The Korean Peninsula Crisis (II): From Fire and Fury to Freeze-for-Freeze

What’s new? The U.S. has responded to North Korean weapons tests with a campaign of “maximum pressure”, involving economic sanctions, diplomatic pressure on states with ties to North Korea and, most visibly, bellicose rhetoric that, together with military exercises, overflights and posturing, aims to signal Washington’s willingness to take preventive military action. Why does it matter? Even the harshest sanctions will not, in themselves, prompt Pyongyang to slow its weapons program within a reasonable timeframe, and they could do enormous harm to its people. By threatening or, worse, carrying out military strikes, the U.S. risks provoking a war with disastrous humanitarian, economic and geopolitical repercussions. What should be done? The U.S., working with regional powers, notably China, should explore a resumption of U.S.-North Korean talks and a deal whereby Pyongyang freezes its most sensitive tests and Washington freezes some military exercises and deployments, while fudging the issue of Pyongyang’s nuclear status. This could presage negotiations toward a durable resolution.

Executive Summary

The risk of catastrophic war on the Korean peninsula is higher than at any time in recent history. The “maximum pressure” strategy the U.S. has pursued in response to North Korea’s weapons tests could badly backfire. Its first track, economic pressure through sanctions, will not, on its own, prompt Pyongyang to slow down its weapons program within a reasonable timeframe, and could cause considerable harm to its people. The second, threatening or, worse, carrying out military action, risks uncontrolled escalation. Both tracks are hobbled by Washington’s objective – North Korea’s denuclearisation – which, while desirable, is unrealistic for the foreseeable future. Instead, the U.S. should use the reprieve provided by the February 2018 Winter Olympics, as well as Pyongyang’s need to improve the economy in 2018, North Korea’s 70th anniversary year, to explore resuming bilateral U.S.-North Korean talks. These would seek a more sustainable de-escalatory deal, whereby North Korea freezes its most sensitive tests and the U.S. some military exercises and deployments, while fudging the issue of Pyongyang’s nuclear status. This could presage negotiations aimed at a more durable solution. All of this requires the U.S. and regional powers, chiefly China, to work closely together. Since 2016, the quickening pace of North Korea’s nuclear and intercontinental ballistic missile (ICBM) tests has confirmed both its determination to achieve nuclear deterrence and significant advances in its arsenal. A new missile, tested in November 2017, in principle could strike U.S. cities, though most credible estimates say Pyongyang will not perfect the missiles’ re-entry systems or master the technology to reliably deliver nuclear warheads atop those missiles until one to five years from now. Top U.S. officials fear Pyongyang’s progress will shift the strategic balance in North Korea’s favour and limit U.S. options. Determined to prevent that, Washington has adopted a “maximum pressure” strategy, involving economic sanctions, diplomatic pressure on states with ties to North Korea and, most visibly, combative rhetoric that, together with military exercises, overflights and posturing, aims to signal Washington’s willingness to take preventive military action. U.S. officials cite China’s acceptance of harsher sanctions as evidence the strategy is working.

Maybe so, but maximum pressure is unlikely to bring much more than that and could provoke much worse. Sanctions have limited effect and will take time to bite, as U.S. officials themselves recognise. Recent UN sanctions – the Security Council’s toughest yet – will seriously hurt the North Korean populace long before they threaten the regime and are unlikely to keep pace with its weapons tests. More importantly, even the harshest sanctions will not induce North Korean leader Kim Jong-un to surrender a nuclear program he views as critical to his survival. If economic pressure has limits, bellicosity carries considerable risk. Some U.S. officials float a “bloody nose” theory: a targeted U.S. strike, they argue, could curb the regime’s nuclear ambitions or set back its program without prompting retaliation. They might well be wrong, and that would be an error with incalculable consequence. Kim could decide to hit back: to signal that the U.S. cannot strike at will, to avoid seeming weak to his generals or because he believes that his retaliation, in turn, would not elicit a U.S. response. Even an asymmetric counter-strike would force the U.S. to either back off and nurse its own bloody nose, thus eroding its deterrence, or respond to Kim’s response and spark an unpredictable and uncontrollable escalation. Even if belligerence is a bluff, designed to spook China to exert greater pressure on North Korea, or to push North Korea to change its own calculations, it is a dangerous one. Raising the temperature risks either side mistaking a test or exercise for the real thing. Brinkmanship has a shelf life: the longer threats are followed by inaction, the hollower they seem and the greater the pressure to make good on them. North Korea will participate in the Winter Olympics, but – absent an understanding with the U.S. – after those Games, its tests will likely resume, perhaps coinciding with joint U.S.-South Korean military exercises and putting pressure on the U.S. to respond.

