 Introduction
The North Korean Risk and Half a Century of
Diplomatic Relations between Japan and South
Korea
Atsushi Ijuin
Lead Economist, Japan Center for Economic Research[Key Points]


East Asia is the world’s growth center, so the risks associated with North Korea are asignificant destabilizing factor, not only for East Asia, but also for the global
economy as a whole. Above all, they pose a serious problem for Japan and South
Korea, whose sustained economic development has been predicated on the conditionof regional peace and stability.



Now in its fifth year, the Kim Jong-un regime is beginning to show new signs of
movement on both the political and economic front, and changes can also be seen in
North Korean society. In 2016, the Congress of the Workers’ Party – North Korea’s
biggest event – will be held for the first time in 36 years; furthermore, there is anupcoming presidential election in the USA, a country of paramount importance toNorth Korea in terms of both foreign policy and security. As such, the situation on the
Korean Peninsula appears to be approaching a major turning point.

Half a century has passed since the 1965 normalization of diplomatic relations
between Japan and South Korea. Although an agreement was reached on the comfort
women issue at the end of 2015, unstable elements still remain in the politics anddiplomatic relations of both countries, and their perceptions of North Korea andChina are also at variance. Following an in-depth discussion of the risks associatedwith North Korea over the next 50 years, we should consider measures to promote
the peace, stability, and economic development of Northeast Asia.

Japan Center for Economic Research

FY2015 “Asia Research” ReportNorth Korea: Basic Data
Key Data

Area
Population

123,138km2 (approximately 55% of the Korean Peninsula as a whole)
24.344558 million (2010)

CapitalPyongyang

Ethnicity

KoreanLanguage

KoreanReligious organizations include a Buddhist Federation and a Christian

Religion
Federation, but the number of believers is unclear
National Defense Commission (supreme guiding organ of national defensewith state sovereign authority)

First Chairman: Kim Jong-un

Supreme People’s Assembly (supreme institution of state sovereignty and
Political

legislature)

SystemCabinet (administrative and executive organ with supreme sovereign power)(MajorOrgans)President of the Presidium: Kim Yong-nam

Premier: Pak Pong-ju
Workers’ Party of Korea (guides all organizational activities in North
Korea)First Secretary: Kim Jong-un

Korean People’s Army Supreme Commander: Kim Jong-un
Source: Compiled from information on the website of the Ministry of Foreign Affairs of Japan andother sources. Figures for land area and population are taken from the Korean Central
Yearbook (2014).

1. North Korea: Changes and Risks

This chapter will provide a broad overview of developments in the Democratic People’s
Republic of Korea (North Korea),1 which is showing various signs of change, as well as examining
the situation faced by Japan and South Korea in dealing with it.

(1) Inherited Power, Nuclear Ambitions, and Missiles
December 2015 marked the fourth anniversary of Kim Jong-un’s accession to the role ofsupreme leader of North Korea, so his administration has now entered its fifth year. During thistime, moves to consolidate his power have been the most conspicuous development on the political
1

Hereinafter, this report refers to the Democratic People’s Republic of Korea as North Korea and the Republic ofKorea as South Korea.

