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Asia Pacific

Outside the Box: China, the US and Korean Reunification


President Obama just concluded a visit to China where the Asia Pacific Economic Cooperation (APEC) summit had met over three days[1]. This recurring event was important for a number of reasons: the last time China had hosted it was in 2002, a year in which the US was already gearing up for war in Iraq and China was not yet visibly on a par with the American economy or military. During that summit, China was still officially adhering to its traditional policy of “keeping a low profile and hiding one’s brightness,” begun in the 1980’s by Deng Xiaopeng, while Putin’s Russia had not yet turned its back on the West. Today, China has maritime disputes with most of her neighbors, Russia and the West are spiraling into a new Cold War over Ukraine, and the US is no longer seen as an undisputed military force.

This year’s conference, held in Beijing, served to highlight China’s economic centrality to the region. China has signed major trade and investment deals with Russia, while negotiating FTA’s[2] with South Korea, Japan, Australia and Sri Lanka. China already has FTA’s in place with many APEC members, including the ASEAN group[3], New Zealand, Peru, and Chile. Meanwhile, China is actively courting states that are traditionally considered outside the “Pacific Rim”, but are nevertheless historic trade partners of the Middle Kingdom: India, Pakistan, Mongolia, and the Central Asian Republics. China is very interested in reestablishing itself as the prime mover of a modern Silk Road, involving road, rail and energy infrastructure investments on a large scale across Central Asia[4].


The United States has not been idle, and one of the key points of the “pivot to Asia” is reinforcing economic ties with key states in the region. The landmark initiative is the Trans-Pacific Partnership (TPP), a massive free trade agreement which President Obama would like to negotiate and sign before he leaves office. His desire for “fast track” authority has actually been enhanced by the Republican victory in the 2014 mid-terms, as the GOP is generally in favor of concluding this agreement while Democratic constituencies are far more leery of it. The TPP has been dubbed by detractors as the “anti-China” club, as the Asian giant has been rather deliberately excluded from the negotiations; but the President has always stated that TPP would eventually have to include China; but that would be too useful a lever for the US to simply give away without any concessions from the PRC.

But the US has not put all of its eggs in the TPP basket; it has recently signed free trade agreements with Panama, Colombia and most importantly – for this article – South Korea. There are ongoing bilateral discussions with Taiwan, New Zealand, Malaysia and Indonesia as well as negotiations with Thailand that have been suspended since that country’s 2006 coup. The United States has been a Pacific economy since the days of the Yankee clipper ships and these initiatives are at least as important to regional stability as the carrier fleets that traverse and dominate the sea lanes.

The highlight of the conference from President Obama’s perspective was the “mega climate deal” between the US and China. This agreement to curb GHG emissions sets new targets for the US and, for the first time ever, China: the goal is to stop emission growth by 2030. The two powers also agreed in principle to cooperate in the new global climate talks to be held in Paris in 2015. Given that the US and China are the two largest polluters on the planet, this truly is a big deal[5]. Both the US and Chinese negotiating teams deserve a pat on the back; but circumstances finally favored such a deal. The air in China’s major cities is now closer to a liquid than a gaseous state, and it is one of the primary complaints of Chinese citizens. China needs to clean up its environment to avoid public backlash against the Party as well as to attempt to curb the long-term costs of air and water degradation on public health: costs that will hit China just as the demographic pyramid begins to tilt decisively against the country in the 2030’s and 2040’s. Meanwhile, the US is improving energy efficiency and emissions thanks to the shale gas revolution, which is permitting more and more of the country’s energy to come from relatively cleaner natural gas. It can sign up for these emissions targets with a high degree of confidence that meeting them won’t hurt the economy much.

If all of this sounds positive, it is. The economic integration and growth of Pacific economies is the great success story of the last quarter of the 20th century. All of these free trade agreements have managed to reduce trade barriers significantly over that period, leading to growth, prosperity and employment for millions across the region:

trade barriers

Everyone is eager for that trend to continue. Yet this progress and the recent good news fail to hide the increasing political and military tensions. The driving forces behind this escalation can be summarized in two words: China and Korea.

