North Korea is a failing state and could fall apart at any moment. Ever since North Korea gained its independence in 1948, the country and its people have been suffering under communism and the dictatorial leadership of the Kim family. Their infrastructure is crumbling, multiple food shortages have left the citizens starving, and the country’s large-scale military spending siphons away most of the resources needed for investments and civilian consumption. Though the regime has managed to crush its internal opposition and maintain a fragile (if impoverished) stability, for the last six decades the northern half of the Korean Peninsula has consistently been only one or two steps away from collapse.

Depending on what happens to trigger it, and how the various powers respond, this could happen in a variety of ways:

A. disintegration and anarchy, with widespread rioting and starvation

B. a bloody civil war between factions of the North Korean army

C. a nuclear attack on foreign forces or cities and/or an all-out assault on South Korea in a desperate attempt to gain resources (through conquest or tribute) to stave off internal collapse

D. any combination of the above

E. a peaceful and orderly reunion with the South, as happened with East Germany

All of these options would be enormously expensive for both South Korea and the U.S. Options B and C would involve a substantial risk that nuclear weapons would be used. Any of them except Option E would mean a huge influx of refugees into South Korea and northern China.

Option E would obviously be the most desirable; however, given the current situation in North Korea, it is also the least likely one — by far. That being said, even Option E would be expensive. It would require the South to provide food, public safety, healthcare, and education to more than 20 million people ravaged by malnutrition and lack of education, in a region lacking in a lot of the essential infrastructure for doing so.

On the other hand, continuing the current situation is not exactly cheap either. Putting a figure on the current cost is difficult, but it is possible to make some rough estimates of what another 80 years of division would cost:

• SK & NK defense (~$35b + $15b = ~$50 billion/yr)

• U.S. defense & aid (~$3 billion/yr)

• Opportunity cost – if NK population were as productive as SK population (~$500 billion/yr)

There is no realistic way to calculate the cost of continued nuclear escalation or the cost and likelihood of losing one or more South Korean, Japanese, or American cities to North Korean missiles. However, if the numbers were knowable, it would certainly dwarf all of the other costs. Furthermore, we can pick a low estimate with confidence that it is low, just by asking what we would willingly pay to avoid it.

For example, would we pay $50 billion a year for a new missile defense system if we knew for certain that it would save one (and only one) major American city from nuclear attack? I don’t think there’s any doubt of that. So whatever the “true” cost of ignoring this risk and allowing North Korea to develop this capability, it has to be at least worth that much.

It took South Korea approximately 50 years to move from being one of the poorest nations in the world to one of the richest. It would take much less time than that to bring North Korea up to the South’s level after a peaceful merger. Doing so would require considerable investments, but the return on investment would be huge. Just bringing North Korea’s population up to the GDP per capita of the South in 2015 would be worth half a trillion dollars a year.

Estimating the net present value of speeding the start of that process by a decade is difficult, but if we took 10 years of increased value in today’s dollars ($5 trillion) and discounted it backward by 25 years at 5 percent, we get a net present value of $1.5 trillion. Even if we are way off on our estimates, it’s clear that getting unification started a decade sooner, represents a real gain of at least several hundred billion dollars and quite possibly several trillion. That’s in addition to the security benefits of achieving a peaceful reunification, rather than waiting for collapse, chaos, or war.

So there’s clearly an opportunity here for a “Really Big Deal” that would save the U.S. and the Koreans huge sums and make everyone safer, given that we can come up with a way to incentivize a peaceful reunion and resolve the situation sooner, rather than later.

So let’s put our brainstorming hats on and think big. What could President Trump do to radically change the equation?

And the answer, in a classic Godfather fashion, is that we need to make the North Korean leadership an offer they can’t refuse.

The Offer

We want to make it as rewarding as possible for the people in charge of North Korea to adopt Option E. We also want the offer to be made in such a way that it will undermine loyalty to Kim Jong-Un and the Kim family if Kim refuses, increasing the pressure on Kim to take the deal.

The simplest way to do this would be to persuade the South Korean government to make a very public official commitment to provide high status and rich rewards for the North Korean leader or leaders who enable peaceful reunification with the South. For example:

The single leader option

If North Korea has a supreme leader who leads the reunification effort, that person will become the fabulously wealthy Emperor of all Korea, revered and exalted by all. Some possibilities:

• $20 billion* cash on completion of the deal

• A pot of $5 billion* to be divided among his followers as he chooses

• An Imperial Palace and Ceremonial Guard with an annual allowance of $50 million*

• Titular head of state, presides over ceremonials

• Honored in huge annual Reunion celebration

• Personal amnesty and immunity for self, wife, and heir

• Amnesty, pensions, and honorable treatment for all colonels and above and all bureaucrats of equivalent rank

*All numbers negotiable

Limitations:

• The Emperor and his family are forbidden to play any role in politics and any direct role in business.

