The Threat of Soft Power On North Korea

The Journal of
EAST ASIAN
AFFAIRS
Vol.29, No.1
Spring/Summer 2015
The Journal of East Asian AFFAIRS
Vol.29 Spring/Summer 2015 No.1
Contents
China’s Economic Leverage in Southeast Asia 1

John Lee
Peace Agreement, Democratization, and Its

Implication in East Asia 23
Young Hwan Park
Markets, Movies, and Media:

The Growing Soft Power Threat to North Korea 41
Mitchell Lerner
International Cooperation for the Construction

of South Korea - North Korea - Russia Pipeline Nat-
ural Gas (PNG) : Effectiveness and Restrictions 71
Ji Won Yun
China’s Economic Leverage in Southeast Asia
John Lee
Hudson Institute
Abstract
The popular perception that China stands poised to supplant America as the
most important economic partner of key countries in Southeast Asia has led to
speculation about a deepening and widening divergence between the security
interests and preferences for Southeast Asian countries (for American strategic
pre-eminence) versus forced reliance on China as the economic driver of growth.
Yet, despite its economic size and assumed importance, Beijing has not been able
to alter the strategic alignment of even one significant power in Southeast Asia. In
fact, every significant trading power in the region has moved closer to America in
strategic and military terms even as their trading relationships continue to deepen
with China.
The article seeks to offer some explanation for China’s incapacity to translate its
supposed economic clout and importance into strategic leverage at America’s
expense. Analysis of the economic relationship between China and key Southeast
Asian countries reveals that these economic partners are not as dependent on
the Chinese economy as rising trade numbers suggest. Indeed, one should not
overestimate the role of China in driving prosperity in the region, or assume that
China has emerged as the primary driver of prosperity in the region. In reality,
advanced economies and firms from those economies such as America’s remain
far more important to major Southeast Asian countries than does the Chinese
economy and Chinese firms. Such a situation is likely to persist into the foreseeable
future, meaning that America’s economic capacity to seduce Southeast Asian
governments and firms will remain robust and possibly even decisive.
Key words: Sino-Southeast Asia relations; regional trade; Asian economic

development

Introduction
In August 2010, China officially surpassed Japan as the largest

economy in Asia and the second largest in the world after the Unit-
ed States. Over the past decade, it has emerged as the largest trading
partner for Japan, South Korea, India, Vietnam, Indonesia, Malaysia,
Australia, and the Association of Southeast Asian Nations if ASE-
AN is treated as a single entity. It has emerged as in indispensable
economic player in the region, a role which offers it an economic
importance and standing that the former Soviet Union never en-
joyed to the same extent in Asia. Just as the rise of the United States
as the preeminent and preferred strategic player in East Asia was
underpinned by the emergence of America as the most important
trading partner for many of these countries in the 1950s, 60s and
70s, there is increased speculation that China stands poised to
supplant America as the most important economic partner of key
countries in Southeast Asia if it has not done so already.
This has led to a common wisdom that there is a deepening and
widening divergence between the security interests and preferences
for Southeast Asian countries (for American strategic pre-eminence)
versus forced reliance on China as the economic driver of growth.
(Novtony 2010; Reilly 2013)Yet, China’s incapacity to translate its
current status as Asia’s greatest trading nation into strategic leverage
in that region is puzzling. Despite its economic size and impor-
tance, Beijing has not been able to alter the strategic alignment of
even one significant power in Southeast Asia. In fact, every signif-
icant trading power in the region has moved closer to America in
strategic and military terms even as their trading relationships con-
tinue to deepen with China.
How then can we explain China’s strategic loneliness vis-à-vis
smaller neighbours seemingly dependent on trade with China? The
simple and accurate answer is that these economic partners are not
2
as dependent on the Chinese economy as the raw trade numbers
suggest. Indeed, one should not overestimate the role of China in
driving prosperity in the region. In reality, advanced economies and
firms from those economies remain far more important to major
Southeast Asian countries than does the Chinese economy and Chi-
nese firms. Such a situation is likely to persist into the foreseeable
future, meaning that America’s economic capacity to seduce South-
east Asian governments and firms will remain robust and possibly
even decisive.
Hedging and Balancing against

China in Southeast Asia
If economic trends point to a China that is poised to dominate

Southeast Asia economically, the security actions of these smaller
states suggest a different direction. In one sense, the security prefer-
ence by key Southeast Asian states for continued American strategic
pre-eminence is easy to understand.
One primary reason is that hopes of China’s ‘peaceful rise’ are
fading. For much of the decade leading up to 2010, Beijing engaged
in what was widely known as ‘smile diplomacy’ toward Southeast
Asia. This included years of trying to convince Southeast Asian cap-
itals that China’s rise was much more of an opportunity and that
the ‘China threat’ thesis was inaccurate and over-blown. To achieve
this, Beijing courter key states in Malaysia, Indonesia, Singapore,
Thailand, Vietnam and the Philippines, and became extremely
active in Association of Southeast Asian Nations (ASEAN) led or-
ganisations. (Lee 2007) From the American and regional point of
view, there were strong hopes that China would indeed emerge as a
‘responsible stakeholder’ in the pre-existing regional order. (Zoellick
2005)

Yet, from 2010, China became far more assertive in pushing its
various claims in the South China Sea. Beijing’s recent actions in
this regard are well known and need not be repeated here.1 The
point is that such actions have raised apprehensions in all the key
states mentioned above (with the possible exception of Thailand
which has kept itself largely apart from these maritime disputes.) In
addition to the rapid rises in China’s military spending and result-
ing gains in its maritime capacities, Southeast Asian capitals have
come to the reasonable conclusion that there can be no military
balance in Southeast Asia which could keep China in check with-
out a robust American strategic and military presence. As Singa-
pore’s Prime Minister Lee Hsien Loong put it in a recent interview,
there are questions as to whether China “is going to be benign and
not only play by the rules but leave space for other countries that
are not as powerful to prosper.” In this context, America is welcome
in the region precisely because it “wants the region to prosper…
countries to do well” and importantly is “prepared to help them.”
(Weymouth 2013)
In a study of recent security behaviours by East Asian states,
one commentator characterises the post-World War Two security
environment as exhibiting a ‘layered hierarchical structure’, and
that states have generally manoeuvred strategic relations in such a
way so as to preserve American strategic pre-eminence rather than
counter such pre-eminence. (Goh 2008) In the post-2010 period,
this has been generally borne out by key Southeast Asian states.
In one recent survey which is representative of the informed
consensus about the recent strategic manoeuvrings of Southeast
Asian states, responses to the challenges of China’s rise have taken
a number of forms: internal balancing, or building up of national
defence capabilities; external balancing, or building up of formal
1 ‌For a summary of increased Chinese assertiveness in the South China Sea, see (Cronin
2013).
4
defence alliances of semi-formal security relationships; and soft
balancing through the use of tacit, informal, and institution-based
offsetting approaches. (Shearer 2012)
For the Philippines which has a pre-existing formal treaty alli-
ance relationship with the U.S., Manila has adopted an external bal-
ancing posture by enhancing the military relationship with the U.S.
and is even considering inviting American forces back into Subic
Bay. Although not a formal treaty ally of America’s, Singapore has
done the same by upgrading facilities in its ports in order to host U.S.
littoral combat ships.
Malaysia, Singapore, the Philippines, Indonesia and Vietnam
have all engaged in various ‘soft balancing’ moves. Malaysia and
Singapore have strengthened their security ties with the U.S., and
remains poised to further upgrade these even if it will resist com-
mitting to a formal treaty. Vietnam is also engaged in soft balancing
with the U.S. in its ongoing discussions to host U.S. naval ships
even as Hanoi insists that no foreign navies will ever be allowed
to use Vietnamese territory as a ‘base’ for operations. Although
committing to its long-standing ‘non-aligned’ rhetoric, Indonesia
has strengthened ties with the U.S. All these countries are also ex-
ploring ‘soft balancing’ options with other strategically like-minded
countries such as Japan and India.
Additionally, all these countries have engaged in various degrees
of ‘internal balancing’ behaviours. Singapore is committed to ensure
that it continues to possess the most capable naval force in South-
east Asia. Malaysia is boosting its maritime and air capabilities.
Vietnam is boosting its submarine capabilities while the Philippines
is bulking up its patrol fleet capabilities. Indonesia is seeking to ac-
quire a submarine fleet.
Finally, all these countries are seeing to use ASEAN and ASE-
AN-backed regimes such as the East Asia Summit to impose in-
stitutional and collective diplomatic pressure on China in order to
raise the non-military costs of Chinese assertiveness and coercion