North Korea’s case is straightforward enough, and the Hermit Kingdom has very few apologists left in the world. Not even their Chinese patrons make any effort to hide their opinion that supporting the regime in Pyongyang is the least bad option available to them. The North Koreans continue to push the envelope of the classic “madman” foreign policy, attributed to Richard Nixon[6] in the context of negotiations with North Vietnam to end the war:

“I call it the Madman Theory, Bob. I want the North Vietnamese to believe I’ve reached the point where I might do anything to stop the war. We’ll just slip the word to them that, “for God’s sake, you know Nixon is obsessed about communism. We can’t restrain him when he’s angry—and he has his hand on the nuclear button” and Ho Chi Minh himself will be in Paris in two days begging for peace.”

The North Koreans have successfully leveraged this through their nuclear weapons development, ballistic missile testing, and random outrages against South Korea to draw attention to themselves, bring major powers to the bargaining table, and extract concession after concession for their benighted regime. The inevitable corollary to this policy is that North Korea is indeed seen as a maverick; an unstable, backwards, opaque state with nukes and a huge army that could collapse at any moment and unleash chaos. Consequently, the border between the two Koreas is the most heavily fortified frontier on Earth, despite being called the “demilitarized zone”.


The simplification may however be unfair to China. The Chinese undoubtedly believe that they are in the right. Yet the fact is that China is embroiled in maritime sovereignty disputes with almost all of her neighbors and is becoming increasingly assertive, even belligerent in pursuing a unilateralist approach to resolving these. China[7] has open disputes[8] with South Korea, Japan, Taiwan, Philippines, Indonesia, Malaysia and Vietnam. There is nothing in geopolitics unusual with this situation: powerful nations tend to impose themselves on their weaker competitors, peacefully if they can or more forcefully if they must. China’s “rise” has given it the means and the appetite to act on disputes that it might have kept quiet about in previous decades, but never actually given up on.

Yet as rational as this pursuit of national self-interest may be, it is clashing with China’s neighbors and some of these are pushing back. In particular, South Korea and Japan are nations with large economies, populations and militaries; and Japan in particular has a long and envious naval tradition. These are not nations that can be easily pushed around, and the fact that they have defense treaties with the United States acts as a stiffener to their resolve. President Obama has stated on numerous occasions that the US is committing to defending Japan, including the Senkaku Islands – a point that infuriated the Chinese earlier in the year[9]. The Senkaku/Diaoyu Islands are one of the world’s most dangerous flash points, an area where a military accident between Japan and China could spiral out of control. Unlike the Cold War hotline between the White House and the Kremlin, there are no established direct communications channels to quickly clear-up misunderstandings and prevent escalation.


The fact that the United States does have defense treaties with South Korea and Japan, historic military ties to Taiwan and Philippines, and is seeking or has achieved military cooperation with Singapore, Indonesia and Vietnam looks a lot like a containment strategy from Beijing’s perspective. Some of this mistrust is overblown: most of the existing US alliance structures in East Asia date from the Second World War, long before China’s rise became a potential threat to the US. But states do not believe in fairy godmothers, nor do they take pronouncements of peaceful intentions at face value. Even if the US is not formally pursuing a containment strategy at this time, the US alliance structure means that containment could be put in place almost overnight. Chinese politicians and military planners must take this into account and must plan for it irrespective of their personal preferences for peaceful coexistence; in other words, there is nothing nefarious in China planning for war with the United States, as the US is the only nation that poses an existential threat to China at this time.


That military truism holds for everyone in East Asia, and consequently, an arms race has begun that threatens to destabilize the region further and even become a self-fulfilling prophecy. Just as the famous “Dreadnought Race” between Germany and the United Kingdom served to increase rather than decrease the sense of insecurity on both sides, so too does the growing military rivalry between China, Japan and the United States. East Asia has seen the largest overall increase in military spending, both in absolute and relative terms, since 2000 and has now overtaken Western Europe. China, Japan and South Korea represent 86% of the total in 2013 – though it is worth noting that SIPRI has no data for North Korean expenditures.


A similar dynamic is at work in East Asia as was clearly seen in the run up to the First World War: a rising Germany felt the need to challenge the established hegemon, Great Britain; built a large fleet to secure her overseas trade interests; and ended up stumbling into a Great War because of inconsequential events in a borderland involving key members of the opposing alliances. Germany sought her “place in the Sun” and felt encircled by the English and the Franco-Russian Entente: it came to view conflict as inevitable and sought to break the encirclement when the military balance of forces seemed favorable[10].