Why should Kim take such a deal? For starters, he has to know that the chances of living to a ripe old age aren't particularly great. His country is weak and struggling, and many of his subordinates have to believe that they could do a better job in his shoes. Many of them also fear being liquidated by him (witness the assortment of other purges that have occurred since he took charge, including most recently his brother) and will be tempted to strike first.

On the positive side, Kim loves adulation and loves things like Hollywood and American basketball. If he took the deal, he could travel the world, go to Disneyland and NBA games, ski in Switzerland, surf in Hawaii, have a Hollywood estate as a vacation home, and be idolized around the world as a super-celebrity on par with the British monarch.

What’s not to like?

Note that the leader doesn’t have to be Kim. If Kim refuses, an ambitious general could easily decide that a coup is worth the risk. One problem with staging a coup is that it often starts a cycle of instability and many successful coup leaders have been assassinated or deposed in turn. But in this case, there’s a safe haven for any successful rebel: stage a coup, lead the unification effort, become the ‘Emperor’ of all Korea, and live a long and glorious life.

The “Revolutionary Council” option

One of the biggest problems with staging a coup is getting others to take the risk of following you for uncertain benefits. But what if the benefits are known in advance? Suppose, for example, that every conspirator knows that a coup will result in lavish benefits for all of them?

For example, let’s say the South Koreans offered these rewards to any group that overthrew Kim and forced through the reunion process:

Cash, status, and amnesty:

• The former ruling council can divide up a pot of, say, $25 billion dollars among themselves and their followers, however they want, but with no one person getting more than $1 billion.

• The former ruling council can designate who will receive a limited number of aristocratic titles (e.g., the Korean equivalent of duke, earl, baron, knight), with appropriate ceremonial honors & duties.

• Each year, the entire country will hold an elaborate celebration at which the former ruling council members are honored for their role in reunification.

• Those with titles are forbidden to participate in politics and strict anti-corruption measures apply. Their titles can be revoked if they get involved in political or financial scandals at home or abroad.

• Senior commanders of military combat units who assist in the peaceful reunification will receive special honors, including the title “Hero of the Unification” and a $1 million honorarium.

• All colonels and above, and government officials of equivalent rank, who are approved by the council will receive amnesty, honorable treatment, and pensions at the equivalent ROK army levels.

Why might North Korean leaders be interested in such a deal?

Physical safety: Living at the whims of a dictator is dangerous.

Security: They know that their country could fall apart at any moment, endangering them and their children.

Wealth: They may have it relatively good in a closed society, but that can’t compare with the wealth they are being offered.

Travel: There’s a big, wonderful, fascinating world out there. The defection rate is already high among North Korean diplomats and others who are allowed to travel.

Status & fame: No one in North Korea dares to become a celebrity and outshine Kim, but the heroes of reunification would be celebrated in song and story for all the world to see.

Children and opportunity: The chances for moving up in North Korea are limited and fraught, even for the children of the rich, and spoiled or rebellious children can be a serious threat to their parents. But the children of titled billionaires and multimillionaires in a free society can go to the best universities in the world and can rise as far as they are able to with an enormous head start.

(Caveat: The idea of offering aristocratic titles was chosen to illustrate the point that the promise of high status and honor can be a potent incentive for powerful people, potentially more potent than additional wealth. However, the South Koreans might very reasonably object to making such a large and long-term change to their democratic social structure. If so, I have faith that creative thinkers can come up with other imaginative solutions that will be equally attractive to the North Korean leaders.)

Cost and benefits of making the offer

The money involved amounts to just a few years of direct savings in the combined defense budgets. It is literally insignificant compared to the cost of extending the conflict for decades more. It’s hard to imagine a bigger bargain or a better investment if it succeeds.

Even if the North Koreans do not accept the South’s offer, just making the offer and publicizing it widely among the Northern elites will intensify Kim’s paranoia. We can expect it to result in increased distrust, an increase in arrests and mysterious disappearances of senior officials, and a breakdown of honest communication as subordinates try even harder to hide small failings and become even more afraid of reporting problems or suggesting changes.

As we know from history, growing Stalinization will further hamper the regime’s ability to govern and respond to crises. All of this will create more pressure, hastening the economic collapse. And when collapse does come, the generals will at least have a de facto plan in their heads for what to do: seize power and hastily accept the South’s offer.

The Warning

To accompany the carrot, we need a stick. Most American presidents would have a hard time articulating a credible threat; but one advantage President Trump has, is that he is not bound by the normal restraints and no one knows yet how far he’s willing to go.

