2018 was an historic year for the Korean Peninsula, but what lies ahead?

In 2017, the Korean Peninsula seemed to be on the brink of war. The risk of disastrous human and economic consequences was high, not just for North and South Korea, but for their neighbours China and Japan, and for all related countries and companies.

In 2018, this situation changed dramatically. The threat has diminished and even promises to become an opportunity. It is now up to the international community to maintain that positive momentum, to prevent a return to the unstable status quo ante and to explore options for generating joint benefits from a peaceful and open Korean peninsula.

From an economic point of view, three of the most obvious issues are:

- Ending the status of South Korea as a de facto island and restoring infrastructure and communication linkages across the Korean peninsula into China

- Exploring the abundant natural resources of North Korea

- Using the highly educated and low-cost workforce of North Korea

A constant obstacle standing in the way of a sober approach is not just the lack of reliable information on various crucial issues, but also the highly politicized nature of the debate on North Korea. The main misconception about the current situation is the belief that it has been created through “maximum pressure”, i.e. through a mix of sanctions, diplomatic pressure and military threats.

This mainstream position makes sense neither rationally nor empirically. If we do not understand why North Korea and Kim Jong-un have been so forthcoming, we run the risk of setting the wrong incentives and creating the wrong strategies. North Korea has survived the collapse of the Soviet Union, a major famine, the death of its founder and designation as a member of the “axis of evil”.

The first priority has been national defence, which has in 2013 been updated to “parallel development of nuclear weapons and the economy”. In 2018, Kim Jong-un officially pledged to focus exclusively on economic development. To this end, he needs international economic cooperation. This, not pressure, is behind his willingness to explore the opportunities offered by a somewhat unconventional president in the US and a pro-engagement leader in Seoul.

It is obvious that North Korea is reaching out internationally to a degree that we have not seen since 2001. No matter how sincere these efforts are, and how long they will last, this is an opportunity we should not let pass.

The World Economic Forum's efforts to convene a group of experts, practitioners, entrepreneurs and international organization leaders to work together on this topic is very timely. The Forum's Regional Future Council on the Korean Peninsula, combined with the wealth of knowledge and experience in the wider Network of Global Future Councils, is well-positioned to make a meaningful contribution to building sustainable peace in Korea.

To this end, we need to try something new and address the issue from the perspective of “demand”, rather than “supply”. For the last few decades, the West has “supplied” its expectations to Pyongyang without much consultation or consideration of North Korea’s needs and desires. Not surprisingly, they chose mostly to ignore or turn down these requests. We should reframe this process and first look at the “demand” side. Specifically, we must get a better understanding of the needs and expectations of the North Koreans, and of how these can be aligned with the prerogatives of the West.

This could be done through a two-way process. First, using the expertise of long-standing North Korea analysts we could create a working hypothesis about the North Korean demand. Based on that, we can utilize the practical expertise and involvement of Council members to create an adequate offer. This offer would have to be conditional and specific.

In a third step we would approach the North Korean side to check the correctness of our working hypothesis on their “demand”, inform them about potential “supply” options as well as necessary conditions, and involve them in actual cooperation efforts. Such an approach will have the best chances for success if this is done in terms of specific projects. To that end, a list of potential projects could be compiled during the upcoming meeting in Dubai based on the affiliation of the Council members.

The work of the World Economic Forum on the Fourth Industrial Revolution could be one way to align policies on this issue with the latest scientific and technological developments. In late October 2018, the North Korean state media once again emphasized the primary role of science and technology for economic development. Specifically, the implementation of automated production has been stressed as a primary target. The Forum can offer its expertise as a pioneer in related thinking.

The main hurdles for this and any other exchange with North Korea are the existing bilateral and international sanctions. It could be a crucial part of our Council’s work to act as a mediator to help solve the problems that led to the sanctions in the first place, and to help remove them in a way that shows the North Korean side the benefits of a cooperative approach. Mutual trust is a big issue here, which we could try to solve through step-by-step actual cooperation on specific issues.

We are not venturing into totally unexplored territory here. There are already examples of effective measures, such as the tit-for-tat policy that has so far prevented any North Korean ICBM or nuclear test in 2018, in exchange for a cessation of joint US-South Korean military manoeuvres. The North Korean side has dismantled a nuclear test site and repatriated Korean War remains to the US. In a similar vein, the removal of guard posts and landmines along the DMZ (the de-facto border between North and South Korea) has improved security along one of the world’s most militarized borders. From November 2018, tourists will be able to cross the 38th parallel at Panmunjom, where in 2017 a North Korean soldier was shot.

Some of the mentioned examples are rather minor, and none are irreversible. Accordingly, critics in South Korea and the US point to the risk of reduced military readiness. No open domestic criticism in North Korea has been voiced, but we can assume that there will be similar concerns. Trust is still a major stumbling block, for good reasons. More small steps are needed to solidify the first and volatile signs of progress after more than a decade of threats, fear, broken promises and mutual accusations.

Under the right conditions, and with enough time, these steps will accumulate and enable all involved parties to proceed along a road that leads towards denuclearization, economic prosperity, enhanced military security and an improvement of the humanitarian and the human rights situation. Our Council should aim at understanding the conditions for such steps, initiating a number of such measures, and directly and indirectly facilitating more such initiatives.