in the South China Sea. While the perennially stalled Code of Con-
duct which seeks to impose binding rules and restrictions on such
behaviour confirms that institutional approaches have been met
with very limited success, the point remains that key Southeast
Asian states are all exploring possible collective means to increase
restrictions on Chinese behaviour.
None of this is to imply that all of these balancing and other be-
haviours by Southeast Asian states is only done with an eye to Chi-
na. Much of the defence spending by Southeast Asian states, par-
ticularly Indonesia, is about preserving internal stability and order.
There has also long been competition between many of these states
and some of the internal balancing behaviours (i.e., improving na-
tional defence capabilities) is also about intra-Southeast Asian rival-
ry. Even so, the point being made here is that any balancing activity
vis-à-vis great powers by all these states is to enhance the American
presence (and in some cases facilitate joint-operations with the
American Seventh Fleet) and balance against China’s military rise
and activity in the area. (Amitav 2014)While Southeast Asia cannot
decisively alter the balance of power in that particular region given
the presence of great powers, these behaviours can ‘complicate’ the
strategic and tactical calculations by potentially disruptive great
powers such as China. (Lee 2015)
The bottom line is that as China is rising, key Southeast Asian
states appear even more determined to preserve the ‘layered hierar-
chical security order’ in America’s favour. The exceptions appear to
be Thailand which is displaying elements of both band wagoning
with China and balancing against the latter by continuing to allow
American forces access to Thai facilities under the practices of its
alliance with America, and countries such as Laos and Cambodia
which seem to be vulnerable to Chinese influence and will.
6
Explaining the Puzzle: Overestimating
Chinese Economic Importance
The belief that China’s economic importance in the region will

translate to greater strategic clout seems self-evident. After all, the
highest priority for Southeast Asian states is prosperity and eco-
nomic growth. If China is emerging as an ever stronger economic
driving force in underpinning growth and prosperity in the region,
then it should follow that Beijing’s growing strategic leverage cannot
be far behind.
Yet, the puzzle lies in the fact that even as China seemingly be-
comes economically more important to the prosperity of Southeast
Asian countries, the key countries in that region are showing stron-
ger balancing behaviours against China and in favour of the U.S.
While the preference for American strategic pre-eminence is easy to
understand, the poor capacity of China to use its economic weight
and clout to force or coerce these countries and pull them toward
Beijing’s strategic orbit is odd. This is particularly the case since
strategic competition between China and America is deepening
rather than fading, and the consequent competition for strategic in-
fluence in Southeast Asia is also deepening between these two great
powers. When one further considers the historical evidence that
all large economic powers – which China undoubtedly is – have
exerted a strategic pull on smaller economies around them, Beijing’s
relative lack of strategic clout is even more puzzling.
(a) The
‌ superficial evidence for Chinese dominance over and centrali-
ty to Southeast Asia
The argument for Chinese economic centrality in the East Asian

region is rarely contested and widely accepted as self-evident. And
there is seemingly ample evidence that China is of high and in-
creasing economic importance to the region.

Take Chinese trade with the region which is the most com-
monly cited set of statistics when it comes to establishing Beijing’s
economic clout and importance. For example, trade with Malaysia
has grown forty-fold over the past two decades with China surpass-
ing Singapore to become Malaysia’s largest trading partner in 2009.
Sino-Vietnam trade has grown almost fifteen-fold since 2000 to
over US$44 billion in 2013, making China the largest bilateral trade
volume partner for Vietnam. Two-way trade between China and
Thailand has grown a more modest but still impressive six-fold over
the past decade, and more than five-fold with Indonesia over the
same period. The rapidly growing Southeast Asian economies has
seen trade with China grow by double-digit percentage figures each
year over the last decade, at least superficially suggesting that the
economic rise of these countries is more dependent on China than
any other country.
(b) Understanding
‌ the drivers of booming trade and economic interac-
tion between China and Southeast Asia
While these official numbers can be taken on face value, the as-
sessment and analysis of their significance is not as straightforward
as those asserting Chinese economic dominance might believe. In
thinking about trade, most intuitively think immediately about
‘ordinary trade’: where ‘Made in China’ means that sourcing raw
materials and parts, design, and assembly of a product is largely
done wholly within that country. Yet, the reality is more complex.
Booming trade numbers are representative of an explosion in ‘pro-
cessing’ trade: where parts of products are imported into an econo-
my, assembled or altered, and then exported to another economy to
further the production process. Opportunistic and highly respon-
sive export-manufacturers view the ASEAN+3 economies (ASEAN
countries plus China, Japan and South Korea) as a vast production
zone with little discrimination as to where they locate production
8
processes beyond commercial motivations of capital and labour
cost and reliability. The iconic illustration is Apple’s iPhone which
although labelled ‘Made in China’ is in fact produced in multiple
countries with Chinese workers adding very little additional value
to the final product despite the labelling. (Batson 2010)
When it comes to processing trade throughout East Asia, one
can take the Sino-Malaysia trading relationship as representative.
More than 70 percent of Malaysian exports to China are manu-
factured goods and parts with the ‘electric and electronic’ (E&E)
sub-sector constituting almost half of all such exports in 2013.
Other prominent sub-sectors include parts for machinery and ap-
pliances. In terms of Chinese imports into Malaysia, more than 95
percent are manufactured goods and parts, also dominated by the
E&E sub-sector as well as machinery and appliance parts. When
one examines this trade structure in asking why the two countries
are importing and exporting the same categories of products to
each other, it becomes clear that parts are brought in and out to be
assembled, or else altered or tailored for specific end products, and
then shipped back again to China or elsewhere in the ASEAN+3
zone for further ‘processing’. (Lee 2014a)
The nature and structure of Chinese trade with the middle-in-
come ASEAN+3 economies are similar. Thailand brings out this
point well. Machinery equipment and parts, electronic equipment
and parts, and chemicals and polymers used for further manufac-
ture make up around half of all Thai exports to China. These same
sub-categories make up around half of all Chinese exports to Thai-
land. (Lee 2013b) The only difference is where countries lie in terms
of adding value to the production process. When it comes to less
developed and lower skilled economies such as Vietnam and Cam-
bodia, these countries tend to supply lower-value added materials to
mid-level processing trade countries such as China, Thailand and
Malaysia. The highest value-added processes tend to take place in the
advanced economies of Japan, South Korea, Taiwan and Singapore.

When it comes to lower income countries such as Vietnam, its
relative backward domestic manufacturing base means that Viet-
namese manufacturing firms have become dependent on Chinese
intermediary products such as machinery and parts, computer and
electronic components (including for cell phones,) chemicals, and
iron and steel products and materials. Even though bilateral trade
volumes are booming, this is contributing to a growing trade deficit
with China that has ballooned from US$11.12 billion in 2008 to
US$23.7 billion in 2013 on two-way trade volume of about US$43
billion in 2013. (Lee 2014b)It is a similar story for Sino-Indonesia
trade with cheap Chinese manufacturing parts and components
flooding the Indonesian market, contributing to consistent trade
deficits over the past decade. (Lee 2013a) All this is reflective of the
trend in Chinese regional trade in intermediate goods which has
increased as a share of exports from around 45-50 percent at the
beginning of this century to 55-65 percent currently.
To emphasise the dominance of these interactions, various stud-
ies from organisations such as the World Bank and Organization for
Economic Cooperation and Development suggest that around two-
thirds to three-quarters of China’s trade with ASEAN+3 countries is
‘processing trade’. (OECD-WTO 2012; OECD 2015; WTO/IDE-JETRO
2012)Note that processing trade also artificially inflates the volume of
two-way trade between processing countries due to multiple count-
ing in trade volumes as parts enter into one country and is then pro-
cessed and returned to that original country, and so forth. China is
now a major hub of processing trade meaning that its trade numbers
with the majority of ASEAN+3 economies have expanded rapidly. But
in emphasizing the point that the ASEAN+3 zone has become a vast
production hub for global products for export, the increase in China’s
trade with the major ASEAN+3 countries has risen at approximate-
ly the same levels as trade between ASEAN countries themselves.
(Ravenhill 2010) This is to reiterate the point that China is only one
part, albeit a major one, of a vast manufacturing network in East Asia.
10
(c) Explaining China’s poor capacity to exercise strategic leverage
Looking at the structure and nature of trade between countries

is not simply of academic importance. But the significance of it in
understanding China’s lack of strategic leverage is not immediately
obvious. The argument being advanced is that the dominance of
‘processing trade’ between China and the other ASEAN+3 econo-
mies is critical to explaining why leverage imputed to Beijing re-
sulting from its booming trade numbers with regional partners is
somewhat overrated for a number of reasons.
First, there is a widespread assumption that China is becoming
the largest consumer of products manufactured in Asia, suggesting
that the Chinese consumer is the dominant driver of prosperity in
the export-orientated economies in the maritime rim of East Asia.
While enhanced intra-region production networks enormously in-
crease manufacturing and cost efficiencies for firms, end consumers
are all important for manufacturers because it is the end consum-
er that ultimately creates markets for manufacturers by driving
consumption. Indeed, the large proportion of products produced
in East Asia is destined for the vast and still dominant advanced
economy consumption markets in the United States and the Euro-
pean Union. One should remember that the domestic consumption
markets of the U.S. and the E.U. are each over US$12 trillion and
remain largely accessible to foreign firms, compared to the Japanese
domestic consumption market of about US$5 trillion and the highly
protected Chinese domestic consumption market of about US$3
trillion.
The importance of the advanced economy consumer to the
prosperity of Asian economies is evident in figures showing that
while ASEAN-China trade had grown in high double digit rates per
annum for the previous ten years, trade between China and ASEAN
immediately contracted by 7.8 percent with the onset of the 2008
global financial crisis which plunged the Western markets into re-