Japan Center for Economic Research“Asia Research” Reportfront. Following the death of General Secretary Kim Jong-il on December 17, 2011, Kim Jong-un
was appointed to the posts of Supreme Commander of the Korean People’s Army, First Secretary of
the Workers’ Party of Korea, and First Chairman of the National Defense Commission, among
others. Having become the head of the army, party, and state, he built up his regime within a shortperiod.
Kim Jong-un immediately set to work to secure his grip on power, to establish himself as the sole,absolute ruler; in December 2013 he executed his uncle Jang Sung-taek for the crime of “plotting tooverthrow the state.” The shock – both at home and abroad – was all the greater because Jang
Sung-taek had been regarded as Kim Jong-un’s guardian or de facto second-in-command. Since
then, he has concentrated power in his own hands, repeatedly purging and promoting members of
his inner circle.
On the political front, he has declared his intention to continue Kim Jong-il’s songun(military-first) policy, prioritizing the military in managing the affairs of state. A plenary meeting of
the Central Committee of the Workers’ Party of Korea in March 2013 officially approved the “newstrategic line on carrying out economic construction and building nuclear armed forces
simultaneously.” In April that year, North Korea clearly demonstrated its intention to continue withthe development of nuclear weapons, enacting the Law on Consolidating the Position of Nuclear
Weapons State for Self-Defence.
Just before this, in February that year, the Kim Jong-un regime embarked on its third nuclear test,
and conducted its fourth, which it described as its “first hydrogen bomb test,” in January 2016.
North Korea has also repeatedly test-launched ballistic missiles, which it refers to as “satellites.”
Based on United Nations Security Council resolutions, the international community continues toimpose sanctions on North Korea over its nuclear and missile development, but North Korea assertsthat nuclear development is a means of counteracting the US nuclear threat. It also refuses to yieldon the question of missiles, arguing that “the peaceful development of space is a legal right ofsovereign states that is recognized in international law,” which suggests that North Korea intends tocontinue firing such missiles on the pretext of launching satellites.
Since the birth of the Kim Jong-un regime, the balance of power in the running of thegovernment administration has shifted to the Workers’ Party of Korea from the National Defense
Commission, to which General Secretary Kim Jong-il attached importance. Accordingly, the lineup
of senior officials and members of Kim Jong-un’s inner circle has changed considerably. However,there has been no change since the era of Kim Jong-il in North Korea’s pursuit of military might as
the source of its power and, in particular, its persistence in developing nuclear weapons, ballistic
missiles, and other weapons of mass destruction.

Introduction: The North Korean Risk and Half a Century of Diplomatic Relations between Japan and South Korea

(2) Changes Revealed by Kim Jong-un
No sooner had the regime paraded the first lady in the media than it formed the mini-skirted
all-female group the Moranbong Band. Their performances even featured cultural imagery from
North Korea’s adversary, the USA, including the theme song from the movie Rocky and soft toysthat resemble Disney characters. The changes that Kim Jong-un has revealed to the North Korean
people since the inauguration of the new administration are too numerous to mention, including ahairstyle and speaking style reminiscent of his own grandfather, President Kim Il-sung.
On the policy front, one characteristic of the Kim Jong-un regime has been the fact that it has
clearly demonstrated a willingness to devote considerable effort to economic development, as wellas national defense. In his speech before the assembled masses at an April 2012 military parade,
Kim Jong-un announced his intention to strive to improve the people’s standard of living. In
addition, the March 2013 plenary meeting of the Central Committee of the Workers’ Party of Korea
at which the “new strategic line on carrying out economic construction and building nuclear armed
forces simultaneously” was approved expressed a desire to build up the economy, and Kim Jong-un
himself ordered that tourism development should be undertaken in the Wonsan district, on the coastof the Sea of Japan. Following on from this, in May, North Korea enacted the Economic
Development Zone Law with the aim of attracting foreign capital, and announced the designationof 19 places across the country as economic development zones.
Aiming to rebuild the economy, North Korea is working on measures to improve economic
management that will extend the autonomy of those working on the front lines of industry andagriculture. While North Korea’s planned economy has been at a standstill, markets have spreadthroughout the country and changes in people’s lifestyles and values have been occurring. The
biggest focal point will be whether or not this series of developments will lead to full-scale reformand opening up of the country.
Looking at foreign relations, North Korea’s relationship with China, its biggest supporter, hascooled in the wake of the third nuclear test, which it carried out after the inauguration of the Xi
Jinping administration, as well as the purge of Jang Sung-taek, who had served as an intermediary
between China and North Korea. Although Liu Yunshan, a member of the Politburo Standing
Committee who ranks fifth in the order of precedence in the Communist Party of China, attended
the October 2015 event to mark the 70th anniversary of the founding of the Workers’ Party of
Korea and high-level dialogue has resumed, the fourth nuclear test in January 2016 soured relations
once more. Unlike the previous three tests, North Korea did not inform China of the fourth test inadvance; this conspicuous tendency to words and deeds that seem designed to irritate China is aJapan Center for Economic Research“Asia Research” Reportcharacteristic that has only emerged since the Kim Jong-un regime took power.
In the arena of economic diplomacy, North Korea has embarked on a strategy of diversifying its
trade partners, with the aim of breaking free from its dependence on China. Accordingly, it has
stepped up negotiations concerning economic cooperation with Russia, among others. North
Korea’s intergovernmental dialogue with Japan has also resumed, following Japan’s agreement tolift some sanctions in return for the launch of an investigation into all Japanese nationals in North
Korea, including Japanese abductees. North Korea has embarked upon north-south dialogue with
South Korea, in the wake of the tensions that followed an August 2015 incident involving landmines near the north-south military demarcation line. And then came the fourth nuclear test, which
seems likely to ruin all the progress that North Korea had made with its external relations.
Brinkmanship – a strategy of unsettling one’s opponent by alternately engaging in provocation anddialogue – is a technique that North Korea has employed since the time of Kim Jong-il, but sometake the view that the amplitude of the swings in policy has grown and the cycle of change has
accelerated in the Kim Jong-un era.

