Building Relationships and Trust Across the Korean Peninsula - Dr Michael Schluter and Dr Jeremy Ive
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Building Relationships and Trust Across the Korean Peninsula A Mutually-agreed Economic and Social Convergence Strategy Dr Michael Schluter and Dr Jeremy Ive Korea Position Paper No 1 • November 2019
Contents
Foreword 3
Executive summary 4
1 Background and context 6
2 The necessity of a Mutually-agreed Economic
and Social Convergence strategy as a
foundation for peaceful unification 11
3 Understanding how relationships are
built systematically 14
4 Outline of a possible process for mutually-
agreed economic convergence 17
5 Why mutually-agreed values and goals
would be needed to achieve economic Dr. Michael Schluter is President
convergencefor different sectors 23 and CEO, and Dr. Jeremy Ive is
Senior Advisor, of Relational
Peacebuilding Initiatives:
6 How mutually-agreed social convergence www.relationalpeacebuilding.org
can be achieved 28 which is established as a Swiss
Association in the Canton of Geneva,
with its research arm in Cambridge,
7 Conclusion: obstacles and opportunities 30 UK.
The authors are grateful to the
UniKorea Foundation for financial
support for the writing of this paper.
They are also grateful to a number
of colleagues who contributed to
earlier drafts of this paper.
2Foreword
The purpose of this research has been to seek and identify a framework for a Parallel
Track of discussions to run alongside the present negotiations about denuclearisation
of the Korean Peninsula.
Along with many Koreans from both DPRK and ROK, the authors hold a view that it is only
Koreans themselves who can and should identify a process by which they can build trust over
a number of years, build closer economic and social cooperation, and thus alleviate tensions
in DPRK’s relationship with the US. We understand the role of the international community as
being to facilitate and support whatever process they decide upon, as well as to ensure it does
not directly or indirectly increase tensions by fuelling further risk of nuclear exchange.
This paper is presented by RPI for consideration
by DPRK and ROK, as well as by the international
community. It is a product of numerous meetings with
experts on the economy and society of both DPRK and
It is only Koreans
ROK, as well as many articles, books and papers on the themselves who can
Korean Peninsula published globally over last 20 years.
There are, perhaps inevitably, still significant gaps in
and should identify a
the authors’ understanding, but they would like to process by which they
thank all those who have contributed to developing
their grasp of the complex situation which has enabled
can build trust over a
them to present these proposals as a possible way number of years, build
forward.
closer economic and
The authors would also like to thank all those who social cooperation, and
have so generously given their time to refine the ideas
presented in this paper in its earlier draft, especially
thus alleviate tensions in
interlocutors from both North and South Korea and DPRK’s relationship with
those who participated in seminars in both Cambridge
and Seoul. It would be invidious for us to mention
the US.
some and not others among these many generous
individuals.
Readers are invited to give feedback to the authors through the RPI website. It may not be
possible to acknowledge all contributions, but our intention is all will be read and considered.
Mistakes and errors in the paper are the sole responsibility of the authors.
Michael Schluter and Jeremy Ive
Cambridge, UK, November 2019
3Executive summary
It is the view of RPI that there can be no solution to the denuclearisation issue without
first building relationships and trust, both between DPRK and ROK, and between DPRK
and the US. The solution suggested here is a Mutually-agreed Economic and Social
Convergence (MESC) strategy gradually extending across all major economic sectors,
and including substantial opportunities for greater social interaction.
There has been relatively little discussion on ways forward to resolve the standoff between
DPRK and the international community other than how denuclearisation could be achieved.
However, since DPRK’s nuclear programme was its only point of leverage with the US and
the international community, perhaps it was not surprising that after the Hanoi Summit,
further discussion about denuclearisation has proved difficult. This has left a void in regard
to the way forward. The MESC strategy in this paper is put forward as a proposed parallel
track for dialogue between North and South Korea; we further propose that it is described as
a Mutually-agreed Economic and Social Convergence strategy to underline the importance of
both parties agreeing to the strategy for each sector to avoid any accusations of dominance by
one over the other.
There is some difference in perspective among those
Mutually-agreed familiar with the Korean situation about how urgent
it is to start a parallel track of discussions. Some
Economic and Social believe the status quo in the Peninsula is likely to
Convergence is a process continue for at least another 25–30 years, with or
without denuclearisation. The view of this paper,
bringing two economies however, is that due to the pressure of sanctions and
closer together so that changing attitudes within DPRK, the change may be
expected much sooner than many anticipate, so to
they have shared goals, start a parallel process to ensure a peaceful transition
policies and priorities for is urgent.
a shared future. Mutually-agreed economic and social convergence
does not mean total integration of the two economies.
Rather, it is a process bringing two economies closer
together so that they have shared goals, policies and priorities for a shared future. This is a
particular challenge in the Korean context because DPRK and ROK have distinctive approaches
to both economic and social organisation.
Perhaps the greatest challenge to achieving shared goals across the economy, and public
services such as education and healthcare, will be to identify a framework of shared values.
RPI’s previous work in peacebuilding since 1986, and initiatives that have been launched
through the family of organisations of which it is a part, suggest that a focus on relationships,
in tune with Korean traditional values and those of faith communities, can provide the basis
for such shared values.
4Executive summary
This paper suggests a strategy to achieve economic convergence, including a series of
consultations over five years, to agree goals and priorities for the agricultural, industrial and
service sectors, a donor conference where DPRK and ROK can jointly present their investment
priorities to the international community, leading on to project implementation.
North and South Korea will want to implement and control the social and economic
convergence process. To succeed, the international community will need to be prepared to give
exemptions to the sanctions regime which is currently severely damaging the DPRK economy.
The proposal of this paper is that these exemptions should be given exclusively to ROK, for
inter-Korean trade, rolled out on a carefully targeted and sector-specific basis, to increase
economic interdependence and build a multitude of relationships driven by commercial
opportunities and shared humanitarian concerns.
