potential turn to nuclear weapons (Yonhap News Agency, 1998). Japan nonetheless pushed for sanctions at the United Nations but failed even as the US moved ahead with the KEDO light-water reactor project, leading Japan to sign the two reactors’ cost-sharing agreement, for which Japan had pledged $1 billion.   Domestic pressures to re-consider engagement with the DPRK have been a constant since. Among these voices, a group of younger Diet politicians warned that the DPRK was building Taepodong ballistic missiles (Maeda, 1999). Obuchi acknowledged that Japan’s position could not be completely aligned with that of the US or South Korea’s due to different domestic considerations in each case (Yonhap News Agency, 1999a). With the DPRK’s announcement of an imminent Taepodong-2 missile test in 1999, both the LDP and DPJ supported the suspension of remittances to the DPRK (Sims, 1999a). Abe Shinzo, a future LDP Prime Minister who also backed the measure, argued that Japan needed a stick-and-carrot approach which constitutional restrictions handicapped (Daimon, 1999). Meanwhile, a US-Japanese missile defense system was under consideration as were changes to Japan’s maritime defense capabilities and to the prohibition to deploy maritime SDF overseas. Japan also continued to offer the withdrawal of sanctions if the DPRK suspended the missile launch, lifted a ban on chartered flights, and restarted food aid (Sims, 1999b; The Japan Times, 1999; Yonhap News Agency, 1999e). Meanwhile the DPRK insisted in colonial reparations but Japan’s negotiator, Takano Kojiro, while reiterating Prime Minister Murayama’s 1995 apology for Japanese wartime aggression, rejected the need for compensation (New York Times, 2000).   Following the June 20 North-South Korean Summit, Japan's Federation of Economic Organizations (Keidanren) launched an initiative to spur business projects in the DPRK and a free trade agreement between Korea and Japan (Yonhap News Agency, 2000b). However, Japan perceived the pace of US and South Korea’s rapprochement with the DPRK to exceed its own ability to forge a domestic consensus (Hughes, 2002). In 2001 Japan offered to buy all of the DPRK’s Rodong missiles, many ready for export to Middle Eastern countries, in exchange for freezing of, and external oversight over, the DPRK’s missile program (Yonhap News Agency, 2001a). Under Prime Minister Junichiro Koizumi the Diet also approved Japan’s Coast Guard (JCG) permission to fire on fushinsen (suspected spy boats), invoked later in the sinking of a suspected DPRK vessel initially spotted within Japan’s 200-nautical mile Exclusive Economic Zone (EEZ) and pursued into Chinese territorial waters in December 2001 (Hughes, 2002, p. 72).   Koizumi’s Deputy Chief Cabinet Secretary Abe Shinzo headed a government taskforce dealing with the abductees’ (racchi jiken) problem. Koizumi raised the issue strongly with South Korea’s President Kim Dae Jung (Asahi Shimbun, 2002c). Against the background of credit union scandals involving pro-Pyongyang groups in Japan there were renewed calls for freezing all negotiations over normalization and for designating the General Association of Korean Residents in Japan (Chongryun) as a subversive organization (Asahi Shimbun, 2002b). As Hughes (2002:75) argued, the racchi jiken had become a precondition for normalization even though MOFA’s position in 1991 had been that there would be no preconditions for a final settlement...(Continued)

EAI Asia Security Initiative Working Paper No. 6   Author   Hyung-Min Joo is an Assistant Professor in the department of political science & international relations at Korea University. He was a visiting assistant professor in the department of political science at DePaul University in Chicago, United States. His research and teaching interests include comparative politics, international relations, and political theory. Aside from the publication of his article in the book Experiencing the State, he has published his research works in a wide range of journals, including Communist and Post-Communist Studies, Problems of Post-Communism, and Europe-Asia Studies. During the academic years 1997-1998, he served as a teaching assistant at the department of political science in University of Chicago, and during the academic year 2004-2005, he was a post-doctoral fellow at the Division of Social Sciences in University of Chicago. Prior to obtaining his PhD from the University of Chicago, he received his BA in political science in Yonsei University and MA in political science in University of Iowa.         On August 5, 1993, U.S. assistant secretary of state for political-military affairs Robert Gallucci presented a tempting proposal to North Korea—a “presidential guarantee” to provide light water reactors to replace the Yongbyon nuclear facility. Officially, the North Korean delegation complained that the presidential letter was “only a promise.” Off the record, they “took great notice.” After the initial enthusiasm subsided, however, one North Korean diplomat at the negotiation began to wonder. “What would happen if a Republican president took office?” (Wit et al., 2004: 272-274). In his question, the negotiator recognized the uncertainty built into a democratic system of government. The regular change of power typical of a democracy means frequent review, revision, and even reversal of earlier policies.   