cession. When it came to specific countries, Sino-Malaysian trade
actually declined 1.7 percent in 2009 from the previous year, having
grown at a remarkable 21.7 percent per annum (compounded) in
the 10 years before according to Malaysian Ministry of International
Trade and Industry figures. It was even worse in terms of the de-
cline of Chinese two-way trade with other neighbours in the same
period. Figures for 2008-2009 show that Chinese two-way trade
with Singapore, Japan and Thailand declined 15.7 percent, 21.5 per-
cent and 9.8 percent respectively according to Thailand’s Ministry
of Commerce and Com-trade figures.
If we take Malaysia as a case study, Sino-Malaysian trade only
recovered to ‘normal’ boom-time levels when the economies of the
U.S. and also the E.U. emerged out of recession. For example, from
2008-2009, Chinese imports to the U.S. declined by about US$41
billion or 12.2 percent – triggering significant declines in trading
levels between the ASEAN+3 economies. From 2009-2010 and 2010-
2011, Chinese imports to the U.S. increased by about US$69 billion
or 23.3 percent, and US$35 billion or 9.6 percent respectively. Over
the same time period, two-way Sino-Malaysian trade increased by
14.5 percent (2009-2010), and 13.7 percent (2010-2011). Similarly,
Malaysian trade with other ASEAN countries increased 21 percent
(2009-2010) and 8.3 percent (2010-2011), having dramatically de-
clined 15.4 percent from 2008-2009. These trends mirror the trad-
ing experiences of countries such as Japan, Thailand, Vietnam and
Singapore over the same period. (Lee 2013a; Lee 2013b; Lee 2014a;
Lee 2014b)
All of this is compelling evidence that Western industrialised
economies (rather than consumer markets in China) have a great-
er role in driving trade between the ASEAN+3 countries. In other
words, the Western consumer remains the dominant driver of trade
in the ASEAN+3 economic region. (Paprzycki et al 2010)China’s
GDP still grew 8.7 percent in 2009, yet the dominant variable when
it came to trade between ASEAN+3 countries was still the strug-
12
gling economies of the U.S. and E.U. This is consistent with the fact
that the raft of free trade agreements in the ASEAN+3 zone (such
as the China-ASEAN FTA) have significantly lowered or eliminated
tariffs primarily for processing trade sectors. But regulatory and
other protection measures remain in place preventing Asian coun-
tries from significantly accessing China’s domestic consumption
and services markets. (European Commission 2014; Scissors 2012;
Sally 2010; Wong 2012)
Second, the majority of ASEAN+3 economies including China
are still primarily importers of innovation, largely through hosting
advanced economy firms or joint ventures with these advanced
economy firms. Technology-transfer, entrepreneurialism and
managerial know-how is largely acquired through the presence of
advanced economy firms setting up manufacturing plants and pro-
cesses in low- and middle-income countries. This was the experi-
ence of Japan, South Korea, Taiwan and Singapore in the 1960s, 70s
and 80s, Malaysia and Thailand in the 1970s and 80s, and China
from the 1990s onwards.
The importance of foreign owned or foreign invested firms to
export manufacturing in Asia remain to this day. In China, it is
estimated that such foreign owned firms are behind at least 60 per-
cent of all export-manufacturing in the country, (Yu et al 2012; Xing
2011a)with foreign-invested firms behind 80 percent of all Chinese
exports. (Xing 2011b)In Malaysia, and according to 2011 figures,
foreign owned firms were behind 60 percent of all manufacturing
in the country, and 80 percent of all export-orientated manufactur-
ing in Malaysia. (Xing 2011b) In Vietnam, over 63 percent of export
manufacturing is done by wholly owned foreign firms. When one
includes joint-venture firms with foreign entities, the export manu-
facturing share by foreign-invested firms is likely to be close to 90
percent. (Lee 2014b)In Thailand, foreign owned firms are behind
more than half of the country’s export manufacturing. (Lee 2013b)
In this context, and far from being an economic opportunity,

China has ‘eaten the lunch’ of every other non-advanced regional
economy since the 1990s. Its virtual duty-free regime for attracting
processing imports in order to increase its market-share in ‘pro-
cessing’ trade vis-à-vis other medium- and low-income ASEAN
economies – in combination with the country’s excellent infrastruc-
ture and shipping port facilities - has been an enormous success.
In 1993, processing imports entering China was valued at US$36.4
billion, rising to US$417 billion by 2010. (Xing 2011c) The top four
sources of Chinese processing imports are Taiwan, Japan, South
Korea and the U.S – all advanced economies using foreign-invest-
ed joint ventures or Chinese based firms to add further value and
assemble medium- and high-tech products. The top nine most
important destinations for Chinese processing exports – account-
ing for about 71 percent of all processed Chinese exports - are all
advanced, consumer economies: U.S., Japan, South Korea, Germany,
Netherlands, Singapore, U.K., Taiwan and France. (Xing 2011c)This
has largely come at the expense of other developing economies in
East Asia.
The bottom line is that South Korean company Samsung’s
US$1.5 billion plant in the Vietnamese province of Bac Ninh which
generated US$21.5 billion in export revenues in 2013 is more criti-
cal to Vietnam’s future economic prospects than any Chinese firm
or brand. The same can be said for American giants General Electric
and Hewlett Packard when it comes to the health of the Malaysian
economy, and export sector in particular. The prospect that Burma
can take its place amongst the rapidly growing regional economies
depend more on Western firms such as Caterpillar, Citibank, Kraft
Foods, Ford, Bell Helicopter, Hewlett-Packard, Arrow Technologies,
Master card and PepsiCo – who are already investing billions in
Burma or have applied for licences to do so - than they do on Chi-
nese counterparts.
In fact, and reflecting the importance of advanced economy
rather than Chinese firms to regional development, the top ten
14
source countries for capital into East Asia are the United States,
United Kingdom, Germany, Switzerland, France, Netherlands, Swe-
den, Norway, Japan and South Korea. Only in the very backward
economies of Myanmar and Cambodia is Chinese capital dominant
over that from advanced economies, bearing in mind that both are
conspicuously attempting to lower their economic reliance on Chi-
na.
One should also note that booming trade numbers with China
conceals the reality that all countries in the region, especially Chi-
na and ASEAN countries are actually competing with each other
to host advanced manufacturing firms in their economies; and in
doing so climb up the value-added production chain in terms of the
companies that have operations in their country. As China is mov-
ing up the value-added chain for manufacturing processes even as
it holds its position for low-end manufacturing processes and basic
assembly of products, (Felipe et at 2010a’ Felipe et al 2010b) China
will remain a competitor for less developed countries such as Viet-
nam and Indonesia, but become a greater competitor for middle-in-
come countries such as Thailand and Malaysia.
Finally, the higher importance of economic interactions with
advanced economies to the prosperity, resilience and innovation in
key Southeast Asia economies is reflected in the patterns of foreign
direct investment (FDI) into Southeast Asia – not surprising since
the majority of FDI entering into FDI is for the purpose of establish-
ing export-manufacturing plans and services in that host country.
In Thailand, active FDI from China amounted to US$1.23 billion
according to 2011 figures. In comparison, active FDI from Japan,
Singapore, the U.S., Netherlands, France, Germany and Malaysia
amounted to US$46.86 billion, US$24.11 billion, US$13.4 billion,
US$9.3 billion, US$3.23 billion, US$3.23 billion and US$3.21 billion
respectively according to Bank of Thailand figures. In Malaysia,
China has never been one of the top five sources of FDI. In 2012,
the top five comprised Singapore, Japan, the U.S., Hong Kong and

the Netherlands according to Malaysian Investment Development
Authority and Bank Negara Malaysia figures. In Vietnam, Chinese
FDI was the only the thirteenth most important source and consti-
tuted just 4.7 percent of total active FDI according to Vietnam’s For-
eign Investment Agency figures. In Indonesia, active Chinese FDI
as a proportion of all FDI was a mere 1.2 percent in 2011. This was
dwarfed by Singapore (42.8 percent) and Japan (27 percent). It was
also below that originating from the United Kingdom (5.2 percent)
and South Korea (3.2 percent) according to Central Bank of Indone-
sia figures. Evidently, the popular perception that Southeast Asia is
becoming reliant on Chinese capital is not accurate.
Conclusion
If China’s capacity to use economics to exercise strategic and

political leverage is somewhat overestimated the capacity of Amer-
ica to do so, its chief strategic and political rival, as well as other
advanced economies such as Japan and South Korea is underappre-
ciated.
The lack of realisation that this might be the case is particularly
pronounced in American foreign policy circles according to this au-
thor’s interactions in Washington. Despite its well-documented po-
litical and fiscal problems, America remains in a powerful position
to shape the economic order of Asia due to the unmatched spend-
ing power of its consumers and importance of its firms in the on-
going economic development of Southeast Asia. As a guardian and
promoter of the ‘liberal order’, Washington’s economic objectives
in Asia ought not to be primarily to promote the narrow commer-
cial interests of American firms but to shape the rules-of-the-road,
something which initiatives such as the Trans Pacific Partnership is
designed to do. In exchange for continued access to American mar-
16
kets, capital and innovation, Washington (and other advanced econ-
omy capitals) is still well placed to insist that adherence to liberal
order principles such as intellectual property protection, observance
of contract law and even-handed processes of dispute resolution,
and protections for investors, shareholders, and consumers of for-
eign-owned and invested companies in the region be paramount.
In doing so, America and its security partners should realise
that China is nevertheless in a position to play the occasional role of
‘spoiler’, and more likely, as a free-rider within such an order even if
it is not entirely committed to it. China is also sufficient important
as an economic partner such that Southeast Asian states have no
appetite for unnecessarily provoking China and drawing out Bei-
jing’s ire.
Even so, wariness of China is not the same as being dominated
by it even if the prospect of Chinese economic dominance engen-
ders caution in Southeast Asian capitals. To be sure, the uncertain-
ty of America’s staying power and strategic and military terms in
several decades time also weigh heavily on the minds of Southeast
Asian leaders. But in the foreseeable future, and assuming Wash-
ington’s continued strategic engagement and resolve to maintain its
pre-eminence in the region, China lacks the economic clout and
leverage to forcibly replace America and its key partners as a shaper
of any future regional economic, and subsequent strategic order.
Asia is becoming more ‘contested’ as is often pointed out. To
understand what that might mean and where the region is heading,
it is important to construct an accurate economic narrative. China’s
rise may well be the most significant geo-strategic and geo-econom-
ic phenomenon over the past three decades, and may well remain
so for the next three. But Chinese economic dominance in the stra-
tegically vital region of Southeast Asia has neither occurred nor is
likely to occur in the foreseeable future.