To give such exemptions, the international community is likely to require certain conditions
which need to be kept as simple and straightforward as possible. This paper explores
possible conditions which might be appropriate; these are not intended to be prescriptive or
exhaustive.
Economic interdependence will not entirely satisfy the necessary conditions for discussion
about political unification. In addition, there needs to be growing opportunities for North and
South Koreans to live in close proximity, and learn how to live together in harmony despite
the very different ideas governing the last 70 years of their experience. There are various
possibilities for systematic capability exchange. This paper proposes as one possibility how
up to 50,000 North Koreans could study in South Korean universities, while 50,000 South
Koreans could live in DPRK and contribute to its economic development. Of course, it would
need to start on a smaller basis in the first few years to allow DPRK and ROK to put appropriate
security arrangements in place.
This paper also explains why the international community, including the US and China,
may be expected to support this approach. DPRK has demonstrated its nuclear and missile
capabilities; it is better to provide a constructive way forward to end its international isolation
and remove the motivation for its nuclear weapons programme. For ROK, opening up its
economic relationship with DPRK offers future economic growth and an end to its military
insecurity; for DPRK, the MESC strategy offers an attractive and positive way forward from its
current economic crisis resulting from the severity of the sanctions regime.
The obstacles to achieving a unified Korea are great, but so are the opportunities, to end over
seventy years of mistrust and hostility. A unified Korea could provide an example to the world
of how trust can be rebuilt and deep-seated conflicts can be resolved.
51 Background and context
Recent history has demonstrated that the Korean question cannot be settled on a
zero-sum basis; there needs to be a win-win solution. Peace needs to be reinforced
negatively by removing the danger of nuclear conflict, but also positively by putting in
place building blocks which can unify the economies of the two Koreas; the aim is for
them to cooperate on the basis of mutual trust and parity of respect and participation.
Attempts at a bilateral approach with the inter-Korean sunshine policies of 2000 and 2007,
including the inter-Korean summits of those years, have been seen as flawed because they
were overly dependent upon ROK providing inducements in cash or kind capable simply of
being accepted by DPRK with only limited and very fragile benefits. One example of this was
the development of Mount Kumgang tourist facility which ended tragically with the death
of a South Korean tourist in 2008. Since then, the flow of tourists from ROK has been halted.
Another is Kaesong Industrial Region (KIR) or Kaesong Industrial Zone (KIZ) opened in 2002
and finally closed ‘temporarily’ by ROK because of perceived DPRK provocations, including a
satellite launch and a suspected hydrogen bomb test in January 2016.
The inter-Korean summits of 2018, both those at
The Korean question Panmunjom and Pyongyang, have been more successful
in that the declarations set in train cooperation in
cannot be settled on a the areas of transport and forestry. The return of the
zero-sum basis; there remains of fallen soldiers and the dismantlement
of guideposts and the clearing of some minefields
needs to be a win-win has helped to provide some momentum towards
solution. the cooperation needed to build the necessary trust
between the two Koreas. However, the sanctions
imposed upon DPRK have not allowed cooperation to
develop beyond this rudimentary stage. Any peace in the Peninsula needs to be set within its
wider international context.
US interests
The US retains a dominant role in the Peninsula with a garrison of some 28,000 military
personnel in South Korea, and a further 50,000 in Japan as part of a powerful alliance with
both countries. South Korea and Japan have highly sophisticated defence (or in the case of
Japan ‘self-defence’) forces. Moreover, the highly-advanced economies of both countries,
together with that of Taiwan, are vital economic alliances for the US. The US will not easily let
go its influence in the region, although the cost of maintaining such a considerable military
establishment there needs to be set against the benefits it obtains from its presence. This cost
would be amplified were the Peninsula to be engulfed in a nuclear conflagration, or should it
spiral into chaos.
Direct military intervention by the People’s Republic of China (PRC) in DPRK would also
threaten the security of the US in that it might put at risk the supply of vital components
necessary for the application of advanced computer technology. This is because Seoul, which
61 Background and context
lies close to DPRK’s southern border, is a vital source for the manufacture of silicon chips
required by the US, along with those produced in Taiwan.1
The current moratorium on DPRK’s nuclear programme has been presented as largely a
voluntary act as DPRK has claimed that since November 2017 it has demonstrated its ability
to strike anywhere on the US mainland with nuclear effect; therefore, it no longer needs
to continue its nuclear weapons tests, be it the testing of nuclear warheads on the one
hand, or the launch of missiles capable of carrying a nuclear payload on the other. This
has not been sufficient to satisfy US concerns, and is likely in itself not to do so despite the
decommissioning of key facilities by DPRK including the Punggye-ri nuclear testing site and
others.
In 2018, a cautious process of détente was initiated For the People’s
between the US and DPRK culminating in the summit
meeting between US President Trump and DPRK
Republic of China, a
Chairman Kim in Singapore on the 12th June 2018. This unified Korea would
took forward the Panmunjom summit between ROK
President Moon and Chairman Kim at Panmunjom
provide a secure
on the 27th April of that year in which the two Koreas economic base to ensure
agreed to hold dialogue and negotiations ‘in various
fields’ and establish a liaison office in Kaesong. This
the stability of the
was followed by an abortive further summit in Hanoi Peninsula.
which foundered on the question of denuclearisation.
