Businessweek Archives

North Korea Plays A Scary Game Of Chicken


International Outlook

NORTH KOREA PLAYS A SCARY GAME OF CHICKEN

North Korea's needs are great. But it is having to shout loudly to be heard. In fact, their latest tactics, including the recent firing of a missile over Japan, are just about the only way North Korean officials can get the West to pay attention.

North Korea is pressing for diplomatic recognition from Washington, more aid from the West, and hard-currency investments from the rest of the world. But they've found that the best way to get what they want is to step up their security threat to Northeast Asia. "It's a very risky game--walking the line between jeopardizing relations with the international community and showing military muscle," says Charles K. Armstrong, a Korea expert at Columbia University's East Asian Institute.

The game could quickly turn into an alarming diplomatic version of chicken. Whether or not Pyongyang's missile simply launched a satellite playing patriotic songs to celebrate Kim Jong Il's Sept. 5 formal installation as head of state, as the North Koreans insist, it did mark a distinct step-up in the country's missile capabilities. And that, say analysts, intensifies proliferation headaches. Iran, for example, has already used older North Korean technology to develop missiles that can hit Saudi Arabia and Israel.SMALL BEER. North Korea's tactics are rapidly painting the Clinton Administration into a corner. The more menacing North Korea becomes, the greater the opposition in Congress--and in Tokyo--to any concessions. The Senate version of the foreign aid bill that was passed on Sept. 2, for instance, bars promised funds to Pyongyang unless inspections establish that both North Korea's nuclear-weapons program and its exports of missile technology have halted. Already, Congress hobbled the Administration by voting just half the funds needed for fuel-oil deliveries promised to North Korea in a 1994 agreement. "What we've essentially done is moved the goalposts," says Robert A. Manning, director of Asian studies at the Council on Foreign Relations. "There was no conditionality in the 1994 [agreement]."

Indeed, the North Koreans argue that the U.S. has failed to deliver on several other 1994 promises to reduce obstacles to trade, restore diplomatic relations, and build two nuclear reactors. Some of what the North Koreans are seeking is small beer. They want their star 7-foot 9-inch basketball player to be able to play on a U.S. team, for example, and for North Korean hotels to be allowed to accept Visa and MasterCard. Washington has refused--until the North Koreans agree to tension-reducing measures, such as installing a cold-war-style hotline.

All this comes when Kim is trying to consolidate his power as the country sinks into famine and economic collapse. Over the past two years, he has promoted 120 young officers to general. Now, analysts say, he has packed the Cabinet so that 23 of the 34 posts are newly filled with his loyalists. "Kim Jong Il is likely to whip up hatred and alertness against outside forces to divert [attention from] internal difficulties," says Jo Myong Chol, a former North Korean university professor who defected to South Korea in 1994.

The Clinton Administration's strategy so far has been to buy time. But its gamble that North Korea would be completely absorbed by internal problems and that Kim wouldn't be able to maintain his power has failed. Instead of becoming so weak that it would accept Washington's terms, North Korea is rattling its saber so much that events could easily spin out of control.EDITED BY JOHN TEMPLEMANReturn to top

FOR SWISS BANKS, A BIG GAP

News that Switzerland's big banks hold dormant accounts belonging to Holocaust victims worth only about $71 million may rub salt into bankers' wounds. The figure comes from a preliminary audit by a commission headed by former U.S. Federal Reserve Chairman Paul A. Volcker. The problem is that it is far less than the $1.25 billion "global settlement" that the Swiss banks agreed to pay on Aug. 2 under threat of economic sanctions.

The global settlement is irrevocable. And while it was intended to cover more than just dormant accounts, the discrepancy between the settlement and the Volcker estimate is expected to inflame public opinion in Switzerland. Many voters believe the country was railroaded by Jewish organizations.EDITED BY JOHN TEMPLEMANReturn to top


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus