The nightmare of North Korea is finally ending.

With Kim Jong Il’s promotion of two family members to senior military posts in time for the historic Workers’-party conference in Pyongyang last week, the Communist world’s latest succession crisis officially got under way. Actually, “promotion” may not be the right word, given that neither the Dear Leader’s 27-year-old son, Kim Jong Eun, nor his 64-year-old sister, Kim Kyong Hui, had held military positions of any significance before they were elevated to the rank of four-star generals.


For the surreal North Korean regime, these days must seem like the Twilight of the Gods. The state’s unification strategy, its raison d’être since the “military first” doctrine emerged in the early 1960s, has visibly and utterly failed. The people have been starving for decades. The government is almost friendless. The state religion — a grotesque amalgam of Stalinism, Confucian collectivism, and god-worship of the Kim dynasty — is melting into a tide from all sides. They have nuclear weapons, which must feel a bit like wielding a Götterhammer, but it has gotten them precious little of what they hoped for. Perhaps most important, Red China’s emergence as a major capitalist power presages nothing good for this aging and decrepit relic of Stalinism. In an inversion of the Wagnerian tragedy, the dwarf has been undone by the mighty.

The tide around the “fortress of socialism” is rising particularly on the Yalu River. North Korea’s remote border with China runs most of the course of the Yalu. On the other side of the Yalu, China’s economic miracle is approaching relentlessly. The thriving metropolis of Shenyang, one of China’s ten largest cities, and Daidan, one of its principal ports, are but a few hours’ drive by freeway from the border town of Dandong.


The once-forbidding border has opened up considerably, partly because of official policy and partly because of the extent to which the North Korean black market — which survives on official corruption — has eroded the internal authority of the regime. Both governments still work hard to keep anybody from getting out of North Korea, but hundreds of thousands of North Korean refugees have nonetheless escaped to China and South Korea, vastly improving our understanding of daily life in the Hermit Kingdom.

As chronicled by Korea experts such as Prof. Andrei Lankov of Kookmin University, in Seoul, the refugees paint a picture of a decaying dystopia. In today’s North Korea, illicit trade is the principal means of subsistence — only a small fraction of the people’s nutritional needs comes from official rations, by some estimates as little as 6 percent of their caloric intake. Moreover, the illicit trade has flourished inside the government’s own infrastructure: Bribery allows traders to “rent” space on the government’s own trains and trucks, and even to pay “duties” at border checkpoints.



According to one refugee, only schoolchildren undergoing indoctrination at official party camps any longer believe official propaganda about the shining success of North Korea and the pervasiveness of squalid conditions elsewhere. Chiefly because of the flood of black-market videocassette recorders and cheap South Korean videos in the last ten years, North Koreans now know what they could not have known before — namely, that it is they who live in squalor while their fellow Koreans to the south enjoy breathtaking material comfort.

After the ruinous famines that followed the end of Soviet subsidies (a million North Koreans or more may have died in the mid-1990s), the regime is said to have toyed with market reforms. But, writing in the journal Asia Policy, Lankov argues persuasively that the regime was merely trying to adjust to the reality of a new informal market that had arisen in the failure of the state’s own food-distribution system. In the last five years, as increased trade and aid have relieved some of the pressure on Pyongyang, North Korea has once again embraced economic and political repression — and confrontation with its adversaries abroad.


As George Kennan wrote of the Soviet Union in his Long Telegram at the dawn of the Cold War, understanding the sources of North Korean conduct involves questions so “intricate, so delicate, so strange to our form of thought,” that any assessment is hazardous. But one thing seems increasingly clear: If you really want to understand North Korea’s behavior, shift your focus from Pyongyang to Beijing.


When the George W. Bush administration first came into office, it was determined to solve the problem of North Korea and its nuclear-weapons program once and for all, rather than punt it into the next administration. It concluded that one positive step would be to involve China in the situation by convincing it that the North Korea nuclear crisis was China’s problem too. But what Americans have always had trouble understanding is that China sees North Korea as principally its problem, more than anybody else’s. (See John Lewis Gaddis’s We Now Know.) And what the Bush administration failed to appreciate was that China’s changing perception of North Korea would now be the central plot-driver in this final act of the North Korean tragedy.

Several historical processes running in parallel have crystallized the preeminence of China at the end of the road for North Korea. The first was that that one by one, North Korea’s traditional enemies have faded as key factors in its strategic calculus. Second was the cutting off of North Korea from the world financial system, especially with respect to illicit activities, chiefly as a result of U.S. Treasury actions. These two forces paved the way for the third, namely the rise of China as the one foreign power that North Korea really cares about.

The eclipsing of Japan, the U.S., and South Korea as North Korea’s principal strategic concerns would have been difficult to predict a decade ago. As a result of an impasse over kidnapped Japanese citizens, Japan has for the better part of a decade refused to give any money at all to North Korea, even as part of the Six-Party Talks, even in the form of humanitarian assistance — a far cry from the 1990s, when it was offering North Korea $10 billion in yearly assistance to give up its nuclear program. The U.S. has also been far more tight-fisted than it was in the 1990s under the Clinton administration. And after a conservative, pro-American government came to power in Seoul early 2008, South Korea began reducing its trade and economic assistance to the North. Now, after the North sank the South Korean navy vessel Cheonan last March, killing all 46 aboard, the South has reduced its trade and aid to a tiny fraction of what it was just three years ago.


The current irrelevance of the U.S. and its allies in the strategic calculus of North Korea was certainly not the intended goal of the Six-Party Talks, but it was almost their only result. The reason is that from the start, the Six-Party framework could only work if it became the gatekeeper for international economic assistance moving to North Korea. If we could create a united front among the surrounding great powers, we might be able to make North Korea an offer it could not afford to refuse.