The process has been retrieved somewhat by the surprise meeting at Panmunjom of President
Trump and Chairman Kim on the 30th June 2019, orchestrated with the support of President
Moon. The fact that these discussions took place in the Demilitarized Zone (DMZ) between
DPRK and ROK, and that President Moon was invited by President Trump and Chairman Kim
to join the discussion on that day, perhaps marked a seismic shift from bilateral to trilateral
discussions about the future of the Peninsula. It symbolically expressed commitment to the
peace process, confirmed by what may come to be seen as a highly significant handshake
between President Trump and Chairman Kim. This was preceded by a cordial exchange of
letters between President Trump and Chairman Kim, which the latter indicated contained
a proposal which he would ‘seriously contemplate’. There was also the prior indication by
Special Representative Stephen Biegun that the US administration was prepared to engage in
dialogue with Pyongyang to make ‘simultaneous and in parallel progress’ towards the goals
agreed to by the two leaders in Singapore. It is not yet clear what all of these signals refer to.
1 According to a recent article in The Economist, Seoul, which lies close to DPRK’s southern
border, is the vital centre for the manufacture of the most advanced silicon chips, alongside those
produced in Taiwan, which are of strategic importance for the defence and other industries in the
United States. See economist.com/leaders/2018/12/01/chip-wars-china-america-and-silicon-
supremacy.
71 Background and context
People’s Republic of China
PRC is a key player in the region, and its ambivalence towards sanctions against DPRK is
a major reason why a sanctions-alone policy is unlikely to be one which PRC can accept
indefinitely, or allow to produce regime change. PRC cannot afford to have a failed state on
its doorstep, with the concomitant prospect of a massive flow of refugees north across the
Yalu and Tumen rivers into their north-east provinces with their fragile economies. This
would have knock-on effects of endangering the economically fragile north-east of China and
indeed threatening the Chinese economy, as well as the stability of the world economic order.
Moreover, the prospect of the ROK border moving northwards, should DPRK collapse, is not
one which PRC can countenance given the consequence which would be US troops on the
Chinese border.
Conversely, should a process of carefully balanced convergence take place between North
and South Korea, that will be to the benefit of PRC in terms of its long-term economic aims.
For PRC, a unified Korea would provide a secure economic base to ensure the stability of the
Peninsula, and thus would meet PRC’s concern about the stability of its provinces which
border DPRK. In addition, a unified and rapidly growing Korean economy is vitally important
for the One Belt One Road strategy, to be able to extend its transport links eastwards towards
Japan and into East China. In the light of these concerns, the first state visit of President Xi to
DPRK on the 20th June demonstrates the high priority which PRC gives these commitments.
81 Background and context
The Russian Federation’s role
The Russian Federation (RF) has a lesser role with respect to the Korean Peninsula than
does PRC. However, its close relationship with DPRK since the latter’s inception make it an
important player nevertheless. The RF, like PRC, has implemented sanctions against DPRK,
albeit without any enthusiasm, and it has been suspected of continuing to foster trade with
DPRK, as well as employment opportunities for DPRK labour to allow income to DPRK from
their remittances. Like PRC it has a strong interest in building transport links across the
Peninsula, not least as an extension of the Trans-Siberian railway system, and this has been
reciprocated by the ‘Nine Bridges’ initiative enunciated by President Moon.2 On this basis,
President Putin of Russia received Chairman Kim at their first summit from 24th to 27th April
2019.
Japan’s relationship with the Peninsula
Finally, Japan has a deeply marred relationship with the whole Peninsula because of its
history as a brutal colonial power, and still unresolved issues with both North and South
Korea. Its relations with both DPRK and ROK are currently at a low ebb, albeit that it is part
of a critical triangular alliance with the latter along with the US. However, Japan too has a
strong interest in peace, not only because it could be targeted by North Korean nuclear and
conventional weapons, but also because it too has a strong interest in the development of
stronger trade links in north-east Asia.
The denuclearisation issue
DPRK’s dilemma is that it sees its possession of nuclear weapons capability as the one ‘trump
card’; it does not wish to risk losing leverage in its future negotiations with the US, ROK, and
Japan. It has stated that it shares the objective of denuclearisation with the US, but this needs
to be carried out in such a way that it is not thereby made vulnerable to externally imposed
regime change. DPRK’s internal stability is increasingly vulnerable with the growth of the
‘informal sector’ now generating over 75 per cent of economic transactions outside its direct
control. The DPRK administration continues to fear the danger of outside intervention, but at
the same time has to ensure internal stability. This is a reality which cannot simply be ignored
if peace is to be achieved across the Peninsula.
Unilateral imposition of denuclearisation will not achieve the goal of complete verifiable
irreversible denuclearisation (CVID) since the DPRK nuclear programme is more extensive
than any previously encountered in countries outside the current international nuclear
agreement; it is certainly more extensive than what was previously developed in Iraq, Libya or
currently in Iran. Historically, even the resolution of the earlier nuclear stand-off between the
US and USSR (e.g. the Cuban missile crisis) was bilateral; the US had to withdraw its missiles
from Turkey in exchange for the withdrawal of USSR missiles from Cuba.
2 The ‘Nine Bridges’ initiative identified areas of potential cooperation in the development of ROK’s
Northern Policy with respect to the RF. While Vladivostok is the RF’s point of access to the Pacific,
it would be considerably extended and enhanced were there to be good transport links across the
Korean Peninsula.
91 Background and context
There are those who argue that the imposition of sanctions, or even the use of military force,
might be desirable in themselves in that they might overthrow or lead to the collapse of the
current DPRK administration. However, the fall of the current DPRK administration would be
unlikely to lead to the consequences which are desired by these advocates. It is more likely to
lead to the seizure of power by forces hostile to the possibility of any settlement, or else the
collapse of the whole of DPRK into anarchy. In such a scenario, the People’s Republic of China
would be compelled to enter into North Korea in part or whole to prevent this collapse, and
to prevent DPRK nuclear facilities from falling into the hands of those who may completely
destabilise the whole region and threaten PRC directly.
On the other hand, in the past, inducements to secure DPRK’s compliance with
denuclearisation have not yielded much success, or at least success only on a temporary basis.