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Peace Agreement, Democratization, and Its
Implication in East Asia
Young Hwan Park

Yeungnam University
Abstract
This article explores how peace agreements facilitate democratization. To this

end, this article utilized the concept of legalized institutions to develop the thesis
of the influence of the peace agreement on democratization. Through the help of
their functions such as obligation, precision, and delegation, legalized institutions
promote cooperation among the actors. I hypothesize that the peace agreement
serves as the legalized institution after armed conflicts and, in turn, the legalized
institution by the peace agreement contributes to democratization. With this
concept in mind, I use Conflict Termination data, Peace Agreement data, and
POLITY IV data to examine if the peace agreement enhances democratization.
The empirical findings support that the legalized peace agreement facilitates
democratization. In particular, the impact on democracy of legalized institution
brought about by peace agreements in East Asia’s political realities is remarkable.
It is worth noting that mediation by third parties plays a pivotal role in
democratization after civil wars in Southeast Asia.
Key words: Peace agreement, Legalization, Democratization, Civil war
Introduction
Little is known about the consequences of a peace process after

the settlements of civil wars. The peace process may facilitate the
establishment of durable peace and prevent the recurrence of vio-
lence by addressing causes and effects of conflict through reconcil-
Peace Agreement, Democratization, and Its Implication in East Asia 23

iation and institution building. Credible commitment between the
warring sides in post-civil wars would be a necessary condition for
sustainable peace and successful state-building in new democracies.
The question therefore becomes how the terms of settlement can
be guaranteed. My argument is that a peace agreement serves as a
legalized institution to provide credible commitment.
Previous works argue that international institutions shape the
expectations, interests, and behavior of actors in various ways. In this
light, the peace agreement is classified as one of those international
institutions. In the contemporary world, more and more institutions
are becoming increasingly legalized. Legalizations refer to a partic-
ular set of characteristics that institutions may process, such as the
degree to which rules are obligatory, the precision of those rules,
and the delegation of some functions of interpretation, monitoring,
and implementation of a third party. These elements serve as legal-
ized constraints operating to change the parties’ behavior. In doing
so, legalized institutions promote cooperation among the actors
(parties). Specifically, legalized institutions increase the credibility
of actors’ commitments, enhance the capacity for enforcement, fix
the actors’ responsibility for legal violations, and increase the costs
of violation through normative channels. Accordingly, this paper
hypothesizes that the peace agreement serves as a legalized institu-
tion after armed conflicts and, in turn, the legalized institution by
the peace agreement contributes to democratization. Using Conflict
Termination data, Peace Agreement data, and POLITY IV data, I
examine if the peace agreement enhances democratization. Indeed,
the empirical results indicate that the legalized peace agreement fa-
cilitates democratization.
This research draws a new picture of understanding of the im-
plementation of peace agreement. A legalized regime made by the
peace agreement requires commitment to a set of rules. With this
concept, this research contributes to a scholarship on implementing
the terms of settlements for new democratic regimes in the after-
24
math of civil wars, especially when an internal threat is perceived
as a constant challenge by the government. In particular, the article
analyzes peace agreements cases in East Asia to seek successful
conditions for state-building and democratization in that area.
Civil War, Peace, and Democracy
Past works that study the relationship between the civil war and
peace building have been variegated. Doyle and Sambanis argue
that peace building success is “a function of a country’s capacities,
the available international assistance, and the death of war-relat-
ed hostility” (Doyle and Sambanis 2000, 782). Their dependent
variables are coded by two dimensions of peace building strength:
lenient peace building and strict peace building. And there are
intermediate variables used in the construction of the dependent
variables: war end, no residual violence, and democracy. The lenient
peace building implies “an end to the war and to residual lower-lev-
el violence and uncontested sovereignty” (Doyle and Sambanis
2000, 783). The strict peace building requires “a minimum standard
of democratization” (Doyle and Sambanis 2000, 783). Their findings
indicate that hostility is negatively associated with peace building,
but state capacity facilitates peace building (particularly, democra-
tization). Also, UN peacekeeping plays a pivotal role in democrati-
zation after civil war, and multilateral peacekeeping contributes to
successful peace building.
Hartzell and Hoddie (2003) claim that enduring peace after civil
war is considerably dependent upon parties to agree to create mul-
tifaceted power-sharing arrangements. Using the 38 civil wars re-
solved through peace processes between 1945 and 1998, they have
emphasized the effect of power-sharing institutions on the duration
of peace. The logic behind the effect of power-sharing arrangements
is that they “foster a sense of security among former enemies and

encourage conditions conducive to a self-enforcing peace” (Hartzell
and Hoddie 2003: 318).
Fortna (2003) persuasively argues that peace agreements matter.
Agreements can help to enforce the peace by implementing mecha-
nisms that increase the costs of defection, increase the incentives to
sanction defections, improve monitoring capabilities, and reward co-
operative behavior. Her empirical analysis suggests that such mech-
anisms matter. In an analysis of the duration of peace after ceasefires
for interstate wars ending between 1945 and 1997, Fortna demon-
strates that the strength of the agreement and components of the
agreement like demilitarized zones, arms control mechanisms, and
confidence building measures can reduce the risk of another war.
With 124 peace spells in civil wars of Doyle and Sambanis data-
set and added eight cases of ceasefires within the wars listed by
Doyle and Sambanis, Fortna (2004) maintains that peacekeeping
after civil wars facilitates the duration of peace. Different types of
peacekeeping (consent based peacekeeping - observer, traditional,
multidimensional peacekeeping vs. enforcement mission) differ-
ently last peace. In particular, consent-based peacekeeping is much
more effective than enforcement missions over 1947-1999 time pe-
riod. With regard to the question of where peacekeepers tend to be
deployed, peacekeepers rarely go where war has ended in a decisive
outcome, but rather try to maintain peace where both sides have
the capacity to disrupt it (Fortna 2004). Furthermore, peacekeeping
is less likely where a peace treaty has been signed to peace, rather
the opposite is true (Forntna 2004).
In short, prior works have mainly studied the effects of various
factors of explaining what determine peace endurance after armed
conflicts. Russett and Oneal’s (2001) research, however, helps devel-
op the argument of this paper that peace contributes to democracy.
Russett and Oneal suggests that the Kantian variables, democracy,
economic interdependence, and membership in IGOs, produce
peace. Democracy, economic interdependence, and membership in
26
IGOs, simultaneously, are accomplished by peace. Regarding the
relationship between peace and democracy, “democracy is easier to
sustain in a peaceful environments. States involved in serious pro-
tracted conflict…are likely to restrict public information about key
government activities, and to limit public criticism of those activi-
ties” (Russet and Oneal 2001, 37).
On the basis of Russet and Oneal’s arguments, this paper makes
an effort to uncover the condition of how peace leads to democra-
cy. Specifically, this paper focuses on peace agreement after armed
conflict which is critical in democratization. Previous research has,
however, failed to provide a convincing explanation of how and
why peace agreements help enhance democratization. The follow-
ing section seeks to explain this.
The Theoretical Context for Peace

Agreement: Legalized Institution
Previous literature on peace agreement implementation has not

fully produced a convincing explanation of how and why peace
agreements enhance successful state-building and democratization.
This research uses international institutionalism to conceptual-
ize the thesis of the influence of peace agreements on sustainable
peace-building and democratization. It is worthwhile mentioning
that an institution has an implicit or explicit structure which de-
termines how actors will behave within international and domestic
political systems. In the international arena, an institution have
been used interchangeably with ‘regime’, which has been defined
by Krasner (1983, 185) as a set of explicit or implicit “principles,
norms, rules, and decision-making procedures around which actors’
expectations converge in a given issue-area.” This concept of insti-
tutionalism broadens our attention to explore the role of a legalized
institution of the peace agreement.