The trend today is eerily similar. China will not stop developing the military capabilities it considers necessary to prevent encirclement by the US and Japan, nor will it yield sovereignty on historic claims, especially not to Japan. The United States cannot allow crucial allies like Japan, South Korea, or the Philippines to fall into the Chinese orbit or be “Finlandized,” so the US will increasingly pivot to Asia and reinforce its alliances there; which the Chinese will increasingly view as “containment” by Washington. A self-reinforcing series of assumptions can be seen to be at working. Divided between hardline and moderate factions and faced with substantial nationalist constituencies, neither side seems capable of summoning the political will to compromise and break the cycle. It is disheartening to note that the latest public opinion poll of Chinese and Japanese citizens found more than half of the former predicting a war with Japan in the future, and the probability of war with the United States lagging not too far behind.

Clearing the Air

All is not despair: the same polls show substantial majorities of Chinese and Japanese people desiring peace, cooperation, prosperity and multi-lateral agreements to resolve disputes. There is nevertheless a dissonance between what people want and what they expect.

There are and have been numerous attempts to stabilize relations and “head-off” disputes before these become acute: most have been ineffectual. Attempts by the US to set up regular meetings and discussions with senior military planners from China have mostly fizzled; China has not been as keen to shed light on its defense capabilities as the US has been eager to get a peek. Opacity continues to serve China’s interests even though it self-evidently breeds distrust. More successful have been the High-Level Consultations on Maritime Affairs held between Japan and China in Qingdao. These should be expanded to become a regular feature between the two nations and could grow to include the US, South Korea, Philippines and Vietnam.

Another possibility put forth is the negotiation of an Incidents at Sea understanding between the US and China, similar to the 1972 agreement between the US and the Soviet Union. Although the circumstances are different, and the relationship between the US and China is nowhere near as antagonistic as the Cold War rivalry with the Soviets, such an agreement could help define permissible conduct, reduce incidents, limit the scope for local commanders to step out of bounds, and increase confidence in the good faith of all parties. Unlike the 1972 agreement, any US-PRC negotiation must encompass non-military forces to be effective: China is very fond of using State Oceanographic, civilian Coast Guard and even private fishing vessels as tools to extend sovereignty claims. It is unlikely that China would be willing to give up so important a tool in its highly successful “salami slicing” tactics, but it US and Japanese negotiators must insist on the inclusion of these actors for any deal to be considered comprehensive. US concessions on maritime and aerial surveillance activities within China’s EEZ, a key bone of contention, might be enough to get the Chinese negotiate: it would be up to the DoD to advise if the increase in regional security doesn’t compensate for the intelligence lost.

These sorts of regional agreements are important and useful steps in limiting regional disputes and preventing incidents from escalating into conflicts, but they are not game changers. The Incidents at Sea, SALT and other treaties with the Soviet Union did not end the Cold War; they only reduced the probability of it becoming a hot war. That really shouldn’t be enough: the US can and should be more ambitious in attempting to forestall both a second Cold War and a Great Power conflict in the Pacific. A paradigm shifting strategy would have another of features:

  1. It must be aligned with the national interests of all the key parties in the region, but especially the US and PRC;
  2. It must be viewed as enhancing security by each of the parties;
  3. It must be viewed as fair and equitable by all parties (though gains need not be “perfectly distributed”, just sufficiently equitable for all to accept their share of them);
  4. It must break the existing perceptions of the status quo on both sides in a mutually acceptable fashion.

To take a historic example, Nixon’s trip to China was a paradigm-shifting event, forcing the Soviet Union to reconsider its strategic options vis-à-vis NATO and to contemplate the possibility of a two-front war with China. It benefited the US and China in numerous ways, paving the way to understandings on Taiwan, the Vietnam War, relations with the Soviet Union, Japan and Korea and laying the groundwork for future economic trade and investment.

