The Cheonan Incident

The Cheonan incident has emerged as a potentially major gambit in South Korean President Lee Myung-bak’s efforts to distance his country from China, establish it as America’s full geopolitical partner in North Asia, and substitute the United Nations Security Council for the six-party talks as the primary venue for international engagement-cum-confrontation with North Korea.

China, for its part, apparently prefers that the Cheonan incident does not impede the current movement toward economic integration with South Korea.

As for the United States, it welcomes a manageable security crisis in North Asia. If the issues are economic, the US is on the outside looking in. But when North Korea misbehaves, the 7th Fleet, 29,000 troops in South Korea, and US shuttle diplomacy look like essentials, not anachronisms.

Even so, the Barack Obama administration is moving cautiously, happy to assert its indispensability but trying not to upset the Asian applecart.

Meanwhile, North Korea, the alleged perpetrator of the Cheonan outrage, is almost lost in the shuffle – although its post-Kim Jong-il future is probably the key factor underlying the calculations of Beijing and Seoul in their handling of the affair.

Increasingly, North Korea does not represent a threat. Instead, it represents East Asia’s last frontier, an untapped treasure-house of human and mineral wealth to be exploited by the regional and world powers that are able to guide its integration into the global economy.

The Cheonan incident remains rather murky. The investigative team claims evidence of North Korean responsibility is indisputable. However, the bizarre circumstances of the attack, even when viewed in the context of North Korea’s opaque security doctrine and chaotic command and control structure, provide ample grist for skeptics.

What is indisputable is the determination of the Lee Myung-bak administration to exploit the geopolitical opportunity presented by the sinking.

Beyond using the incident as a 9/11-type opportunity for galvanizing public opinion in favor of his administration and policies in the run-up to local elections – and unleashing a full-court media and legal effort to rebut, sideline, intimidate, and even sue critics of the Cheonan investigation – Lee is using the security crisis to build a consensus favoring its longstanding desire to confront North Korea and strengthen his nation’s strategic alliance with the US as a counterweight to China’s growing economic influence.

One of the first orders of business is, not surprisingly, an arms buildup that will give South Korea the enhanced ability to retaliate against the North without reference to US geopolitical qualms.

A major increase in defense spending – a long-held ambition of the current government – is being justified by, in the words of the Wall Street Journal, “the lethal effectiveness displayed by North Korea’s mini-submarine fleet” in a brazen exercise of asymmetric warfare that undercut the credibility of the US deterrent.

The Journal tells us:

“We need to have our own ways to threaten North Korea,” said Kim Tae-woo, a South Korean defense expert who sits on one of two committees Lee has established to assess Seoul’s military preparedness.

North Korea’s decrepit fleet of diesel submarines may find new peril in a muscled-up South Korean military, but China will also find much to chew on.

Lee has explicitly organized his foreign policy around the concept of obtaining acknowledgement of South Korea as a leading regional power, an alternative to China as an Asian economic and social model, and a valued American security partner in North Asia.

South Korea’s appeal to the US has been significantly enhanced by the serial ineptitude of the hapless Japanese government under the Democratic Party of Japan’s (DPJ) Yukio Hatoyama, who resigned on Wednesday.

Committed to establishing Japan as an independent actor in international diplomacy, Hatoyama’s government had antagonized the US by committing to negotiate the relocation of the US Marine base at Futenma off the island of Okinawa. In another display of geopolitical waywardness, Japan lurched away from the US and toward China in late 2009, its shifted emphasis symbolized by a gigantic, 600 person delegation dispatched to Beijing under the leadership of the DPJ kingmaker and former secretary general, Ichiro Ozawa, who stepped down on Wednesday.

Meanwhile, Lee repositioned South Korea away from the pro-unification/anti-US policy of his predecessors. He has made his case for South Korea as a key factor in Washington’s security equation and backed off from the decision of the previous administration to remove forces from US operational control as a statement of the nation’s independent security policy.

The fates of the dueling free trade agreements with China and the United States illustrate Lee’s calculations.

China has been pushing for a free trade agreement in order to further integrate the South Korean and Chinese economies on the basis of the current $200 billion annual two-way trade and investment flows.

South Korea, which has protected-agriculture issues similar to those that have bedeviled trade negotiations with Japan, has determinedly slow-walked negotiations for years.