The basic assumption behind international institutionalism is
that the expectations of actors involved will converge through their
interactions over time with norms and decision-making procedures
accepted by actors in the regulation of a particular set of issues. In
this light, the peace agreement can be understood as one of regimes
because it outlines “a process for how the warring parties plan to
regulate the incompatibility” by complying principles, rules, and de-
cision-making processes agreed upon by the warring parties (http://
www.pcr.uu.se/research/UCDP/data and publications/definitions).
The peace agreement is ratified between the warring parties that end
an armed conflict by covering all issues signed between each party.
To understand how the peace agreement becomes an institution so
that it regulates the behavior of actors, it is noticed that how an insti-
tution is legalized. Rules and practices that regulate a particular set of
issues are rooted in legalization of shaping actors’ behaviors, interests,
and identities. According to Abbot, Keohane, Moravcsik, Slaughter,
and Snidal (2000, 401), “‘(L)egalization’ refers to a particular set of
characteristics that institution may (or may not) possess.”
The research builds on the concept of the legalized institution
and develops our knowledge of peace agreement implementation.
The research on clarifying the terms of settlements helps how ef-
forts at society-wide reconciliation and state-building in societies
emerging from an armed conflict facilitate political, economic, and
social stability that might contribute to democratization.
What is important about the implementation of the peace agree-
ment is how to account for why the peace agreement that serves as
the legalized institution promotes democratization and state-build-
ing. Therefore, it is necessary for us to explain the function of
legalization that assures the terms of settlement. The definition of
legalization contains three criteria: the degree to which rules are
obligatory, the precision of those rules, and the delegation of some
functions of interpretation, monitoring, and implementation of a
third party (Goldstein, Kahler, Keohane, and Slaughter 2000, 387).
28
Obligation means that “states or other actors are bound by a rule
or commitment or by a set of rules or commitments. Specifically, it
means that they are legally bound by a rule or commitment in the
sense that their behavior is subject to scrutiny under the general
rules, procedures, and discourse of international law, and often of
domestic law as well” (Goldstein, Kahler, Keohane, and Slaughter
2000, 410). Legal obligations bring into play the established norms,
procedures, and forms of discourse of international legal system.
There appear two principles of obligations in some different ways:
(1) pacta sunt sevanda means that the rules and commitments are
regarded as mandatory without any defense and exception and any
breach necessitate responsibility, and (2) rebus sic stantibus means
that the building character of a rule may vanish if unexpected and
important changes occur (Goldstein, Kahler, Keohane, and Slaugh-
ter 2000, 409).
Precision means that “rules unambiguously define the conduct
they require, authorize, or prescribe” (Goldstein, Kahler, Keohane,
and Slaughter 2000, 401). Precision refers to the clarity of what is
expected by actors from a rule, what is intended by a rule, and how
it is achieved. More specifically, it “narrows the scope for reasonable
interpretation… It is essential as a coordinating device. It increases
the legitimacy of rules” (Goldstein, Kahler, Keohane, and Slaughter
2000, 412). Clarity is essential to the force of law. Precise sets of
rules are often, though by no means always, highly elaborated or
dense, detailing conditions of application, spelling out required or
proscribed behavior in numerous situations, and so on.
Delegation means that “third parties have been granted authority
to implement, interpret, and apply the rules; to resolve disputes;
and (possibly) to make further rules” (Goldstein, Kahler, Keohane,
and Slaughter 2000, 401). Delegation is the extent to which actors
delegate authority to designate third parties, including arbitrators,
administrative organizations, and courts to implement agreement
(Goldstein, Kahler, Keohane, and Slaughter 2000, 415). The charac-

teristics forms of legal delegation are third-party dispute settlement
mechanisms authorized to interpret rules and apply them to partic-
ular facts under established doctrines of international law. Dispute
settlement mechanisms are highly legalized “when the parties agree
to binding third-party decisions on the basis of clear and generally
applicable rules”; they are less legalized “when the process involves
political bargaining between parties who can accept or reject pro-
posals without legal institution” (Goldstein, Kahler, Keohane, and
Slaughter 2000, 415).
As a result, highly legalized institutions are those in which 1)
rules are obligatory on parties through links to the established
norms and principles of international law, in which 2) rules are
precise, and in which 3) authority to interpret and apply the rules
has been delegated to third parties acting under the constraint of
rules. Actors choose to order their relations through obligation,
precision, and delegation to solve substantive problems. In fact, by
using this legalized institution to order their relations, actors reduce
transactions costs, strengthen the credibility of their commitments,
expand their available political strategies, and resolve problems of
incomplete contracting (Abbott and Snidal 2000, 422). To sum-
marize, legalization increases the capacity of enforcement of the
peace agreement that helps promote democratization, because legal
commitments 1) fix consequences for legal violations, 2) clarify the
responsibility of actors, reduce costs and risks of self-help, and 3)
enhance credibility by constraining self-serving auto-interpretation.
Research Design
Models
In this research, I test two models: the direct effect of the peace
agreement on democratization, and the relationship between the
30
peace agreement as the legalized institution and democratization.
In a first model, the direct effect of the peace agreement is tested by
controlling for military victory, and two year-lagged GDP per capita.
In the second model, I show how the concept of legalization which
is measured by obligation, precision, and delegation helps enhance
democratization.
Data, Variables, and Measurements
The dependent variable in both models is an increase/decrease

of democracy. To measure this variable I use the POLITY IV data-
set to compute an increase/decrease of polity score. The variable is
coded as follows: [two year lagged polity score (two years after the
peace agreement) – polity score (the year of the peace agreement)].
Therefore, democratization is a dichotomous variable, 1 if the polity
score is positive, 0 if the polity score is 0, or negative. Because a sig-
nificant number of missing values are found in the Polity score in
several empirical models, I use the alternative score included in the
Freedom House score.
The independent variable is the peace agreement in the first
model. To test the direct effect of the peace agreement, I use the
UCDP Conflict Termination dataset, 1946-2005. The UCDP Con-
flict Termination dataset disaggregates each extra systematic, inter-
state, intrastate, and internationalized intrastate conflict 1946-2005
into periods of activity, referred to as conflict episodes, which are
followed by at least one year of peace. The data consist of a sys-
tematic effort to provide information about whether each episode
of fighting is ended through victory for one of the parties, a peace
agreement, a ceasefire agreement, or any other type of outcome.
Using 231 total conflict outcomes provided by the data, I begin
by choosing intrastate conflicts of all armed conflicts. The peace
agreement is measured as a dichotomous variable, i.e., 1 if conflict
outcome is the peace agreement, 0 otherwise. War victory is also a

dummy variable (1 if conflict outcome is war victory, 0 otherwise.
In the second model legalization is the independent variable. To
measure the elements of legalization, I use the UCDP Peace Agree-
ment dataset. The UCDP Peace Agreement dataset includes 148
accords between the warring parties covering one-third of the 121
armed conflicts active between 1989 and 2005 (Harbom, Högbladh,
and Wallensteen 2006). The UCDP Peace Agreement dataset cap-
tures the key elements of legalization (i.e., obligation, precision, and
delegation). The dataset provides provisions (a set of rules) agreed
upon by the warring parties that solve incompatibility, contents of
peace agreements (clarification of provisions), and variables that
oversee implementation by the third party. Consequently, the UCDP
Peace Agreement dataset is appropriate to study how the elements of
legalization facilitate the capacity of enforcement after the war ends.
Regarding coding rules, I first calculate each element’s scale of le-
galization and then construct an index of legalization. Obligation
is a total number of incompatibility solved in the peace agreement.
The score ranges between 0 and 26, and then is recoded from 0 to 1.
Precision is measured from content analysis of peace agreements.
By looking at peace agreement, I, particularly, pay attention to some
words of clarifying legal commitments, such as “must,” “shall,” “has
(have) to” of each provision in peace agreements. The score is col-
lapsed in 1 if the high level of precision, .5 if the middle level of pre-
cision, and 0 if the low level of precision. Delegation is an average
score combined the deployment of peace keeping operation (dummy)
with commission or committee to oversee implementation (dummy).
Thus the score includes 1, .5, and 0. In both models GDP per capita
is controlled. GDP per capita is calibrated as two year lagged GDP
per capita using Penn World Table 6.2 Version, 1950-2004.
32
Empirical Findings
Logistic regression is conducted to test the direct effect of the

peace agreement on democratization. The findings support that the
peace agreement enhances democratization. In Table 1, the effect of
the peace agreement is very strong, significant in a positive direc-
tion across each model. This result implicates that the peace agree-
ment is related to the resolution of the incompatibility signed and
publicly accepted by all or the main actors in a conflict. The peace
agreement may address all issues in contention. These features
might help contribute to democratization. War victory provides no
explanation of facilitating democracy. Two year lagged GDP per
capita positively contributes to democratization after the civil war,
but too weakly significant in both the Polity IV model and the com-
bined model (the POLITY IV + the Freedom House score). In the
other models this variable is no longer significant.
Table 1. The Effect of the Peace Agreement on Democratization

Polity IV FH score Polity IV + FH score
1.926** 2.434** 2.295**

Peace agreement
(.776) (.774) (.728)
-.292 .694 .275

War victory
(.733) (.568) (.668)
2 year lagged GDP .00015* .00002 .00015*

per capita (.00008) (.00008) (.00008)
-2.283*** -1.289** -2.523***

Constant
(.586) (.488) (.580)
N 86 75 101
Log likelihood -34.106816 -43.598739 -41.486263
11.39 11.91 14.69