Pyongyang, just before the event to mark the 70th anniversary of the founding of the Workers’
Party of Korea (September 2015, taken by the author)(3) The Predictability of Kim Jong-un as Seen from the “Hydrogen Bomb Test”
First Secretary Kim Jong-un’s handling of government administration has been characterized byrepeated purges and promotions of members of his inner circle, as well as significant swings inpolicy, so many officials in other countries have described him as unpredictable.

Introduction: The North Korean Risk and Half a Century of Diplomatic Relations between Japan and South Korea

To learn more about the personality of First Secretary Kim Jong-un, the US government once
conducted a survey among those who had been his classmates during his time as an international
student in Switzerland, asking them about his past behavior. Speaking on the US news channel
CNN, former Assistant Secretary of State Kurt Campbell said that the US government came to theconclusion that “he was dangerous, unpredictable, prone to violence and with delusions ofgrandeur.” After the fourth nuclear test in January 2016, a South Korean intelligence official stated,“We couldn’t see any signs that this was going to happen,” while a Chinese source disclosed, “Wejust don’t know what Kim Jong-un’s thinking.”
But is this young leader really so unpredictable? In this recent incident, it was not the case thatexperts in each country were unable to predict that North Korea would conduct a nuclear test within
the near future. The fact is that several members of the Japan-South Korea Research Group set upby the Japan Center for Economic Research commented at the time of the group’s establishment in
the spring of 2015 that “North Korea’s fourth nuclear test won’t be far away.”
The reason for the test does not lie solely in the official adoption of the “new strategic line on
carrying out economic construction and building nuclear armed forces simultaneously,” in which
North Korea publicly declared that it would undertake nuclear development. One Japanese memberof the research group regarded it as being a consequence of North Korea’s having proposed to the
USA that it would temporarily suspend its nuclear tests in exchange for the USA canceling the
US-South Korean joint military exercise. In this academic’s view, “North Korea knew from theoutset that there was no way that the USA would cancel a military exercise, so this proposal was
nothing less than an announcement of its intention to conduct a nuclear test.”
Many predicted that North Korea would carry out this nuclear test sometime between May andNovember 2016. The Congress of the Workers’ Party – North Korea’s biggest political event – will
be held for the first time in 36 years in early May, while a presidential election is due to take placein November in the USA, a country of paramount importance to North Korea in both political andsecurity terms. Accordingly, the general view was that North Korea would work on improving
relations with China and building up the economy during the run-up to the party congress. As such,many observers thought that North Korea would launch a ballistic missile or conduct a nuclear test
sometime before the new US president was elected, as a means of enticing the Obamaadministration back to the negotiating table near the end of its term of office or, if that failed, to lay
the foundations for discussions with the next administration.
In December 2015, there was a flurry of developments, including the US Department of theTreasury’s imposition of additional sanctions against North Korea (December 8), First Secretary
Kim Jong-un’s declaration that North Korea had a hydrogen bomb (December 10), the effective

