Papa China should dock North Korea's allowance

Tuesday, June 1, 2010
By William Pesek, Bloomberg

This time things are different.

It's odd that Greece's debt gets more attention these days than Kim Jong Il's nuclear weapons. It may be a sign that the latest North Korea crisis will be the one that brings real change in the world's relationship with Pyongyang.

The only time it's more dubious to say “this time things are different” is when characterizing a Japanese recovery. Such an argument can lead to cliche and utopian thinking.

One reason to think this Korean incident is different is China. You don't have to be a fly on the wall in Beijing to know officials there are annoyed. Kim is a giant mosquito buzzing around their heads, threatening to sting at any moment. Merely swatting him away is no longer an option as the U.S., South Korea and United Nations demand that China rein in its ally.

This is a highly complicated dynamic for Kim's sugar daddy. China's key objective is to avoid a meltdown that would send millions of refugees its way. Kim also is a convenient way to preoccupy the U.S. Better ties between Washington and Pyongyang would cost China geopolitical influence in North Asia.

The benefits of triangulation are dwindling now that Kim may have thrown one tantrum too many. It began with an alleged North Korean torpedo that, according to an international report, sank the 1,200-ton Cheonan in March, killing 46 sailors.

'Rock Solid'

South Korean President Lee Myung Bak took his case to the United Nations Security Council, halted trade with his neighbor, barred any new investment in the country and banned North Korean ships from the South's waters. Visiting Seoul on May 26, Secretary of State Hillary Clinton said the U.S. commitment to South Korea's security was “rock solid.”

All this puts China in an awkward position. It's perhaps plausible for China to argue its interests in Sudan don't afford it great influence there. It's not possible to say the same about North Korea. It's the main benefactor of the world's most isolated regime, which relies on China for aid, food and oil.

China should threaten to turn off this flow. It was entertaining in 2006, for example, when George W. Bush's administration moved to deprive Kim of his prized luxuries. No more Rolexes, Cadillacs, iPods, Harley-Davidsons or yachts. No more fur, wagyu beef, Jet Skis, cigars or Johnnie Walker scotch. It was clearly aimed at annoying the pampered tyrant.

Carrots and Sticks

It's time for China to begin taking away Kim's allowance. Few serious people want to see North Korea implode. The implications for the South Korean and Chinese economies would be dire. China must stop covering for Kim's belligerence, though. It's time for fewer carrots and more sticks.

China has plenty on its plate: clamping down on asset bubbles, riding out Europe's debt fiasco, deflecting U.S. demands for a stronger currency and grappling with simmering social unrest. Striking workers at a Honda Motor Co. plant in Guangdong province and a rash of suicides at Foxconn Technology Group's factory in Shenzhen show wages aren't increasing fast enough as a proportion of gross domestic product.

There's no time to waste. This month, China backed U.S. proposals for tougher sanctions against Iran. It was an encouraging sign of realpolitik.

Going a step further and clamping down on North Korea would win China goodwill. It would force Kim to negotiate with the world, open his economy and set the stage for a more stable Asia. It could mark progress for North Korea's 23 million people and give Chinese officials one less thing to worry about.

China's economic might isn't at risk. The question is: As China's economy races ahead of its diplomatic efforts, will it be a responsible global citizen? North Korea is a perfect place to prove it is.

We are caught on a toxic pattern. Kim misbehaves when he feels ignored, spooks the world and often gets his way. Then we return to the delusion that the so-called six-party talks can succeed. They are the diplomatic equivalent of the Doha round of World Trade Organization talks. Let's drop the collective fiction that either is still alive.

China can help bring North Korea back from the brink. The odds it will begin doing just that may be better than ever.

William Pesek is a Bloomberg News columnist. The opinions expressed are his own.

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