JIIA Policy Report

Resolving the North Korean Nuclear Problem:
A Regional Approach and the Role of Japan

Project for Northeast Asian Security
The Japan Institute of International Affairs

July 2005

JIIA Policy Report

PREFACE

Following the revelation of North Korea's new uranium enrichment program in October
2002, the first Six Party Talks were convened in August 2003 to actively seek a regional
solution to the North Korean nuclear issue. Although the countries concerned haveagreed that the Six Party Talks constitute the most effective framework for resolving
the North Korean nuclear issue, these talks have arguably been unsuccessful and in theinterim North Korea’s Foreign Ministry released a statement on February 10, 2005
publicly declaring its possession of nuclear weapons.
Given the urgency and gravity of the situation, the Japan Institute ofInternational Affairs (JIIA) established the Project for Northeast Asian Security in 2003.
A group of regional and security specialists has prepared this policy report, “Resolving
the North Korean Nuclear Problem: A Regional Approach and the Role of Japan,” toprovide a multifaceted analysis of the North Korean nuclear issue, its implications forJapan’s security, and ways to solve the issue. We strongly hope that this report will
become a valuable basis for future policy debate and policymaking not only in Japanbut also in other countries.
The project members met regularly for discussions in the course of preparing thispolicy report, and visited the United States, China and other countries to conduct
interviews and discussions on this issue with government officials and specialists. We
would like to express our sincere gratitude to those who so kindly offered theircomments on earlier drafts of this report.

Seki Tomoda
Director General
The Japan Institute of International Affairs
July 2005＊ The opinions expressed in this Report do not necessarily represent those of theorganizations with which the respective Project members are affiliated.

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MEMBERS OF THE PROJECT

Chair
Masao OKONOGI

Dean and Professor,
Faculty of Law, Keio University

Coordinator & Member
Hideya KURATA

Professor, Kyorin University
Adjunct Research Fellow, JIIA

Members
Shunji HIRAIWA

Professor, University of Shizuoka

Tomoyoshi ISOGAWA

Special Research Fellow, JIIA

Ken JIMBO

Assistant Professor, Keio University
Adjunct Research Fellow, JIIA

Narushige MICHISHITA

Senior Research Fellow,
National Institute for Defense Studies

Yasuyo SAKATA

Associate Professor,
Kanda University of International Studies

Hirofumi TOSAKI

Research Fellow,
Center for the Promotion of
Disarmament and Non-Proliferation, JIIAii

JIIA Policy Report

EXECUTIVE SUMMARYThe North Korean nuclear problem is a multi-faceted problem with not just global
implications for the non-proliferation regime and global war on terrorism, but also
regional and local implications for the security of Northeast Asia and the Korean
Peninsula. Needless to say, the fundamental obstacle to the resolution of this issue isthat North Korea has not fully committed to the complete, verifiable, and irreversible
dismantlement (CVID) of its nuclear weapons program. Another problem is that theother five parties---the United States, China, Japan, South Korea and Russia---have notworked out a common definition of CVID or “comprehensive dismantlement.” For the
Six Party Talks to be effective, the five parties need to work out a common position
with regard to CVID.
The phased dismantling process seen in the Agreed Framework is still the mosteffective for this nuclear issue. Multilateral security assurance would be anotherfeature of a new agreement. The nations involved in the Six Party Talks have reached abasic agreement on granting North Korea multilateral security assurances to persuade
North Korea to abandon its nuclear aspirations. The “Libya model,” which induces astate to abandon its nuclear program without demanding regime change, is a good
option for use with North Korea, whose leader is deeply fearful of pressure for regimechange. Given the scarcity of economic resources in North Korea, a “North Korea
model” would require a larger comprehensive package---security guarantees combinedwith meaningful economic incentives. The phased approach, security assurances, andeconomic rewards are out on the table, but we must keep in mind that there are still
considerable gaps among the parties not only on a common definition of “complete
dismantlement” as a goal and a process, but also on a timeframe for resolution.
Against this backdrop, there are three scenarios with regard to the future of theNorth Korean nuclear issue. Scenario 1 for a diplomatic resolution would be the mostdesirable for all, but we cannot exclude other less desirable scenarios of diplomaticstalemate and crisis. In the first scenario, the Six Party Talks result in a multilateralagreement that includes security assurances to North Korea provided by othermembers of the Six Party Talks. North Korea is given multilateral security assurancesin return for coming back to the Treaty on the Non-Proliferation of Nuclear Weapons(NPT). Pyongyang does so, “the continuity of safeguards” between North Korea andiii

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the IAEA stipulated in the Agreed Framework is restored, and North Korea accepts
IAEA safeguards in accordance with the IAEA Comprehensive Safeguards Agreement
and, ideally, the Additional Protocol. A roadmap is created to lay out a path that begins
with a freeze on Pyongyang’s nuclear program and ends with its eventual
dismantlement.
During and after the process of dismantling North Korea’s nuclear facilities,
completion verification that Pyongyang does not secretly continue or restart its
development of nuclear weapons will be conducted. While the IAEA will, of course,play a major role in verification in North Korea, dismantlement of nuclear weapons,
which involves a great deal of sensitive information, would have to be conducted by
nuclear-weapon states, particularly the United States and China. In addition, variantsof the Cooperative Threat Reduction Program (the Nunn-Lugar Program) and the G8Global Partnership for the countries of the former Soviet Union to support
denuclearization, customized to North Korean needs, may be useful.
Next in this scenario is linking the above process with other regional security
concerns, most notably North Korea’s medium- to long-range ballistic missiles. Whenthe agreement on nuclear dismantlement is reached, an agreement for a phased
reduction and ultimate elimination of North Korea’s No Dong and Taepo Dong missiles
should be pursued.
Ideally the process outlined above will produce a basis for the establishment of apeace regime on the local level through resumption of currently suspended high-level
military talks between North and South Korea, implementation of confidence-building
measures included in the inter-Korean Basic Agreement of 1991, and the reduction anddisengagement of conventional forces. Consequently, it will be beneficial if this ties inwith a resumption of Four Party Talks that include the United States and China, which
can guarantee such agreements.
Finally, as indicated in South Korean President Roh Moo-hyun’s speech in
November 2004, South Korea recognizes the need to allow North Korea to maintainsome level of deterrent capabilities. In this context, South Korea can consider ways tobalance its need to better defend itself and North Korea’s need to maintain some levelof non-nuclear deterrent in order to buttress multilateral security assurances.
In the stalemate scenario, both the United States and North Korea take ahalf-hearted approach, and the Six Party Talks neither succeed nor break downiv

JIIA Policy Reportcompletely. The United States will increase pressure on the North Korean regime bybolstering the Proliferation Security Initiative (PSI) on North Korea’s arms exports,
cracking down on its illicit activities, and encouraging anti-North Korea movements byaggressively using the North Korea Human Rights Act. However, North Korea’s
nuclear development continues in the interim.
Behind this scenario is the widely held expectation that North Korea will not use
nuclear weapons or export them to entities hostile to the United States since such a
move would result in U.S. retaliation against the country. The “benign neglect” policy
actually works to avoid a dangerous standoff between North Korea and other countries.
However, unless the North Korean regime collapses, the “benign neglect” policy will
inevitably create a situation where North Korea continues to obtain enough fissile
material for two nuclear devices annually, and to miniaturize such devices in order toload them on ballistic missiles. Moreover, the North Koreans may prove to be morerisk-taking than generally thought. It may actually export fissile materials and evennuclear devices to foreign nations or non-state actors to put further pressure on the
United States and to make money. If the North Korean regime were to become
destabilized or collapse, the regime’s ability to control nuclear weapons andweapons-grade fissile material might deteriorate. Finally, stalemate might undermine
the U.S.-Japan alliance. If the United States continues the “benign neglect” policy andlets a heavily armed nuclear North Korea emerge, it will make it harder for the UnitedStates to intervene in regional contingencies for the sake of Japan, casting doubts on thecredibility of the U.S.’ commitment to the security of Japan and the U.S.’ extended
deterrence.
In the crisis scenario, the Six Party Talks break down, and collective pressure isbrought to bear on North Korea in stages by the United Nations Security Council(UNSC) through the adoption of a presidential statement, a resolution criticizing North
Korean actions, and finally a resolution authorizing sanctions. Even if the UNSC were
to consider a resolution on sanctions, however, it is conceivable that China would
attempt to buy time by getting involved in the process of crafting a resolution, and try
to use the time to guide the United States and North Korea into a new agreement. In
this case, South Korea may go along. However, such an effort might mislead the North
Korean leadership to believe that brazen defiance will be the best way to survive thecrisis and obtain the optimal outcome.

