The Start of the New Year: the Speech, Sony and North-South Relations



Usually, we would start the year by reading the tea leaves of the New Year’s joint editorial, replaced from 2013 by speeches by Kim Jong Un himself; past analyses are linked below. This year, however, requires somewhat more context, as Pyongyang, Seoul and Washington are entering the new year pulling in quite different directions.

The US started the year with the announcement of a new round of sanctions against North Korea; the Treasury press release can be found here; the full executive order here. The immediate effect of the executive order is not likely to be great. The three entities named (the Reconnaissance General Bureau, the Korea Mining Development Trading Corporation and the Korea Tangun Trading Corporation) had already been subject to sanction under prior executive orders. The ten individuals named were all associated with trading companies presumed to be engaged with WMD- and arms-related trade (with Iran, Syria, Russia and southern Africa).

Nonetheless, several things about the Executive Order (EO’s) were noteworthy. First, it dramatically expands the president’s authority to target any entity or individual in the government or party; it thus breaks the more narrow focus of past EO’s on WMD-related concerns and can easily be scaled up. Second, the justification for the sanctions departed from past EO’s in explicitly mentioning both human rights and the Sony hack. Treasury Secretary Lew took the unusual step of issuing a statement—included in the press release—emphasizing that the US will “employ a broad set of tools to defend U.S. businesses and citizens, and to respond to attempts to undermine our values or threaten the national security of the United States.” Third, however, despite the wide coverage the sanctions received in the media, they did not move toward the much more comprehensive financial sanctions contained in the recent House resolution, the North Korea Sanctions Enforcement Act.

The administration has rightly come to see the hack not as “cyber vandalism” but as a much more serious effort to destroy physical assets, financially weaken a foreign subsidiary operating on American soil, threaten Sony employees and theater-goers, and dictate artistic—or at least entertainment—expression; the hack has clearly become a First Amendment issue. Moreover, the administration clearly has a very high degree of confidence that North Korea was behind the Sony hack and is signaling so, despite virulent skepticism among critics of the administration and media coverage. Even if the sanctions are not materially consequential, the action sets the tone of US policy in the last two years of the Obama administration. Not only is strategic patience here to stay, but US action may not be over. The White House press briefing on Friday by Josh Earnest again suggested that this was just the first step in the US response (or perhaps the second if you think the US was behind the interruption of North Korea’s access to the world wide web of last weekend).

Meanwhile, developments on the peninsula itself are taking a completely different turn, with President Park struggling to find a way forward for Trustpolitik (our posts on the ups and downs of the concept can be found here). At a joint press briefing by Minister of Unification Ryoo Kih-jae and the vice chairman of the President's Unification Preparatory Committee Jeong Jong-wook last week, the Park administration announced that it had issued a wide-ranging proposal to the North for a resumption of the high-level talks. These talks convened briefly last February before crashing in the wake of the President’s Dresden speech and North Korean disinterest in the materially modest offers President Park had put on the table.

The proposal sticks to President Park’s belief in a step-by-step approach, starting small and building up to more ambitious collaboration. But a small hint of the willingness to take some risks was mention of cooperation around Rajin-Khasan. Such cooperation would ultimately require either lifting or relaxing the May 24 sanctions imposed in the wake of the sinking of the Cheonan, an action which I believe Seoul should take unilaterally (I outline the logic more fully here and in a forthcoming editorial at the Joongang Daily). The commission appears to be listening to its more liberal members, including Chung-in Moon, who argues Seoul should not only move forward on North-South relations but should drive the entire Six Party Talks process as well.

Which brings us finally to the speech. Our view has long been that external signals—whether in the form of sanctions or engagement—have much less influence on North Korean behavior that grand strategists would like to believe. The crucial question is what direction Pyongyang ultimately wants to take and there are at least some signals in the speech that once again raise hopes of a shift in stance.

The speech begins with well-trod themes of the unity of the people, party and military and the economic and sports accomplishments of last year. Yet laced through the ideological invocations to both the party and military were interesting suggestions of concern: that “all the organizations and officials of the Party should eliminate abuses of power and bureaucratism” and that the military should “effect a turnaround in improving the quality of training by eliminating formalism and stereotyped patterns in combat and political training and updating its contents and methods.”