LR test
Prob>chi² = .0098 Prob>chi² = .0077 Prob>chi² = .0021
Pseudo R² .1431 .1202 .1504

Standard errors are in parenthesis
***p<.001, **p<.01, *p<.08

In the meanwhile, Table 2 confirms the hypothesis that the
legalized institution by the peace agreement plays a pivotal role in
enhancing democratization. In effect, legalization is very signifi-
cantly strong from left to right across each model specifications. On
the contrary, two year lagged GDP per capita does not contribute to
democratization.
Table 2. The Effect of the Peace Agreement

as the Legalized Institution on Democratization
Polity IV FH score Polity IV + FH score
1.828** 1.111** 1.821***

Legalization
(.619) (.411) (.483)
2 year lagged GDP -.00009 -.00013 -.00006

per capita (.00006) (.00008) (.00005)
-2.308** -1.445* -2.635***

Constant
(.888) (.656) (.746)
N 71 98 98
Log likelihood -39.048184 -57.340732 -53.986614
16.22 17.06 23.77

LR test
Prob>chi² = .0003 Prob>chi² = .0002 Prob>chi² = .0000
Pseudo R² .1720 .1295 .1804

Standard errors are in parenthesis
***p<.001, **p<.01, *p<.05; two-tailed
In the appendix, I provide the results demonstrating the effect

of each element of legalization on democratization. Regression co-
efficients of each element are almost statistically significant across
different types of datasets.
In particular, this paper focues on the implication of the legal-
ization of peace agreements in East Asia. According to the UCDP
dataset, between 1993 and 2005 there were 15 active low-intensity
civil wars. It is worth noting that mediation by third parties plays
a pivotal role in democratization after civil wars in the region. The
Humanitarian Dialogue Center (HDC) proposed to mediate in the
Aceh, Indonesia conflict in 2000, and became the most frequent
34
mediator in talks there between the parties. The HDC mediated di-
rect talks with the government of Indonesia and the Garakan Aceh
Merdeka (GAM) leaders. Australia was the most important actor in
the Papua New Guinea conflict over Bougainville. Australia engaged
the government in bilateral talks, often supporting the government’s
position, and facilitated talks and provided good offices for confer-
ences and high-level meetings between the parties. In 1997, after
the conflict in Papua New Guinea turned into one of low military
activity, New Zealand and Australia became active in facilitating an
agreement. The majority of the efforts undertaken by the UN and
Thailand were direct at the many conflicts in Myanmar. Both third
parties were engaged in bilateral talks with the government side.
These talks did not much address the conflict with the opposition
All Burma Students Democratic Front as they did the general situa-
tion of democracy and human rights in Myanmar.
The United States’ involvement in East Asia was mainly direct-
ed toward the conflicts in the Philippines region of Mindanao and
Aceh, Indonesia. In the Philippines, the U.S. engaged in talks with
both the government and the rebel Abu Sayyaf Group (ASG) re-
garding the talking of hostages, which is a common occurrence in
the conflict over Mindanao. Japan’s efforts focused on the conflicts
in Cambodia and in Aceh. In Aceh, Japan especially put pressure
on the Indonesian government to return to negotiations.
In Cambodia, regional third parties such as the Association
of South East Asian Nations (ASEAN), Japan, and Thailand were
among the most involved mediate actors. Because of its history as a
former colonial master in Cambodia, France also engaged actively
in the conflicts. Talks involving these third parties started in July
1997, when FUNCINPEC, a royalist political party, renewed its
armed struggle against the government. In 1998, negotiations pro-
duced some progress with both FUNCINPEC and the government
of Cambodia announcing unilateral cease-fires in February, the
latter after talks with EU and French representatives. In 1999, the

talks led to an agreement where the parties again committed them-
selves to the peace agreement, and thus committing to the democ-
ratization of Cambodia.
Conclusion
Thus far, this paper has explored the consequence of the peace
agreement after settlements of confirm that when controlling for
war victory, and two year lagged GDP per capita, the peace agree-
ment enhances democratization. Moreover, we have attempted to
find the reason why the peace agreement helps facilitate democra-
tization. The peace agreement as an institution serves as a legalized
enforcement that contributes to democratization. Obligation (a set
of rules or commitments), precision (the clarification of provision),
and delegation (overseeing implementation by the third party) are
key elements of legal commitments that enable the peace agreement
to be democratic, because these elements of legalization increase
the credibility of actors’ commitments, enhance the capacity for
enforcement, fix the actors’ responsibility for legal violations, and
increase the costs of violation through normative channels.
It is worth noticing that mediation as the most element of le-
galization of peace agreements is critical in democratization after
civil wars in East Asia. Case studies indicate a strong positive re-
lationship between third-party mediation and democratization. I
argue that third-party efforts to bring warring parties to agreement
should be viewed as cumulative processes. While mediation must
be seen as closely related to other third party intervention methods,
it needs to be differentiated from them in its pure form. Mediation
may incorporate components of some of these other intervention
tools such as good offices or fact-finding. Through these efforts, me-
diators assist the involved parties to voluntarily reach a settlement
36
of the issues in dispute and, in doing so, it leads to democratization
in the region.
We have seen an increase in the occurrences of conflict man-
agement such as mediation in East Asia. In conjunction with the
increased use of third-party intervention since the end of the Cold
War, we have seen more conflict end as well. Although third-party
mediation is an encouraging sign, we seek to find out other conflict
management efforts that have positive impact on civil wars. These
allow us to see that the vast majority of conflict management efforts
can become increasingly productive.

References
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38
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Appendix
Each of Elements of Legalization on Democratization

Obligation Precision Delegation
1.058 6.487** .828

Polity IV
(1.678) (2.077) (.773)
1.597† 3.165*** 1.180*

FH score
(1.229) (.824) (.520)
2.883* 5.146*** 1.497**

Polity IV + FH score
(1.271) (1.234) (.532)
Standards errors are in parenthesis
***p<.001, **p<.01, *p<.05; two-tailed, †p<.10

Markets, Movies, and Media:
The Growing Soft Power Threat to North Korea
Mitchell Lerner
Ohio State University
Abstract
Recent years have seen growing calls within the United States for dramatic action
to be taken against North Korea. This essay argues that the best course of action
is instead a policy of strategic patience, one that would allow for the growing
forces of popular culture, technology, and open markets to help weaken the hold
of the Kim family in the North. Such soft power tools, it suggests, have already
begun to penetrate the North, and stand a better chance of fostering changes
within the nation than does more immediate and direct action.
Key words: North Korea, culture, markets, soft power
Introduction
Few nations have proven as frustrating to American policy-

makers over the past half-century as has North Korea. The small
country, despite its many economic, industrial, and military
shortcomings and a generally poor standing with the internation-
al community, has nevertheless managed to frustrate the United
States and its allies for decades, threatening, insulting and on some
occasions even assaulting the world’s superpower, and yet the Kim
family dynasty remains largely unscathed. American leaders have
long called for dramatic action against the North, dating back to the
Korean War, when a number of prominent voices went as far as to
Markets, Movies, and Media: The Growing Soft Power Threat to North Korea 41
advocate for the use of atomic weapons.1 Such calls have waxed and
waned since the war, but have recently been on the rise. American
defense officials have demanded action.2 Political leaders have de-
manded action.3 Academics have demanded action.4 Think tanks
have demanded action.5 And with the North’s clear commitment
to advancing its missile development and its nuclear program; its
involvement in counterfeiting, smuggling, and international arms
sales; its egregious human rights violations; and the presence of
a relatively new and young leader whose grip on power might be
more tenuous than that of his progenitors, one could certainly argue
that the time is right for the United States and its allies to take more
direct action against the North. Most recently, in the wake of the
alleged DPRK cyber attack against Sony Pictures, such calls for ret-
ribution exploded again; “The only way to prevent future attacks,”
wrote one columnist in the New Republic, “is for foreign govern-
ments to know that attacks against U.S. targets—cyber or kinetic—
will bring fierce, yet proportionally appropriate, responses.”6
Despite the temptation for action, however, prudent policy re-
quires just the opposite approach. The United States, in fact, needs
not only to resist the urge to increase its anti-DPRK activities but
should ignore the North’s provocations, which, recent scholarship
suggests, are largely designed to reinforce the regime’s domestic
1 ‌Bruce Cumings, “Korea: Forgotten Nuclear Threats,” in Le Monde Diplomatique,