Democracy is said to have many advantages. Democracy is better because it “avoids tyranny,” “guarantees more freedom,” “brings more economic growth,” and so on (Dahl, 1998: 44-61). The advantage of democracy goes beyond domestic politics because it brings “peace” in foreign relations. The so-called democratic peace theory has been warmly embraced by politicians. According to President Bill Clinton, for instance, a key to global peace is to spread democracy, because “democracies don’t attack each other” (Economist, April 1, 1995). President George W. Bush emphasized the importance of a stable democracy in Iraq, because “democracies don’t go to war with each other.” Likewise, President Barack Obama argues that “we benefit from the expansion of democracy” because democracies are “nations with which we share our deepest values” (Washington Post, March 2, 2008).   One of the core elements of the democratic peace theory is that negotiations made with democracies are “durable” because of their institutional arrangements. A contract with a democracy, especially when ratified by the legislature or supported by public opinion, acquires “law-like” qualities that become difficult to change in a short period of time. Compared with “fickle” dictators (e.g., Hitler’s surprise abrogation of the Nazi-Soviet Pact), democracies are less likely to engage in sudden changes of policies. As a result, democracies are more “consistent”—thus more “reliable”—partners.   From this point of view, however, the North Korean nuclear crisis presents an interesting puzzle. For the past seventeen years, the United States has been inconsistent in its policy regarding the North Korean nuclear crisis. While the Clinton administration was willing to “buy out” the North Korean nuclear program through the 1994 Agreed Framework, the George W. Bush administration reversed Clinton’s policies and refused even to negotiate with the “axis of evil.” During the administration’s later years, however, it reversed its own policy, reviving an “updated” version of the 1994 agreement. Moreover, such “democratic inconsistency” is not an isolated incident. South Korea—another democracy—has engaged in similar policy zigzagging during the same period. By analyzing these “zigzag” moments, this paper questions one of the core arguments of democratic peace theory: the consistency of democracies. Instead, it analyzes the North Korean nuclear crisis from the viewpoint of democratic inconsistency.   It is not argued here that the United States has been more responsible for the collapse of the 1994 Agreed Framework than has North Korea. The ongoing North Korean nuclear crisis can be persuasively analyzed from the viewpoint of “dictatorial inconsistency” as well. Instead, the goal of this article is to theorize about the phenomenon of “democratic inconsistency” in order to understand when and why a democracy becomes inconsistent in its foreign policy, and then to apply our findings to the North Korean case so that we can better understand the ongoing crisis.   I. Why Democracies Can be Inconsistent   The idea of “democratic peace”—that is, that there is a strong tendency among democracies not to fight among themselves—has evolved with significant theoretical revisions over the years. The democratic peace theory has been strongly supported (Dixon, 1994; Doyle, 1983; Lake, 1992; Lipson, 2003; Maoz and Russett, 1993; Morgan and Campbell, 1991; Morgan and Schwebach, 1992; Owen, 1994; Russett, 1993; Schweller, 1992; Snyder, 1991; Weart, 1998) and hotly disputed at the same time in academia (Bremer, 1992; Chan, 1984; Farber and Gowa, 1997; Garnham, 1986; Gates et al., 1996; Layne, 1994; Maoz and Abdolali, 1989; Rasler and Thompson, 2005; Rosato, 2003; Small and Singer, 1976; Spiro, 1994; Thompson, 1996; Ward et al., 2007; Weede, 1984).   One of the interesting arguments of “democratic peace” is the idea that a democracy is more consistent in its foreign policies because of its institutional arrangements. According to Charles Lipson, for instance, democracies can guarantee “long-term commitments” in their foreign policies because “their constitutions are designed to make some policies very difficult to reverse.” A contract with a democracy, especially when ratified by Congress or supported by strong public opinion, acquires “law-like” qualities that become difficult to change. Unlike authoritarian systems, democracies are less likely to engage in sudden changes of policies. As a result, democracies are more “consistent”—thus more “reliable”—partners (Lipson, 2003: 6-15).   The often-cited example to support such an argument is the surprise abrogation by Hitler of the Molotov-Ribbentrop Pact. In 1939, Hitler shocked the world by making a deal with Stalin to avoid a dual-front war. With the pact, Hitler could focus on Western Europe. When his western project was finished, Hitler then turned to the east, launching Operation Barbarossa. As a result, the Nazi-Soviet Pact was merely “an updated version of Germany’s Schlieffen Plan” (Lipson, 2003: 97). In this way, Stalin was caught off guard when Nazi soldiers began to march toward Moscow. Ronald Suny comments that Stalin was so shocked that he looked like a living corpse for a few days (Suny, 1998: 310).   