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At the same time, despite the challenges that a crisis on the Korean Peninsula
might pose, we have to remember that a crisis could be an opportunity for a negotiatedsettlement of the problem. In fact, the Agreed Framework materialized following thecrisis in May-June 1994. This was not a mere coincidence. On the one hand, the crisis
created the situation where the North Koreans could “sell” their nuclear cards at thehighest prices; on the other hand, it enabled the United States to convince its allies andfriends that the negotiated settlement was worthwhile despite the political, military,
and financial cost that might ensue. In this sense, although it is always good to avoid
crises, we must not forget that they can be a catalyst for a diplomatic resolution.
One of the major differences between the 1993-94 crisis and the ongoing crisis
regarding North Korea’s nuclear development is the role that Japan plays. Contrary to
its passive approach in the past, Japan took a more proactive approach as manifested in
Prime Minister Koizumi’s visit to Pyongyang and the Pyongyang Declaration of
September 2002 and since then has taken both positive and negative measures topersuade North Korea to abandon its nuclear program. On the positive side, Japan hasoffered normalization of bilateral relations and provision of economic assistance if
North Korea properly addresses nuclear as well as other issues of Japanese concern.
On the negative side, Japan has taken steps to pressure North Korea militarily
and economically. Japan can now prevent the flow of money and sensitive technologies
to North Korea, unilaterally impose economic sanctions on the country, effectively deal
with limited attacks from the country, and support the United States in case of anarmed conflict. Taken as a whole, Japan is carrying a bigger stick with a bigger carrot in
facing North Korea.
It is in the interest of Japan to pursue a peaceful diplomatic resolution of theNorth Korean nuclear problem through the Six Party Talks in parallel with theJapan-DPRK bilateral channel. Being prepared for other scenarios would also be an
essential part of Japan’s strategy, but pursuing a regional diplomatic resolution throughthe Six Party Talks would be the optimal option.
If North Korea agrees to “comprehensive dismantlement” and returns to the NPT,
it will certainly claim its inalienable right to the peaceful use of nuclear energy
stipulated in the treaty. In that case, we can decide to suspend these rights for a certain
period of time until it is deemed appropriate for North Korea to resume legitimate
peaceful nuclear activities while allowing it to retain its rights as a signatory to the NPT.

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Tokyo, along with Washington and Seoul, should then propose using the Korean
Peninsula Energy Development Organization (KEDO) framework as a means ofproviding alternative conventional energy such as heavy fuel oil, while keeping theconstruction of the light-water reactors frozen. In the long run, if North Korea has
faithfully fulfilled verification and dismantlement requirements, the construction oflight-water reactors could be resumed. In this case, North Korea has to be provided
nuclear fuel for its LWRs by, and return spent nuclear fuel from, supplier countries.
Such an expectation will serve to give Pyongyang an incentive to remain a responsible
actor in the verification and dismantlement process.
Given the current stalemate in Japan-North Korea relations over the abduction
issue, adoption of multilateral security assurances at the Six Party Talks would likely
become an important starting point for Tokyo and Pyongyang to resume normalization
talks. Looking at the matter from the perspective of a potential comprehensive package,
it is desirable for a multilateral agreement to explicitly link the beginning of
normalization talks with the provision of convincing evidence on abductees’
whereabouts and North Korea’s pledge to fully satisfy reasonable Japanese demandson the matter. If Tokyo and Pyongyang normalize relations and decide to incorporate
phased economic assistance into this process, it will greatly promote North Korean
compliance in accepting verification measures and in moving from a freeze on its
nuclear facilities to eventual dismantlement.
In addition, Japan should pursue a bilateral agreement to eliminate North Korea’s
medium- to long-range ballistic missiles. As Japan does not possess offensive ballistic
missiles, any agreement will involve Tokyo improving relations with and providing
economic aid to North Korea in exchange for Pyongyang eliminating No Dong andTaepo Dong missiles.
Large amounts of economic aid will not flow into North Korea simply with theestablishment of diplomatic relations. Japan’s economic assistance to North Korea willbelinkedwiththeprocessofPyongyang’s

complianceinamultilateraldenuclearization arrangement and with a bilateral Japan-DPRK arrangement to reduceand eventually eliminate North Korea’s medium- to long-range ballistic missiles.
While it would not be wise for Japan to unilaterally impose economic sanctions aslong as the Six Party Talks continue, Japan should take part in multilateral sanctions if
the talks break down and the situation moves into the crisis scenario. Japan must alsovii

JIIA Policy Reportbe prepared for the most extreme eventuality: collapse of the North Korean regime.
Additionally, the National Defense Program Guidelines released in December
2004 gave great weight to responding to ballistic missile attacks, attacks by special
operations forces, and intrusions by armed special-purpose vessels. Japan has adopted
the National Protection Law for civil defense, and is going to deploy operationalsea-based and ground-based missile defense systems in 2007. These steps will bolster
Japan’s security in times of crisis while at the same time reducing the effectiveness ofNorth Korea’s “military card.” As time passes, North Korea’s missiles will have lessdiplomatic value. Thus this sort of pressure will likely lead Pyongyang to theconclusion that reaching a diplomatic solution quickly is in its interests.
The fact that Japan is carrying a bigger stick with a bigger carrot in facing North
Korea suggests that we are facing a “high-risk, high-return” situation. Despite thegrowing tension, a peaceful solution to the nuclear issue is possible. Moreover, there is
the potential for more substantial sets of agreements among the concerned countries ina “more-for-more” arrangement. If the abduction, nuclear, missile, and other pending
issues are resolved, Japan would be willing to normalize relations with North Korea
and provide substantial economic assistance, in accordance with the September 2002
Pyongyang Declaration. In the best-case scenario, Japan as well as the United States
will normalize relations with North Korea; North Korea will acquire economic
assistance from Japan and use it to rehabilitate its economy, which, if combined with an
open-door policy, will facilitate regional economic integration and possibly growth;
North and South Korea will establish peaceful coexistence in the political and militaryarenas and integration in economic terms.
The current situation involves higher risks, however. North Korea has morerobust nuclear weapons programs and a much larger ballistic missile arsenal than ten
years ago, while its political and socio-economic conditions have become more
precarious. If North Korea continues to build up its nuclear arsenal and succeeds inputting nuclear warheads on No Dong medium-range ballistic missiles, it will send
enormous political and military shock waves. Japan will not be able to accept such a
consequence. If North Korea neither returns to the Six Party Talks nor demonstrates
willingness to make concessions, Japan, in conjunction with the United States, will
have to use a coercive approach. We should first strengthen PSI and bring the matter tothe UNSC to discuss imposing economic sanctions on North Korea.

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If we are to take such coercive measures, however, it is not clear whether we
could secure support from South Korea, China, and Russia. Moreover, if sanctions are
actually implemented, North Korea might decide to conduct flight tests of medium- tolong-range ballistic missiles and a nuclear explosion test, making the worst scenario
come true---an isolated nuclear North Korea.
It is for this reason that Japan and the United States should first use a positive
approach to the maximum extent before resorting to negative sanctions. To implement
the positive approach, the United States should first agree to hold bilateral talks with
North Korea to seriously negotiate agreements. Such bilateral talks must take place
within the Six Party framework, but do not have to actually convene when and where
the Six Party plenary meetings are held. With the other Six Party members’ consent, theUnited States and North Korea can hold bilateral talks more frequently to negotiate
concrete and detailed agreements, which will later be approved by all Six Party
members in plenary meetings.
Despitethepotential

meritsof

U.S.-DPRK

bilateraltalks,theBush

Administration has long remained reluctant to fully engage North Korea. In thiscontext, the role of Japan, particularly that of Prime Minister Koizumi’s, will be critical.
Prime Minister Koizumi has been one of the most trusted allies of President George W.
Bush. At this point, Koizumi is the best and only person who can persuade President
Bush to have serious negotiations with the North Koreans.
Once Japan and the United States agreed to push ahead, they should carefully
coordinate their policies in taking the positive initiative. Only the strong positive
incentives, generated by Japan-U.S. joint action and backed by potential use of negative
incentives, will convince the North Koreans to respond positively. At the same time,
Japan should prepare to resume Japan-DPRK talks to discuss normalization in addition
to the abduction, nuclear, and missile issues. Such an action will demonstrate that theregional solution to the nuclear issue is still on the table, and provide North Korea withthe final but attractive offer to put an end to its isolation. By first taking these positive
measures, we will be able to test North Korea’s willingness to come back to the Six
Party Talks to have serious negotiations and, if need be, secure support from South
Korea, China, and Russia in bringing the matter to the UNSC.
If the United States and North Korea reached an initial agreement for eventual
dismantlement of North Korea’s nuclear programs, Japan should resume normalizationix

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talks with North Korea and start discussing a comprehensive assistance program forNorth Korea’s socio-economic rehabilitation in conjunction with South Korea, China,
Russia, and the United States. Japan’s most powerful policy tool is its ability to provide,
when Japan-DPRK relations are normalized, substantial economic assistanceindispensable to North Korea’s socio-economic reform. Phased provision of economic
assistance, say, over ten years would play an important role in guaranteeing the
successful dismantlement of North Korea’s nuclear programs and resolving abduction
and other outstanding issues between the two countries.
Avoiding risks will not provide security. Despite risks and dangers, we will haveto take calculated risks and adopt the regional approach described above to resolve theNorth Korean nuclear issue peacefully. Japan has an important role to play in theprocess.