That is a terrifying prospect. Estimating precise costs of war on the Korean peninsula is impossible, but even conservative projections are staggering. A conventional North Korean attack on Seoul could kill hundreds of thousands in days. Add to that the risk that the regime fires missiles at heavily populated Japanese cities or launches a chemical, biological or even – were it to sense its demise – nuclear attack. Displacement would be massive. Reconstruction would take a generation. Any conflict could draw in China. Even if a war damaging the world’s largest economies did not prompt a global economic crisis, its effects would reverberate for years. North East Asia would be hit hardest, but the U.S. would not be spared: tens of thousands of civilians endangered, the military stretched, coffers emptied, commerce disrupted, credibility shattered and influence diminished. Thus far, the Trump administration has not prepared the country for such a war, and the U.S. people appear broadly unaware of both risks and costs. The limits of sanctions, perils of bellicosity and horrific toll of confrontation are compelling reasons for all parties to seek an off-ramp. An opportunity exists: the forthcoming Winter Games have prompted both sides toward parallel de-escalation. This window should be used to enable the U.S and North Korea to resume bilateral talks aimed at prolonging and formalising a freeze-for-freeze understanding. The following sequence could be used to achieve that goal and pave the way for a more ambitious bilateral diplomatic process:

  1. An informal halt to provocations: The thaw in Pyongyang’s relations with Seoul suggests more weapons tests are unlikely before or during the Olympics. U.S. President Donald Trump and his South Korean counterpart Moon Jae-in already have suspended joint military exercises until after the Games. This first step requires only that both sides stick to the script, refraining from provocative acts and muting belligerent rhetoric.

  2. Developing a “freeze-for-freeze” deal: Meanwhile, the U.S. and regional parties – notably China and South Korea, but also optimally Japan and Russia – would coordinate their positions on a formal U.S.-North Korean understanding expanding upon the informal one. This arrangement likely would include North Korea freezing all nuclear tests and intercontinental and intermediate-range missile tests that extend their capability of striking the mainland U.S. and U.S. territories in the Pacific, as well as desisting from overflying other countries’ airspace. For its part, the U.S. would redesign its joint exercises with South Korea: freezing those that particularly rankle Pyongyang (such as “decapitation drills” aimed at Kim and exercises whose timing Pyongyang finds particularly insulting, such as during national days, planting or harvest seasons); and scaling back some regular exercises; while freezing the deployment of some strategic assets to South Korea.

  3. A role for China: Beijing, which has mooted a freeze-for-freeze since last summer, will have to play an important facilitation role, despite its reluctance to do so. As a regional and global power, and North Korea’s economic lynchpin, it could sweeten the proposed deal for Pyongyang and Washington, offering the former incentives for accepting it and promising the latter to hold the Kim regime accountable for any rejection or violation. Here Beijing could work with Moscow (which largely shares its view of the crisis): Pyongyang’s relations with Beijing have soured but it still needs China and welcomes Russian diplomats.

  4. Launch of formal bilateral talks: After the Olympics, the informal freeze would continue and formal U.S.-North Korean talks commence. These talks would first seek to reach agreement on the freeze-for-freeze deal described above before moving to broader issues concerning the nuclear program and its safety. In entering these talks, the U.S. would stand by its position that the ultimate outcome must be denuclearisation of the peninsula, a view with which North Korea would disagree.

Such a deal would be imperfect. All sides would sacrifice something. But they would gain, too. Kim would stop tests, but could claim to have achieved his goals and pivot to fulfilling economic pledges equally critical for his legitimacy at home. President Trump could claim he had significantly slowed development of nuclear-tipped missiles able to hit the U.S. homeland – arguably a better score sheet than his predecessor, all the more so if subsequent negotiations succeed. For South Korea, Japan and Russia, de-escalation would reduce the risks inherent to both U.S. military action and Pyongyang’s tests. Beijing risks further fuelling Pyongyang’s hostility but gets to de-escalate the crisis, preserve a status quo that works to its benefit and burnish its claims of global leadership. All would lower the threat of a war that could devastate the region and its people and provoke dreadful geopolitical upheaval. Seoul/Beijing/Washington/New York/Brussels, 23 January 2018