I propose that the game-changing opportunity in East Asia today is the reunification of Korea. This frozen conflict is not only highly destabilizing with an unknown but increasing potential for catastrophic violence, it also cements an antagonistic alliance structure in place that pits the US and China against each other. Nowhere else is this true, not even in the Senkaku/Diaoyu Islands dispute. Finding a way to break this impasse and achieve the reunification of the Korean peninsula –under a South Korean-led government of course – would fulfill all of the above listed conditions:

  1. The key US national interest involved is to protect the South Korean people and democracy from a violent invasion and occupation by an inimical authoritarian regime, and to prevent the Korean peninsula from being used as a staging area for hostile forces pointed against Japan. China’s vital interest is to prevent US forces or US allied forces from advancing up to the Yalu River and threating not only Manchuria (as the Japanese did in the 1930’s) but also the whole Chinese coastline down to Shanghai.

Both vital interests could be secured in the event of a reunification. The Republic of Korea would no longer be threatened by the bellicose intentions and enormous military of the North. This would eliminate the need for US forces to be permanently stationed in the country, which would satisfy China. To further anchor these interests, the US, China, Russia and Japan could each become guarantor powers for the territorial integrity, security and non-alignment of the new Republic of Korea, similar to the guarantees issued to the new Kingdom of Belgium in the Treaty of London in 1836. No foreign troops could be stationed on the peninsula; Korea would agree to limitations of its conventional armaments; and each of the signatories would be committed to the defense of the ROK in the event that the country was attacked by an external power.

  1. The reunification and demilitarization of the Korean peninsula would enormously enhance regional, and even global, security. It would vitally strengthen the international non-proliferation regime with an IAEA-led effort to dismantle and destroy North Korea’s fissile materials stockpile; it would reassure Japan that its security did not require nuclear weapons.

China and the United States would also consider the elimination of an unstable, unpredictable actor like North Korea to be a net gain to security. China would achieve the removal of 36,000 US Army and Marine personnel as well as the US Seventh Air Force from Osan and Kunsan AFBs; and these forces would almost certainly return to the US, not to Japan[11]. The benefit to the US is too obvious to require much explanation.

  1. In terms of equity of results, I believe that the security enhancements described above would be viewed as sufficient for the major regional powers: the US and Japan remove a dangerous and unstable nuclear regime that threatens them directly; China and Russia secure the removal of US troops and bases from their frontiers while also removing an unstable element whose collapse could cause significant chaos in Manchuria or the Russian Far Eastern region.

The two parties who are least likely to view reunification as equitable or desirable are North and South Korea. South Korea certainly desires to remove the threat posed by the North and live in peace with its neighbors; but it is not going to want to be saddled with a reunification bill that will dwarf Germany’s reunification costs by an order of magnitude. The Germans estimate that it has cost them approximately 2.6 trillion dollar[12]s (2 trillion euros) to reintegrate East and West Germany, and North Korea is in far worse shape than the DDR was in 1990. That is about 130 billion dollars a year for twenty years.

Nor is the North Korean elite likely to relish the prospect of becoming mere citizens in a unified Korean Republic, losing all of the perquisites attendant to their lordship over a semi-feudal economy, and possibly even being tried for crimes against humanity. They will want to cling to power and privilege like ticks to a dog.

The solution to both of these arguments is money: lots and lots of money. Part of the reunification costs would come from savings in defense spending. South Korea’s defense budget in 2013 was approximately USD 34 billion, while North Korea’s is estimated at anywhere from USD 10 to 15 billion, for a total of perhaps USD 47 billion per year. With the elimination of intra-Korean rivalry and the security guarantees of all of Korea’s neighbors, up to three quarters of that total might be dedicated to reunification investment, around USD 36 billion. The Four Power Guarantors (US, PRC, Japan, Russia) would then need to agree to create a Korean Reunification Fund, which would cover a substantial portion of the yearly costs of integration and development for a period of not less than 20 years. How much they will contribute each year is a question to be negotiated of course; but given that we are talking about a vital national security interest for the three largest economies in the world, the amounts should be substantial.

The North Korean elite – a majority of it at least – will have to be bought off with promises of political asylum, immunity from prosecution, and a very generous lifetime pension plan. All of this might be distasteful and expensive, but buying off 10,000 or 15,000 top Korean officials and letting them live out their lives in lavish style is still almost certainly less expensive than the permanent stationing of 28,000 US troops on the Korean peninsula. Whatever the price they name to cede power and accept reunification is cheap in my opinion.