But as it happened, neither China nor South Korea was willing to hold bilateral trade or economic assistance hostage to the talks. From 2000 to 2008, China’s trade with North Korea increased from about $400 million to more than $1.7 billion, and South Korea’s trade with the North increased by nearly an equal amount. Indeed, not even hard-line Bush-administration officials were willing to hold humanitarian assistance hostage to the nuclear issue. In the end, the talks amounted to a nearly irrelevant exchange of minimal steps for minimal assistance. They were doomed from the start.

Of more lasting but less obvious significance were the actions taken by the U.S. Treasury against North Korea starting in 2005. The largely unsung success of those actions has important implications for our Iran policy, as Juan Zarate explains in a recent issue of NR. Zarate, who eventually became deputy national security adviser under President Bush, was then a senior Treasury official, part of an interagency working group that sought ways to leverage the post-9/11 financial regulations against rogue regimes such as North Korea.

In October 2005, after careful preparation, and with little warning, the U.S. Treasury issued a preliminary ruling designating a small bank in Macau — Banco Delta Asia — an institution of “primary money laundering concern” and enjoining American banks from doing any business with any bank that did business with it. As banks everywhere scrambled to implement the know-your-customer due-diligence rules adopted by the Treasury in the wake of 9/11, BDA was cut off from the international financial system. The morning after the ruling, there was a run on the bank, and it was seized by local authorities to avoid a collapse.

BDA was one of a few banks — another being the Bank of China — that North Korea depended on to launder cash obtained from its illicit trade in drugs, weapons, counterfeit cigarettes, and counterfeit dollars. North Korea used an array of front companies to conduct this vital trade, but the due-diligence rules that banks were now forced to adopt as a result of Treasury regulations — even at the Bank of China — made it hard for North Korea to hide its ownership of those front companies. People stopped doing business with them. The regime was forced deeper into dependence on China and South Korea.


With the recent loss of South Korean support, North Korea now depends utterly on China, as it has never depended on any single power since the fall of the Soviet Union — and of course, for Beijing, it has nothing like the strategic value that it had for Moscow at the height of the Cold War. In fact, it is hard to see how North Korea has any strategic value for China at all. It is purely a problem.

Dependence on modern China is not the most comfortable place for a moribund Stalinist dictatorship to be. Despite an alliance going back to the Korean War, China’s current course of economic development has put it on a collision course with Pyongyang. China reacted sharply to planned U.S.–South Korean exercises in the East China Sea not because it wants to defend North Korea but because China increasingly views its near abroad as its natural sphere of influence. Like most rising Great Powers before it, China has come to view itself as the preeminent power in its own region. That should not distract Korea-watchers from the obvious fact that the relationship of North Korea and China has been transformed — along with all of China’s other relationships abroad.

China remains a Communist regime and continues to rely on political repression and economic central planning to maintain its political monopoly. And as the latest Pentagon report on China’s military power makes clear, a great deal of China’s military development has hegemonic and even hostile intent. Its grand strategy aims to defeat key capabilities of America’s defense architecture on the Pacific Rim, to intimidate those countries that contest its claims to large tracts of the South China Sea (as we saw recently in its dispute with Japan), and eventually to bring Taiwan to its knees.

But it has become a more subtle and less ideological Communist regime, to make no mention of a spectacular economic success. Thomas Friedman’s embarrassing paeans to the Communist Chinese are decidedly illiterate next to Edmund Wilson’s similarly admiring tracts on Soviet Communism written during the 1930s, but Friedman is not as ill-informed as Wilson was. He has at least put his finger on the importance that globalization has to the political economy of China. Globalization is of course totally poisonous to Pyongyang’s “fortress of socialism” philosophy, and to have its benefactor embrace it so wholeheartedly can only spell doom.

It is true that China has dramatically increased its trade with North Korea; and by some estimates, North Korea receives some 40 percent of China’s total foreign assistance. It is true that maintaining stability in North Korea is a far higher priority for China than resolving the nuclear issue. It is also true that China has frustrated the U.S. goal of ending North Korea’s nuclear program — although, to be fair, only marginally more than our own policies have done that.

Still, consider the fact that China has consistently voted against North Korea in the Security Council since 2006. It could have abstained, but it did not, in any instance. Instead it has assumed an obviously hostile, and even humiliating, diplomatic stance. China tried to water each of those sanctions down, true enough, but they were still hostile votes, and in their cumulative effect, they have proven more than a little painful. For example, as a result of sanctions that Pyongyang can rightfully attribute to Beijing, even Burma has refused docking rights to North Korean vessels.

The truth is that China’s votes against North Korea in the council have been astounding public repudiations, especially given the two countries’ history as brothers-in-arms in the Korean War and steadfast allies for most of the 60 years since. And consider, too, that no regime has ever survived the accumulation of Security Council resolutions that have now passed against North Korea — and Iran.

Shen Dingli, vice dean of the Institute of International Affairs at Shanghai’s Fudan University, recently explained China’s refusal to condemn North Korea for the sinking of the Cheonan with a simple observation: “North Korea is dying.” The end of North Korea has been predicted for years, but now the signs are everywhere. It remains only to pray that this wicked regime passes beyond the twilight without ever using the cataclysmic weapon it now wields.

– Mario Loyola, a former foreign-policy counsel to the U.S. Senate Republican Policy Committee, is director for Tenth Amendment studies at the Texas Public Policy Foundation.