For example, the ‘Agreed Framework’ which held from 1994 to 2002 temporarily offset the
production of weapons-grade plutonium in return for
the promise of light-water reactors and development
What is needed is a fresh of fuel-grade enriched uranium. However, the Bush
administration lost faith in DPRK’s compliance in the
strategy, which avoids moratorium on the development of its military nuclear
the impasses of the past capacity; for its part DPRK regarded the deliveries as too
late and imperfect to fully justify its own compliance.
resulting from the stick So the ‘Agreed Framework’ was set aside. Similarly,
and carrot approach. during the Six-Party talks which ran from 2005 to
2009, the inducements offered by the US in return for
the cessation of DPRK’s nuclear programme had only
limited success. There was even less success with the Leap Day Accord of 2012 which offered a
moratorium on uranium enrichment at the Yongbyon nuclear plant in return for the delivery of
240,000 metric tonnes of monitored food aid.
What is needed is a fresh strategy, which avoids the impasses of the past resulting from the
stick and carrot approach, and which opens up new and transformative possibilities for the
Peninsula and the wider region.
102 The necessity of a Mutually-agreed
Economic and Social Convergence strategy
as a foundation for peaceful unification
Going right back to July 1972, both DPRK and ROK accepted three principles:3
• that unification should be achieved independently, without external interference
• it should be achieved by peaceful means
• ‘great national unity’ should be achieved by transcending differences in ideas,
ideologies and systems.
In this paper, we will be exploring steps towards unification which meet the first two of these
principles. At the same time, RPI is working on a longer paper to show how they can be
part of a bigger story which satisfies the third principle of transcending differences in ideas,
ideologies and systems.4
Subsequently, in October 1980, Kim Il Sung, in the 6th Congress of the Workers’ Party of Korea,
proposed the Democratic Confederal Republic of Koryo, which stated that ‘North and South
Korea should establish a national unification government with the equal participation from
both sides based on mutual tolerance of differences
in ideologies and counterparts’ systems.’5 Then
in 1993, Kim Il Sung issued ‘Ten Point Programme
for Reunification of the Country’, which has been
A peaceful path to
considered as the official unification policy of DPRK. unification of DPRK and
Earlier ROK administrations have also recognised
ROK is going to require a
the importance of ‘breaking away from inter-Korean process of convergence
confrontations’ and strengthening civic exchanges.
The ‘National Community Unification Formula’
in both their economic
(Minjokgongdongchae Tongilbangan) has been South systems and their social
Korea’s official unification formula throughout the Kim
Dae-joong, Roh Moo-hyun, Lee Myung-bak and Park
arrangements.
Geun-hye administrations.6
More recently, ROK government policy on peace in the Korean Peninsula, published by the
Ministry of Unification in November 2017, states three guiding values: peace first, a spirit
of mutual respect and an open policy; as part of the three goals, it also emphasises the
3 North-South Joint Communique, 4 July 1972.
4 RPI plans to publish this second paper in the first half of 2020 based on a relational vision for a
unified Korea.
5 Young Ho Park, ‘South and North Korea’s views on the Unification of the Korean Peninsula and
Inter-Korean Relations’, KRIS-Brookings Joint Conference, 21 January 2014.
6 Ibid.
112 The necessity of a Mutually-agreed Economic and Social Convergence strategy
importance of ‘a single market on the Korean Peninsula to create new growth engines and
create an inter-Korean economic community of coexistence and co-prosperity’. It goes on to
speak of establishing a ‘New Inter-Korean Basic Agreement’ to establish sustainable inter-
Korean relations.
What is set out here as a Mutually-agreed Economic and Social Convergence (MESC) strategy
provides one possible means to implement these stated values and goals in a way which we
believe will gain the interest and support of the government and other major political parties
within ROK, the United States, PRC and the rest of the international community. At the same
time, it is designed to offer immediate benefits to DPRK without compromising the existing
sanctions regime in a way which would raise major concerns for those who are focused on the
imminent nuclear threat to the United States and the international community represented by
DPRK’s nuclear missile capability.
It is obviously important to recognise that DPRK and ROK are both ‘strong countries’ in
terms of their national ethos and technical capabilities. A peaceful path to unification is
going to require a process of convergence in both their economic systems and their social
arrangements. As is widely recognised in ROK, immediate unification is impossible without
either DPRK or ROK taking over the other country, which itself would be highly unlikely
without military involvement, and would be undesirable as it would make much more difficult
the movement towards solidarity and sustainability of
their unified country.7
This paper argues that This paper argues that a foundation must be laid
a foundation must be through a period of mutually-agreed economic and
social convergence over a minimum period, we
laid through a period estimate, of five to seven years, to build the necessary
of mutually-agreed mutual understanding and trust at public policy,
professional and personal levels.8 Of course, even five
economic and social to seven years is far too short a time to complete the
convergence over a process. However, it is long enough to generate public
support and momentum; it is important to initiate a
minimum period of five transformative movement towards such convergence as
to seven years. soon as possible.
What exactly would economic convergence look like?
Convergence does not mean total integration of the two economies, which in any event is not
achievable. Convergence is a process of bringing two countries or sectors together so that they
have shared goals, priorities and values, and move towards a shared future.
7 For an example of the long-term problems created by ‘instant unification’ see a report on the issues
today in East and West Germany resulting from sudden unification in November 1989. (‘Thirty
years after the Wall fell: Germans still don’t agree on what reunification meant’, The Economist,
London, 2 November 2019, pp.32–34.)
8 See ‘Moon Jae In’s Policy on the Korean Peninsula’ from ROK Ministry of Unification,
www.unikorea.go.kr/eng_unikorea/policylssues/koreanpeninsula/goals/.
