Problems with current U.S. policy.

The Bush administration signaled early on that it considered the Clinton approach of engaging North Korea tantamount to appeasement. In 2001, Bush snubbed Kim Dae Jung's policy of engaging the North and put the brakes on the progress the Clinton administration had made in negotiating an end to North Korea's missile program. Disproving the notion that Bush's inclusion of North Korea in his Axis of Evil speech was only to preemptively counter charges of anti-Islamicism, the State Department's Arms Control Undersecretary John Bolton reiterated the administration's approach in Seoul in August 2002. "The 38th parallel serves as a dividing line between freedom and oppression, between right and wrong," Bolton stated. It was this hard line that Assistant Secretary of State James Kelly brought to Pyongyang in early October.

Despite rhetoric to the contrary, a chief Bush administration goal has been to isolate Pyongyang. The traditionally hermetic North Korea has been pushing hard for engagement for some time, discreetly sending its intelligentsia abroad for training and exposure to foreign ideas. In an updated version of the Meiji-era Japanese attempt to borrow technology from the West without transforming prevailing ideology--"Western machines, Eastern thought"--North Korea is trying to modernize according to its own rules.

While admitting a trickle of North Korean visitors to the U.S., the Bush administration has erected roadblocks to North Korea's larger engagement with the world, claiming that Pyongyang still represents a terrorist threat, even though the State Department acknowledges that the country has not engaged in international terrorism in fifteen years. As such, the administration has opposed an inter-Korean joint venture that would develop a mobile phone system in the North and has blocked South Korea's initiative to invite the North to a meeting of the Asian Development Bank. The U.S. has consistently prevented North Korea from approaching the International Monetary Fund (IMF), even as it urges the country to embrace capitalism.

Economic reform, whether encouraged by the U.S. or not, will likely open up North Korea just as surely as the global market has transformed China. In the late 1990s, Pyongyang began laying the legal groundwork for a Chinese-style transition, changing the Constitution, looking the other way at a burgeoning black market, and permitting such experiments as a revolving loan fund and joint ventures with the South. After visiting Shanghai in January 2001, Kim Jong Il began talking about the importance of introducing "profit-oriented" economic management. According to conventional wisdom, North Korea will permit these market changes only in special zones such as Rajin-Sanbong, Sinuiju, and Kaesong.

But instead of being restricted to liberalized cantons, economic change is already spreading more generally throughout North Korea. In a pilot program begun over the summer in one northeast province, portions of collective farms have been turned into individual plots. According to a new accounting act, certain state enterprises such as Kim Chaek Steel Company and the Soon Chun Cement Company have become reorganized as corporations. In July, in perhaps the most unexpected departure from orthodoxy, the government removed price supports and raised wages. Small private enterprises, like ice cream vendors in Pyongyang, are moving into the official sphere. Financial reform is expected to follow soon. Last year the economy grew by 3.7%, the third straight year in the black.

The logic of reform presents North Korea with an unavoidable dilemma. Whether prompted by an internal calculus or dictated by the international financial institutions that it wants to join, North Korea has to shift resources from the military to the economic sector in order to boost industrial and agricultural capacity. It has done this in part by transforming large sections of its army into the equivalent of the U.S. Army Corps of Engineers in order to buttress the country's sagging infrastructure. Kim Jong Il has also extended the moratorium on missile development in a bid to win a package deal from the West. Moreover, North Korea has sent its officials abroad for training in disarmament and this October even sent representatives for the first time to the multilateral security forum, the Northeast Asia Cooperation Dialogue. The Bush administration did not pursue any of these tantalizing openings.

North Korea does not likely feel secure enough to risk a massive military conversion effort, particularly in light of the Bush administration's insistence on regime change not only in Iraq but as a general principle of statesmanship. Specifically, the Bush administration's new nuclear doctrine, unveiled at the end of 2001, lists North Korea as one of seven countries that might warrant a U.S. nuclear attack.

Since regime change is popular with neither the Japanese nor the South Koreans, both of whom are still operating within an engagement-containment continuum, the Bush administration has chosen to multiply the hoops that Pyongyang must jump through in order to emerge on the world stage. Unlike the Clinton administration, which focused on halting North Korea's nuclear program and then its missile program, the Bush administration seeks to regulate all weapons of mass destruction, determine troop concentrations, and even induce internal changes within North Korea. The administration's "hawk engagement," which has turned out to be all hawk and no engagement, has expanded the prerequisites for negotiations and challenged the viability of the Agreed Framework. With its nuclear revelation, Pyongyang has defiantly challenged the terms of engagement and put the nuclear issue back at the center. North Korea's strategy appears to be a step backward pour mieux sauter (to more easily leap forward). Carrots didn't work with the Bush administration, Pyongyang has reasoned, so perhaps sticks will.

Key Problems

* Despite rhetoric to the contrary, a chief Bush administration goal has been to isolate North Korea.

* The U.S. has largely failed to recognize or encourage the dramatic economic transformation occurring in North Korea.

* The Bush administration preference for regime change has hardened the U.S. negotiating position with North Korea.

John Feffer <[e-mail]> is the author of Shock Waves: Eastern Europe After the Revolutions, the editor of the forthcoming Power Trip: U.S. Foreign Policy After September 11 (Seven Stories, 2003), and has recently returned from three years based in Tokyo working on East Asian issues.