Why sanctions are not the way to fix relations with North Korea

On 5^th November 2020, shortly after the US elections, the World Economic Forum’s Global Future Council on the Korean Peninsula hosted a panel discussing inter-Korean economic development of Gangwon (Kangwon) province in the two Koreas, together with the Jeju Peace Forum and Choson Exchange, a volunteer network training North Koreans on entrepreneurship and economic policy.

We were joined by Gangwon Governor Choi Moon Soon who reminded us that his province is in the same situation as the Korean Peninsula. The province is split in half by a demilitarized zone – into Gangwon in the South and Kangwon in the North – divided for seven decades too long, by a war that has yet to end.

How the two Koreas cooperate on Gangwon province, and whether the new US administration is willing to permit it, could make this the site for the next stage of South Korean President Moon Jae In’s peace process. It could also become a platform for building trust between the US and the Democratic People's Republic of Korea (DPRK) in a relationship sorely needing its own Great Reset.

Kangwon Province in North Korea (DPRK) carries special symbolism for inter-Korean cooperation. Since 2014, North Korea invested significant state resources in its underdeveloped east coast, at Kangwon Province, to develop the tourism infrastructure. We have conducted business and economic policy training inside the province since 2014, and we track these developments at our website Kangwon Korea.

The province encompasses projects such as the Wonsan-Kalma beach resort, the Masikryong Ski Resort and the Geumgang Mountains, which hosted South Korean tourists until it was shut down in 2008 when a South Korean tourist was shot there.

Korean families divided by the war are occasionally hosted in the Geumgang Mountains for closely supervised family reunions. For the North Koreans who attend our programmes, many of them have only had exposure to South Koreans through the Geumgang Mountains or the Kaesong Industrial Complex, joint Korean initiatives that are now defunct.

Prior to 2006, Japan was North Korea’s top trading partner. Ever since Japan imposed economic sanctions on North Korea, North Korea’s foreign trade has become entirely dependent on China. This was especially so after the shuttering of inter-Korean trade in 2016.

North Korea’s decision to pick Kangwon Province to invest significant state resources in it, for an outward looking tourism sector, is interesting in this context. This province sits far from the epicentre of DPRK-China trade, at the furthest location from China. It is close to Japan and shares a land border with South Korea.

In choosing this area to develop, DPRK continues to hope for economic ties with South Korea, Japan and the rest of Asia. Its choice of industry to focus on – the tourism sector – if done sensibly, could benefit the many entrepreneurs and small businesses we train in the country. It also holds the potential for greater people-to-people exchange with the rest of the world, although past tourism models have limited the scope of such interactions. For a small country that is now entirely dependent economically on China, North Korea realizes that diversifying its economic relations is critical for its autonomy and development.

Economic sanctions have been, for the past decades, the weapon of choice in coercing North Korea into compliance. There is increasing recognition that the ability to lay economic siege to DPRK is outmatched by its determination to hang on to its nuclear deterrence.

These sanctions also have severe humanitarian impact on a population already struggling with COVID-19 and natural disasters. As an estimated 95% of DPRK trade is with China, any additional economic pressure requires Chinese complicity. This will be hard to obtain. Beyond the strategic rivalry with the US accentuated by the Trump administration, China is unwilling to push a policy that it does not believe will lead to a resolution of tensions on the Korean Peninsula. China also believes that North Korea made significant concessions in halting its weapons testing for which it was rewarded with zero sanctions relief.

The United States should consider providing the opportunity to reconnect both Koreas through Kangwon Province and the Kaesong Industrial Complex, or even to connect North Korea to the world through these initiatives, in a phased manner.

This can restore some economic leverage in its discussions with North Korea and lay a crucial foundation for building trust in a relationship crying out for it. Most importantly, the US should take a realistic look at the failures of past transactional negotiations and use these connectors to build broader areas of interactions in the US-DPRK relationship so as to better safeguard US security and prevent nuclear proliferation.