The threat of war on the Korean peninsula is higher than at any time in recent history, due to the combination of nuclear and missile testing by the Democratic Republic of North Korea (DPRK) and the increasing bellicosity of the U.S. Since 2016, Pyongyang has conducted two nuclear tests, one on 9 September 2016, the other on 3 September 2017. In the summer of 2017, it twice tested a new intercontinental ballistic missile (ICBM), the Hwasong-14. In November, it tested another, the Hwasong-15, which was noticeably larger and appeared to have a more mobile and sophisticated launch mechanism. In principle, the latter could strike any locale in the continental U.S., a possibility that some in the U.S. see as a strategic game changer. Pyongyang does not yet appear to be capable of fitting nuclear warheads onto missiles or to have mastered technology that protects those warheads during re-entry into the earth’s atmosphere; one well-informed observer argues that it is several years from being able to do either. Also debated is the number of nuclear devices in North Korea’s stockpile. The U.S. has responded to North Korean weapons testing with a campaign of “maximum pressure”: economic sanctions, diplomatic pressure on states with ties to North Korea and, most visibly, bellicose rhetoric. On 8 August 2017, Trump vowed that, were North Korea to threaten the U.S., he would respond with “fire, fury and frankly power, the likes of which this world has never seen before”. Soon thereafter, his national security adviser, H.R. McMaster, warned that the U.S. “cannot tolerate, will not tolerate, a threat to the United States from North Korea involving nuclear weapons”. After meeting White House officials, Admiral Mike Mullen, former chairman of the Joint Chiefs of Staff, warned that the U.S. is “closer to a nuclear war with North Korea” than ever before. U.S. officials speak of a narrow strike aimed at either sending a message of deterrence to Kim or damaging his nuclear program.

Within the administration, views on North Korea policy appear to vary, with McMaster widely perceived as more hawkish and the secretaries of state and defence, Rex Tillerson and James Mattis, respectively, believed to be more cautious. The administration’s signals on diplomacy have been mixed. Tillerson at one point suggested direct and unconditional talks with Pyongyang but was quickly countermanded by the White House.Trump has punctuated his insults of Kim with sporadic suggestions he would be willing to meet the North Korean leader; in one case, he said he expected the two of them would get along well. Privately, U.S. officials and unofficial intermediaries claim an offer for direct, unconditional talks was made and that North Korea rejected it.

Nor is it clear whether threats of military action are sincere, reflecting conviction that the U.S. cannot live with the strategic shift that North Korea’s capability to strike the continent with a nuclear device would bring; a bluff, aimed at persuading China to exert greater pressure on Pyongyang, and at getting Pyongyang to curb its nuclear ambitions; or a combination of both. Overall, though, the net effect of the threats has been to project a readiness to use force that, while falling far short of a public relations campaign to prepare the country for war, has shifted the national conversation about how far the administration might go to achieve its objectives. In North East Asian capitals, Pyongyang’s weapons tests, along with alarm that a preventive U.S. strike might provoke North Korean retaliation and an uncontrollable escalation, have set in motion an evolving geostrategic recalibration. For its part, Pyongyang, whether out of fear of U.S. military action, or as part of a longer-term divide-and-conquer strategy, has opened indirect channels of communication with the U.S., while apparently rejecting direct talks. It began by permitting a number of high-profile U.S. journalists into the country as tensions peaked in the early fall of 2017. Track II talks and discussions through a channel involving the U.S. special representative for North Korea Policy, Joseph Y. Yun, also have taken place, although Pyongyang questioned the value of these talks on the grounds that only Trump can speak for Trump. After several months of growing tension, North Korea used more formal routes to disseminate its mixed message. UN Political Affairs Chief Jeffrey Feltman, a U.S. citizen and the highest-ranking UN official to visit Pyongyang since 2011, held fifteen and a half hours of talks with North Korean diplomats including Foreign Minister Ri Yong-ho in Pyongyang in early December. Feltman came away convinced that North Korea wanted “some kind of policy dialogue after not having had [one] for a long time”. But he reportedly concluded that Pyongyang was not yet ready for direct talks with the U.S. – possibly because Kim first wanted to make more progress on his nuclear program.