But although the Nazi-Soviet Pact is often used to illustrate the “fickle” nature of dictatorships, there was nothing fickle about it. Hitler began planning for the invasion even before the ink on the pact was dry (Weinberg, 1994: 179-90). As a result, there was no sudden change of heart on Hitler’s part. Rather, Hitler was skilled at hiding his real thoughts and at misrepresenting his genuine preferences. What Hitler’s famous betrayal illustrates is the importance of unknown intention, not his alleged fickleness. When a country makes a contract with another country, it cannot divine the intention of its partner “with 100 percent certainty” (Mearsheimer, 2001: 31). Realism has long emphasized the importance of unknown intention in international politics. Robert Jervis argues, for instance, that countries cannot be sure of others’ intentions because “minds can be changed, new leaders can come to power, [and] new opportunities and dangers can arise” (Jervis, 1978: 168). It is these three factors, or types, of unknown intention—change of mind, new leaders, and new circumstances—that constitute the sources of inconsistency in foreign policy...(Continued)       Acknowledgement    This article is supported by a generous grant from the East Asia Institute. My deepest gratitude goes to Young-Sun Ha, Byung-Kook Kim, Sook-Jong Lee, and Chaesung Chun for their thoughtful comments and suggestions.  

EAI Asia Security Initiative Working Paper No. 4   Author   Byung-Yeon Kim works mainly on transition economics and applied econometrics, in particular with reference to North Korea as well as East European and CIS countries. He received B.A. and M.A. from Seoul National University, and D.Phil. from the University of Oxford. He is currently Professor of Economics at Seoul National University, and has held faculty positions at University of Essex and Sogang University. He has been a visiting researcher at University of California at Berkeley, Woodrow Wilson Center for International Scholars, Bank of Finland Institute of Transition Economies, and Institute of Transition Period in Moscow, and elsewhere. He published more than twenty articles in international journals such as Journal of Comparative Economics, Economics of Transition, Journal of Economic History, Economic History Review, and Oxford Bulletin of Economics and Statistics.           Abstract   This paper uses data from surveys of North Korean refugees to investigate the relationships between markets, bribery, and regime stability in North Korea. More specifically, it tests four hypotheses about the characteristics, trend and extent of North Korean bribery and the extent as well as trend of bribery. We find that bribery in North Korea is characterized as “bad” corruption because, unlike other socialist countries, it is tied mostly to informal markets rather than to the formal sector, and fails to increase the supply of goods and services in any substantial way. It is found that bribery is widespread and household expenditure on bribes is exceedingly high. The average share of spending on bribes as a proportion of total household expenditures from 1996 to 2007 was 8.95 percent, which translates to 6-7 percent of annual North Korean GDP. Despite this high level, however, the share of bribes in household expenditures has not significantly increased from 1996 to 2007, implying that the authorities are still able to deter it from expanding even though they might have difficulty in reducing it substantially.   This paper suggests that the current situation relative to the informal economy and bribery may be characterized as one of equilibrium among the dictator, government officials, and market participants, in that the three actors do not intend to change their behavior regarding bribes significantly for the time being. However, the equilibrium is fragile. Increasing bribe-taking from participants in market activities can cause the interests of the police machinery to become misaligned with the interests of the dictator, which may further destabilize the regime to the point of collapse when the dictator is perceived to be weak and the fear factor is reduced.   Introduction   One of the striking features of the current North Korean economy is the prevalence of bribery. According to the 2008 Worldwide Governance Indicators compiled by the World Bank, North Korea is one of the most corrupt countries in the world: Somalia is the worst country, followed by North Korea. This status is in line with numerous testimonies from North Korean refugees. They report that bribes are necessary whenever they take one small step, providing anecdotal evidence on bribes in connection with market activities, travel, college admissions, and even with escaping from North Korea.   Corruption is defined as the abuse of entrusted powers for private gains (Bardhan 1997). Shleifer and Vishny (1993) define government corruption as the sale of government property by government officials for private gains. Corruption can be classified into various categories in terms of its type (Andvig and Fjeldstadt 2000). Bribery, which is an illegitimate transfer of resources from one body to another one, is a part of corruption. Embezzlement refers to the theft of resources by those who are responsible for administering them. Fraud involves trickery, swindling, and deceit for private benefit at the cost of others. In addition, corruption may take forms such as extortion, which denotes receiving money, favors, or resources extracted by use of coercion, violence, and threats. Favoritism can be included as a part of corruption as it involves the abuse of power.   