Japan Center for Economic Research“Asia Research” Reportbreakdown of north-south talks at the vice-ministerial level (December 12), and the cancelation of aperformance by the all-female Moranbong Band, which was visiting China at the time (also
December 12). In the wake of these events, another member of the research group concluded thatan act of provocation by North Korea would not be far away. Some suspected that Kim Jong-un
might well decide that the earlier he carried out an act of provocation the better, if he was to ensurethat he had dealt with the geopolitical fallout of a nuclear test by the time of the party congress inMay. Some took the view that North Korea might time any nuclear test to coincide with the
US-South Korean joint military exercise in the spring, to ensure that it did not push China toward
the USA and South Korea.
While all of the predictions – including those of members of the research group – appear tohave been ultimately off the mark, this is because they were deceived by North Korea, which was
actively trying to outsmart its opponents, as explained by an official from the South Korean
National Intelligence Service, who said, “North Korea intentionally and systematically madepreparations to ensure that information would not leak out in advance, in order to shock people.”
The fact that First Secretary Kim Jong-un did not refer to the nuclear issue at all in his New Year
Address on New Year’s Day (the day before the test) and actually seemed more willing to devote
greater attention to building up the economy could even be described as a diversionary tactic. In
other words, the nuclear test that North Korea conducted was not in itself an entirely unpredictablerisk; rather, it was a risk that was to some extent predictable and the other countries concerned
merely lost the information war on this this occasion.
North Korea has been described as a “guerrilla state” that has traditionally been skilled in
impromptu actions, the history of which dates back to its founding father Kim Il-sung’s
involvement in anti-Japanese partisan activities. In South Korea, General Secretary Kim Jong-il’spolitical activities were described as a “kkamjjak (surprise) show” and a “gapjagi (sudden) show.”
Kim Jong-un’s approach also draws quite heavily on such techniques.
While there is a tendency to link the recent nuclear test to instability in North Korea’s domestic
politics, this does not seem appropriate in light of the outcomes of the test. Nuclear tests are only
carried out where there is a high level of social control. The fact that North Korea was able toconduct the test without any information leaking out and without any turbulence actually indicatesthat there are no major rifts within the regime and that it has control of the country. Some foreign
policy and security experts have even suggested that Kim Jong-un wanted to show off the power of
his administration to people both at home and abroad, boasting of the extent of his control, and that
this might have been part of the purpose of the nuclear test.
In any case, North Korea’s neighbors must do something to ensure that unpredictable risks

Introduction: The North Korean Risk and Half a Century of Diplomatic Relations between Japan and South Korea

become as predictable as possible. These countries must increase the accuracy of forecasting forrisks that are somewhat foreseeable and explore risk reduction strategies. They must also envisage
situations in which the risks become reality and make preparations to minimize the resultant harm.
In particular, there are quite a few lessons for Japan and South Korea – as countries within close
range of the North Korean threat – to learn from this recent incident.

