Socio-Economic Change in the DPRK and Korean Security Dilemmas: The Implications for International Policy

IntroductionMore than 20 years have passed since the signing of the Geneva Agreed Framework between the U.S. and the DPRK. Since the October 1994 agreement, the U.S.- DPRK relationship has at times seemed to improve and at other times rapidly deteriorated. The international community is no closer today to resolving the nuclear issue than it was during the early 1990s, and many observers believe North Korea will never completely abandon its nuclear ambitions.1Yet two decades ago, in the face of overwhelming odds, an incongruous marriage was formed between the U.S. and the DPRK. The Agreed Framework itself is remarkable, given the long-standing mutual enmity and distrust between the U.S. and the DPRK. The Korean nuclear crisis situation in the early 1990s could have developed into a military conflict on the Korean peninsula.2 However, the Agreed Framework provided a diplomatic solution, which temporarily diffused the tension between the U.S. and the DPRK and averted further escalation of the North Korean nuclear crisis. The U.S. elected to implement positive economic sanctions-a package of goods- in exchange for a promise by the DPRK to end its nuclear program. This controversial U.S. decision contradicted the prevailing U.S. foreign policy preference, which favored negative economic sanctions and/or military action when dealing with the nuclear weapons ambitions of rogue nations.Since the Agreed Framework, many scholars have tried to explain the North Korean nuclear issue.3 While many articles describe the agreement's technical aspects and procedures, most of them have not provided a theoretical basis that explains why and how the agreement was reached.4 While a few studies even define North Korea as an irrational state and its nuclear program as terror and coercive diplomacies, North Korea's pursuit of its nuclear program was a rational choice given its domestic and international conditions.5 To understand why and how the U.S. and the DPRK first reached the agreement and then failed to maintain it, research should focus on the DPRK's rational decisions given its domestic and environmental conditions.This paper attempts to provide a theoretical basis for not only the initial success, but also the ultimate failure of the Agreed Framework. The U.S. and the DPRK were bargaining during a conflict situation in the early 1990s. In a bilateral bargaining situation, the ability of one participant to achieve its goals depends, in large part, on the decisions of the other participant.6 Negotiators also had limited choices given their expectations of the other's reaction. While the U.S. could enforce economic sanctions or militarily attack North Korea, these choices could be less beneficial given the United States' expectation of North Korea's reaction. While the DPRK could ignore U.S. demands and continue its nuclear development, the choice could be less favorable given the DPRK's expectation of the United States' reaction. While the Agreed Framework was less than perfect, the agreement was beneficial to both nations as long as neither defected from the agreement.Given the long adversarial relationship between the U.S. and DPRK, it was uncertain whether both countries would continuously and credibly commit to the agreement. To make the commitment "credible," in terms of transaction cost economics, both nations imposed direct and indirect "self-enforcing" restrictions to the agreement-a set of rules and conditions-that could devise "mutual reliance relations" and thus protect the agreement from potential expropriation by the other party.7 By making these credible commitments, the U.S. and the DPRK reached the mutually beneficial Geneva Agreed Framework in 1994.Still, the Agreed Framework failed to achieve its ultimate goal of mutual dependence because of major delays in implementation and lack of negative enforcement mechanisms (against defection from the agreement). Despite its ultimate failure, the Geneva Agreed Framework was the first agreement between the U. …