Some scholars classify corruption in terms of degree. Grand corruption, which typically involves high-ranking bureaucrats and politicians, refers to large-scale corruption, and the value of corrupt transfers is high and often tied to one-time exchanges. In contrast, petty corruption takes place at lower levels of the administrative hierarchy and is more pervasive, involving transfers of smaller value. Petty corruption is closely related to people’s day-to-day daily life experiences, such as the “street-level extortion” of policemen and “speed-money” at lower administrative levels involving bribes to facilitate bureaucratic action such as the speedy processing of an application. Rose-Ackerman (1978) denotes grand corruption as legislative corruption and petty corruption as bureaucratic corruption.   There are two contrasting arguments on the effect of corruption on a society. One group of scholars argues that corruption corruption negatively affects the economic performance of a country by preventing businesses from starting and growing and by distorting the allocation of talent (Murphy, Shleifer, and Vishny 1991; Mauro 1995; Rock and Bonnett 2004). Furthermore, corruption endangers the stability of a society in both market and socialist economies by causing the deterioration of credibility in formal and informal institutions. Treml and Alexeev (1994) and Grossman (1998) maintain that corruption related to the informal economy caused the disintegration of the Soviet economy. According to these authors, the expansion of the informal economy, which increased corruption and rent-seeking activities, distorted the information required for efficient planning and undermines the ideological foundations of the society. Socialist countries are also arguably more vulnerable to corruption because it weakens the fundamentals of socialism, based on equity and institutional control over society (Grossman 1998).   In contrast, many other studies suggest that corruption can be regarded as “greasing the wheels” of an economy that suffers from hold-ups by bureaucrats and the grabbing hand of the government (Leff 1964; Huntington 1968; Rock and Bonnett 2004). According to this perspective, corruption, which can act as the second-best option in helping economic agents to bypass such institutional deficits, contributes to improving efficiency in the economy. In the context of the Soviet economy, some form of corruption was used to increase output as the tight requirements of plans “forced” the managers to break rules in order to achieve plan-fulfillment goals (Heinzen 2007). More specifically, the managers of firms used secret money to purchase raw materials and spare parts that were not always delivered in accordance with the plan (Harrison and Kim 2006).   The above discussion suggests that the relationship between corruption and the stability of a socialist regime is not clear-cut. Corruption appears to be a double-edged sword for the stability of a socialist regime. Corruption may contribute to the stability of a socialist regime by allowing the purchase of much needed inputs of production to fulfill the planned output target. However, members of the public, who believe that the socialist system is neither credible nor fair, are likely to mistrust it all the more. In addition, information needed for planning is distorted if firm managers rely not on the plan but on other ways of production, which may lead to a weakening of control for the firms’ central planners. Moreover, corruption is likely to destabilize a socialist regime if it is tied to informal market activities rather than fulfilling the planned output target.   What are the relationships among bribery, markets, and regime stability in North Korea? This analysis first presents several hypotheses on the characteristics of bribery, and the behavioral patterns of the dictator, officials, and market participants in connection with bribery, markets, and regime stability. In more detail, the following questions will be asked: Does bribery in North Korea contribute to the stability of the regime? Is there any possible equilibrium among the three actors, namely, the dictator, officials, and market participants, in North Korea currently? What does this equilibrium tell us about the extent and trend of bribery? These questions are important not only to evaluate the current situation faced by the North Korean authorities but also to comprehend the future of the North Korean regime. Following the presentation of the hypotheses, they will be tested empirically using data from surveys of North Korean refugees.   In order to conduct empirical exercises, data are needed that enable the measurement of the extent of bribery in North Korea. Obviously, data on bribery are hard to come by because the revelation of bribe-giving or bribe-taking is likely to present difficulties in most countries. In this regard, data from surveys of North Korean refugees who have settled in South Korea offer a unique opportunity to understand the nature and the extent of bribery in North Korea. The refugees are relatively free to reveal details about their bribe-giving while they were living in North Korea. Although it must be remembered that the samples of North Korean refugees are not drawn randomly from the North Korean population, the increasing number of refugees from various strata of society indicates that the survey data can provide useful information on the extent and nature of bribery in North Korea. In addition, multivariate regressions can mitigate the problems arising from nonrandom samples.   