(4) Backstage at the “Surprise Show”
70 years after the division of the Korean Peninsula, North Korea is one of the poorest countries
in East Asia, with a massive disparity in economic might between it and its rival South Korea.
Upon becoming the new leader, Kim Jong-un made a commitment before the people that he would
improve their standard of living. So why, despite this, has he repeatedly carried out nuclear tests,
which are assured to make enemies across the globe and which can only be regarded as outrageousby other countries.
From the perspective of countries that have achieved economic development within the bounds
of international order, such behavior defies understanding, but if we change our perspective, thelogic and calculation of the Kim Jong-un regime emerges and North Korea’s specific circumstances
become clear. Broadly speaking, North Korea had two goals in conducting the fourth nuclear test
and launching what was effectively a long-range ballistic missile. One was an improved deterrent
effect and the other was greater bargaining power in relation to other countries.
In an official statement dated January 6, 2016, North Korea explained that the nuclear test was “ameasure for self-defence [North Korea] has taken to firmly protect the sovereignty of the country
and the vital right of the nation from the ever-growing nuclear threat and blackmail by the US-led
hostile forces and to reliably safeguard the peace on the Korean Peninsula and regional security.”
Even today, the Korean Peninsula is a region where the Cold War remains. As the years go by,conventional weapons are being increasingly outnumbered and outperformed by the state-of-the-art
modern weapons with which the USA and South Korea are equipped. Without the economic might
to catch up with such advances, nuclear weapons and other weapons of mass destruction are thequickest and easiest way of making up the difference. Possession of numerous intercontinental
ballistic missiles (ICBM) and nuclear missiles capable of reaching the USA would serve as a checkon that country. Accordingly, the reasoning goes, North Korea needs to continue its efforts tominiaturize nuclear devices so that they can be carried on a ballistic missile, as well as conducting
further tests aimed at expanding the destructive force of those devices.
In the same statement, the North Korean government also said, “There can neither be suspended
nuclear development nor nuclear dismantlement on the part of [North Korea] unless the US has

Japan Center for Economic Research“Asia Research” Reportrolled back its vicious hostile policy toward the former.” One could read this as a statement that thesuspension of nuclear development and abandonment of nuclear weapons is possible if the USA nolonger implements policies hostile to North Korea, so one could say that it is a North Korean-stylecall for dialogue with the USA.
North Korea’s stance is that the situation that has prevailed ever since the Korean ArmisticeAgreement was concluded in 1953 is no more than a ceasefire and that a structure for peace shouldbe established via the conclusion of a peace treaty between the USA and North Korea. It believes
that to bring this to fruition, it must first establish its position as a de facto nuclear state and thenincrease its bargaining power via possession of missiles capable of reaching the US mainland. It is
likely to have sought to maximize the impact by conducting the test when other countries least
expected it, with particular emphasis on its “success in developing a miniaturized hydrogen bomb.”
Although it has mainly addressed its various statements to the USA, North Korea is actually alsoquite conscious of its traditional ally China when it refers to “the sovereignty of the country.” As
North Korea now depends on China for 90% of its trade, the Kim Jong-un regime’s feelings toward
China, which influences North Korean domestic affairs in various ways, are complicated. The
deterrent effect and bargaining power are also aimed at China, and the Kim Jong-un regime
believes that possessing these will also help to strengthen the foundations of its regime within
North Korea.
The Kim Jong-un regime has decided to hold the Congress of the Workers’ Party – the body withsupreme authority over affairs of state – for the first time in 36 years in early May. Although theeconomy is ostensibly improving, any upturn is not so great as to be able to boast about it to thepeople. It is likely that, as the country’s supreme leader, Kim Jong-un wanted a visible achievement
to help to increase national cohesion. In short, Kim Jong-un is persisting with nuclear and missile
development to maintain the present regime.

(5) The “Reasoning” behind the New Strategic Line and the Need for Multifaceted Analysis
So what will happen to the promise to “improve the people’s standard of living” as a result of
the decision to devote large sums of money to nuclear and missile development as a means ofmaintaining the regime? The usual view is that as the international community’s sanctions becometighter, the North Korean economy will become even poorer. However, to the domestic audience,
the Kim Jong-un regime explains that this will help to improve the people’s standard of living,
because it will provide additional funds not only for military capacity, but also for the economy, byusing nuclear development to bolster the country’s security. This is the theory behind the “newstrategic line on carrying out economic construction and building nuclear armed forces

