North Korea Reaches Out.

After more than fifty years of conflict, the Korean Peninsula is poised for a dramatic breakthrough. The successful June summit between the leaders of North and South Korea is only the latest in a series of diplomatic advances. Over the past year, North Korea has been patching up relations with friends and adversaries alike. In South Korea, meanwhile, a strong political consensus continues to favor engagement with the north. The United States can play a critical role in hastening progress in Korea, if the Clinton administration can overcome cold war resistance in Congress, the Pentagon, and the State Department.

From Washington's point of view, the chief obstacles to peace in the region are Pyongyang's missiles and weapons of mass destruction. In 1994, the U.S. considered bombing North Korea's suspected nuclear weapons facilities. The Agreed Framework, negotiated at the last moment, committed the two countries to a set of sequenced compromises. The U.S. agreed to provide heavy oil, begin lifting economic sanctions, and help construct two light-water nuclear reactors in North Korea to compensate Pyongyang for the freezing of its nuclear program.

In 1998-99, the two countries again collided--over North Korea's rocket launch in August 1998 and accusations from both sides of noncompliance with the Agreed Framework. A turning point occurred in September 1999, when the United States recommitted to lifting economic sanctions and North Korea promised to suspend testing of its long-range missiles. This year, the two countries have discussed a U.S. visit by a high-ranking North Korean official and, once again, the possible exchange of liaison offices.

This U.S.-North Korean rapprochement is taking place within the context of a much larger process of engagement. North Korea has been dubbed the most isolated country in the world, as manifested by the 1993-94 nuclear crisis. But in the past year, North Korea has made up for lost time in improving relations with the most powerful capitalist countries in the world. This policy bore fruit in January, when North Korea established its first official tie with a G-7 country, Italy. Normalization of relations between North Korea and Australia followed in May. In April, North Korea and Japan restarted talks that may lead to formal recognition. If issues such as alleged North Korean abductions of Japanese citizens are resolved, Japan will provide billions of dollars in compensation for its colonial crimes.

North Korea is extending diplomatic feelers in many directions, but the approach is not scattershot. Normalized relations with the Philippines have eased entry into the Association of Southeast Asian Nations Regional Forum (ARF). The wooing of Kuwait will better cement relations with the Organization of Petroleum Exporting Countries (OPEC), which is currently financing a major North Korean irrigation project. At the same time, North Korea has not abandoned its previous alliances, concluding a new treaty with Russia and strengthening relations with China through a visit by leader Kim Jong Il in late May.

The most important developments in the last year, however, have taken place across the divided Korean Peninsula. The June 13-15 summit, when South Korean leader Kim Dae Jung visited Pyongyang, has paved the way for a crisis hot line, a rail link between the two countries, reunions of families divided by the Korean War, a reciprocal visit to the South by Kim Jong Il, and more economic assistance flowing northward.

This official meeting has been preceded by numerous nongovernmetnal initiatives. Over 200,000 South Koreans have now visited Mt. Kumgang in the north, thanks to the Hyundai corporation. Joint soccer games and musical concerts have expanded unofficial contacts. Relatively speaking, business across the divided peninsula is booming. Inter-Korean trade hit an all-time high in 1999, a 50% increase over the year before. Hyundai, although suffering from recent cash-flow problems, is at the head of the pack, with plans to build a major industrial park and tourism complex in the north. Samsung has established a North-South Korean joint venture in Beijing to produce computer software.

Despite these developments, the fate of the Korean Peninsula remains uncertain. North Korea, increasingly dependent on foreign aid, is still gripped by a food crisis and a severe energy shortage. The region remains heavily militarized, and North Korea's neighbors continue to be suspicious of its motives. The inter-Korean summit may help to reverse these trends, and Washington could take several steps to help tip the balance in a peaceful direction.

Key Points

* As North Korea has become more engaged internationally, new opportunities have emerged for Korean reunification and greater security in East Asia.

* Relations between the two Koreas have progressed at an official level, with the June summit, and unofficially through economic and civic contacts.

* The United States can play a key role in reducing tensions and encouraging economic cooperation in the region.