This paper is laid out as follows. Section 2 focuses on state policies toward markets, and provides a brief history of the North Korean economy and its current situation. Section 3 presents hypotheses in connection with markets, bribery, and the stability of the regime based on the analysis of objectives and capacity of the dictator, government officials, and market participants. Section 4 presents the data used in this paper and provides some statistics on the North Korean informal economy. Using data from surveys of North Korean refugees, Section 5 evaluates the hypotheses presented in Section 3. In Section 6, we discuss the implications of prevalent bribery for the North Korean regime and present our conclusions in Section 7...(Continued)  

EAI Asia Security Initiative Working Paper No. 5   Author   Stephan Haggard is the Lawrence and Sallye Krause Professor at the University of California, San Diego Graduate School of International Relations and Pacific Studies. He is the author of The Political Economy of the Asian Financial Crisis (2000) and coauthor of The Political Economy of Democratic Transitions (1995) and Famine in North Korea: Markets, Aid, and Reform (Columbia University Press, 2007). He is a member of the Advisory Committee of the Peterson Institute for International Economics.   Marcus Noland is the deputy director of the Peterson Institute for International Economics, where he is also a senior fellow. He has been associated with the Institute since 1985. He was a senior economist at the Council of Economic Advisers in the Executive Office of the President of the United States and has held research or teaching positions at Yale University, the Johns Hopkins University, the University of Southern California, Tokyo University, Saitama University (now the National Graduate Institute for Policy Studies), the University of Ghana, the Korea Development Institute, and the East-West Center. Noland is the author of Korea after Kim Jong-il (2004) and Avoiding the Apocalypse:The Future of the Two Koreas (2000), which won the 2000–2001 Ohira Memorial Award, and coauthor of Famine in North Korea: Markets, Aid, and Reform (Columbia University Press, 2007).         Abstract   The penal system has played a central role in the North Korean government’s response to the country’s profound economic and social changes. As the informal market economy has expanded, so have the scope of economic crimes. Two refugee surveys—one conducted in China, one in South Korea—document that the regime disproportionately targets politically suspect groups, particularly those involved in market-oriented economic activities. Levels of violence and deprivation do not appear to differ substantially between the infamous political prison camps, penitentiaries for felons, and labor camps used to incarcerate individuals for a growing number of economic crimes. Such a system may also reflect ulterior motives. High levels of discretion with respect to arrest and sentencing and very high costs of detention, arrest, and incarceration encourage bribery; the more arbitrary and painful the experience with the penal system, the easier it is for officials to extort money for avoiding it. These characteristics not only promote regime maintenance through intimidation, but may facilitate predatory corruption as well.   Keywords: prison camps, corruption, North Korea, refugees   Introduction   During the 1990s, a famine in North Korea killed between 600,000 and 1,000,000 people, 3 to 5 percent of the population (Haggard and Noland 2007). As the state proved unable to provide food through the socialist distribution network, the economy underwent a process of marketization from below. Small-scale social units—households, factories and cooperatives, local government and party offices, even military units—engaged in entrepreneurial behavior in order to survive. Much of this behavior was technically illegal.   This unplanned and unwanted marketization resulted from the coping strategies of citizens and was not overtly political. But it also eroded state control of the economy and therefore over pathways to wealth, prestige, and ultimately power; it even threatened to create an independent civil society around unregulated market relations. Not surprisingly, the regime’s response to this process has been ambivalent at best. At times, the government acquiesced to the facts on the ground and decriminalized or tolerated market activity out of sheer necessity. At other times, the government sought to reconstitute the socialist system through a revival of the state sector and the imposition of controls on private activity, most recently through a confiscatory currency reform announced on November 30, 2009 (Haggard and Noland 2010a).   The penal system has played a central role in the government’s response to these economic and social changes. During the famine, the regime established an extensive system of low-level labor training facilities (ro-dong-dan-ryeon-dae). These facilities were used to incarcerate those caught crossing the border into China or repatriated by Chinese authorities, movements that increased in the wake of the famine. However, labor-training facilities were also used to punish the unprecedented level of internal movement and market activity that sprung up as heavily affected segments of the population wandered the countryside in search of food (Noland 2000).   