Introduction: The North Korean Risk and Half a Century of Diplomatic Relations between Japan and South Korea

simultaneously” approved by the Workers’ Party of Korea in 2013.
An economist from the Institute of Economics of the North Korean Academy of Social Sciences,whom the author met during a September 2015 visit to North Korea, explained the new strategic
line as follows: “Building up nuclear capacity will enable us to reduce the money spent on
conventional forces. Investing 1 in nuclear capability will enable us to reduce conventional forcesby 1.5 to 2.” Another government representative hailed the fact that the military airfield in theprovincial city of Wonsan had also been opened up for commercial use (such as for tourism) as oneof the fruits of the new strategic line. The basis for these figures is tenuous and such arguments are
hard for Japanese people to accept, but both the USA and China have reduced troop strength andolder conventional weapons on the back of their nuclear capacity, so this is typically North Korean
logic.
However, at the same time, we should perhaps focus not only on the fact that North Korea istrying to rush headlong into its new strategic line on carrying out economic construction andbuilding nuclear armed forces simultaneously, but also on the situation within North Korea, which
believes the new strategic line to be a viable means of survival. We need to look at the political,
economic, and social situation within North Korea, which has declared this new strategic line, andhow this situation is changing.
For example, there is the issue of the falling birthrate and aging population, which is a concern
for North Korea as well. The troop strength of the Korean People’s Army has been estimated at
between 700,000 and one million, primarily ground forces, but will North Korea be able tomaintain this level if the number of children continues to fall at the same rate? Will it be able to use
its abundant, low-cost workforce as a weapon to attract foreign companies and achieve economic
development, in the same way as China and the countries of Southeast Asia have? Demographic
issues will have an impact not only on the economy and society, but also on national development
strategy and military strategy.
The aforementioned North Korean economist explained that North Korea aspires to be a “scienceand technology superpower” and pointed out that “it is vitally important to raise per capita
productivity; human resources will determine everything in the information industry age.” He alsoemphasized economic development that brings together the military and civilian sectors, saying,“Computers were initially developed for military purposes and were then introduced into thecivilian sector.”
Political, economic, military, and social problems are linked in every country. This is even more
the case in North Korea, which is physically only a small country, unlike China, for example, which,after embarking on the process of reform and opening up in the late 1970s, addressed questions ofJapan Center for Economic Research“Asia Research” Reportpolitical philosophy somewhat in isolation from the economic issues and problems affecting cities
and rural areas. When considering the North Korean risk, we must firstly analyze the issue from amultitude of angles, including the political, economic, military, and social perspectives. The
subsequent chapters will examine these individual themes in turn.

2. Japan and South Korea 50 Years after the Establishment of Diplomatic Relations(1) The Comfort Women Agreement and Issues Left Unresolved
In 2015, Japan and South Korea marked the 50th anniversary of the signing of the Treaty on
Basic Relations between Japan and the Republic of Korea on June 22, 1965, which establisheddiplomatic relations between the two countries. Over the last half-century, both the flow of people
traveling between the two countries and trade, investment, and other aspects of economic relations
had grown dramatically, and they had forged a close relationship in such areas as culture, tourism,and sport. The development of the relationship between these two democratic market economies
contributed substantially to the peace and stability of East Asia, as well as the economic
development of the region.
However, the governments of both countries saw in what should have been a year of celebration
in a mood that was far from jubilant. Political and diplomatic relations cooled amid disputes
concerning territorial rights over Takeshima (called Dokdo in South Korea) and historical issues, aswell as mutual distrust between political leaders. As a consequence, there was a deterioration in thepositive impression that the people of both countries had of each other and mutual distrust spread.
In November 2015, Prime Minister Shinzo Abe and President Park Geun-hye took the opportunityof the Japan-China-South Korea Summit in Seoul to hold their first bilateral summit meeting,which was actually the first time that the leaders of Japan and South Korea had met inthree-and-a-half years.
Factors behind the deterioration in Japanese-South Korean relations include structural issues in
the form of changes in their power relationship resulting from South Korea’s growth and a shift inthe balance of power in the Asia-Pacific region as typified by China’s ascendancy. However, thetwo countries cannot afford to let their political and diplomatic relationship stagnate. The nuclear
and missile threat posed by North Korea is growing and there is ongoing conflict between the USA
and China over the South China Sea and cyber-attacks. This was why the USA – an ally of both
Japan and South Korea – expressed concern over the deterioration in Japanese-South Korean
relations in the context of its Asian policy and President Obama himself sought to encourage bothleaders to mend their relationship.