122 The necessity of a Mutually-agreed Economic and Social Convergence strategy
In terms of alignment of goals, both North and South Korea have their own distinctive
approaches which influence priorities for the allocation of resources for each major sector and
subsector of their respective economies. To achieve convergence of the goals and priorities
between the plans of DPRK and ROK there needs to
be a process of detailed discussions between key
policymakers and experts of the two governments. The weakness of
Behind the policies often lie values which inform them.
A major challenge to achieving joint goals and priorities Western economies,
will be to make those values explicit and to seek shared whether in Europe or
values to help in the process of defining what both
countries are seeking to achieve in the future. North America, is that
they have sacrificed
The aim is not a process of ad hoc compromises between
the policies of each of the two Koreas, for each sector, social capital in pursuit
but rather seeking a ‘third way’ which draws on aspects of economic growth and
of the traditions of both countries, looking back into
Korean culture and history, and at contemporary individual rights.
religious beliefs, to identify sources, themes and
values which can act as foundations for future policy.
One possible basis for a third way would be to establish as a core value that quality of
relationships between individuals, organisations and nations is the heart of personal, family
and community wellbeing, and national identity. It is a precondition for creation of economic
growth or personal wealth, and self-reliance and national security.
The weakness of Western economies, whether in Europe or North America, is that they have
sacrificed social capital in pursuit of economic growth and individual rights. The cost of
this is becoming increasingly self-evident in terms of the social polarisation which results
from growing wealth differentials, which arguably are therefore unsustainable in the longer
term.9 Of more immediate concern are a growing number of those whose welfare is seriously
threatened as a consequence of these priorities. A significant segment of the population is not
able to handle the pressures brought about directly or indirectly by the existing economic and
social systems.
Symptoms of this inability to cope are inadequate supplies of food, lack of access to adequate
healthcare, various of forms of depression, leading in some cases to suicide, other forms of
mental illness, levels of drug use and other addictions, loneliness especially among the elderly
and distress caused by relational breakdown within families and communities. In ROK, it is
also seen in declining birth rates, which is resulting in an economy which is unsustainable
without a politically unacceptable level of immigration.10
9 Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2017.
10 A birth rate to maintain existing levels of population requires an average of 2.07 children per adult
woman. Current levels are as follows: ROK (0.98), Italy (1.1), Japan (1.3), Germany (1.3), and DPRK (2.2).
133 Understanding how relationships are built
systematically
If the two Koreas were to accept that a shared approach to economic and social policy
could be built on the foundation of putting relationships as the first priority in all areas
of policy, and all sectors of economic activity, it would be important to understand how
relationships are built most effectively, whether between individuals, stakeholders,
organisations, ethnic groups or nations. Recent research has highlighted that there are
five key factors which drive ‘relational proximity’ between individuals, stakeholder
groups, organisations, and ultimately nations.11 These are as follows:
• Directness of communication, where people are able to meet face-to-face to make plans
and resolve differences. It involves ensuring that people put the same content in the
words they use, so that they mean the same thing; the same words in Korean may mean
different things to those in DPRK and those in ROK after 70 years of following very different
development paths.
• Continuity in relationships over time is crucial to allow people to reflect on past times
of connection and anticipate together their relationship in the future. Momentum towards
proximity is important, even if sometimes it is slow to develop.
• The breadth and depth of information and understanding which each person,
stakeholder, organisation or nation has with one another influences how well they
understand what the other party is seeking to communicate, their interests, and
motivations.
• Mutual respect has to underpin healthy relationships as otherwise one party will not
necessarily share their real feelings and aspirations with the other. This mutuality comes
out of participation in joint decisions and a perception that the risks and rewards from the
relationship are shared fairly between them. But it is also shown in a multitude of small
ways when people show respect for each other in the way they address one another, how
seating is set around tables when they meet formally, and whether public recognition and
blame are felt to be shared fairly between the two parties.
• Shared goals, shared values and agreement on how differences will be handled.
Inclusion of both North and South Koreans on boards of governing organisations, and
management of enterprises is likely to lead to a diversity of opinions which is often
beneficial to a successful organisation if all parties share ultimately the same goals.
RPI’s previous experience in seeking a shared policy framework between the Capitalist-
oriented White Establishment in South Africa and the Socialist-leaning African National
Congress (ANC), leading up to formal negotiations to end Apartheid; and between North and
South Sudan, showed how the five dimensions of ‘relational proximity’ were all important in
achieving consensus between the two opposing parties. Recognition of these five aspects of
11 Ashcroft et al., The Relational Lens: Understanding, Managing, and Measuring Stakeholder
Relationships, Cambridge University Press, 2017.
143 Understanding how relationships are built systematically
relational proximity contributed to the design of the process, at the level of the individuals
involved in the policy discussions, and informed the pattern, programme and content of the
meetings themselves. Some examples will illustrate how this worked in practice:
• In terms of directness of communication, RPI focused on ensuring a core group of
individuals from the two sides of the dialogues were able to attend the majority of the
meetings across the wide range of policy areas. This ensured not only face-to-face dialogue,
but also development of trust between them through the continuity in the relationships
over a series of meetings. In one particular case, the Machakos Protocol of 2002 which
ended the war between North and South Sudan, it was the personal relationship between
one person from the North and one person from the South which enabled the two sides to
break the deadlock and reach an agreement.
• The breadth and depth of information which
participants in the consultations had of one
another in both a personal and organisational
Mutual respect has
context was enhanced through the opportunity for to underpin healthy
personal conversations during the three or four-
day consultations, and the opportunities given
relationships as
to participants to express their concerns about otherwise one party will
proposals under discussion based on their own
professional background and experience.
not necessarily share
• Mutual respect was emphasised through their real feelings and
the assured neutrality of the Chairman to the aspirations with the
consultations. Allocation of time given to speakers
from both sides of the negotiations, and in a other.
multitude of small details such as which participant
was given the first opportunity to speak (which made
sure that in the South African case the government was not automatically allowed to speak
first), seating around the table used for the meetings, and access to the Chairman for all
participants to be able to have informal discussion between sessions.