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CONTENTS
I. Introduction
II. Assessing North Korea’s Nuclear Program
1. The Multi-layered Nature of North Korea’s Nuclear Issue(1) Global Implications(2) Regional Implications(3) Local Implications
2. Achieving a Multilateral Regional Solution(1) A Nuclear-free Korea as the Common Goal
(2) The Relevancy of a Phased Approach(3) Multilateral Security Assurances and the Higher Cost of Non-Compliance(4) A Comprehensive Package: A Libya-plus?
(5) Timeframe for Resolution
III. Prospects of the Six Party Talks
Scenario 1: Diplomatic Resolution(1) A Multilateral Agreement and the Reinstatement of the International Nuclear
Nonproliferation Regime(2) Regional Security Assurances Linked with Regional Security(3) Reviving Local Arrangements
Scenario 2: Stalemate(1) Stalemated Six Party Talks and the Rise of Nuclear North Korea(2) Growing Potential Threat
Scenario 3: Crisis(1) Pressure and Response: Missile Launch, Nuclear Test, and Transfers of Nuclear
Materials(2) North Korea’s Risk Diversion Tactics(3) Crisis as an Opportunity
IV. Japan’s Response: Reviving the Regional Approach
1. Staying the Course: Japan’s Unwavering Policy Objectives
2. Preparing Carrots and Sticks: Policy of “Dialogue and Pressure”
3. Pursuing a Regional Solution
4. Resolution of Abduction, Nuclear, and Missile Issues
5. Military Preparedness
6. Abduction Issue and the Debate over Economic Sanctions
V. Conclusions

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I. Introduction
The second North Korean nuclear standoff started in October 2002 with revelations
that the Democratic People’s Republic of Korea (DPRK) had a clandestine uranium
enrichment program in violation of its commitment to the U.S.-DPRK Agreed
Framework of 1994 and other international obligations. Moreover, North Korea
declared itself a nuclear weapons state in its statement on February 10, 2005.
Instead of a bilateral U.S.-DPRK approach, a multilateral regional approach – theSix Party Talks, including the United States, Japan, China, Russia and the two Koreas –was adopted in August 2003, to deal with the nuclear issue and to work out a peaceful
diplomatic resolution. There was much collaborative effort by all parties, minus North
Korea, to open the Six Party Talks, and some progress has been made to offer ideas
from both sides. After more than a year and a half, three rounds of talks have been held,
but no substantial progress toward a realistic resolution has been made thus far. The
starting points for serious dialogue were put forth at the third round of talks in June
2004. After a year of stalemate, it has been agreed that the fourth round of talks will beheld in July 2005.
The Six Party Talks remain the most realistic option for Japan to deal with andresolve the North Korean nuclear problem. Japan does not desire a military resolution
to this issue, but also cannot leave the North Korean nuclear issue unattended. North
Korea’s nuclear arsenal and missiles are perceived as a direct threat to Japan’s security.
Japan also needs to address many other issues with North Korea, including theabduction issue.
The Pyongyang Declaration announced during Prime Minister Koizumi’s visit toPyongyang in September 2002 was part of Japan’s proactive diplomacy to deal with
North Korea in a comprehensive way by committing to normalization and substantial
economic assistance if North Korea attends to the security concerns of Japan. The
Declaration was also an attempt to deal with the past history of Japan’s colonization of
Korea and must also be understood in this context. Nevertheless, normalization talks
have not progressed due to the abduction issue, while Japan’s “dialogue and pressure”
approach toward North Korea has been bolstered on the latter with new measures for
economic sanctions and the Japan-DPRK talks remain at an impasse.
From Japan’s perspective, along with the other parties involved, a peaceful and

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viable diplomatic resolution through the Six Party Talks would be most desirable. In
this context, the Six Party Talks and the Japan-DPRK talks in combination can beeffective in realizing a nuclear-free Korean Peninsula and peace and stability on the
Korean Peninsula and in Northeast Asia.
Even if the Six Party Talks are resumed, however, the task of working out aresolution acceptable to all parties remains. If a common position cannot be worked
out among the five parties (minus North Korea), the Six Party Talks are doomed to fail,and alternative routes must be considered. If the Six Party Talks and diplomatic
resolution remain the optimal option, more serious efforts must be undertaken in order
to induce North Korea to make a “strategic decision” to abandon its nuclear programand pave the way for substantially improved relations with its neighbors and theworld.
This report addresses the complex nature of the North Korean nuclear issue andthe Six Party Talks as well as the issues we are facing at this juncture, and considers the
future of the Six Party Talks and the role of Japan in the process. It stresses that theNorth Korean nuclear issue is not only a global non-proliferation issue but also a
regional and local security issue. Therefore, it must be addressed in a comprehensive
way in which a regional approach still holds the key. The Six Party Talks is a realistic
venue for that approach, and one in which Japan can play a critical role.

II. Assessing North Korea’s Nuclear Program
1. The Multi-layered Nature of North Korea’s Nuclear Issue

The North Korean nuclear problem is a multi-faceted problem with not just global
implications for the non-proliferation regime and global war on terrorism, but also
regional and local implications for the security of Northeast Asia and the Korean
Peninsula. We will discuss its complex nature below.

(1) Global Implications
In October 2002, it came to light that North Korea was working on a new nuclear
program involving uranium enrichment. Since then North Korea has cancelled its

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JIIA Policy Reportagreement on the “continuity of safeguards,” the minimal connection it had
maintained with the International Atomic Energy Agency (IAEA), which included thestationing of two IAEA inspectors at the Nyongbyon nuclear facility. Also, Pyongyang
has announced its withdrawal from the Treaty on the Non-Proliferation of Nuclear
Weapons (NPT). All these developments meant that the international nuclear
nonproliferation regime comprising the IAEA and NPT could not adequately check
North Korea’s further development of its nuclear program.
The Agreed Framework signed by North Korea and the United States in October
1994 represented a regional arrangement aimed at bolstering and complementing the
global nonproliferation regime already in place. This agreement contained a phrase –“the continuity of safeguards” – that prevented North Korea’s development of nuclear
weapons and ensured its continued adherence to the NPT. However, Pyongyang’s
actions as described above have disabled this agreement.
The current nuclear situation differs in several ways from the previous one thattook place in 1993-94. First, the North Koreans openly declared in April 2003 that they
had a right to possess a “nuclear deterrent.” Furthermore, on February 10, 2005, North
Korea declared that it had developed nuclear weapons. However, the status of North
Korea’s nuclear weapons is not necessarily clear. Nearly two years have passed since
the North restarted its nuclear facilities that had been shut down under the terms of the1994 Agreed Framework. It is not clear whether this time has been used to reprocesssome 8,000 fuel rods but, if these rods have been reprocessed, they should yieldenough weapons-grade fissile material to boost the North’s nuclear arsenal from thepreviously projected one or two devices to seven to eight.
It is also evident that Pyongyang has been continuing its efforts to miniaturize
these weapons so that they could be loaded on ballistic missiles. In this regard, the ties
that existed between North Korea and Pakistan are noteworthy.
Second, North Korea has continued to develop longer-range ballistic missiles
such as Taepo Dong 1 and Taepo Dong 2. These medium and intermediate range missiles
will have global security implications since they can reach targets well beyond theNortheast Asian theater.
Finally, the September 11 attacks on the United States have heightened concernsthat fissile material may make its way from North Korea into the hands of terrorists,
connecting North Korea’s nuclear issue with the war on global terrorism. North Korea’s

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JIIA Policy Reportpossession of weapon-grade plutonium may increase global proliferation risks, as itenhances its ability to proliferate this material to third parties.

(2) Regional Implications
The North Korean nuclear issue is not only an issue in the global nonproliferation
regime to be dealt with on a global level through United Nations Security Council(UNSC) deliberations but also a regional security issue that the United States has
decided to tackle on a regional level through multilateral talks. It is in this context that
Washington has tried to bring other Northeast Asian nations into the talks. The North
Korean nuclear issue is, in fact, something that primarily threatens the security of theNortheast Asia region.
However, members of the Six Party Talks do not always share the same concernsand priorities when it comes to the problem of North Korea. The fact that Pyongyang
has been developing ballistic missiles as well as nuclear weapons has certainly brought
about differing perceptions of the threat of the country’s actions among the otherparties to the talks. South Korea, for instance, does not see North Korea’s No Dong andTaepo Dong ballistic missiles as a major threat since these are medium- to long-range
weapons delivery systems. Also, North Korean missiles cannot currently reach all
locations in the United States, and the current level of Taepo Dong deployment is
insignificant compared with that of No Dong. For Japan, meanwhile, North Korea’s
nuclear threat is perceived in sync with the threat of its missiles. If the North achieves
miniaturization of nuclear warheads, Japan will have to face directly the threat ofnuclear missiles that can strike its territory.
In the process of finding a solution for the nuclear issue, Japan, South Korea, andthe United States will have to work out a new, stable, and achievable equilibrium in the
security arena acceptable to all parties. In alleviating heightened anti-American
sentiments, the U.S.-ROK effort to realign U.S. forces in Korea as a result of the Global
Posture Review will certainly come into play in working out a new balance.
Finally, while it is difficult to describe China and Russia as being threatened by
North Korea’s missiles, these nations are nonetheless quite concerned with its
development of nuclear weapons, which has considerable impact on the security of theregion as a whole. China sees the Six Party Talks as a valuable opportunity to press forthe denuclearization of the Korean Peninsula and the preservation of stability on the

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Peninsula and of the North Korean regime. These Six Party deliberations are in fact anextension of the talks between China, North Korea, and the United States held in late
April 2003, and Sino-American bilateral relations are a prime factor in the larger
grouping, along with the dynamic between Pyongyang and Washington. Furthermore,
China believes that if it succeeds in getting North Korea to abandon its pursuit ofnuclear weapons it will boost its standing as a valuable strategic partner in regional
security in the eyes of the United States. Chinese participation in the Six Party Talks
appears to be rooted in these considerations. For these reasons, this report will pay
special attention to the role played by China in the ongoing situation.