The Japan/China/South Korea summit at Jeju, which was examined obsessively by the media for Chinese statements on the Cheonan incident, was actually an economic summit which produced a rather empty-looking agreement to form a commission to study a free trade agreement.

At the same time, Lee has been lobbying the United States aggressively to pass the “KORUS-FTA” – the Republic of Korea-United States Free Trade Act.

During his visit to Washington in April, the South Korean president touted the geopolitical advantages of the deal in an interview with the Washington Post’s Fred Hiatt:

For us, the FTA is not just simply a trade agreement or an economic agreement. It really is much more than that. And I think the KORUS-FTA will also play a very important part of the Obama administration’s new Asia policy as well.

Like I said before, the United States is very determined to reengage with the Asian region, and I fully welcome that. And there is a role that the Americans must and should play in this region. And I say the KORUS-FTA will have a positive benefit for the Asian region as a whole because of the China factor. Because when we look at China, China’s influence in the region, both militarily, economically and otherwise, is growing rapidly, and this is something that we will all have to take into consideration. And with the passage and implementation of the KORUS-FTA, the US role in the Asian region will be much more specifically defined, and I think it will be a very positive aspect when we take into consideration everything, including the China factor.

The Chinese government would be expected to question the sincerity of South Korea’s negotiating posture based on the following passage from the same interview:

And also another point I’d like to raise is that we hope that the KORUS-FTA will be implemented before our FTA with either China or the European Union. Because this will have a direct impact on whether American consumers and Americans will be able to create jobs and reap the benefits of the passage of the FTA. Because, again, the US Chamber of Commerce has released the report saying that the KORUS-FTA must be passed before Korea passes its agreement with either China or the EU [European Union] in order to reap the maximum benefits.

America’s right-wing commentariat is enthusiastic about KORUS-FTA. The Obama administration is not.

Beyond the desire to protect the unionized employees of American auto manufacturers from Korean competition – and the well-founded suspicion that a free trade agreement would simply exacerbate the US-Asia trade headache (South Korea currently enjoys a $45 billion annual trade surplus with the US, bigger than Japan’s) – the Obama administration apparently still believes that its North Asian interests and global interests are not necessarily served by trying to repurpose South Korea as an anti-Chinese bastion.

That role is traditionally played by Japan, which is locked in a zero-sum economic battle with China and highly suspicious of Chinese military motives. The US forward military presence in Japan pre-empts Japanese rearmament, reduces the incentives for a regional arms race, and is welcomed by many regional actors including, perhaps, China itself.

The DPJ government is now in full retreat from its original non-aligned strategy. It aroused Chinese ire by tweaking Beijing on the issue of its nuclear arsenal, then leaked the news of Foreign Minister Yang Jiechi’s rage to the international press to gain desperately needed political and diplomatic capital.

Instead of moving the US Marine air base off Okinawa, Hatoyama clumsily and without reference to his cabinet reaffirmed the pro-US deal negotiated by the previous Liberal Democratic Party (LDP) government that keeps it on the island, to the dismay of Hatoyama’s coalition partners and the disgust of the Japanese electorate.

It appears inevitable that the successor to the Hatoyama government will remain committed to the US alliance.

The Obama administration may be somewhat beguiled by the vision of Korea rising, but it remains committed to the Japanese alliance and is doubtless wary of Seoul’s growing desire to assert itself militarily – a recapitulation of threats by previous LDP governments in Japan to unleash the Self-Defense Forces.

It is also aware that, for the time being, China is still the economic and military powerhouse in the neighborhood, and has hedged its bets accordingly.

Therefore, US diplomats have supported South Korea’s call for punishment unequivocally.

However, at the same time, Washington has resisted calls to push China into a corner by demanding it endorse the Cheonan findings or else risk international ostracism.

For its part, China has unsuccessfully attempted to to defuse the crisis and handle it as a regional issue within the context of the six-party talks in which its role is pre-eminent, and promote business as usual.

However, Lee does not appear interested in handing the regional initiative to Beijing, and the six-party talks appear to be the primary diplomatic victim of the Cheonan sinking.

The incident reportedly derailed a bilateral meeting between North Korean and American negotiators in Washington that would have led to the resumption of the Six Party talks on denuclearization – talks which the current South Korean government ostensibly welcome but have done little to advance.