Introduction: The North Korean Risk and Half a Century of Diplomatic Relations between Japan and South Korea

On December 28, with the end of the year in sight, Foreign Minister Fumio Kishida and South
Korean Foreign Minister Yun Byung-se held talks in Seoul and the governments of Japan and South
Korea reached an agreement that represented a “final and irrevocable resolution” to the issue of theImperial Japanese Army’s comfort women, which was the biggest outstanding issue between thetwo countries. Acknowledging the involvement of the Imperial Japanese Army, the Japanese
government stated that it was painfully aware of “responsibilities,” while Prime Minister Abe
expressed his “most sincere apologies and remorse.” It was decided that the South Korean
government would establish a foundation for the purpose of providing support for the former
comfort women, that the Japanese government would contribute about ¥1 billion to this, and thatboth governments would work together on projects in this area. Prime Minister Abe and President
Park confirmed the content of the agreement by telephone and the two governments at last laid thefoundations for an improvement in their relationship.
However, this agreement has not fully succeeded in extinguishing the embers of thedisagreement when it comes to the matter of the acknowledgment of legal responsibility, which theSouth Korean side had been seeking. Moreover, there will inevitably be a backlash from theJapanese side if the statue of a girl symbolizing the comfort women that was erected outside theJapanese embassy in Seoul is not moved, but the question of how to deal with this statue remains
unresolved. There is also a perception gap between Japan and South Korea when it comes to China,
and unstable elements remain in their political and diplomatic relations.
Dealing with North Korea is a matter of the utmost urgency. At the beginning of the year, after
North Korea carried out its nuclear test on January 6, 2016, the Japanese and South Korean leadersheld discussions by telephone the very next day and agreed to work closely together to ensure that
the UN Security Council adopted a resolution on sanctions. However, international politics takes
more than dogma and slogans. As neighbors in Northeast Asia, Japan and South Korea’s interests
should overlap in many areas when it comes to matters of security and economics, yet it would be
hard to say that there has been adequate coordination between them over the last few years when it
comes to their North Korean policies, which ought to be the very core of their relationship. It suits
North Korea perfectly for Japan, USA, and South Korea to be out of step with each other; the fact
is that, with Japan and South Korea negotiating separately with North Korea while their own
relationship was on shaky ground, it was not unusual for a sense of paranoia to arise between them.
Half a century after the normalization of diplomatic relations, there would be tremendous
significance in an in-depth discussion by the two countries of the risks associated with North Korea
over the next half-century, to examine measures to promote the peace, stability, and economic
development of Northeast Asia. As neighboring countries that share strategic interests, they need toJapan Center for Economic Research“Asia Research” Reportrebuild a relationship that enables them to hold in-depth talks and address issues of importance,even if some problems remain between them under normal circumstances.

Figure 1

70 Years Since the Korean Peninsula was Divided in Two(2) The Korean Peninsula at a Turning PointOn October 30, 2015, the Politburo of the Workers’ Party of Korea announced that it had decided
to convene the 7th Party Congress in early May 2016. This is the first time that the Party Congress,
which is North Korea’s supreme decision-making body, has been convened since the 6th Party
Congress was held on October 10–14, 1980. Due to economic difficulties, among other reasons, theIntroduction: The North Korean Risk and Half a Century of Diplomatic Relations between Japan and South Korea