The economic sections of the speech are always of interest in signaling priorities and elusive clues on reform. This year, science and technology led—a mixed blessing because of the faith in technological fixes—followed by the emphasis on improving people’s livelihood. Agriculture and solving the food problem led the parade of sectors, but with no references—even oblique ones—to the institutional reforms that appear to be in train.

However, agriculture was followed by an interesting reference to the fact that the light industry sector “should work out a strategy for fending for itself,” followed later in the speech by the most interesting line on economic policy: “The Cabinet and other state organs for economic guidance should make proactive efforts to establish the economic management method of our style as demanded by the reality so that all the economic organs and enterprises can conduct their business activities creatively on their own initiative.” Although followed immediately by an injunction that the Party should play the role of enforcer, the idea that economic management would shift toward the cabinet and that firms would have more responsibility for management decisions is probably as open a reference to reform as we have seen in a New Year’s editorial or speech for years.

The section of the speech on foreign policy leads with the fact that US exercises—and US involvement more generally—constitute the main barriers to improving North-South relations; the invocation of exercises provides a ready out if Pyongyang wants to pull the plug on any future initiatives. But the speech also contained a not-so-veiled reference to President Park’s renewed emphasis on unification in an important passage that marks a subtle shift in emphasis. It is worth quoting in full:

“The north and the south should refrain from seeking confrontation of systems while absolutizing their own ideologies and systems but achieve great national unity true to the principle of By Our Nation Itself to satisfactorily resolve the reunification issue in conformity with the common interests of the nation.

If they try to force their ideologies and systems upon each other, they will never settle the national reunification issue in a peaceful way, only bringing confrontation and war.

Though the people-centred socialist system of our own style is the most advantageous, we do not force it on south Korea and have never done so.

The south Korean authorities should neither seek "unification of systems" that incites distrust and conflict between the north and the south nor insult the other side's system and make impure solicitation to do harm to their fellow countrymen, travelling here and there.”

In essence, this is an open plea for détente—and arguably from a position of weakness--backed by one of the most explicit proposals we have seen in a New Year’s editorial or speech: that suspended high-level contacts should resume, that sectoral talks could take place, and—most striking—that “there is no reason why we should not hold a summit meeting if the atmosphere and environment for it are created.” It is one thing to simply invoke the spirit of past documents (in this case, the July 4 [1972] Joint Statement and the two summit declarations (June 15 [2000] Joint Declaration and the October 4 [2007] Declaration); it is quite another to propose a summit. The significance of the statement was not lost on Seoul; the Ministry of Unification quickly issued a brief but supportive statement.

These initiatives are not inconsistent with an unyielding posture with respect to the United States, albeit with an interesting conditional formulation. The hostile U.S. policy, including its “human rights racket,” is portrayed as the root cause of the regime’s grand strategy: “as long as the enemy persists in its moves to stifle our socialist system, we will consistently adhere to the Songun politics and the line of promoting the two fronts simultaneously [the byungjin line of simultaneously pursuing economic development and nuclear weapons] and firmly defend the sovereignty of the country and the dignity of the nation.”

A quick review of our past analyses shows that betting on a change in course in Pyongyang has not proven a particularly sound investment. We are reminded of the highly a propos title of the study of financial crises by Carmen Reinhart and Ken Rogoff on our endless capacity for self-deception: This Time is Different: Eight Centuries of Financial Folly. The North Korean system is clearly not sustainable, however. The fundamental question remains constant: does Kim Jong Un have the inclination—and capability—to turn North Korea around? Or is all of this just another round of fruitless tactical maneuvering? With the United States stuck as a result of domestic politics and the Sony hack, the test of this question is going to run through North-South relations.

Witness to Transformation Analysis of Previous New Year’s Speeches

2014. We deemed this speech “mildly hopeful” based on greater attention to economic issues and a North-South proposal, analyzed in a subsequent post. That proposal did lead to the high-level talks of February and family visits, but progress then stalled.

2013. The first Kim Jong Un New Year’s speech, deemed disappointing because of it’s “Masik pass” emphasis on pushing forward on all fronts. On the foreign policy front, particular emphasis was placed on the precedent of the last two summits but without the specificity of the 2015 speech.

2012. This editorial was absorbed with the death of Kim Jong Il. But with food issues constituting a short-term worry, we analyzed the role that food had played in past speeches and noted a correlation between shortages and the priority given to the issue.

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