(3) Local Implications
Why does North Korea seek to develop weapons of mass destruction (WMD)? It is not
because they hope to challenge the U.S.-centered unipolar system or to bring down the
global nonproliferation regime. Nor, in North Korea’s case, is it out of a desire toestablish regional dominance in Northeast Asia. Rather, North Korea’s motives arerooted in regime survival based on its perception that it has lost in a competition with
South Korea for legitimacy as the sole sovereign entity on the Korean Peninsula andthat Soviet-type socialism has lost ground in the world community. It is likely,
therefore, that the North Korean leadership will try to keep nuclear weapons as anultimate guarantor of its survival until a situation is created where two different
sovereign entities can legally coexist on the peninsula.
North Korea has long attempted to create such a situation by abolishing the 1953
Armistice Agreement and replacing it with a peace treaty with the United States. For
example, in October 1993, North Korea contended that the Armistice Agreement was
outdated and insisted that it be replaced with a peace treaty. In April 1994, at the midstof the first nuclear crisis, Pyongyang proposed a “new peace arrangement” to becreated in conjunction with the United States.
However, what South Korea, the United States, and even China have demanded
of North Korea in the Four Party Talks (the two Koreas along with the United States
and China) is to establish bilaterally with South Korea such a peace regime, which
would be guaranteed and supported by the United States and China. For this reason,
the multilateral security assurances discussed in the Six Party Talks should be designed
in such a way that they will eventually be translated into a new local peace regime for5

JIIA Policy Reportpeaceful coexistence between the two Koreas. In this context, it may be worth
discussing the broader peace issue in a four-party format within the Six Party Talks tohelp create a viable local peace regime with an expanded regional guarantee andsupport.

2. Achieving a Multilateral Regional Solution

As discussed above, the North Korean nuclear issue is a complex problem with global,
regional and local implications. Thus, it cannot be resolved bilaterally by the UnitedStates and North Korea, and must be dealt with in a comprehensive and multilateralway. The Six Party Talks, therefore, are an appropriate venue for the solution. The
parties in the Six Party Talks, including North Korea, have already agreed that thecommon goal is a nuclear-free Korean Peninsula. The problem, though, is that they failto agree on specifics.
After three rounds of talks, the parties involved in the Six Party Talks havereached a certain level of agreement, as seen in the Chinese Chairman’s host country
summary, with respect to the direction they want to take toward resolution of the
problem. However, there are still gaps among the parties’ understanding. What are thepoints of agreement so far in the Six Party Talks? What are the tasks and the gaps tofill?

(1) A Nuclear-Free Korea as the Common Goal
The common goal of the talks is a nuclear-free Korea. Compared to the Agreed
Framework of 1994, however, the scope of dismantlement must be morecomprehensive. The Bush Administration introduced the concept of the complete,verifiable, and irreversible dismantlement (CVID) of North Korea’s nuclear weapons
program as a goal at the Six Party Talks, and the participants in principle, more or less,support this idea. The North Koreans objected to this expression, so the United States
revised the phrase to “comprehensive dismantlement” at the third round of the Six
Party Talks. Whatever the term we use, however, CVID will remain a basic principle.1
1 For the detailed discussion of CVID, see Scott Snyder, Ralph A. Cossa, Brad Glosserman,“Six-Party Talks: Possible Futures and Requirements for Implementation,” Pacific Forum
CSIS report (unpublished), courtesy of Mr. Scott Snyder.

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JIIA Policy Report

Needless to say, the fundamental obstacle to the resolution of this issue is that
North Korea has not fully committed to the comprehensive dismantlement. Anotherproblem is that the other five parties---the United States, China, Japan, South Korea
and Russia---have not worked out a common definition of CVID or “comprehensive
dismantlement.” For the Six Party Talks to be effective, the five parties need to workout a common position with regard to CVID.
What

does

CVID

mean?

The

“C”

or

“complete”

means

that

both

plutonium-based and uranium-based nuclear programs must be acknowledged andincluded in the comprehensive dismantlement package. Regarding the plutonium
program, it would include pre-1994 and post-2003 activities at Nyongbyon and otherrelated facilities.
The “V” or “verifiable” means a cooperative verification and inspection regime.
This could include inspectors from not only the IAEA but also the United States andother concerned parties. Whether it should include adherence to the Additional
Protocols must also be debated.
The “I” or “irreversible” means that a system should be put in place so that it will
be practically impossible for North Korea to resume nuclear activities. In principle, itwould mean denying North Korea any nuclear activities, including peaceful ones, andlimit North Korea to conventional energy. When an agreement is reached, there will be
substantial assistance for building conventional power plants in return. An equivalentof the Cooperative Threat Reduction (CTR), widely known as the Nunn-Lugar
program, for the former Soviet Union countries can also be applied here to insure this.
Denying North Korea the right to peaceful use of energy as articulated in Article 4 of
the NPT would be the maximalist position. However, if North Korea accepts CVID andrejoins the NPT, and desires the right to peaceful use of nuclear energy, conditions canbe negotiated in the agreement so that the North could exercise its right as a NPT
signatory at some point in the future. In this case, North Korea has to be provided
nuclear fuel for its LWRs by, and return spent nuclear fuel from, supplier countries.
The “D” or “dismantlement” means not only a freeze but also dismantlement of
the plutonium and uranium enrichment programs. This can be done in a
“step-by-step” or phased process. One of the limits of the Agreed Framework was thatthe dismantlement of the Nyongbyon sites was delayed until the very end of theprocess. In a new agreement, in order to build trust, dismantlement would need to

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JIIA Policy Report

come at an earlier stage.
These issues need to be discussed in order to work out a common consensus onwhat constitutes CVID. CVID as a “goal” should be made clear, but some level offlexibility in CVID as a “process” will also be necessary, in order for it to be
successfully and effectively implemented.

(2) The Relevancy of a Phased Approach
The goal of the talks is to achieve a nuclear-free Korea through “comprehensive
dismantlement” of North Korea’s nuclear program. However, this cannot be achieved
overnight. In an environment where there is basically no trust or confidence, this has tobe done in a step-by-step or phased approach, building confidence as we go along in
the process. The Agreed Framework took this approach. The Bush Administration has
come to understand this and has modified its early approach of “no reward until
dismantlement is complete.” Any resolution should be based on a phased approach.
If North Korea is indeed pursuing a nuclear arsenal out of a sense that its present
regime is in danger, it does not necessarily mean that the nation views this nuclear
development as mutually exclusive with improving its relations with the United States
and Japan to create an international environment more conducive to its continued
survival. From this perspective, it was quite conceivable for North Korea to try to keep
the potential for nuclear development open even as it attempted to improve relations
with Washington in the Agreed Framework. In 1994 the North Koreans agreed toparticipate in “asymmetrical” bargaining, dismantling step by step their nuclear
capabilities while achieving gradual improvement in their relations with the UnitedStates. Both the moves to improve the Pyongyang-Washington relationship and todevelop nuclear weapons, however, arise from the same desire to maintain the North
Korean polity in its present form.
Furthermore, the North insisted on a phased approach in the dismantling process
because the Agreed Framework alone was not enough to dispel its distrust of theUnited States. By retaining the ability to resume its nuclear program at any time, North
Korea prepared for the possibility that the United States would turn its back on theAgreed Framework at some point. As long as Pyongyang takes this sort of tactics in its
dealings with the United States, it is unlikely to give up its nuclear ambitions all at
once based solely on verbal or written security assurances. The phased dismantling

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JIIA Policy Report

process seen in the Agreed Framework is still the most effective for this nuclear issue.
Although the Agreed Framework itself may no longer be in effect, its lessons are
relevant in guiding dealings with North Korea.

(3) Multilateral Security Assurances and the Higher Cost of Non-Compliance
Multilateral security assurances would be another feature of a new agreement. Under
the terms of the Agreed Framework between North Korea and the United States,
Pyongyang pledged to adhere to the NPT even while it claimed that it enjoyed “uniquestatus” in relation to this treaty. Now, however, the North is stating that it has
withdrawn completely from the NPT. The Clinton Administration presented North
Korea with bilateral security assurances in the form of negative security assurance(NSA), a fundamental norm of the NPT, in exchange for pledges that the North would
freeze operations at its nuclear facilities and eventually dismantle them. The George W.
Bush administration, however, has not entirely excluded the use of nuclear weapons
against non-nuclear-weapon states in its counter-proliferation policy, and North Korea
feels that the bilateral NSA included in the Agreed Framework are no longer valid.
Security assurances offered by the United States to North Korea, if adopted, would
eliminate North Korea from the target list in the U.S. counter-proliferation strategy.
On the multilateral front, meanwhile, the nations involved in the Six Party Talks
have reached a basic agreement on granting North Korea multilateral security
assurances to persuade North Korea to abandon its nuclear aspirations. Even if theseassurances are given first by the United States, the other parties will also endorse them.
If the North persists in its nuclear development programs despite these moves, taking
actions that infringe upon this multilateral agreement, the cost could in the end begreater than for violation of the bilateral Agreed Framework. By presenting security
assurances to North Korea in a multilaterally endorsed format, the other nations cangive North Korea a good reason to choose adherence to the rules over violations ofthem.

