Introduction

[  ] asia policy Introduction Nicholas Eberstadt & Richard J. Ellings While many parts of the world have joined in the profound international integration that has occurred in the postwar era, the Democratic People’s Republic of Korea (DPRK) has maintained a distinctly—perhaps uniquely—bellicose and autarkic international posture since its founding in 1948. Pyongyang’s discordant approach to “international security” was most recently illustrated earlier this summer. As the United States was celebrating the Fourth of July, the DPRK launched seven missiles (including an inter-continental ballistic missile) into the Sea of Japan—a calculated and deliberately menacing violation of both international law and previous official commitments. Pyongyang then ostentatiously spurned Chinese emissaries sent to manage the incident, prompting Beijing to support—for the first time—the United Nations Security Council condemnation of, and sanctions against, North Korea’s missile program. If anything, North Korea’s international behavior is perhaps more distant from evolving international security norms today than ever before. Contemporary North Korean security policy is marked by a hypermilitarization of society and economy under the banner of songun chongchi (military-first politics); hallmarks of the policy include maintenance and augmentation of chemical and biological weapon capabilities, ballistic missile development, relentless overt and covert nuclear weapons development programs, a confrontational approach to international diplomacy, and a stance toward unification that suggests the complete absorption of South Korea would be the only acceptable outcome. There is a grim logic at work here: Pyongyang routinely extracts resources from neighboring states and the international community through this careful, methodical recourse to “security crisis.” NorthKorea’saggressiveandpredatoryexternalbearingisaninternational dilemma that continues to defy easy resolution. Though the central issues in  Whether or not the sanctions are voluntary or legally binding is, however, a question open to interpretation. Nicholas Eberstadt holds the Henry Wendt Chair in Political Economy at the American Enterprise Institute for Public Policy Research and is Senior Advisor to The National Bureau of Asian Research. He can be reached at . Richard J. Ellings is President and Co-Founder of The National Bureau of Asian Research. He is also Affiliate Professor of International Studies at the Henry M. Jackson School of International Studies, University of Washington. He can be reached at . [  ] bold switchover • special roundtable the ongoing North Korean drama are strategic and political, there is also an economic aspect to the problem: until Pyongyang develops viable alternative sources of state finance, the DPRK will continue to rely upon international military extortion to bankroll state survival. While having “exported” strategic insecurity, North Korea has at the same time also “imported” economic failure. Among the economies of East Asia, the DPRK economy alone has suffered prolonged economic retrogression since the end of the Cold War. For example, though reported world exports of merchandisemorethantripled(incurrentUSdollars)between1990and2005, DPRK commercial merchandise exports are estimated to have dropped by about one-third. Note that although an urbanized and literate society, North Korea has a level of per capita exports today that is roughly comparable to Haiti’s. In short, North Korea’s confrontational external posture has coincided with the deterioration of its economic self-sufficiency and a declining ability to finance state operations and state survival. Given this close association between the degree of radicalization of North Korea’s security policy and the performance of the country’s domestic economy, the National Bureau of Asian Research (NBR) organized a research project and international conference to examine the economic consequences of two radically different courses that North Korean security policy could follow. The first, more optimistic scenario is one where North Korea would undertake a “bold switchover” by resolving regional security concerns regarding DPRK international behavior and thus opening the way for the international community to anchor this new security environment with substantial economic benefits for North Korea. This scenario is examined in the first two sections of the paper: section one overviews what exactly such a switchover would entail, while section two considers what aid might be available through the international financial community if North Korea were to implement such a positive change to its security behavior. The next section examines the likely outcomes of a second—and much more pessimistic— scenario: a North Korean nuclear breakout, commencing with the...