Tyrant’s Leverage Wanes Without Cognac Pipeline

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Nov. 9 (Bloomberg) -- One would be hard-pressed to accuse South Korea’s Park Geun Hye of holding a grudge.

The presidential candidate wants to meet North Korean leader Kim Jong Un to improve relations if she wins next month’s presidential election. That’s mighty big of Park, considering North Korean agents killed her mother in a 1974 assassination attempt on her father when he led the South. It’s also a heartening sign for this increasingly unhinged world of ours.

Park, 60, is the ruling party’s nominee and outpolling two challengers. Victory is far from certain, though, thanks to the plunging popularity of fellow party member President Lee Myung Bak. Being the standard-bearer of a party hobbled by scandals and a failed hard-line stance on North Korea is proving damaging ahead of the Dec. 19 ballot. Also, Park’s two opponents, Ahn Cheol Soo and Moon Jae In, are now joining forces against her.

Yet Park’s olive branch may inspire more creative and specific North Korea policies and lay the groundwork for a formal detente. She wants to open offices in the two capitals of Seoul and Pyongyang to improve communication, form a crisis-management bureau to centralize control over national security, diplomacy and unification issues, help North Korea join global financial and trade organizations, and promote foreign investment in the totalitarian state.

Global Spotlight

If she succeeds it will have implications for the U.S., where North Korea was barely mentioned by President Barack Obama or challenger Mitt Romney during their recent campaigns. One of the best things about Romney losing is that John Bolton will stay in the private sector. The thought of Bolton, George W. Bush’s United Nations ambassador and prominent North Korea hawk, playing a key role in a Romney White House had me losing sleep. Of course, Obama hasn’t paid enough attention to peace on the Korean peninsula.

Obama has a full plate of international flashpoints, from Iran’s nuclear objectives to an ambitious China and a teetering Europe. But it would be a grave mistake not to put North Korea high on America’s to-do list. Sanctions only go so far. A second term affords Obama a chance to place this issue in the global spotlight.

Reaching out to the late Kim Jong Il, who ruled North Korea until his death last December, bore little fruit for the administrations of Bill Clinton, Bush or Obama. Nor did Lee’s predecessors, Roh Moo Hyun and Kim Dae Jung, get much mileage out of visiting Pyongyang. And it might be awkward to see veteran lawmaker Park negotiating with an untested dictator believed to be less than half her age.

But the world confronting North Korea today is very different from that a just a few years ago. In the age of GPS tracking systems and military drones, it’s becoming ever harder for the Kim Dynasty to conduct its favored businesses -- weapon sales and counterfeiting. Printing fake $100 bills is easy; transporting them in sufficient quantity isn’t. The same goes for military hardware.

Sanctions have deprived the Kims of their currency of choice: luxury goods. They long bought the loyalty of generals and party bigwigs with Mercedes sedans, Rolex watches, Tiffany rings, Chanel perfumes, flat-screen televisions and pricey cognac.

Enter Kim Jong Un, who took over upon his father’s death. He’s been no slouch in the provocation department, rarely missing a chance to threaten war. But then, it is what he must do. The only way Kim can hold off the trigger-happy generals looking over his shoulder is to show he is as macho as his dad. Let’s just not miss the growing signs the Swiss-educated Kim may differ.

Pyongyang’s Skyline

Take Pyongyang’s skyline. Kim is letting German hotel operator Kempinski AG open one of the world’s tallest hotels, a 105-story, pyramid-shaped monstrosity that was started in the 1980s and never completed. Welcoming the luxury-hotel manager is an attempt to court more overseas visitors. That isn’t a step Kim’s predecessors would have had the confidence to take.

Earlier this year, Japan’s Mainichi newspaper reported that Kim supports trying new strategies “whether they are from China, Russia or Japan.” Domestic media reported that Kim said the North’s fossilized industries must catch up with global trends. This, too, marks an abrupt change in Kim-family philosophy.

Then there are the quirkier hints, like hosting a Walt Disney-themed extravaganza in Pyongyang and appropriating rapper Psy’s hit “Gangnam Style” to tart up propaganda videos. Kim has been shown smiling and breezing around town with his stylish, young wife who news reports say may be pregnant -- the kind of things you might not have time for if you are planning to launch nuclear warheads.

The strategies his family used to retain power are less available to Kim the younger. He must have noticed how quickly Myanmar traveled from pariah state to investment darling when the government relaxed its iron grip. He sees China becoming a less-enthusiastic benefactor. And surely he is hearing that South Korea’s next leader may be more inclined to approach the North’s 24 million people with carrots than sticks.

It’s interesting that South Korea’s finance ministry, perhaps sensing an opening with a less belligerent Kim at the helm, chose this year to conduct a research project on the costs and benefits of joining with the North. It is a timely sign that not all of Lee’s team is holding a grudge. Nor, with any luck, will Korea’s next leader.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)

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To contact the writer of this article: William Pesek in Seoul at wpesek@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net