(4) A Comprehensive Package: The Libya Model or Libya-plus?
Many compare the North Korea case with the “Libya model.” The Bush administration
has called for North Korean leader Kim Jong Il to make the “strategic decision” that
Libyan leader Col. Muammar Al Qadhafi took to voluntarily give up his program, in a9

JIIA Policy Reportverifiable way, for improved and normalized relations. This model, which induces astate to abandon its nuclear program without demanding regime change, is a workableoption for use with North Korea, whose leader is deeply fearful of pressure for regimechange.
Asymmetric bargaining was conducted with Libya, in which rewards, namely
political and economic benefits, were exchanged for abandonment of their nuclear
weapons program. The same scheme would be applied to North Korea. However, very
different dynamics are involved when it comes to the security assurances that can beoffered. Although Libya ascribes to the NPT and to the IAEA’s Additional Protocols,
North Korea has declared its withdrawal from the NPT and has refused to accept the
IAEA safeguards. In addition, North Korea’s weapons development program is much
farther along than Libya’s, and thus the North Koreans have more to lose.
Given the scarcity of economic resources in North Korea, a “North Korea model”
would require a larger comprehensive package---security guarantees combined withmeaningful economic incentives---i.e., a “Libya-plus” model in terms of incentives. In
the Six Party Talks held so far, North Korea has sought not only security assurances but
also energy and economic assistance. It is clear that a comprehensive package isnecessary in the resolution of this issue.

(5) Timeframe for Resolution
The phased approach, security assurances, and economic rewards are out on the table,
but we must keep in mind that there are still considerable gaps among the parties not
only on the common definition of a “complete dismantlement” as a goal and a process,but also on a timeframe for resolution. China, in particular, appears content to takemore time to resolve the issues than the other nations involved.
Behind these divergent views of the appropriate timeframe lie differences inperception of the urgency of the North Korean nuclear situation. Basically, China
understands that, in order to reach a final resolution of the issue, there will have to be apreliminary stage during which North Korea is in temporary possession of nuclear
arms. The Chinese view is that so long as this does not result in Japan, South Korea,
and particularly Taiwan also obtaining such weapons, this preliminary period can beallowed to go on for a relatively long stretch of time. We must also note that China
cannot completely control the actions of the North Koreans; nor can Japan, South Korea,

10

JIIA Policy Reportor even the United States hope to control China’s stance toward Pyongyang. Without aproper recognition of these facts we are likely to see growing unhappiness with China
among the latter three nations, a development that could throw the entire resolution
process into disarray.

III. Prospects of the Six Party Talks
Despite agreement on resuming the talks, the prospects of the Six Party Talks remainprecarious. The Six Party Talks have made some progress, to the point that a starting
point for talks has been laid out, but the parties have yet to engage in serious
negotiations. The fourth round of talks will be held in July, but even if it were resumed,
there are still many obstacles and tasks ahead to reach a negotiated solution.
In this section, we will discuss three scenarios with regard to the future of theNorth Korean nuclear issue. Scenario 1 for a diplomatic resolution would be mostdesirable for all but, considering the circumstances, we cannot exclude other lessdesirable scenarios of diplomatic stalemate and crisis.

Scenario 1: Diplomatic Resolution(1) A Multilateral Agreement and the Reinstatement of the International Nuclear
Nonproliferation Regime
In this scenario, the Six Party Talks results in a multilateral agreement that includes
security assurances to North Korea provided by other members of the Six Party Talks.
North Korea is given multilateral security assurances in addition to collective NSA, in
return for coming back to the NPT. Pyongyang does so, “the continuity of safeguards”
between North Korea and the IAEA stipulated in the Agreed Framework is restored,
and North Korea accepts IAEA safeguards in accordance with the IAEA
Comprehensive Safeguards Agreement and, ideally, the Additional Protocol. A
roadmap is created to lay out a path that begins with a freeze on Pyongyang’s nuclear
program and ends with its eventual dismantlement. The steps that need to be taken forthis scenario to become a reality follow.

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JIIA Policy Report(a) North Korea’s Commitment to “Comprehensive Dismantlement”: In reinstating
the international nuclear nonproliferation regime, the starting point for any resolution
is that Pyongyang commits to “comprehensive dismantlement” as unanimously
accepted by all parties. It is a process that at a minimum would include the following
elements: dismantlement of nuclear explosive devices, its 5-megawatt experimental
reactor, the 50- and 200-megawatt reactors under construction, reprocessing facilities,
and uranium-enrichment facilities; and disposition of weapons-grade fissile material sothat it cannot be used in weapons.

(b) Verification Measures: During the process of dismantling North Korea’s nuclear
facilities and after its completion, verification that Pyongyang does not secretly
continue or restart its development of nuclear weapons will be conducted.
When South Africa gave up its nuclear weapons program, some two years wererequired to verify that it no longer had nuclear weapons or fissile material for nuclear
weapons. Even if North Korea proved exceedingly cooperative with regard to
inspections, it would likely take two to three years to reach a conclusion as to whether
it had given up all its nuclear weapons and had no undeclared fissile material or
clandestine nuclear activities. While such a conclusion would not have 100% certainty,
North Korea’s attitude toward inspections and the degree to which it cooperates will be
an indicator of its will to give up its nuclear program. North Korea’s cooperation will
be measured by the level of access it provides to documents, data, scientists to beinterviewed, and nuclear-related facilities. While the IAEA will, of course, play a majorrole in verification in North Korea, dismantlement of nuclear weapons, which involves
a great deal of sensitive information, would have to be conducted by nuclear-weapon
states, particularly the United States and China, given North Korea’s desire to draw U.S.
attention and the special relationship that North Korea has with China.
The British government has recently studied techniques and technologies withpotential applications to the verification of any future arrangement for the control,
reduction and ultimate elimination of nuclear weapon stockpiles, and reported its
findings to the 2005 NPT Review Conference. The study has identified four major
elements of the nuclear weapons dismantlement process: authentication of warheads
and components; dismantlement of warheads and their components; disposition of thefissile material coming from dismantled nuclear weapons; and monitoring nuclear

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JIIA Policy Report

weapons complexes. In negotiating an agreement on the dismantlement of North
Korea’s nuclear weapons, we have to bear these findings in mind and attempt to clarify
how these major works should proceed in step with other military and diplomatic
moves.
A stringent verification regime, however, brings with it the possibility of greatly
reducing the ambiguity that North Korea has relied upon for its military anddiplomatic leverage. Even after North Korea declares that it will give up its nuclear
program, it is thus quite conceivable that it will hesitate to reveal its capabilities, andpossibly sabotage the inspection process in order to maintain its leverage. For thisreason, a mechanism must be built into the agreement with which North Korea will
benefit by compliance and lose by non-compliance.

(c) Assistance in Denuclearization: Because of the technical difficulties inherent in
the verification and dismantlement process, various forms of support and assistanceshould supplement it. In this regard, variants of the Cooperative Threat Reduction
Program (the Nunn-Lugar Program) and the G8 Global Partnership for the former
Soviet Union countries to support denuclearization, customized to North Korean needs,
may be useful. In order to prevent nuclear weapons and fissile material from being
diverted to third countries or non-state actors, these weapons and materials will bedisposed of quickly under tight control with support from major nations, including theUnited States and Japan. North Korean scientists and engineers involved in the nuclear
program will be encouraged to engage in peaceful scientific activities in medical andother areas.

(2) Multilateral Security Assurances Linked with Regional Security
Next in this scenario is linking the above process with other regional security concerns,
most notably North Korea’s medium- to long-range ballistic missiles. Currently, morethan 100 No Dong missiles capable of reaching Japan are reportedly fielded. If theNorth achieves miniaturization of nuclear warheads, North Korea could launch
nuclear strikes against Japan. At present, however, there is no international frameworkin place to discuss the problem of these missiles. It was partly why Japan has decided
to take part in the Six Party Talks, and to focus on having North Korea abandon its
nuclear development program before addressing the missile issue. However, when the

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JIIA Policy Reportagreement on nuclear dismantlement is reached, an agreement for a phased reduction
and ultimate elimination of North Korea’s No Dong and Taepo Dong missiles should be
pursued to address regional security concerns. The Intermediate-Range Nuclear Forces(INF) Treaty reached by the United States and the Soviet Union in 1987 successfully
eliminated 846 U.S. and 1,846 Soviet intermediate-range missiles and other related
systems within four years. We can learn lessons from this example.

(3) Reviving Local Arrangements
Ideally the process outlined above will produce a basis for the establishment of a peace
regime through the resumption of currently suspended high-level military talks
between North and South Korea, the implementation of confidence-building measures
included in the inter-Korean Basic Agreement of 1991, and the reduction anddisengagement of conventional forces. Consequently, it will be beneficial if this ties inwith a resumption of the Four Party Talks.2 By combining the four-party process with
the Six Party process, Japan and Russia can also become guarantors of this peace
regime to further strengthen the credibility of multilateral security assurances agreed
in the Six Party Talks.
It is worth noting that this will not prevent U.S. Forces Korea (USFK) fromancillary participation in negotiations on arms control on the Korean Peninsula. Basedon the policy of “cooperative self-reliant national defense,” South Korea will play alarger role in guaranteeing its own security. In particular, by taking on a greater role interms of providing counter-fire capability to deal with North Korea’s long-range
artillery as well as multiple rocket launchers and countering North Korean special
operations forces, South Korea will be able to contribute to reducing the sense of
burden on the United States.
Finally, as indicated in South Korean President Roh Moo-hyun’s speech in
November 2004, South Korea recognizes the need to allow North Korea to maintainsome level of deterrent capabilities.3 In this context, South Korea can consider ways to

2 The “peace regime” mentioned here is what is expressed in the Basic Agreement between
North and South Korea, not the “new peace arrangement” advocated by North Korea, whichrefers to a peace treaty between Pyongyang and Washington.
3 President Roh said that there was an element of truth in the North Korean argument that
their nuclear and missile forces were a deterrent to protect themselves from external
threats.