Instead, South Korea has seized center stage as the injured party, replacing North Korea as the government whose priorities and sensibilities have to be acknowledged by the international community.

Concurrently, South Korea’s claims to importance as a world power – and key US ally – are enhanced by Lee’s so-far successful insistence that the Cheonan incident be elevated to the UN Security Council, a US-friendly venue where China routinely backs down on matters of importance to the West to avoid diplomatic isolation.

Under ordinary circumstances, China would be expected to keep its head down and wait for the economic logic of its relationship with South Korea to reassert itself.

The wild card that could upset the regional calculus is how the Korean peninsula will look if and when North Korea gives up the ghost – an increasingly likely scenario.

Given the growing wealth of its neighbors and the level of international commitment to rescuing the people of North Korea from the economic mismanagement of their leaders, the “massive costs” and “flood of refugees” obstacles to reunification appear less and less daunting.

Lee’s “Vision 3000” reunification policy – an assisted suicide program for the North Korean regime predicated upon it opening up its economy to foreign aid and investment while delaying integration until North Korean per capita incomes had roughly tripled to US$3,000 – has started to generate some investment bank heat.

South Korea’s latest Vision 3000 video-conference pitch was hosted by Goldman Sachs.

A high tech trends website, h+, breathlessly spun the latest reunification scenario: it will pay for itself! With “change left over!” Just like Iraq!

More arithmetic for you:

The Rand Corporation estimates the cost of Korean reunification at $50 billion, Credit Suisse insists $1.5 trillion is the expense, and Stanford fellow Peter M. Beck posits an alarmist $2-$5 trillion.

Question: Who’s got that kind of cash?

Answer: North Korean mines. 360 minerals are sequestered in the Hermit Kingdom’s caves, many trapped by flooding and NK’s [North Korea’s] appalling infrastructure. Billions of tons of coal, iron, zinc, magnesite, nickel, uranium, tungsten, phosphate, graphite, gold, silver, mercury, sulfur, limestone, copper, manganese, molybdenum… worth an estimated $2-$6 trillion (Goldman Sach’s figure is $2.5 trillion). Reunification could be entirely paid for by these mines, perhaps with change left over.

It appears that Lee would prefer to treat northern Korea as the low-wage, resource-rich hinterland that powers the West-oriented-export economy of a united and pro-US Korea – rather than China’s Shandong. China would also prefer an independent or at least autonomous successor regime with an Asian-authoritative tinge to arise in Pyongyang under Beijing’s tutelage, one that would not look to Seoul for advantage – or enhance South Korea’s military heft and diplomatic pretensions in the region.

South Korea’s well-advertised reunification-related hesitations may have less to do with the genuine financial and social burden of taking immediate responsibility for 23 million citizens of a failing state. It may be down to the vulnerability of the current political system system, particularly its ruling party, to a “flood of voters” – voters supposedly indoctrinated with a hatred of Lee – that immediate reunification would bring.

What matters to South Korea today is, by this analysis, making it possible for post-Kim Jong-il’s North Korea to pass into some form of pro-Western international receivership that guides its steps toward liberal democracy and eventual integration into the South Korean economic and political system on the most advantageous terms to Seoul.

Reportedly, China is concerned that reunification managed by Seoul and the West will send North Korea, its large population, its rich resources, its loyalties – and its soldiers – into the arms of the South.

In the unlikely event that the North Korean army was absorbed en masse into South Korea’s armed forces, a reunited Korea would have 10 million soldiers under arms – more than China.

This would not appear to be a future that China is prepared to promote, let alone subsidize by underwriting Lee’s Vision 3000 program.

However, if Lee succeeds in pushing the Cheonan incident up to the UN Security Council, there exists the potential to put North Korea’s entire future in play on US and South Korean terms.

As prospects for prolonging the status quo under Chinese auspices dwindle in the wake of the Cheonan sinking, the United States may find the prospect of Korea rising – a unified, vigorous, and economically vibrant regime replacing Japan as China’s primary pro-US antagonist in the region – increasingly attractive.

PETER LEE is a business man who has spent thirty years observing, analyzing, and writing on Asian affairs. Lee can be reached at peterrlee-2000@yahoo.

A version of this article appeared in Asia Times.





Peter Lee is creator of the Patreon Peter Lee’s China Threat Report.