You'd think the prospect of a resolution to North Korea's quest for nuclear weapons, a geopolitical risk with heavy economic implications for Asia, would have touched off a regionwide stock rally on Feb. 13. After all, wire-service reports and cable networks such as CNN had been signaling all day that some sort of deal had been brokered in Beijing, where the latest round of six-party talks with Pyongyang was unfolding.
Yet the drama in Beijing barely registered with global investors, who have long grown used to fits-and-starts developments in the diplomatic dance by the U.S., China, Japan, South Korea, and Russia to convince North Korea to back off from its nuclear weapons ambitions. "Show, don't tell" seemed to be the operating principle at work in the Asian financial markets.
That's not to say that, on paper at least, the outline of the agreement announced in Beijing doesn't look promising. Some observers who follow the twists and turns of these things are actually encouraged. North Korea "will shut down and seal for the purpose of eventual abandonment the Yongbyon nuclear facility" and a plutonium reprocessing plant there, and invite back International Atomic Energy Agency (IAEA) inspectors to look around, according to a joint statement issued by the six-party group.
Less Confrontational Talks
In exchange, North Korea will get an initial emergency energy assistance of 50,000 tons of heavy fuel oil while the U.S. and Japan will open up bilateral talks with Pyongyang leading to an eventual normalization of relations. In addition, all parties will explore economic assistance to North Korea and all the key aspects of the deal are supposed to be set in motion in the next 60 days.
In South Korea, which would be on the receiving end of any outbreak of hostilities with North Korea, there was definitely some cautious optimism about the day's events. Paik Hak Soon, a North Korea specialist at the Sejong Institute, an independent security think tank, thinks a less confrontational approach by the Bush Administration made a critical difference in getting Kim Jong Il's regime to make a deal.
"Finally, steps have been taken toward a thaw in the nuclear logjam in the Korean Peninsula," says Paik, who thinks Bush gave Secretary of State Condoleeza Rice and Assistant Secretary of State Christopher Hill the running room to convince Kim's government the U.S. wasn't intent on regime change—and the message seems to have been received on the other end. "This was possible because the leaders in both the U.S. and North Korea have political willingness to seek a resolution."
Made to Be Broken?
While China, which supplies massive amounts of oil and food to North Korea, is thought by some to have the most leverage over Kim, Teng Jianqun, deputy secretary general of the China Arms Control & Disarmament Assn. in Beijing, also thinks a shift in U.S. approach made a big difference. "This is an achievement of compromise, especially by the U.S. and North Korea."
But will any of this hold? The track record of U.S. and foreign engagement with Pyongyang isn't encouraging. North Korea signed a similarly ambitious deal back in 1994 and pledged to give up its nuclear weapons program, but later reneged. (Kim's government says promised economic and energy development never materialized.)
Also, the compromises made in Beijing by six-party members will receive some blistering criticism back home. Bush is sure to come under fire from hawkish national-security Republicans who will think the U.S. gave away too much to strike a deal that may be dead a year from now. Similarly, Japanese Prime Minister Shinzo Abe is under heavy domestic pressure to have North Korea make restitution for its abduction of Japanese citizens in the past. Both could trip up talks to normalize relations with North Korea.
Years of Work Ahead
On top of all that, just consider a few of the thorny issues that lie ahead. There is no guarantee that IAEA inspectors will truly be allowed unfettered access to North Korean nuclear labs and processing plants—or that Kim's government will hand over any of the nuclear weapons the U.S. Central Intelligence Agency believes Pyongyang has already developed.
All that, plus the U.S. living up to its pledge to hold talks with North Korea and then gain approval back home to establish full diplomatic relations with Kim's regime and remove its designation as a terrorist state, will take years. "The agreement is significant without any doubt, but it would be premature to think a solution is within reach," says Choi Kang, security specialist at South Korea's state-funded Institute of Foreign Affairs and National Security.
In fact, he sees a multiyear effort that will carry on beyond Bush's term in office. So, in the end, the market reaction in Asia was probably just about right. This is far from the final curtain in the North Korea drama. More likely, it's just another episode in a multiact play that is likely to carry on well into the future.