Let’s imagine a scenario in which the U.S. military responds to North Korean bomb or missile tests by instituting a total blockade on North Korea and carrying out a visible deployment of the resources necessary to carry out a decapitation strike against the North Korean military and government. News of other, less visible preparations is also carefully leaked, so that individuals inside of North Korea are aware that there may be real risks in pushing their current strategy too far.

In any such scenario, it would be essential that both the carrot and the stick be widely known in North Korea, so the Americans and South Koreans will need to ramp up their overt and covert communications aimed at North Korean elites. The idea is to make them wonder whether the old strategy has reached the end of its usefulness, leaving them with no good option except reunion.

What about the Chinese?

On the one hand, reunification could result in a close U.S. ally with military forces right on the Chinese border. On the other hand, North Korea is a serious problem for the Chinese, and one that they’ve recently demonstrated a bit of aggravation with. Subsidizing the Kim regime is a substantial drain on their resources. Trying to control smuggling and the escape of North Koreans into China creates a serious border problem. And the Chinese are desperately worried that a North Korean collapse would flood northeastern China with 10 or 15 million refugees.

So China’s response to this kind of initiative is going to be nervous, but not necessarily hostile. On the one hand, they don’t want North Korea to collapse into chaos, which they know is a real danger, and in the long run, some form of peaceful reunification is the best way— possibly the only way— to prevent that. On the other hand, they don’t want the U.S. or a strong military ally of the U.S. moving units hard up against their border.

To make this work, we need to do some quiet diplomacy in advance to reassure the Chinese of our intentions and to point out the benefits of having a peaceful, productive, unified neighbor to its east. We will also need to publically guarantee that when Korea is unified, the U.S. will substantially reduce its military presence in Korea, including the removal of all nuclear weapons from the Korean peninsula, and that we will not move any combat units north of the 38th parallel.

The South Koreans will need to reinforce this by making a strong commitment that the new unified government will adopt a more neutral policy between the U.S. and China, and will work with the Chinese closely in managing the border to the satisfaction of both neighbors. It would undoubtedly help if they made a major commitment, perhaps even a constitutional change, to ban nuclear weapons from the peninsula.

The Chinese will almost certainly attempt to use the transition period as leverage to make demands on the Koreans, such as a ban on advanced air defenses and missile defenses, but ultimately the Chinese have little leverage once the U.S. and South Korea publish their offer and the president states his doctrine. In addition, the U.S. also has levers it can push – e.g., with respect to trade, Taiwan, and the South China Sea – that it can use to dissuade the Chinese from interfering.

Would it work?

Success is more plausible than it might look at first glance. North Korea has played the obnoxious bully, shaking down the locals for tribute, for 60 years. But even the North Koreans have to suspect that the U.S. will not tolerate being pushed too far in this extortion game. Building ICBMs that can land nukes on U.S. and European cities is a step too far by any reasonable strategic analysis. It would completely change the game and up the threat to unacceptable levels for the West.

It makes sense for North Korea to try it, as a gambit. If the U.S. response is weak, it’s a victory for North Korea, and a working nuclear ICBM arsenal further guarantees the regime’s safety from external threat. If the U.S. response is not weak, then the nukes and missiles are potential bargaining chips that can be traded away for a lot of aid and recognition. The weakness in the strategy is the small possibility that the US doesn’t respond with serious threats and demands, but with overwhelming force to take out their missile facilities and/or the regime.

America’s track record has given the regime ample reason to believe that the likelihood of such action is (or was) tiny – but the risk is still there. North Korean leaders have been playing this game for decades and have always kept a keen eye on just how far the regime can push American leaders without triggering a military response.

If we make the North Korean leadership an extremely attractive offer that lets them become heroes in the eyes of a rich, unified Korean nation, and we accompany it with a credible threat to burn their house down with them inside it if they continue on their current course, then they would have every reason to accept unification.

One problem with modern diplomacy is that we have become the captives of some entrenched habits and beliefs based on European diplomacy going back at least to the 16th century. Western-style great power diplomacy served the U.S. well for half a century after World War II, but it could now be time to look to business for our models instead.

Instead of endless stalemate and diplomatic maneuvering, let’s look at North Korea like corporate investors with a takeover target. What kind of golden parachute would it take to get management to side with us in a friendly buyout? And if the opposing CEO isn’t willing to budge, what would it take to get the shareholders to oust their CEO and tender their shares?



President Trump may not be anyone’s idea of a traditional diplomat, but he certainly understands the power of a great vision in negotiations.

Morgan D. Kauffman

Contributor

Morgan D. Kauffman is a writer and consultant living in Houston. He has degrees in Geology and Strategic Forecasting, and specializes in analyzing complex systems. He is currently working on a book, Rethinking America: Getting Serious About Poverty, Inequality, and Economic Growth.