Despot dynamics: the dirty secret to survival

By Peter Hartcher

(SMH) -How will we know when the world is finally serious about disciplining Kim Jong-il's regime? Nobody wants a war, but there are three specific non-military steps that the big powers of North Asia could take to sever the regime's most important lifelines and bring it to its knees.

And the dirty secret of the North Korea debate is that nobody in officialdom's polite circles will discuss them openly. We certainly know the ritual signs that nothing serious is going to happen to hold North Korea accountable for its nuclear belligerence - we are seeing them now.

The United Nations Security Council wrings its hands over Kim's latest outrage. Special envoys fly about from one city to another. And experts debate whether to negotiate with Pyongyang or to apply sanctions.

Since 1994 the world has offered Pyongyang carrots and sticks in a giddying alternation of incentives and sanctions. And Kim pushes on relentlessly with his nuclear program regardless.

We'll know when the world has truly had enough of Kim's nuclear brinkmanship. The three steps to seriously disciplining North Korea? One is for Japan to take, another is for South Korea, and third is for China.

Japan would shut down the flow of hard currency that it allows its residents to send to North Korea.

Every year, the 100,000 or so members of Japan's North Korean community, organised through a group called Chosen Soren, send remittance money home.

How much is impossible to know, but in 1994 Japanese police estimated that it was about $US600 million ($739 million) annually. For perspective, a sum of $US600 million would make up a third of North Korea's declared annual shortfall of foreign exchange. The regime makes up the rest by smuggling out drugs, counterfeit US dollars, fake Viagra, weapons and other contraband.

Tokyo has taken a sterner approach to Pyongyang in recent years and has clamped down on bank transfers, but large volumes of cash still cross the Sea of Japan (also known as the East Sea) in the 1000 or so vessels that ply the route in any year.

Second, South Korea would shut down its trade with North Korea.

For Seoul, the $US1.8 billion annual two-way trade with its badly behaved northern neighbour is a trifling amount. North Korea makes up a lousy 0.2 per cent of South Korea's trade and there is nothing that Seoul buys from Pyongyang that it couldn't buy elsewhere.

But for Kim Jong-il, this would represent a third of his country's total trade. It would be a serious loss for the country and a body blow to the regime.

Third, China would cut off its trade with North Korea. This is the big one. Beijing is by far the biggest trading partner and biggest source of foreign exchange to Pyongyang.

And because much of China's export to its communist ally is provided on concessionary terms, this would be tantamount to shutting off its aid to Pyongyang as well. Among other things, China supplies some 90 per cent of North Korea's oil, most at friendship prices.

But rather than reduce its trade and aid to North Korea, China in recent months has actually increased it.

Why? Because the US and South Korea have been cutting aid to the recalcitrant country. China stepped in and more than offset the loss. As long as Kim Jong-il has China, he can probably survive the punishments that the rest of the world might attempt to mete out. So for any discipline to work, it's not enough for Japan or South Korea to act. China must act, too. And the world would need to support it with equivalent sanctions.

Keep in mind that North Korea is already on the economic equivalent of life support. Kim gets much criticism for starving his people to feed his army. And it's true that his people are starving - a third of the population is so desperately short of food that it is suffering from malnutrition, according to the UN World Food Program.

But visitors to the hermit kingdom in the last couple of years report that there isn't even enough to money to supply basics to the army. Close inspection of soldiers around Pyongyang shows that some have no socks and carry painted wooden guns. The country's total economy is estimated to produce between $US20 billion and $US30 billion a year, about the same as Tasmania's but for a country of 22 million.

Concerted action by its big three neighbours could reduce Kim to powerlessness. So why don't they act? For Japan it would be administratively and politically messy. For South Korea it would be politically tough - most South Koreans favour a conciliatory approach to their kinfolk across the demilitarised zone.

For China, keeping Kim's regime alive is a strategic priority. Worse than having Kim Jong-il next door would be not having Kim Jong-il next door.

If Kim's regime were to collapse, China would expect to be mobbed by millions of starving North Koreans. Even more troubling for Beijing is the likelihood Seoul would quickly assume control of Pyongyang. China would lose the buffer state that sits between it and a US treaty ally. That's why the world is not about to get serious about making Kim behave.

Presuming he succeeds in making deliverable nukes, Kim is not mad enough to attack anyone with them. And the world is not going to effectively deter him from trying.

Perhaps the best approach is to recall the wisdom of the Peter Sellers Cold War movie classic, Dr Strangelove Or: How I Learned To Stop Worrying And Love The Bomb.

Peter Hartcher is the Herald's international editor.