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JIIA Policy Reportbalance its need to better defend itself and North Korea’s need to maintain some levelof deterrent in future formal or informal confidence-building and possibly arms control
arrangements. After peaceful settlement of the nuclear issue, North Korea’s deterrent
must be based on non-nuclear conventional forces such as long-range artillery, multiple
rocket launchers, and short-range ballistic missiles. Combined with multilateral
security assurances, such arrangements would encourage North Korea to forgo its
nuclear programs. In addition, North Korea’s chemical and biological capabilities must
be reduced and eliminated over time through inter-Korean or multilateral agreements,
but it will take a long time in any case. As North Korea’s nuclear and other WMD
programs are dismantled, a new military equilibrium should be established to keep the
local and regional security environment stable.

Scenario 2: Stalemate(1) Stalemated Six Party Talks and the Rise of Nuclear North Korea
In this scenario, both the United States and North Korea take a half-hearted approach,and the Six Party Talks neither succeed nor break down completely. The United States
will increase pressure on the North Korean regime by bolstering the Proliferation
Security Initiative (PSI) on North Korea’s arms exports, cracking down on its illicit
activities, and encouraging anti-North Korea movements by aggressively using theNorth Korea Human Rights Act. Nevertheless, North Korea’s nuclear development
continues in the interim. It may operate its 5-megawatt nuclear reactor and extract
greater quantities of plutonium, miniaturize nuclear warheads, and start preparing fora nuclear explosion test, or it may launch ballistic missiles. North Korea may also
undertake small-scale military provocations in its neighborhood.
In this case, the Six Party Talks will lose momentum and the parties will debate
whether to refer the matter to the UNSC. It is quite possible, however, that such an idea
will meet with resistance from China and Russia, and that the UNSC will fail tofunction properly. South Korea may also object, fearing that it will become a target for
North Korean military retaliation. The United States might then look for a “coalition of
the willing” to impose economic sanctions on North Korea, and start interdicting ships
and aircraft coming to and from the country. Again, however, it would be difficult for
the United States to organize such a coalition by mobilizing non-Six Party member

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JIIA Policy Reportcountries and, even if the coalition is organized, it might not be too effective.

(2) Growing Potential Threat
Behind this scenario is the widely held expectation that North Korea will not use
nuclear weapons or export them to entities hostile to the United States since such a
move would result in U.S. retaliation against the country. The “benign neglect” policy
actually works to avoid a dangerous standoff between North Korea and other countries.
It also enables North Korea to maintain the current regime relatively easily and othermembers of the Six Party Talks not to choose between accepting North Korea as anuclear state and risking a major crisis by pressuring the country. In addition, being
isolated, Kim Jong Il’s regime may start crumbling, and the eventual collapse of theregime may put an end to the North Korean nuclear issue.
However, unless the North Korean regime collapses, the “benign neglect” policy
will inevitably create a situation where North Korea continues to obtain enough fissile
material for two nuclear devices annually, and to miniaturize such devices in order toload them on ballistic missiles. North Korea may also increase the number and range ofits ballistic missiles. With improved nuclear and missile capabilities, North Korea will
be in a better position to exercise military-diplomatic coercion on its neighbors. As longas nuclear and missile capabilities are concerned, the longer the “benign neglect”
policy continues, the stronger North Korea’s bargaining position will become.
Moreover, the North Koreans may prove to be more risk-taking than generally
thought. It may actually export fissile materials and even nuclear devices to foreign
nations or non-state actors to put further pressure on the United States and to makemoney. They may think that such a move will actually strengthen their leverage
without necessarily provoking strong retaliatory actions. With the “benign neglect”
policy, they may prove to be right.
If the North Korean regime became destabilized or collapsed, the regime’s ability
to control nuclear weapons and weapons-grade fissile material might deteriorate. This
would increase the likelihood of their outflow from North Korea---which will spur
nuclear proliferation---and of the unauthorized use of North Korea’s nuclear weaponsand missiles.
Finally, the stalemate might undermine the U.S.-Japan alliance. While the
U.S.-Japan security relationship remains strong, the stalemate might start undermining

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it at some point. If the United States continues the “benign neglect” policy and allows aheavily armed nuclear North Korea to emerge, it will make it harder for the UnitedStates to intervene in regional contingencies for the sake of Japan. If that happens, itwould cast doubts on the credibility of the U.S. commitment to the security of Japanand the U.S.’ extended deterrence. A less robust U.S.-Japan alliance would, in turn,make it even harder to solve the already difficult nuclear issue.
The “benign neglect” policy will work to avoid a crisis in the short run, but it will
also result in acquiescence of the growing potential threat, make it harder to resolve theissue. It may eventually convince North Korea to concede and make the “strategic
decision,” or instigate an internal political change within North Korea. Nonetheless, it
may not do so while North Korea continues to build up its nuclear and missile
capabilities.

Scenario 3: Crisis(1) Pressure and Response: Missile Launch, Nuclear Test, and Transfers of Nuclear
Materials
In this scenario, the Six Party Talks breaks down, and collective pressure is brought tobear on North Korea in stages by the UNSC through the adoption of a presidential
statement, a resolution criticizing North Korean actions, and finally a resolution
authorizing sanctions.
When the matter is brought to the UNSC, China will likely object to strong
punitive actions in consideration of its relationship with North Korea. It is quitepossible, however, that Beijing may later shift to a position of abstaining from any vote,thus tacitly accepting this pressure tactic. During the 1994 crisis, when the IAEA
referred the North Korea nuclear issue to the UNSC, China contended that this referral
would complicate the situation and would not lead to a solution, but hinted that it
might simply abstain from voting if a draft resolution on sanctions were formallypresented. Behind this course of action lay the calculation that it could benefit most by
maintaining good relationships with both the United States and North Korea.
China may take a similar approach this time. Even if the UNSC were to consider
a resolution on sanctions, it is conceivable that China would attempt to buy time bygetting involved in the process of crafting a resolution, and try to use the time to guide

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the United States and North Korea into a new agreement. In this case, South Korea
would probably go along. However, such an effort might mislead the North Koreanleadership into believing that brazen defiance will be the best way to survive the crisisand get a good deal out of it.

(2) North Korea’s Risk Diversion Tactics
Faced with Beijing’s pressure, it is also possible that North Korea might suddenly takebold steps to resolve the abduction issue in a way that satisfies Japan, and/or to
substantially improve inter-Korean relations by bolstering economic and social
interactions with South Korea, thus trying to drive a wedge into the U.S.-Japan-South
Korea relationship.
Also, we can expect to see anti-American and anti-war demonstrations not just in
North Korea, but also in parts of South Korea if the United States starts talking about
imposing sanctions against North Korea. If military tension seriously rises, South
Korea’s stock market will stumble, foreign capital will flee, and domestic assets will besent overseas. In short, South Korea’s economy might plunge into chaos, and the South
Korean government and people may look on Washington as the instigator rather than
Pyongyang. North Korea may foresee this development and propose to South Korea’s
Roh Moo-hyun administration that the two Koreas hold a summit. It is not clear
whether the Roh administration would be able to decline the offer.

(3) Crisis as an Opportunity
Despite the challenges that a crisis on the Korean Peninsula might pose, we have toremember that we are not always successful in avoiding crises, and that a crisis can be
an opportunity for a negotiated settlement of the problem. In fact, the Agreed
Framework materialized following the crisis in May-June 1994. This was not a mere
coincidence. On the one hand, the crisis created the situation where the North Koreans
could “sell” their nuclear cards at the highest prices; on the other hand, it enabled theUnited States to convince its allies and friends that the negotiated settlement wasworthwhile despite the political, military, and financial cost that might ensue.
In this sense, the current U.S. policy not to react to North Korea’s provocative
actions and not to casually define the situation as a “crisis” has prevented, as U.S.
policymakers had correctly anticipated, North Korea from playing a tactical

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JIIA Policy Report“cat-and-mouse” game. The Bush Administration’s approach is that of trying toconvince the North Koreans that it should make a strategic, rather than tactical,
decision to give up its nuclear programs and to suggest that such a decision would be
rewarded with substantial political and economic benefits.
If North Korea takes major provocative actions combined with a diplomatic
offensive, it might mean that North Korea is ready to make a strategic decision, but
wants to up the ante before actually selling off its cards. Also, North Korea can, as it
has done in the past, deliberately create a crisis first, and then deflate it to give theworld the impression that it is time to reach an agreement. In this sense, although it isalways good to avoid crises, we must not forget that they can be catalysts for a
diplomatic resolution.

IV. Japan’s Response: Reviving the Regional Approach
One of the major differences between the 1993-94 crisis and the present standoff
regarding North Korea’s nuclear development is the role that Japan plays When North
Korea declared its withdrawal from the NPT in March 1993, it was four months after
Japan-DPRK normalization talks broke down. When North Korea did the same inJanuary 2003, it was four months after the Japan-DPRK Summit meeting was held. Ten
years ago, the U.S.-DPRK bilateral talks led the process to solve North Korea’s nuclear
issue. Now, it is the Six Party Talks, featuring the United States, North Korea, China,
Japan, South Korea, and Russia, that are leading the process. In other words, Japanese
involvement in the efforts to resolve North Korea’s nuclear issue is much more
substantial now than ten years ago.
Contrary to its passive approach in the past, Japan’s current approach is much
more proactive, taking both positive and negative measures to persuade North Korea
to abandon its nuclear program.
On the positive side, Japan offered normalization of bilateral relations andprovision of economic assistance in the September 2002 Pyongyang Declaration if
North Korea properly addresses nuclear as well as other issues of Japanese concern.
Given the economic reform that North Korea embarked on in 2002, sizable economic
assistance from Japan must be quite attractive.