December 8, 2014.
2 ‌Washington Post, June 22, 2006.
3 ‌See, for example, Politico, “John McCain: Kim Jong Un a Clown and a Fool,” April 12,
2013, on line at: http://www.politico.com/story/2013/04/john-mccain-north-korea-
kim-jong-un-89987.html.
4 ‌See, for example, Jeremi Suri, “Bomb North Korea Before Its Too Late,” New York Times,
April 13, 2013.
5 ‌See, for example, “Facing the Facts: Towards a New Korea Policy,” Brookings Institute
Research paper, October 2013.
6 “Why Aren’t We Retaliating Right Now for the Sony Cyberattack?,” New Republic,
December 19, 2014, on-line at: http://www.newrepublic.com/article/120604/sony-
interview-hack-demands-us-cyberattack-response.
42
standing rather than to alter the balance of power on the peninsula
or threaten the United States.7 This does not mean that the world
must resign itself to the perpetuation of this dangerous dictatorship.
What it means instead is that the best weapon against the North
appears not to be any official government effort but instead to be
the less formal forces of capitalism and soft power––particularly
the soft powe r of the Korean Wave emanating from below the 38th
parallel––whose penetration of the North offers for the first time
a legitimate threat to the regime’s grip on power. For decades, the
Kim family has withstood economic sanctions, covert operations,
military muscle, and hostile international alliances, and has always
persevered. It is time to recognize that cultural and market penetra-
tion might succeed where these more dramatic efforts have failed.
The Potential of Soft Power
The potential influence of such soft power approaches can easily

be overstated, of course, and the virtually unprecedented degree
of control the Kim family exerts, combined with the ideological
uniformity that has historically dominated the nation, makes the
North appear at first glance to be an unlikely place for a revolution
driven by ideas rather than weapons. Yet, a number of circumstanc-
es suggest that the possibility is not as remote as it appears. First, it
is important to recognize that the relationship between China and
the DPRK is not as close as most Americans believe, and hence the
more subtle approach of culture and commerce might well avoid
antagonizing the DPRK’s superpower neighbor as long as it yields
a form of stability not antithetical to Chinese interests. US policy-
7 See, for example, Mitchell Lerner, “Patience, not Preemption, on the Korean Peninsula,”
The Diplomat, April 24, 2013, on line at: http://thediplomat.com/2013/04/patience-not-
preemption-on-the-korean-peninsula/
makers often cite China as the critical player in the North Korean
situation. China, explained Senator John McCain recently, “does
hold the key to this problem,” and he criticized their “failure to rein
in what could be a catastrophic situation.” Senators Chuck Schum-
er, Lindsey Graham, Dick Durbin, and others have echoed these
sentiments.8 Such beliefs, however, overstate the closeness of what
has always been a fairly tenuous relationship, one based primarily
on strategic interests rather than on ideological or fraternal ties.
Chinese interests in the North, simply, are rooted in maintaining
stability and preventing the expansion of a competing economic
and ideological system along their territory, but they have no deeply
rooted connection to the North. For their part, the Kim family has
long seen the Chinese as, at best, an unreliable ally and at worst, a
potential rival for control.9 Such fears were on display during the
Korean War, when Kim rarely provided the Chinese with informa-
tion about his war plans and strategies, and resisted their demands
for control of the war’s infrastructure; they were on display after the
war when Kim purged many pro-Chinese officials (publicly blam-
ing them for “trying to overthrow the party and the government,”)
and avoided meeting with Chinese diplomats in Pyongyang; they
were on display in the 1960swhenthe two sides fought border skir-
mishes and Chinese newspapers called Kim “a fat revisionist pig,”
and “ more and more insane.”10 The tenuous relations outlasted the
8 ‌McCain in Bloomberg Business, April 7, 2013; Schumer and Graham in Washington

Post, April 7, 2013, on-line at: http://www.washingtonpost.com/blogs/post-politics/
wp/2013/04/07/senators-call-on-china-to-step-up-pressure-on-north-korea/; Durbin
in Quad-Cities Online, April 2, 2013, on-line at: http://www.qconline.com/news/local/
durbin-north-korean-leaders-crazy/article_da8e9fff-3fc7-5753-b684-81f8af29bd6a.
html
9 ‌Mitchell Lerner, “Why China is not the Solution to the Korean Crisis,” The Diplomat,
June 3, 2013, on-line at: http://thediplomat.com/2013/06/why-china-is-not-the-
solution-to-the-korean-crisis/.
10 On the Korean War, see: Zhihua Shen, “China and the Dispatch of the Soviet Air Force:
The Formation of the Chinese–Soviet–Korean Alliance in the Early Stage of the Korean
War,” Journal of Strategic Studies, Volume 33, #2, 2010; and Zhihua Shen, Alliance of
44
Cold War, especially after the Chinese recognition of South Korea
in 1992, which many in the North saw as a great betrayal.11 Wiki
leaks cables have further demonstrated the disdain that most con-
temporary Chinese officials have for the North, while also lament-
ing their inability to control them; at a 2009 luncheon, a Chinese
official admitted to an American delegate that recent provocations
by the DPRK had “gone too far,” and noted that the Chinese gov-
ernment had pressed Kim to return to the negotiating table but had
had “no effect.”12 And there are no immediate signs of improvement;
if anything, Chinese leaders have grown increasingly frustrated
with the regime over the past few years.13 Accordingly, one can rea-
sonably speculate that while China would certainly work to prevent
any overt strikes or even covert operations or political actions that
might lead the expansion of direct Western influence along their
borders, they would likely be less concerned about a slower and less
overt change in the DPRK’s socio-economic system, especially since
it would seem to be a path at least somewhat akin to the one China
“Tooth and Lips” or Marriage of Convenience?” US-Korea Institute at SAIS, Working

Paper 08-09; after the war in James Person, “We Need Help from Outside”: The
North Korean Opposition Movement of 1956,” Cold War International History Project
Working Paper #52, August 2006; 1960s in James Person (ed.), Limits of the “Lips and
Teeth” Alliance: New Evidence on Sino-DPRK Relations, 1955-1984, NKIDP Document
Reader, March 2009; “Fat Revisionist, in The Telegraph, July 11, 1994, on-line at: http://
www.telegraph.co.uk/news/obituaries/7859377/Kim-Il-Sung.html; insane in Woodrwo
Wilson Center Document Archive, on-line at: http://digitalarchive.wilsoncenter.org/
document/116664.pdf?v=e02d4116c9db35e43260f3fce6b8f2b5
11 “North Korean Attitudes Toward China: A Historical View of Contemporary Difficulties,”
April 6, 2009, on-line at: http://www.wilsoncenter.org/event/north-korean-attitudes-
toward-china-historical-view-contemporary-difficulties
12 Guardian, “US embassy cables: China ‘would accept’ Korean reunification,” December
1, 2010; Guardian, “Wikileaks cables reveal China ‘ready to abandon North Korea’,”
November 29, 2010; http://wikileaksnorthkorea.com .
13 See, for example, New York Times, “North Korea Threatens to Restart Nuclear Reactor,
April 3, 2013; Guardian, “Wikileaks cables reveal China ‘ready to abandon North
Korea’,” November 29, 2010; BBC News, “China Media Criticize North Korea’s Nuclear
Programme,” October 8, 2014; Wall Street Journal, “China’s Anger at North Korea Test
Signals Shift,” May 29, 2009.
itself has followed, and which Wiki leaks documents suggest has
been a path that Chinese officials have been urging the Kims to fol-
low for over a decade.14
A second point of relevance is that newer materials from the
archives of the former communist bloc states suggest that DPRK
provocations have historically been intended largely for domestic
reasons, a means for the regime to both justify the hardships of its
people by pointing to an omnipresent American threat that requires
great national sacrifice and a military-first orientation, and to rally
the country around the Kim family in these critical times of stress.15
The DPRK, explained Hungarian officials in the North during a
crisis in 1967, “does not strive to escalate military actions, but by
the regularly [sic] provoking border incidents and the accompany-
ing propaganda campaign it intends to justify the militarization
of the country and the fact that they.....cannot develop the defense
strength and the economy of the country simultaneously but lay
stress only on the increasing of military strength, [which results in]
the neglect of economic development and the stagnation of living
standards.”16 Such depictions reveal a fundamental precept about
DPRK belligerence that is often overlooked by the United States and
its allies: the North might constantly blast alleged aggression by the
West and proclaim its willingness to fight to the death against im-
perialism, but in reality, the Kims are simply another in a long line
of the world’s dictators who proclaim great ideological dedication
and foster a powerful nationalism in order to solidify their own rule
rather than because of any true commitment. Following a course
14 “North Korean Attitudes Toward China: A Historical View of Contemporary Difficulties”;