• Shared goals and shared values were identified through research undertaken by RPI
which demonstrated how the different views of the parties could be resolved with mutually
beneficial outcomes. This involved use of case study material from other countries which
had encountered similar problems during peace negotiations, and use of international
experts to write papers for the consultations. They came in person to deliver their papers
and answer questions from participants about the experience which they had gained or
studied.12
12 More than ninety research papers were produced for the series of consultations on peaceful
transition in South Africa during the period 1987–1991 for the Newick Park Initiative, a precursor of
RPI (the story of NPI can be found on the RPI website, www.relationalpeacebuilding.org).
153 Understanding how relationships are built systematically
The possible design of a Mutually-agreed Economic and Social Convergence strategy set out
below reflects the underlying methodology and process which has developed out of this
experience. It is built on the experience of how relationships between both individuals and
groups of people can be effectively forged through organisational structures and working
practices. This methodology has been put into practice not only in the earlier peace processes
in which the authors have been involved, but also in a wide range of initiatives at an
organisational level in Europe, Australia and Africa over the last 30 years, carried out by the
family of organisations of which RPI is a member.13
13 See www.relationshipsfoundation.org, www.relational-analytics.com and www.relationism.net.
164 Outline of a possible process for mutually-
agreed economic convergence
A fourfold process
A structured process to accelerate economic convergence would help to convince the
international community, including the US and PRC, that DPRK and ROK are committed
to long-term change in their relationship, and therefore that use of donor funding, and
in the future even commercial investment, is appropriate. Such a process might include
the following components:
Consultations
International expertise could be drawn into consultations to ensure best practice, latest
advances in science and technology, and include the international community in the joint
development process in the Peninsula. In this way, multilateral and bilateral donor agencies
would have a greater interest in helping to finance sectoral joint strategies when they emerge
one by one from the discussions between DPRK and ROK which will follow the consultations.
A number of topics could be considered for the consultation over the first five years. In
our view, food, forestry and agriculture, healthcare and education should be prioritised
for humanitarian reasons. Other possible topics following these could include business
structure and organisation, sources of finance and financial institutions, transport priorities
(interregional, urban and rural), energy (nuclear, carbon-based and sustainable energy), the
environment and water. Towards the end of the consultation process, during which a new
sector could be considered every four to six months, it may be possible, if there is sufficient
goodwill, to explore some of the more difficult and contentious issues outstanding. These
include how to integrate the armed forces of DPRK and ROK if there was to be a unification
treaty for the Peninsula, and how to resolve residual land claims by citizens in South Korea for
properties which their families once owned in North Korea.
Joint strategy
Following each consultation with international experts, DPRK and ROK officials, sector civil
servants, academics and business leaders would seek to agree a joint strategy for that sector
for the Peninsula as a whole, and also decide priorities for the Peninsula in preparation for
a donor conference. Our understanding from those with experience of organising such joint
strategy planning for the agricultural sector in other countries is that a team of no more than
ten policymakers and experts from the two Koreas should come up with the joint strategy
over a period of around six to eight weeks. It could be chaired by an international expert with
knowledge of the region to help resolve differences of view between the policy teams from
DPRK and ROK. They may well choose to be supported by technical subcommittees, drawing
on policy documents from each country (with which they would be familiar).
174 Outline of a possible process for mutually-agreed economic convergence
International donor conference
Following the agreement on a joint strategy between DPRK and ROK for any given sector (i.e.
every four to six months), potential providers of capital and expertise could be invited to
attend an ‘International Donor Conference’ for those with a special interest in the region and
that sector to support implementation of the agreed shared strategy. Invitees would need to
include:
• Governments, parastatal bodies, international corporations, and smaller private sector
organisations and cooperative sector organisations wishing to undertake development
projects with humanitarian objectives, or provide funding through their associated
charitable foundations.
• Multilateral donor organisations.
• Bilateral donor agencies.
• International NGOs and other foundations with a special focus on the sector under
consideration. This group is likely to be largest for those sectors with an impact on areas of
high humanitarian concern, such as agriculture and food, healthcare and disability, and
education.
The purpose of the donor conferences would be for them to decide how, where and when they
could provide financial support and technical expertise to help DPRK and ROK to achieve
the shared ten-year goals and strategies set out in their joint strategy document. DPRK and
ROK would set the agenda in terms of their priorities and goals so the donor community is
being asked to make their suggestions fit in with the goals and priorities set by the Koreans
themselves.
A major concern for DPRK could legitimately be that ROK companies, or the commercial
giants in PRC or the US, could too easily take over many of the prime industrial, agricultural
and other assets and natural resources within their country. There has been considerable
experience in other socialist countries as to how this can best be tackled. It would be
important to both study how those different approaches worked in practice, and their
relevance to the unique situation in DPRK.
Projects
It is critical that the consultation process should result in concrete and transformative
outcomes. The international consultation process should lead through to joint strategy, a
donor conference and then onto project implementation on the ground to make a practical
difference. Following an inter-Korean dialogue on forestry which failed to deliver any practical
implementation due to sanctions, DPRK made it clear, understandably, that it regards policy
discussions which do not lead to practical projects as a waste of time.14
14 See www.koreaherald.com/view.php?ud=20181023000671.
184 Outline of a possible process for mutually-agreed economic convergence
Sanctions exemptions for trade between ROK and DPRK as an essential
prerequisite
The most crucial constraint on the practical implementation of projects and development
of DPRK in the recent past has been the sanctions imposed primarily by the UN, and also
separately by the US and other countries. So far it has been assumed that exemptions from
existing sanctions necessary for the mutually-agreed
economic and social convergence process would not
be allowed by the UN and US as such exemptions
would undermine the ‘maximum pressure’ which they The international
are seeking to exert on DPRK until it demonstrates
consultation process
total denuclearisation. However, this paper argues
that sanctions exemptions could be agreed for both should lead through
the transport of goods and the associated financial
to joint strategy, a
transactions, whether the flow of these goods is from
ROK to DPRK, or DPRK to ROK, without threatening the donor conference
security concerns of all the parties. However, DPRK and
and then onto project
ROK would have to agree to certain conditions.