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On the negative side, Japan has taken steps to pressure North Korea militarily
and economically. Japan can now prevent the flow of money and sensitive technologies
to North Korea, unilaterally impose economic sanctions on the country, effectively deal
with limited attacks by North Korea, and support the United States in case of an armed
conflict. Taken as a whole, Japan is carrying a bigger stick with a bigger carrot in facing
North Korea.

1. Staying the Course: Japan’s Unwavering Policy Objectives

Despite the twists and turns in Japan-North Korea relations since the September 2002
summit meeting, Japan’s policy objectives regarding North Korea -- resolving bilateralissues such as the abduction issue, getting rid of the military threat that North Korea
poses to the region, and turning North Korea into a responsible actor in theinternational community -- and the broad steps to be taken to achieve those objectives
remain unchanged. In order to achieve those goals, Japan is taking a three-step
approach. The first step is to resolve pending issues such as the abduction and nuclear
issues to pave the way for normalization of Japan-DPRK relations. The second step is
to normalize bilateral relations, which would enable Japan to provide economic
assistance to North Korea while addressing the missile issue. The final step is to fully
engage North Korea politically, economically, and militarily to make the country a
responsible member of the international community and create a more peaceful andstable Northeast Asia.
In the Japan-DPRK Summit meeting in September 2002, Koizumi identified fivebilateral issues and three other issues to be addressed in the first phase. The bilateralissues included abductions, nuclear development, missiles, special-purpose vessels,
and security dialogue. The other three were further dialogue between the two Koreas
as well as between North Korea and the United States, and a multilateralconfidence-building forum such as Six Party talks. Although this Six Party process is
not exactly the same as the Chinese-sponsored Six Party Talks that started in August
2003, it is noteworthy that Japan had been calling for such a forum since 1998 when
Prime Minister Keizo Obuchi espoused the idea.

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2. Preparing Carrots and Sticks: Policy of “Dialogue and Pressure”

While Japan’s policy objectives have not changed, its strategy has. “Dialogue andpressure” has been key since 1998 when Prime Minister Keizo Obuchi was in office.
The emphasis has been on “dialogue” and Prime Minister Koizumi has carried on thatline. In May 2003, however, in response to the impasse in bilateral talks, Prime Minister
Koizumi started to put greater emphasis on “pressure,” indicating that Japan would
use not only carrots but also sticks to induce positive behavior on the part of North
Korea.
Japan offered big carrots in September 2002 when Koizumi visited Pyongyang tomeet with Kim Jong Il. The two leaders agreed that Japan would provide economic
assistance to North Korea after normalization, and that they would discuss the specificscale and nature of the economic assistance in the normalization talks. It is noteworthy
that Koizumi made this pledge despite his knowledge about the fate of some of theJapanese abductees and the existence of North Korea’s secret uranium enrichment
program. The Japan-DPRK Pyongyang Declaration specified that the economic
assistance would include “grant aid, long-term loans with low interest rates and suchassistance as humanitarian assistance through international organizations, over a
period of time deemed appropriate by both sides, and providing other loans andcredits through such financial institutions as the Japan Bank for International
Co-operation with a view to supporting private economic activities.” The total amountis expected to be several billion dollars.
In July 2002, North Korea started to take a series of measures to improve its
economic management. If economic reform were to gather momentum, North Korea
would need a larger amount of foreign capital goods and funds. However, few foreignbusinesses are interested in investing in North Korea under the current circumstances.
Moreover, if North Korea really hopes to rehabilitate its economy, including its
infrastructure, full-fledged economic assistance from Japan will be indispensable.
In this context, it is noteworthy that, in the first session of the Six Party Talks,
North Korea proposed a “package solution to the nuclear issue” in which it demandedthat the United States “guarantee the [sic] economic cooperation between the DPRK
and Japan and between the north and the south of Korea.” In other words, North Korea
implicitly demanded that the United States make sure that Japan and South Korea

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would provide economic aid to the North when the nuclear issue is resolved.
For this reason, the Pyongyang Declaration, developed in a Japan-DPRK bilateralcontext and signed before the current nuclear standoff arose, has become a criticalelement in the Six Party process. Japan’s economic assistance to North Korea, laid out
in the Declaration, will play a critical role in convincing North Korea to abandon its
nuclear programs and embark on major economic rehabilitation programs instead. In
addition, Japan and South Korea can jointly provide North Korea with human andtechnical assistance in such a case.
On the negative side, Japan has taken steps to pressure North Korea militarily
and economically. The Japanese government has started to crack down on North
Korea’s illegal activities, including drug trafficking, counterfeiting, and trading insensitive machinery by enforcing existing laws more strictly than in the past. Japan has
become an active player in the PSI. A patrol vessel and a special security team of theJapan Coast Guard and observers from the Japan Defense Agency participated in amaritime interdiction exercise for PSI held off Australia in September 2003. Japan
played a central role in that exercise. It also hosted the “Team Samurai” exercise off thecoast of Sagami Bay and outside the port of Yokosuka in October 2004. In addition,
Japan has introduced stricter export control measures, decided to procure ballistic
missile defense (BMD) systems, and made preparations to better deal with possible
contingencies on the Korean Peninsula and with limited attacks against Japan. These
measures have put Japan in a better position than ten years ago to deal effectively with
North Korea. Taken as a whole, Japan is carrying a bigger stick with a bigger carrot in
facing North Korea.

3. Pursuing a Regional Solution

It is in the interest of Japan to pursue a peaceful diplomatic resolution of the North
Korean nuclear problem through the Six Party Talks in parallel with the Japan-DPRK
bilateral channel. Being prepared for other scenarios would also be an essential part ofJapan’s strategy, but pursuing a regional diplomatic resolution through the Six Party
Talks would be the optimal option.
Working with the United States, Japan should actively cooperate with China,
South Korea, and Russia and make an effort to strengthen the regional approach. For

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the time being, as Japan’s hands are tied with the abduction issue, Japan should
support U.S.- and China-led regional initiatives in the Six Party format, and should
support Beijing’s active intermediary diplomatic efforts and assist in the creation of aninterim or preliminary agreement. It will otherwise be impossible for Tokyo to resolve
the abduction issue and to proceed with normalization talks. It would also beappropriate to consider hosting the Six Party Talks in Tokyo, in time, perhaps after theconclusion of a preliminary agreement with North Korea.
If North Korea agrees to “comprehensive dismantlement” and returns to the NPT,
it will certainly claim its inalienable right to the peaceful use of nuclear energy
stipulated in Article IV of the treaty. However, with the United States insisting on CVID,
it is difficult to imagine that a settlement of the nuclear issue would involve an
immediate resumption of the construction of light-water reactors under the Korean
Peninsula Energy Development Organization (KEDO). In that case, we can decide tosuspend these rights for a certain period of time until it is deemed appropriate forNorth Korea to resume legitimate peaceful nuclear activities while allowing it to retain
its rights as a signatory to the NPT. Tokyo, along with Washington and Seoul, should
then propose using the KEDO framework as a means of providing alternative
conventional energy such as heavy fuel oil, while keeping the construction of thelight-water reactors frozen. In this context, it is worth pointing out that Japan expressed
its intention to join with South Korea, China, and Russia to collectively provide energy
assistance to North Korea in the third round of the Six Party Talks.
In the long run, if North Korea faithfully fulfills the verification anddismantlement requirements, the construction of light-water reactors could be resumed.
Such an expectation will serve to give Pyongyang an incentive to remain a responsible
actor in the verification and dismantlement process.

4. Resolution of Abduction, Nuclear, and Missile Issues

Given the current stalemate in Japan-North Korea relations over the abduction issue,
adoption of multilateral security assurances at the Six Party Talks would likely become
an important starting point for Tokyo and Pyongyang to resume normalization talks.
Looking at the matter from the perspective of a potential comprehensive package, it isdesirable for a multilateral agreement to explicitly link the beginning of normalization

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talks with provision of convincing evidence on abductees’ whereabouts and North
Korea’s pledge to fully satisfy reasonable Japanese demands on the matter.
Even if a multilateral agreement provides a roadmap toward a solution, it is not asolution in and of itself. It therefore follows that, even if a multilateral agreement isreached and Pyongyang agrees to move in stages from a freeze on its nuclear facilities
to dismantlement, there is no guarantee that North Korea will not go back on its word,and suspicions about its nuclear program will persist in the interim. Even if the CVID
principle is accepted and North Korea’s abandonment of its nuclear program remains
verifiable, there will still be a time lag between the time of agreement and the time
when the abandonment is actually verified. It may take longer than in the case in South
Africa mentioned above, meaning that acceptance of CVID by North Korea is the
beginning of a long process, not the end. If Tokyo and Pyongyang normalize relations
and decide to incorporate phased economic assistance into this process, however, it
will greatly promote North Korean compliance in accepting verification measures andin moving from a freeze on its nuclear facilities to eventual dismantlement.
In addition, Japan should pursue a bilateral agreement to eliminate North Korea’s
medium- to long-range ballistic missiles. As Japan does not possess offensive ballistic
missiles, the contents of a Japan-DPRK agreement on missiles will be asymmetrical innature. In other words, Japan and North Korea will not swap missiles; any agreement
will involve Tokyo improving relations with and providing economic aid to North
Korea in exchange for Pyongyang eliminating No Dong and Taepo Dong missiles. For
this purpose, a framework for the elimination of medium- to long-range ballistic
missiles should be created to fit the process of normalization of Japan-DPRK relations
and Japan’s provision of economic assistance to the North.
Large amounts of economic aid will not flow into North Korea simply with theestablishment of diplomatic relations. As was the case when Japan normalized
relations with South Korea, economic assistance will be provided on a project basis.
Japan’s economic assistance to North Korea will be linked with the process ofPyongyang’s compliance in a multilateral denuclearization arrangement and with abilateral Japan-DPRK arrangement to reduce and eventually eliminate North Korea’s
medium- to long-range ballistic missiles. If this approach produces positive results, itwill become a historic success story for one of the major tenets of Japanese foreign
policy---non-proliferation and disarmament.