Over the past month, relations between North and South Korea, often a bellwether for dynamics between the U.S. and North Korea, have thawed. The South Korean president, Moon Jae-in, responded quickly and positively to Kim Jong-un’s announcement in his 1 January 2018 New Year Address that North Korea was willing to participate in the 2018 Winter Olympic Games, hosted in the South Korean city of Pyeongchang. Moon also welcomed Kim’s suggestion that the two Koreas meet to discuss the Games. Kim’s proposal was preceded by several informal contacts between officials from the two Koreas; around the same time, South Korea announced it would delay joint military exercises with the U.S. until after the Olympics and subsequent Paralympics. The day after Kim’s address, Moon offered to hold high-level talks with North Korea on 9 January; in order to plan the meeting, Pyongyang reconnec­ted an inter-Korean phone line that had been out of use for 23 months. In a joint statement after the 9 January meeting, the two sides stated they were committed to the success of the Winter Games, had agreed to military-to-military talks to ease tensions and wished to resolve issues through negotiations, including a high-level meeting. The Trump administration, which has welcomed the inter-Korean dialogue and agreed to postpone joint exercises, now faces a dilemma: continue with maximum pressure, including by escalating, presumably after the Winter Games, its belligerent rhetoric; or use the short window ahead of the Games to seek a way out of the crisis. This report, one of two published simultaneously on the Korean crisis, examines that choice and what it means for the crisis, for states in North East Asia and for the U.S. itself. It looks at the gains, limits and dangers of the administration’s maximum pressure strategy, sketches the potential toll of a war on the Korean peninsula and offers a path to dialling down the tension. Its companion, The Korean Peninsula Crisis (I): In the Line of Fire and Fury, provides background, examining perspectives from Pyongyang, Washington, Seoul and Beijing, as well as Tokyo and Moscow.

II.Limits of Economic Pressure

The first track of maximum pressure has succeeded in tightening the economic noose around North Korea’s neck. Over the latter half of 2017, the U.S. shepherded through the UN Security Council the toughest sanctions yet, leaving precious little of the North Korean economy untouched. These measures would sanction an estimated 90 per cent of the routes by which the impoverished nation earns its hard currency. In concert, the U.S. has applied increasing pressure on China, the lynchpin of North Korea’s economy, to enforce the UN sanctions strictly. Secondary U.S. sanctions on Chinese entities aim to curtail trade with North Korea and, together with U.S. diplomatic pressure and fear of U.S. military action, have pushed Beijing to do as Washington wished. Economic strangulation, the administration hopes – albeit not with great conviction – will leave Pyongyang sucking so much wind it will temper its nuclear aspirations. Sanctions have their limits, however, as U.S. officials themselves recognise. First, the noose will take time to tighten, and the civilian population will be gasping for air long before the regime, which has a track record of withstanding its people’s suffering. The effects of sanctions, in other words, are unlikely to keep pace with the regime’s weapons development. Second, sanctions almost certainly will not bite as hard as the U.S. would like, given China’s reluctance to enforce them fully. Partly Beijing fears the humanitarian repercussions of doing so. Mostly, though, it wants to avoid precipitating the regime’s collapse or incurring its enmity, or otherwise upsetting the regional strategic balance.

True, Chinese President Xi Jinping has brought an indisputably harder line toward North Korea. Beijing’s patience with Pyongyang’s missiles and nuclear tests is wearing thin; Chinese officials view these efforts as adventurism. Combined with U.S. pressure, Beijing’s annoyance has led it to curtail economic cooperation initiatives and enforce sanctions more rigorously than ever before. But Xi will only go so far; Beijing’s perceptions of its core strategic interests are unlikely to change. Even as China insists that it is “comprehensively, accurately, faithfully and strictly implementing the Security Council’s DPRK-related resolutions”, reports by journalists and the UN Panel of Experts say otherwise. More importantly, even the toughest sanctions will not persuade the Kim regime itself to surrender a weapons program it regards as critical to its own survival. Alone, no sanctions can change that calculation, all the more so if inconsistent Chinese enforcement takes the edge off. Severe sanctions bring still another potential pitfall: they will induce further deprivation among a population already ravaged by it. While famine remains unlikely, the humanitarian situation is dire: in 2016, 41 per cent of the population was estimated to be undernourished; infant mortality, under-five mortality and maternal mortality rates were well above the global average; and rates of tuberculosis infection were among the world’s highest. Over time, even sanctions that carefully target the regime have dangerous negative effects on the health and livelihoods of ordinary people. State control over health care, for example, means that sanctions curtailing the state’s power supplies leave hospitals without electricity. Ordinary people pay the price. Sanctions on the textiles sector introduced in September will likely have a direct impact on the livelihoods of thousands of workers in that sector.

Sanctions should be part of the world response to the DPRK’s nuclear crisis. On some issues, trade restrictions can serve as leverage. North Korea’s economy desperately needs cash. Kim’s “pyŏngjin line” promises both nuclear and economic development. The Kim regime needs to deliver on its economic pledges, especially with the 70th anniversary of North Korea’s founding around the corner in September 2018. Yet binge spending on weapons tests over the past few years has sapped its efforts to revive the economy. Sanctions thus obstruct the regime’s ec