Party Congress was not held at all during the Kim Jong-il era, so this will be the first time that it
has taken place under the Kim Jong-un regime.
The announcement states that the Politburo had decided to convene the Party Congress,“reflecting the demand of the party and the developing revolution that witness epoch-making
changes in accomplishing the revolutionary cause of Juche, the cause of building a thrivingsocialist nation.” As such, there is a possibility that the Kim Jong-un regime might reveal newpolicies on domestic affairs and foreign relations, as well as rolling out new economic policies. It is
anticipated that, while stressing his determination to continue the teachings and traditions of Kim
Il-sung and Kim Jong-il, Kim Jong-un will seek to make this a major event that heralds the adventof the “Kim Jong-un era” and there is a strong possibility of large-scale personnel changes. The
possibility of further provocation in the wake of the nuclear test, sometime around the Party
Congress, is undeniable, given that November will see the presidential election in the USA, whichis the country of most critical importance to North Korea from the perspective of foreign relations
and security.
What kind of risks does the process of succession and change about to take place in North Korea
hold for us? And what kind of opportunities could it bring about? The transfer of power from Kim
Jong-il to Kim Jong-un has been comparatively smooth and North Korean nuclear test missile
launches are no longer unusual, so interest in North Korean issues is dwindling in some quarters.
Although the Tokyo and Seoul markets saw some moves to avert risk when the North Korean
nuclear test was reported on January 6, 2016, it did not trigger as much activity as problems in the
Middle East or the economic slowdown in China. It is vital to react to such developments calmly,
gathering plenty of information. We must not panic or overreact. However, it is also dangerous tobecome desensitized to such actions and to treat them as routine. Even if this nuclear test did not
involve a hydrogen bomb as claimed by North Korea, repeated nuclear tests and missile launches
are steadily raising the risk to surrounding countries.
Things that we thought we had anticipated can go beyond our expectations before we know it.
Consequently, the time when the status quo is changing significantly is when the danger is greatest.
As well as the parties directly concerned, namely South Korea and North Korea, countries such as
the USA, China, Russia, and Japan have an impact on the Korean Peninsula, so the situation there
is based on maintaining a precarious balance between major countries. If that balance were to be
upset due to a change in the situation, something terrible could occur. As such, the North Korea
issue is one of the biggest destabilizing factors in East Asia and the impact of moves by North
Korea on both the regional situation and international politics could be incalculably huge. It is not
only military force that brings about changes in a situation. We must also look closely at political,

Japan Center for Economic Research“Asia Research” Reporteconomic, and social changes. This is why we are entering a period in which research focused on
North Korea will be more important than ever before to us as citizens of the same region.

References

Atsushi Ijuin (2015) “Kitachōsen jirenma kakae keizai kaikaku tesaguri――Zōsan mezashi,kōgyō/nōgyō de jishuken kakudai” [Facing a dilemma, North Korea gropes its way toeconomic reform――Expansion of autonomy in the industrial and agricultural sectors, withthe aim of boosting production] Japan Center for Economic Research Staff Report
http://www.jcer.or.jp/mainte/preview/report/researcher/detail4933.html―――― (2015) “Gaishi yūchi, Genzan―Kumugansan no kankō kaihatsu ni shōjun―shikōsakugo
no kin’yū kaikaku Shinrai kaifuku ga saidai no kadai” [Wonsan seeks to attract foreign
capital―Sights set on tourism development at Mount Kumgang―Economic reform by trial
and error Restoring trust is the biggest challenge] Japan Center for Economic Research Staff
Reporthttp://www.jcer.or.jp/mainte/preview/report/researcher/detail4934.html
Korean Central Yearbook
Atsushi Ijuin (2015) “FLIRTING WITH CHANGE――Pyongyang comes as close as it dares toeconomic reform” NIKKEI ASIAN REVIEW (Nov. 30―Dec. 6, 2015 / No.104)
http://asia.nikkei.com/magazine/20151126-Asia-300-Companies-to-watch/Politics-Economy/In-an-economic-bind-Pyongyang-dances-around-reform?page=1―――― (2015) “ROOMS AVAILABLE――Desperate for foreign investment, Pyongyang targets
tourism”

NIKKEI ASIAN REVIEW (Dec. 21―27, 2015)

http://asia.nikkei.com/magazine/20151217-ASEAN-ECONOMIC-COMMUNITY-REALIT
Y-CHECK/Politics-Economy/In-need-of-foreign-funds-North-Korea-courts-tourists?page=1

Introduction: The North Korean Risk and Half a Century of Diplomatic Relations between Japan and South Korea