The 2004 reform of the criminal code regularized these facilities and specified “labor training” for up to two years as punishment for a growing number of economic and social crimes (Han 2006). A further set of amendments to the criminal code in 2007 lengthened the list of these crimes and increased punishments for them.   We draw on two refugee surveys—one conducted in China, the other in South Korea—to draw a picture of the changing political economy of the North Korean penal system. Respondents portray a judicial and penal system characterized by high rates of arbitrary detention and release. Horrific abuses are characteristic not only of the camps for political prisoners, but are found at all levels of the penal system. In the survey of more than 1,300 refugees conducted in China between August 2004 and September 2005, nearly 10 percent reported incarceration in political and correctional detention facilities. Among this group, 90 percent reported witnessing forced starvation, 60 percent deaths due to beating or torture, and 27 percent executions. These findings are broadly confirmed by a second survey of 300 refugees conducted in South Korea in November 2008, which also included more detailed questions about initial arrest and detention, the types of facilities in which respondents were held, and the conditions they witnessed while incarcerated.   The emerging portrait of the North Korean penal system suggests a vast machine that processes large numbers of people engaged in illicit activities for relatively short periods, but which exposes them to terrible abuses while incarcerated. This pattern serves to effectively intimidate; our surveys reveal an atomized society in which barriers to collective action are high and overt political opposition minimal. However, repression has not served to eliminate market-oriented activity, in part because of the continuing poor economic performance of the regime. Rather, our surveys suggest a changing political economy in which corrupt officials extract bribes from those in the market, exploiting their ability to limit entanglement with a brutal penal system.   Methodologically, refugee surveys are susceptible to well-known problems of selection bias. Those who undertake the risks of trying to leave North Korea may have more adverse experiences with the regime, which could give rise to behaviors and attitudes that are quite different from the population as a whole. Because crossing the border has historically been seen as a very serious crime, those incarcerated for attempting to exit could have faced particularly severe punishment. The survey may thus accurately capture the experiences of the refugee communities in China and South Korea, but provide only a limited perspective on North Korea.   However, there are some reasons to believe that the sources of bias are somewhat less pronounced than might be thought. We can also reduce at least some sources of bias with multivariate statistical techniques that control for possible demographic or even experiential determinants of political attitudes. Refugees are asked questions not only about their own experience but their observation of others’ experiences as well. Refugees’ experience with the prison system may also not be unique. There is strong evidence that the punishment of border crossing now resembles the punishment of a widening array of other economic and social crimes associated with the growth of markets.   We begin with a brief overview of the North Korean penal system before turning to a descriptive overview of respondents’ experiences with it. A striking finding is that the conditions that are frequently seen as characteristic of the country’s infamous gulag of political penal-labor colonies—such as extreme deprivation and exposure to violence—in fact pertain across the penal system, including the work camps established to handle lower-level economic crimes.   We then explore some of the determinants of incarceration. The repressive apparatus disproportionately targets those involved in economic activities beyond direct state control, at a rate more than half again as high as the general population. These findings are consistent with the expansive definition of economic crime contained in the 2004 and 2007 changes in the North Korean criminal code. In the last two sections, we use the surveys to provide a more detailed analysis of the emerging North Korean political economy, noting the effectiveness of repression in stilling overt dissent but its inability to eradicate market activity and corruption...(Continued)           Acknowledgement   This research was supported by the Smith Richardson and MacArthur Foundations. The piece was greatly improved by extensive comments on an earlier draft received from Nick Eberstadt, David Hawk, seminar participants at the Japanese National Graduate Institute for Policy Sciences and the Korea Development Institute, and two anonymous reviewers. We thank Jennifer Lee and Jihyeon Jeong for diligent research assistance and Dan Pinkston and Chung Tae-un for their assistance in conducting the South Korean refugee survey.   This paper is a reprint of the Peterson Institute for International Economics Working Paper.