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JIIA Policy Report

5. Military Preparedness

The above arguments are not intended to deny the importance of being prepared todeal with a crisis. While it would not be wise for Japan to unilaterally impose economic
sanctions as long as the Six Party Talks continue, Japan should take part in multilateralsanctions if the talks break down and the situation moves into the crisis scenario. If
multilateral sanctions are called for to deal with nuclear proliferation, Japan must takepart. Japan must also be prepared for the most extreme eventuality: collapse of theNorth Korean regime.
Additionally, the National Defense Program Guidelines released in December
2004 gave great weight to responding to ballistic missile attacks, attacks by special
operations forces, and intrusions by armed special-purpose vessels. Japan has adopted
the National Protection Law for civil defense, and will be deploying operationalsea-based and ground-based missile defense systems in 2007. These steps will bolster
Japan’s security in times of crisis while at the same time reducing the effectiveness ofNorth Korea’s “military card.” As time passes, North Korea’s missiles will have lessdiplomatic value. Thus this sort of pressure will likely lead Pyongyang to theconclusion that reaching a diplomatic solution quickly is in its interests.
Finally, the Council on Security and Defense Capabilities Report: Japan’s Visions for
Future Security and Defense Capabilities released in October 2004---widely known as the
Araki Report---suggested that when there is no alternative, Japan should address thequestion of whether it is appropriate to possess offensive capabilities against enemy
missile bases as a last resort. If North Korea’s nuclear and missile capabilities become aclear and present danger, Japan might be forced to consider such an option.

6. Abduction Issue and the Debate over Economic Sanctions

At present, the Japan-DPRK bilateral channel is paralyzed due to the abduction issue,
and the idea of imposing economic sanctions on North Korea is being debated in somequarters. This idea attracts support in the public and among lawmakers in the Diet. It isdifficult to imagine that the unilateral imposition of economic sanctions on Japan’s part
would lead to a quick concession on the abduction issue by North Korea, however. On

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the contrary, if sanctions were not used judiciously, the more likely result would be tofurther prolong the problem.
To begin with, in the third round of the Six Party Talks, Japan expressed its
willingness to join with South Korea, China, and Russia and collectively provide
energy assistance to North Korea. The unilateral imposition of economic sanctions
would run counter to the tone of the talks and would thus fail to gain the support ofany of the other participants. In line with the Six Party Talks process, Japan should
pursue a resolution to the abduction issue by reopening bilateral negotiations with
Pyongyang. Since the abduction issue has become a major political issue, though, it is
not likely that the Japanese government would resume normalization talks with North
Korea without a satisfactory solution of the issue.

V. Conclusions
The fact that Japan is carrying a bigger stick with a bigger carrot in facing North Korea
suggests that we are facing a “high-risk, high-return” situation. Despite the growing
tension, a peaceful solution to the nuclear issue is possible. Moreover, there is thepotential for more substantial sets of agreements among the concerned countries in a“more-for-more” arrangement. North Korea has more to offer now than ten years ago,
while Japan has already offered more compared to ten years ago. If the abduction,
nuclear, missile, and other pending issues are resolved, Japan would be willing tonormalize relations with North Korea and provide substantial economic assistance, in
accordance with the September 2002 Pyongyang Declaration. In the best-case scenario,
Japan as well as the United States will normalize relations with North Korea; North
Korea will acquire economic assistance from Japan and use it to rehabilitate its
economy, which, if combined with an open-door policy, will facilitate regional
economic integration and possibly growth; North and South Korea will establish
peaceful coexistence in the political and military arenas and integration in economic
terms.
The current situation involves higher risks, however. North Korea has morerobust nuclear weapons programs and a much larger ballistic missile arsenal than ten
years ago, while its political and socio-economic conditions have become more

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JIIA Policy Reportprecarious. In addition, if the North Koreans are to raise the value of their bargaining
chips by scaring the international community, which has experienced the North Korean
nuclear game once already, they might have to bring the situation much closer to thebrink than before. Even after returning to the Six Party Talks, North Korea may wellattempt to open a new chapter in its nuclear diplomacy by defining itself as a “nuclear–weapon state. If Japan and the international community are to prevent North Korea
from cheating again, they might have to get tougher than before.
Moreover, even if we choose not to take risks, the risks will grow as North Korea
continues to improve its WMD capabilities, and Japan will be the first to be adversely
affected by the continuation of the stalemate. If North Korea continues to build up its
nuclear arsenal and succeeds in putting nuclear warheads on No Dong medium-range
ballistic missiles, it will send enormous political and military shock waves. Japan will
not be able to accept such a consequence.
In order to attain security, we will have to take calculated risks. However,calculated risks do involve dangers, of which two stand out. On the one hand, wemight end up “appeasing” North Korea by giving in to its brinkmanship diplomacy.
On the other hand, we might inadvertently provoke a war by pushing North Korea off
the brink. Achieving the complete dismantlement of North Korea’s nuclear arsenal
while avoiding these dangers will not be easy, particularly when the situation in Iraq
remains unstable and the Iranian nuclear issue looms large.
If North Korea does not engage in serious negotiations in the Six Party Talks nor
demonstrate willingness to make concessions, Japan, in conjunction with the UnitedStates, will have to use a coercive approach. We should first strengthen PSI and bringthe matter to the UNSC to discuss imposing economic sanctions on North Korea. When
we actually impose economic sanctions, we should keep the Six Party framework intact
so that the coercion would bring North Korea back to the negotiating table. We should
not forget that coercion is a means to an end. Coercive measures should not bedesigned to exacerbate tension but to bring about desired political results.
If we are to take such coercive measures, however, it is not clear whether we
could secure support from South Korea, China, and Russia. Moreover, if sanctions are
actually implemented, North Korea might decide to conduct flight tests of medium- tolong-range ballistic missiles and a nuclear explosion test, making the worst scenario
come true---an isolated nuclear North Korea. If North Korea chooses to respond to the27

JIIA Policy Reportinternational pressure by further intensifying its brinkmanship strategy, the situation
might get out of control.
It is for this reason that Japan and the United States should first use a positive
approach to the maximum extent before resorting to negative sanctions. To implement
the positive approach, the United States should first agree to hold bilateral talks with
North Korea to seriously negotiate agreements. Such bilateral talks must take place
within the Six Party framework, but do not have to actually convene when and where
the Six Party plenary meetings are held. With the other Six Party members’ consent, theUnited States and North Korea can hold bilateral talks more frequently to negotiate
concrete and detailed agreements, which will later be approved by all Six Party
members in plenary meetings.
Despitethepotential

meritsof

U.S.-DPRK

bilateraltalks,theBush

Administration has long remained reluctant to fully engage North Korea. In thiscontext, the role of Japan, particularly that of Prime Minister Koizumi’s, will be critical.
Prime Minister Koizumi has been one of the most trusted allies of President George W.
Bush. At this point, Koizumi is the best and only person who can persuade President
Bush to have serious negotiations with the North Koreans.
Once Japan and the United States agreed to push ahead, they should carefully
coordinate their policies in taking the positive initiative. Only the strong positive
incentives, generated by Japan-U.S. joint action and backed by potential use of negative
incentives, will convince the North Koreans to respond positively. At the same time,
Japan should prepare to resume Japan-DPRK talks to discuss normalization in addition
to the abduction, nuclear, and missile issues. Such an action will demonstrate that theregional solution to the nuclear issue is still on the table, and provide North Korea withthe final but attractive offer to put an end to its isolation. In addition, to bolster
multilateral regional initiative, Japan can propose that the Six Party Talks be held incapital cities of the member countries, including Tokyo and Pyongyang. By first taking
these positive measures, we will be able to test North Korea’s willingness to come backto the Six Party Talks to have serious negotiations and, if need be, secure support fromSouth Korea, China, and Russia in bringing the matter to the UNSC.
If the United States and North Korea reached an initial agreement for eventual
dismantlement of North Korea’s nuclear programs, Japan should resume normalization
talks with North Korea and start discussing a comprehensive assistance program for

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North Korea’s socio-economic rehabilitation in conjunction with South Korea, China,
Russia, and the United States. Japan’s most powerful policy tool is its ability to provide,
when Japan-DPRK relations are normalized, substantial economic assistanceindispensable to North Korea’s socio-economic reform. Phased provision of economic
assistance, say, over ten years would play an important role in guaranteeing the
successful dismantlement of North Korea’s nuclear programs and resolving abduction
and other outstanding issues between the two countries.
Avoiding risks will not provide security. Despite risks and dangers, we will haveto take calculated risks and adopt the regional approach described above to resolve theNorth Korean nuclear issue peacefully. Japan has an important role to play in theprocess.

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