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Expect Kim to smile and shake hands, but not disarm

Expect Kim to smile and shake hands, but not disarm

If it takes place, the announced Trump-Kim summit promises to be one of the biggest diplomatic events in living memory. The willingness of both sides to engage in dialogue is a positive development, a sentiment reflected in today’s cautious optimism, net of Trump tariff fears, among regional markets. We nevertheless maintain our view that the North will not agree to denuclearise – even if it may take steps to reduce tensions in return for concessions. 

Kim Jong-un has agreed not to oppose upcoming US-South Korean military drills and to freeze nuclear and missile testing in the run-up to the summit. While hailed as major concessions in Seoul and Washington, these steps are relatively cost- and risk-free for Pyongyang. The North already has an arsenal sufficient to deter a military attack and loses nothing by agreeing to a freeze. Having achieved its goal of building a deterrent – an ambition some four decades in the making – the Kim regime now feels it can once again engage with the international community. Most significantly, Kim Jong-un can do so on his own terms in a face-to-face meeting with the world’s most powerful leader, greatly boosting his domestic legitimacy and prestige.

A meeting of equals?

We believe that North Korea sees the upcoming summit with Trump as a ‘meeting of equals.’ As fellow nuclear powers, the two countries can now hash out an agreement that would reduce the stranglehold on the Northern economy while preserving its nuclear and ballistic missile programmes. Although Pyongyang has dangled the carrot of denuclearisation in order to get the US to agree to talks, it has used non-committal and vague language which will allow it to stall negotiations. Unconfirmed media reports from early March suggest that Kim Jong-un recently reassured senior party cadres that the North has no intention of denuclearising.
Although both Trump and South Korean president Moon Jae-in assert they will maintain ‘maximum pressure’, this commitment has the strong potential to waver during years of negotiations, particularly if the North threatens to call off talks and resume testing. Kim Jong-un could plausibly propose further token concessions – such as the reopening of various high-level dialogues or the resumption of family reunions – which could nevertheless be seen as a significant step by Washington and particularly Seoul. Unless both Trump and Moon Jae-in maintain a united front and insist on verifiable steps towards denuclearisation before easing sanctions, Pyongyang would benefit while sacrificing little in return.

Regime change remains Kim’s key concern

There is nothing in either North Korea’s or Kim Jong-un’s historical record that would suggest this sudden diplomatic about-face is anything but a clever manoeuvre. The ‘Sunshine Policy’ era serves as a historical warning. Initiated by former South Korean president Kim Dae-jung in 1998, the policy ushered in years of apparent rapprochement by Pyongyang and Seoul, culminating in the 2000 Pyongyang Summit between Kim and North Korean leader Kim Jong-il. Another summit was held in 2007, while the international community discussed denuclearisation with Pyongyang within the framework of the Six-Party Talks. However, the North never had any real intention of dismantling its nascent nuclear programme, and instead conducted its first nuclear test on 9 October 2006.
Development has continued apace since, even as international pressure has mounted. The North Korean government has channelled billions of US dollars into its nuclear and ballistic missile programmes, even at the cost of widespread malnutrition and untold suffering of its civilian population. With the regime now finally confident that it can deter a military intervention, it is exceedingly unlikely to dismantle its defensive shield without massive and iron-clad security guarantees. At the very least, we expect these would need to include a withdrawal, or massive scaling-back, of US forces from South Korea (or even Japan) to allay deeply-ingrained fears of regime change. It is difficult to imagine the US conceding to such demands.

Our forecasts

It is safe to say we view the upcoming summit with a great degree of scepticism. Our expectations are:

  1. It is likely that Trump’s attitude toward the summit could harden in April, following a scheduled meeting with Japanese Prime Minister Shinzo Abe. The latter has consistently opposed engagement with Pyongyang. Although we expect the summit to still go ahead, we cannot rule out the possibility of postponement or cancellation as a result.
  2. If it takes place, the summit is unlikely to lead to any breakthrough, certainly not one involving North Korean disarmament. 
  3. We expect the meeting to lead to months (or years) of see-sawing negotiations as the US and South Korea seek denuclearisation and the North attempts to stall or obtain a less ambitious settlement that would win it aid or sanction cuts while keeping its nuclear deterrent intact.
  4. Talks could fall apart suddenly, either because of the lack of agreement or because of personal animosity between Kim and Trump.
  5. It will be difficult for Trump and Moon to maintain a united front if negotiations drag on for years. We expect Seoul will prioritise reaching a settlement – even if it falls short of denuclearisation – while Washington will not. International pressure, including from China and Russia, will likely similarly favour ‘any deal’ over ‘no deal’. Diplomatic friction between the two allies is a distinct possibility as a result, impeding efforts to negotiate any solution.
  6. While it is exceedingly unlikely, we cannot completely rule out the possibility of a ‘Nixonian moment’ for Trump. In this scenario, Trump negotiates a major breakthrough with Kim, akin to the meeting between Richard Nixon and Mao Zedong in 1972, which restored Sino-US relations. In our view this would only be possible if the US relinquishes its goal of denuclearisation, instead agreeing to recognise the North as a ‘de facto’ nuclear state. If this were to happen, it would pave the way for a gradual normalisation of relations.
  7. Any normalisation of relations would profoundly shift the geopolitical landscape in East Asia. China in particular would be alarmed at the realignment of one of its key allies, likely severely raising tensions between Beijing and Washington.

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