EAI Asia Security Initiative Working Paper No. 2   Author Jihwan Hwang is an assistant professor of North Korean Studies at Myongji University, Seoul, Korea. Professor Hwang was a research fellow at the Institute for Unification Studies of Seoul National University.   His research interests include East Asian international relations and security studies, focusing on the North Korean nuclear crisis. His main concern is how to explain North Korea’s foreign policy in terms of international relations theories.   He published numerous articles, and his recent publications include “International Relations Theory and the North Korean Nuclear Crisis,” “Offensive Realism, Weaker States, and Windows of Opportunity: The Soviet Union and North Korea in Comparative Perspective,” “The Second Nuclear Crisis and U.S. Foreign Policy,” and “Rethinking the East Asian Balance of Power.” Professor Hwang received his Ph.D. in political science from the University of Colorado at Boulder.       Explaining the mindset of the North Korean regime has been a difficult, if not the most difficult, assignment for scholars and policy-makers who study North Korea. Without this understanding, negotiations often go nowhere and confrontations may escalate into a crisis because the situation is misread. Some have characterized North Korea as aggressive, reckless, and irrational (Downs 1999; Cha 2002; Bush 2002), while others have tried to pinpoint its unique internal logic and motives (Snyder 1999; Kang 2003). Although many have sought to explain Pyongyang’s perspectives and policy attitudes, they have still main-tained that North Korea is irrational by nature and have been unable to explain the North’s own version of consistency. Even though some try to explain North Korea’s behavior in a systematic way, they assume that Pyongyang has adopted a single national strategy—of either confrontation or engagement (Sigal 1998; see also Cha and Kang 2003). Some argue that North Korea has never departed from its rogue nature, because the real nature of the regime has not changed at all but remains confrontational and irrational. On the other hand, those who argue that North Korea is ready to change its course of action if the United States and South Korea move first do not really explain North Korea’s eccentricities for Western society. Although proponents of both arguments are concerned with Pyongyang’s behavior and policies, they have failed to read the North Korean mind and explain how North Korean leaders think and why they behave in a certain way as they do. Aside from the question of whether the real nature of the North Korean regime has changed or not, it is important to understand the main factors that determine Pyongyang’s internal and external perceptions and behavior in terms of its own concept of rationality.   This paper emphasizes the importance of the concepts of “saving face” and “reference points” in assessing North Korea’s strategies. The concept of face-saving has often been discussed in explaining North Korea’s negotiating behavior (Snyder 1999; Sigal 2006; Zissis 2007). It is said that because the North Korean people have great self-respect, they cannot tolerate humiliation. The North Korean regime is understood to be willing to fight, even in an unfavorable situation, because it prefers saving face to being bullied. This attitude is thought to somewhat explain Pyongyang’s aggressiveness and brinkmanship.   However, it is unreasonable to say that North Korea tries to save face at all costs. Al-though the North always wants to save face, it is not likely to sacrifice strategic values or a specific objective in all circumstances. It is, rather, a very practical regime and makes every effort to maximize its own benefit. This does not mean that Pyongyang is always ready to accept the risk of being bullied and losing face in order to win some benefit. Both face-saving and gaining an objective are important to the North Korean regime. Ideally, it would like to save face and gain an objective simultaneously, but there must be many occasions where the leaders have to sacrifice one for the other. How and why does the North Korean regime make these choices? Regime choices may look irrational by Western standards, but may be rational in terms of the North’s way of thinking. Thus, it is necessary to understand the North Korean point of view regarding its strategic environment.   