CIAO DATE: 06/2008
April 2008
Peterson Institute for International Economics
A continuing leitmotif of the Six Party Talks—among the United States, China, Japan, Russia, South Korea, and North Korea—is the prospect that a resolution of the nuclear question could set the stage for more institutionalized and enduring multilateral cooperation in Northeast Asia. The Joint Statement of September 19, 2005, which outlined the principles governing subsequent negotiations, referenced new "ways and means for promoting security cooperation in northeast Asia," and the February 13, 2007 Joint Statement created a Working Group on a Northeast Asia Peace and Security Mechanism (NEAPSM).
From the beginning, these aspirations have included a strong economic component. The September 2005 Joint Statement invoked "economic cooperation in the fields of energy, trade and investment, bilaterally and/or multilaterally." The February 2007 Joint Statement explicitly referenced humanitarian assistance to North Korea as well and created an Economy and Energy Cooperation Working Group. Although initially focused on the delivery of heavy fuel oil and its equivalents to North Korea, this working group could become the locus for wider economic cooperation and thus complement the security agenda.
The benefits from integrating North Korea into the regional economy do not necessarily point to a central role for the NEAPSM, however. These objectives might also be achieved through other multilateral institutions, including the international financial institutions, or through regional or bilateral aid and trade and investment agreements. Moreover, it is not clear that the economic agenda of any new multilateral institution should focus solely or even primarily on North Korea; to the contrary, we argue that for such a body to be robust it should engage the interests of all the six parties.
In this brief, we explore the economic dimension of multilateral security cooperation in Northeast Asia. We begin with a discussion of the purported security benefits of economic engagement with North Korea. We then outline recent economic developments in North Korea, which provide a crucial background to any discussion of the issue. We raise some cautionary questions about the scope for multilateral economic cooperation in Northeast Asia before outlining how economic cooperation can complement long-run security and economic objectives on the peninsula, including economic reform in North Korea.
Resource link: A Security and Peace Mechanism for Northeast Asia: The Economic Dimension [PDF] - 294K