  1. Negotiating an end to the division of Korea would fundamentally alter the paradigm in the Far East.

It would visibly “break” the encirclement of China by removing US forces from Korea and involving both the US and China as guarantors of the new state’s territorial integrity and stability. This would be achieved without Korea falling into China’s military orbit; thus US and Japanese security would not be compromised.

The long-term commitments to Korea as guarantors of her security and the involvement of the four powers in the Reconstruction Fund, demilitarization and nuclear disarmament efforts would require the creation of permanent structures for oversight and governance. Participation in these structures would require familiarity, tolerance and compromise from members and enhance their mutual perceptions of each other. Successful collaboration in this area would lead to fruitful dialogue in other areas, with the possibility of similar cooperation in the permanent resolution of disputes involving shared sovereignty or access to disputed areas in the East and South China Seas.

The requisite military dialogue and cooperation could lead to permanent high level discussions on a broader security framework for East Asia that could eventually include the ASEAN nations and even India. The transparency necessary to work together in Korea could be extended to improved transparency between the US and PRC. The goal would eventually be to establish a security framework that would permit agreements on limitations to conventional, strategic and asymmetric forces. As both Chinese and American security is enhanced, and threat perceptions diminish, such agreements will be easier to achieve.

This proposal is ambitious, to say the least. It is my belief, however, that ambitious proposals can sometimes succeed where more cautious approaches fail. By its nature, the ambitious proposal forces the other party to reevaluate their perceptions and their “assumed certainties”, where more cautious or limited advances serve to reinforce ideas of the immutable nature of the status quo. The United States can and should make an effort to propose a radical change to the deteriorating security situation in the Far East and in its relations with China; in full consultation and agreement with our regional allies; and in a manner that clearly demonstrates our commitment to our friends, but also our sincere desire for peaceful coexistence with China and a recognition of her legitimate interests.

I believe that Korean Reunification is the key to this puzzle; it is long overdue.


Sources and Notes 

[1] 09 to 12 November in Shanghai

[2] Free Trade Agreement

[3] Myanmar, Thailand, Laos, Cambodia, Vietnam, Malaysia, Singapore, Indonesia, Brunei and Philippines. East Timor and Papua New Guinea are observers.

[4] Emily Rauhala, “The APEC Summit Closes With a ‘Historic’ Climate Deal Between the U.S. and China,” Time, 12 November 2014

[5] Many if not most climate scientists would argue that the deal is not big enough: simply stopping GHG emissions growth by 2030 is nowhere near enough to stop long-term climate change and the resulting damage, according to some models. But most would also agree that it is far better than no agreement at all.

[6] An older citation is Niccolo Macchiavelli, in his Discourses on Livy; and there are undoubtedly even older examples in the classical texts that I am not aware of. There is nothing new under the Sun.

[7] Some of these are admittedly multi-lateral disputes. For example, the Scarborough Shoal is claimed by China, Taiwan and Philippines; the Spratly Islands are claimed by 6 nations and their actual control is divided: Vietnam (29), China and Philippines (8), Malaysia (5), Brunei (2) and Taiwan (1).

[8] China also has territorial disputes with India, Bhutan and North Korea: but as these are disputes over land borders, I am ignoring them for this article.

[9] Perhaps pointedly, the President referred to the disputed islands by their Japanese names (Senkaku) rather than the Chinese (Diaoyu). Luis Ramirez, “Obama Reaffirms US-Japan Defense Commitment,” Voice of America, 24 April 2014

[10] It is no coincidence that 1914 is also the year that Germany completed the Kiel Canal, allowing her to shift her battle fleet between the North Sea and Baltic without going around the Jutland Peninsula. The German High Command was also full of paranoid fears of Russian industrialization and their “closing” of the armaments gap with Germany.

[11] US forces in Japan already create sufficient tensions with locals without the addtional of an additional 50,000 personnel rebased from Korea.

[12] Nicholas Kulish, “Germany Looks to Its Own Costly Reunification in Resisting Stimulus for Greece,” New York Times, 25 May 2012

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