In order to explain the North Korean mindset, I hypothesize that North Korea’s face-saving is closely connected with gaining an objective or benefit. A corollary is that the North Korean regime is more likely to feel humiliated when it believes that it has failed to gain the benefit that it originally sought or expected. To explore this hypothesis, I turn to the concept of a “reference point.”   A reference point is a cost that people view as the limit of what they can concede—that is, they can concede no more than the cost involved. When people gain more than they expect, they are happy. When the outcome falls short of what they originally anticipated, however, they are disappointed. This reaction may be particularly true of North Korea. If the North Korean regime achieves its reference point, it will be satisfied. But if its reference point is threatened or appears impossible to attain, the North is likely to be seriously provoked and become aggressive, because it may feel that it has lost face. Thus the identification of the reference point is critical in understanding Pyongyang’s strategic mindset. Further, the reference point helps us understand the North Korean regime not by its emotional features but by its rational calculation of costs and benefits. The regime may often display unexpected behaviors to save face, but most of these actions can be explained in terms of the reference point, that is, the costs and benefits for North Korea from its perspective.   In short, I posit that recognizing Pyongyang’s reference points provides a more accu-rate picture of North Korea’s internal and external perceptions and behavior. We can iden-tify the reference points by examining not only the North Korean regime’s objective situa-tion on the Korean Peninsula but also its official perceptions and statements in the North Korean media such as the state-run newspaper Rodong Sinmum and the Korean Central News Agency. In the next sections, I will discuss the concepts of face-saving and the refer-ence point, and then explain North Korea’s strategic assessments in 2009. In the final section, I will survey the reference point gap on the Peninsula and provide policy recommendations to resolve the gap and move forward...(Continued)  

Author Wade L. Huntley Simons Centre for Disarmament and Nonproliferation Research Presented to Workshop ”America in Question: Korean Democracy and the Challenge of Non-Proliferation on the Peninsula” Seoul, ROK 10-11 May 2005 (revised for publication September 2005)        US policies toward North Korea under the Bush Administration are frequently critiqued for being insufficiently responsive to the “real” circumstances currently prevailing on the Korean Peninsula and in the East Asian region. This article argues that this critique is insufficient. The ideological and almost personal predilections driving the Bush Administration’s North Korea policy are not incidental shortcomings easily rectified. Rather, this orientation expresses the administration’s deeper ideational foundations. The Bush Administration’s North Korea policy is but one of many expressions of this foundation, the commitment to which impinges “realistic” US response to North Korea’s growing nuclear ambitions. This article first briefly reviews the current state of the Korean Peninsula nuclear crisis. The article next focuses on US responses to the threats this crisis poses to the Nuclear Non-Proliferation Treaty (NPT) and the wider array of global nonproliferation efforts that treaty spearheads. Because the inadequacy of the present US position stems from the Bush Administration’s dogmatic adherence to a particular broader global outlook, the article then examines the ideational roots of the Bush Administration’s broader concept of American grand strategy in the post-Cold War world. The article concludes that meeting the challenge to prevent emergence of a nuclear North Korea, and impede proliferation of nuclear and other weapons of mass violence more broadly, will require not simply realistic assessment of the problems, but supplanting the ideational dispositions of US policy-making that are impeding effective responses.   The confrontation between North Korea and the United States reflects metaphorically the Biblical parable of David and Goliath. David prevails because he has unshakable faith in the certainty that of victory despite his evident inferiority, and because, fearless in this faith, he finds and then exploits weaknesses Goliath didn’t realize he had. Goliath’s similarly unquestioned faith in his own strength blinded him to his vulnerabilities. The United States, facing an adversary correspondingly uninhibited by US potency, risks encountering an equivalent fate...(Continued)