implementation on
We assume first that sanctions exemptions would be
the ground to make a
given by the US and the UN only between DPRK and
ROK to encourage and promote economic convergence, practical difference.
and with no other country. Also, sanctions exemptions
would only be given for one economic sector at a time,
to allow a more manageable roll-out of the inspection
regime and necessary adaptation of existing security arrangements. Arguably, if North and
South Korea are historically, and potentially in the future, to be regarded as one political
entity, it could perhaps be argued in international law that it is not legitimate to have a
sanctions regime applying between two existing, though conflicted, parts of the same country.
On the other hand, it could be argued that this is a ‘legal fiction’, and therefore it is simply a
matter of pragmatic policy as to whether this is the best way to diffuse the nuclear threat.
To meet the security concerns of all parties, a number of agreements between DPRK, ROK and
the international community could be put in place. Any of these would need to be subject to
detailed discussion, but might include some of the following:
1. While this Track Two process is not concerned with the Track One process of
denuclearisation and military issues, the international community would want to be
assured that the mutually-agreed economic and social convergence process would not
undermine the Track One negotiations. So it would be necessary to ensure that goods
supplied by ROK to DPRK are not ultimately used to support the nuclear programme. This
might require ROK to set up special inspection points at all points of entry to and from
DPRK by road, rail and air, which are sufficiently thorough to satisfy the international
community.
194 Outline of a possible process for mutually-agreed economic convergence
2. The international community would probably need to be assured that there would be no
transfer of exports from DPRK to other third-party countries passing through ROK. This
might require special inspection and tracking procedures by ROK to be in place to ensure
exports from DPRK to ROK were sold and used within ROK and not re-exported.
3. An added complexity is likely to be that all goods supplied by ROK to DPRK for project
implementation, in whatever sector, may contain components obtained from countries
outside ROK. So the issue of secondary sanctions will need to be addressed. There might
be a requirement that for exports from ROK to DPRK components sourced outside ROK
represent less than, say, 30 per cent of the value of the exported goods.
4. Because the international community may wish to send goods such as machinery, vehicles,
spare parts, fertilisers and other industrial raw materials for the implementation of
development projects in DPRK, procedures might need to be in place to allow such goods to
pass through ROK on their way to DPRK, but still subject to the same inspection procedures
as set out in point 1 above.
5. All financial transactions for the export of goods from ROK to DPRK, and for the export
of DPRK goods into ROK, would probably need to be cleared by financial institutions in
both DPRK and ROK to ensure the requirements of the international sanctions regime are
satisfied.
Simply to permit imports and exports of goods between North and South Korea to be exempt
from sanctions would create a set of powerful financial as well as humanitarian incentives
to drive forward mutually-agreed economic and social convergence. However, to accelerate
this further, the process of consultations suggested earlier in this paper could be used to
increase the confidence of both parties in taking advantage of these trading and development
opportunities. It might also help to bring about a shared values framework, not only to
underpin long-term economic strategy but also to bridge the gap in political understanding
and perception which would be vital for any discussions about reunification in the future.
What is being argued in this paper is not the universal lifting of sanctions, because this
would not be acceptable to the international community, and in particular not acceptable
to the US. Nor is the intention to reward, let alone ‘buy-off’, DPRK but rather to set in train a
potentially transformative process of integration which will build peace, and thereby reduce
the possibility of nuclear exchange or any other kind of hostilities.
The unique sanctions exemptions provided to North and South Korea would increase
economic interdependence between them, as well as creating a growing number of personal
and organisational relationships between those on both sides of the border who come to
depend on this potentially huge trade for their livelihoods and wellbeing. It is likely to lead
to a growing need for North Koreans be able to visit markets, suppliers and donor agencies
in South Korea, and similarly for South Koreans who wish to visit North Korea so as to
understand the needs and possibilities of developing projects in DPRK. This flow of people
across the border in both directions, while likely to start small, could grow rapidly.
204 Outline of a possible process for mutually-agreed economic convergence
DPRK and ROK could legitimately argue that this is
not proposed as a means to diminish pressure for
The unique sanctions
denuclearisation; but the negotiation process itself
needs to be undergirded by a simultaneous and parallel exemptions provided to
process such as the one proposed here. They could
North and South Korea
point out that this process is of such a form that it
cannot be seen or misused as payment for promised would increase economic
outcomes not yet delivered, nor one that creates cash or
interdependence
potential matériel which can be diverted to build up or
maintain the military-industrial infrastructure of DPRK. between them, as well
Rather, it would be intrinsically transformative, and so
as creating a growing
not readily reversible, bringing the economies of DPRK
and ROK into closer alignment as a sure foundation for number of personal
a sound and lasting future peace.
and organisational
To meet the likely concerns of the US, PRC and others relationships between
in the international community, it is important to stress
those on both sides of
that the proposal put forward here is likely to lead to
much less funding potentially available for diversion the border.
into nuclear activities relative to other proposals under
discussion. For example, if the Kaesong Industrial
Complex was reopened, it would be relatively easy for the DPRK administration to tax the
50,000 workers there so that those funds would then be readily available for whatever the
DPRK administration choose to do with them. Equally, if the flow of ROK tourists was to be
increased rapidly to areas in DPRK such as Wonsan and Mount Kumgang, that again would
provide a flow of income relatively easily taxed by DPRK for any use they might choose.
In comparison, tax on income received by farmers resulting from agricultural projects, or
from development of medical facilities and supply of medical equipment and medicines to
strengthen healthcare facilities, would be much less easily diverted to other purposes.
In addition, the economic multiplier effects of increased agricultural products in terms of
employment and rural incomes are well documented to be high in rural towns.15 The increased
farmer income is generally spent on items such as local construction (e.g. improved housing),
higher-cost agricultural or horticultural products such as vegetables, meat, eggs and milk, and
low-cost consumer goods such as bicycles and radios. All of these generate significant new
employment opportunities in rural areas. Again, it is difficult for states to capture this income
in order to divert it to military purposes.
15 John W. Mellor, The New Economics of Growth: A Strategy for India and the Developing World,
Cornell University Press, 1976.
214 Outline of a possible process for mutually-agreed economic convergence
There are good reasons why the US and PRC may be willing to encourage the UN Security
Council to support this exemption to the sanctions regime for trade between DPRK and ROK.
For both the US and PRC, promoting economic convergence between North and South Korea
as a foundation for discussions about possible future political unification could be seen to be
serving their long-term interests towards denuclearisation of the Peninsula. Growing economic
interdependence and financial relationships between DPRK and ROK is likely to build trust
and reduce tensions between them, as well as opening up opportunities for international
development projects from a wide variety of countries, including the US and PRC, using ROK
as a partner in all such transactions. This would also help to build trust between DPRK and
many countries in the international community which contribute to building infrastructure
and helping to modernise DPRK.
225 Why mutually-agreed values and goals
would be needed to achieve economic
convergence for different sectors
Values are implicit in all models of economic growth or welfare which underlie
government decision-making, although they are not always obvious or explicit. In
the immediate Korean context, they are currently very different in DPRK and ROK so
this may become a barrier to bringing about mutually-agreed economic and social
convergence as discussed below.
Given the much greater population and levels of GDP in ROK, it is likely that there will be an
understandable concern in DPRK that ROK would use its financial muscle to seek to impose
its Capitalist system on DPRK and thus destroy the social priorities underlying the economic
system on which DPRK was founded. At the same time, it will be difficult for ROK to persuade
its citizens to abandon a market-based economic system having experienced such enormous
growth of economic capital through its utilisation and the associated consumer benefits,
despite the obvious concurrent deterioration in its social capital.
To recognise and respect the best aspects of the economic and social capital in both DPRK and
ROK will require either a series of pragmatic compromises from both administrations, or a
third alternative systemic framework which they feel comfortable to adopt. The advantage of a
new and distinctive underlying theme to public policy which resonates with traditional Korean
culture would be a more compelling driver of the cultural changes needed to achieve mutually-
agreed economic and social convergence as well as greater consistency and predictability
across all sectors of the economy and public life.
A number of examples from specific economic sectors will illustrate why shared goals and
values are likely to be important to achieve commitment of both heart and mind, in both DPRK
and ROK, for their long-term economic convergence:
Agriculture
One of the key challenges in developing a joint strategy for this sector is likely to be defining
principles for ownership and distribution of agricultural land, because this has such critical
implications for the distribution of wealth and income as well as future population rootedness
and community. Strategic questions such as how farms will be owned and managed also
greatly affect adoption of new technologies, long-term investment in irrigation and similar
factors driving agricultural growth.
DPRK is based on a collectivist approach to land ownership. However, over the last two
decades, there has been increasing ability of small family-size groups of individuals to be
able to manage their own pieces of land within the collective, even though the government
continues to take 70 per cent of all production from the farm. To increase productivity on these
farms even further, it will be necessary for an even greater proportion of production to be left
235 Why mutually-agreed goals and values would be needed
in private hands. On the positive side, the restrictions on population mobility has resulted in
the rootedness and stability of extended families and communities in rural areas.
In ROK, most agricultural land is owned and cultivated by individuals which is the stated
intention of the Farmland Reform Act of 1949 and subsequent legislation. However, some land
has been sold to financial institutions who rent it back to individual farmers on a relatively
short-term basis. Also, there is a rapidly ageing profile of farmers as almost all young people
have moved to the cities. Therefore, there is a serious question mark over the long-term
sustainability of agricultural production in ROK. The additional problem arising from the
exodus of so many young people from rural areas is that many families are not sufficiently
rooted and located near to one another to be able to provide effective physical and emotional
support for their old people and vulnerable members.
The fastest agricultural growth is found in countries where farms are owner-occupied,16 but
it is not clear how to achieve such growth without destroying the social infrastructure and
long-term welfare and investment capacity of rural communities. If owner-occupation were to
be adopted in DPRK, land ownership within DPRK by North Koreans would need to be assured
and protected from powerful external or internal
commercial interests, for the sake of future generations.
Issues relating to
So how would these differences of values and goals be
convergence of the resolved to achieve a shared policy framework for the
health sectors would agricultural sector?
include how the training Healthcare
of medical staff in DPRK has placed strong emphasis on disease
prevention, reliance on plant-based medications, and
DPRK and ROK could be traditional practices such as acupuncture. However,
brought together. despite large numbers of doctors being trained, they
often lack experience in sophisticated diagnostics and
use of clinical skills in hospital medicine due to lack of
equipment and medicines. Also, there are no ambulances in rural areas. So priorities include
investment in equipment and medicines, vaccination programmes and an ambulance service
for emergency situations. This, in turn, influences the allocation of resources in the health
sector and the patterns of medical training provided in each of the two Koreas.
In ROK, there is universal coverage, and a private insurance scheme to cover costs rather
than depending on state provision. There is an adequate supply of diagnostic equipment
and medicines. However, arguably, there is some overdependence on diagnostic tests rather
than doctors’ experience, and inadequate focus on mental health and the consequences of
scattered extended families resulting in loneliness and even suicide among older people.
16 John W. Mellor, Agricultural Development and Economic Transformation: Promoting Growth with
Poverty Reduction, Springer 2017.
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