“China and the Cheonan Incident,” 38 North, June 2, 2010, on-line at: http://38north.
org/2010/06/china-and-the-cheonan-incident/; New York Times, “Kim Jong Un Tests
Relations with China,” April 14, 2013.
15 Mitchell Lerner, “Mostly Propaganda in Nature: Kim Il Sung, the Juche Ideology, and the
Second Korean War,” NKIDP Working Paper #3, December 2010.
16 Lerner, “Mostly Propaganda in Nature.”
46
of overt confrontation thus not only seems unlikely to bring about
a satisfactory resolution, but is more likely to play into Kim’s hands
by confirming his central message about aggressive Western inten-
tions that is at the core his domestic propaganda efforts, and might
even provide an excuse for greater domestic repression. Rallying
the people, however, against an alleged threat rooted in television
shows, music, and markets, is likely to prove much more difficult.
Finally, and most significantly, is the simple fact that evidence
is emerging to suggest that the cultural and market penetration
of the North, particularly by the US and South Korea, is starting
to occur. Although Pyongyang still remains overtly hostile to any
form of foreign, particularly Western, culture, the last few years
have offered signs that the virtually impenetrable walls around
the hermit kingdom are beginning to crumble. Evidence of the
outside penetration of the North can be lumped into three central
areas: the growth of private markets; the spread of American and
American-allied culture; and the inevitable impact of technological
change. Perhaps most significant is the emergence of a small but
growing market economy in the North. For generations, the DPRK
depended on a state-run distribution system to deliver food and
other important goods to its residents. That system began to break
down in the 1990s and now only operates sporadically. What has
replaced it has been the rapid growth of local markets (Jangmadang),
through which DPRK residents began to sell or trade goods and
services for food, medicine, or other critical supplies. What began
as a largely spontaneous and emergency measure focused on food
and agriculture soon became more accepted, more institutionalized,
and more permanent. Over the past decade, the market system has
evolved from being small and uncoordinated gatherings in open
fields to larger merchant centers selling diverse collections of items
within constructed buildings and accepted regulatory parameters.
They also became an open secret, officially denied by the govern-
ment, but so critical to survival (and so profitable for many within
the regime who benefit through its bribes) that most turned a blind
eye. Eventually the government intervened, limiting the types of
goods that could be sold and imposing some personal restrictions
on merchants, and later launching a more frontal assault with the
disastrous currency reform effort of 2009. Still, the fact that the re-
pressive Kim regime has not taken more dramatic steps to eradicate
this burgeoning sign of capitalist exchange speaks volumes about
the important role it holds in DPRK society and the extent to which
it is connected to powerful members of the nation’s elites who ben-
efit from its existence. “You can get everything here except nuclear
weapons,” joked one DPRK official while giving a tour of the market
in Rajin.17
The Influence of the Market
The Jangmadang is transforming DPRK society on many levels

beyond the day-to-day role it plays in keeping people alive. Most
obviously, it represents a large-scale intrusion of capitalist values
into the North. Participating merchants have quickly learned the
basics of private business; in the Chongjin market, for example ven-
dors allegedly rotate trading positions within the market because
of complaints about preferential spots going to select individuals,
evidence of a desire for fair competition and transparency typical of
market-based competition. Other merchants collaborate on the de-
tails of the exchange, using cell phones to communicate with each
other and with outsiders to track price and demand fluctuations,
and make market-based decisions about where and when to sell
goods.18 Shoppers have learned that they can acquire products out-
17 h
ttp://thediplomat.com/2014/02/the-perils-of-investing-in-north-korea/
18 ‌See, for example, “North Korea Implements Identity-Based Vendor System, New
48
side the long arm of the state, thus lessening the government’s con-
trol and eroding its respect, while limiting one of the chief weapons
used to repress dissent. The need for capital has also helped produce
a network of upper-middle class money lenders, essentially creating
a growing group of financial elite (often with connections to the
regime and thus access to hard currency)who loan money to people
trying to bring in goods to sell at the markets. Such lenders obvi-
ously have a vested interest in the ability of their debtors to earn
private funds in order to repay them, which commits the lenders to
the preservation of a system that recognizes the relative sanctity of
private property and rewards individual initiative.19 Other stories
have emerged from the markets that hint at the first steps towards a
market-based society: the creation of a labor exchange network and
transportation service industry organized at the markets; street-cor-
ner currency exchanges that require at least some interaction with
and knowledge of the world economy; and community efforts to
pool resources to buy goods from China and then sell them for a
profit to be shared among the original investors.20
Even more than the practical consequences of the market is
the influence it has had on the deeper values of those who experi-
ence it regularly, especially the younger generation. Markets have
become places for the exchange of ideas and the sharing of news,
helping to create what some have dubbed the “Jangmadang gener-
ation,” a group of younger North Koreans without the traditional
loyalty to the Kim family and more open to the outside world. The
older generation, scarred by a lifetime of repression and ideological
Focus International, July 29, 2013, on-line at http://newfocusintl.com/north-

korea-implements-identity-based-vendor-system/?utm_source=buffer&utm_
campaign=Buffer&utm_content=buffer01ac1&utm_medium=twitter ; and The
Economist, “North Korea: Not Waving. Perhaps Drowning,” May 27, 2010, p. 57.
19 ‌The Money-Makers of North Korea, New Focus International, March 6, 2013, on-line at:
http://newfocusintl.com/the-money-makers-of-north-korea/ .
20 http://www.economist.com/node/16214349
‌
immersion, has been conditioned to keep even the least controver-
sial thoughts to themselves, so as to avoid potential consequences.
The younger generation, on the other hand, has seen the inherent
economic and social interactions of the market to be a liberating
place for them to think, learn, and sometimes even speak outside
of conventional norms. The market has created, concluded one col-
umnist in the Washington Post, “a new generation of post-famine
North Koreans who are less ideological, more capitalistic and more
engaged with the outside world than any before them…[who are]
slowly changing the hermit kingdom from within.”21 Moreover, the
system spurs its participants to question a fundamental principle of
society, the traditional “Songbun” class system, which made materi-
al prosperity a reflection of political loyalty, since the younger gen-
eration now sees that another road to material gain exists through
individual initiative and exchange.22 As one self-described member
of the “Black Market Generation” explained, the Jangmadang “un-
dermines the Songbun of North Korea. With the government in
charge of social classifications and food distribution, it has always
determined who could acquire wealth and who would starve. The
private market removes that from government control.”23 It is im-
portant, of course, to not overemphasize the transformative strength
of the market as presently constituted. Negotiating the price of a
rice cooker from a private vendor is hardly the stuff of revolution,
especially in a society marked by decades of such fierce repression.
But it is an important first step away from regime control, a step
21 Washington
‌ Post, “‘The Other side of North Korea’: A defected smuggler’s
extraordinary story,” December 5, 2013, on-line at: http://www.washingtonpost.
com/blogs/worldviews/wp/2013/12/05/the-other-side-of-north-korea-a-defected-
smugglers-extraordinary-story/ .
22 Washington
‌ Post, “The Hopes of North Korea’s Black Market Generation,” May 25,
2014, on-line at: http://www.washingtonpost.com/opinions/yeon-mi-park-the-hopes-
of-north-koreas-black-market-generation/2014/05/25/dcab911c-dc49-11e3-8009-
71de85b9c527_story.html .
23 “The
‌ Hopes of North Korea’s Black Market Generation.”
50
that seems to be significantly more difficult for the regime to curtail
than more overt and threatening moves against it.
Nor is it simply these domestic markets that suggest a changing
socio-economic system emerging from the North. Despite the polit-
ical differences between China and the North, their economic rela-
tionship remains active, a reflection of both their geographic prox-
imity and the North’s desperate need for capital.24 A growing series
of factories along the Chinese border now house DPRK workers
who work long hours under difficult conditions to produce prod-
ucts to be sold abroad, all with government sanction since a signif-
icant chunk of their wages are returned to the state. The factories
are often run by North Korean managers who have to succeed in
the world of international business, which means moving beyond
the nationalist and anti-imperialist ideology that has long bound
the country behind the Kims and starting to interact with a more
market-based world. One such manager recently confessed that his
role models were not members of the Kim dynasty but the leaders
of such ROK companies as Samsung and Hyundai because of their
economic prowess; such sentiments would have been unheard of a
few decades earlier. Another manager acknowledged that it did not
bother him that his goods often went to the hated Western impe-
rialist nations, since he was interested only in maximizing profits;
“It doesn’t matter whether they’re an enemy country or not,” he
explained.25 The regime’s need for hard currency from overseas has
forced them to send workers internationally as well. There are now
an estimated 50,000 North Koreans working abroad, who learn to
survive and adapt in nations where the market plays a role.26 Whole
24 Washington
‌ Post, “North Korea’s growing economy — and America’s misconceptions
about it,” March 13, 2014, on-line at: http://www.washingtonpost.com/world/
asia_pacific/north-koreas-growing-economy-and-americas-misconceptions-about-
it/2015/03/13/b551d2d0-c1a8-11e4-a188-8e4971d37a8d_story.html .
25 “North
‌ Korea’s growing economy — and America’s misconceptions about it.”
26 Washington
‌ Post, Talking Kimchi and Capitalism with a North Korean Businessman,
neighborhoods in some Chinese towns such as Dandongare run by
DPRK managers and workers, who dine, shop, and survive in places
whose values are antithetical to the traditional views of the North.
Meanwhile the Kaesong Industrial Complex just north of the DMZ,
where 55,000 DPRK workers work for 125 ROK companies, offers
similar lessons closer to home.27 The facility itself is hardly opulent
by Western standards, but its daily life, complete with paved roads
and electricity, is so far beyond conventional DPRK standards that
stories have been passed throughout the North about its offerings,
despite efforts by the regime to prevent them from spreading.28
Also making the rounds in the North are foreign products brought
into Kaesong by Southerners or produced by the factories them-
selves, including cosmetics, clothing, watches, footwear, junk food
and more, items far beyond the means of all but the wealthiest in
the DPRK.29 Included in those foreign items, of course, are the now
famous choco-pies––a cheap snack common in the South but be-
yond the reach of most in the North and whose popularity among
the workers and their families became for many a symbol of the
hollowness of the regime’s claims, and which led to the much pub-
licized DPRK demands for their restriction. But choco-pies were
just one small part of a larger wave of common goods that might
someday challenge the system overall. “Choco Pies”, as Victor Cha,
former National Security Council Director for Asian Affairs in the
Bush administration, wrote:
tell a larger story of how even the smallest opening can encourage an
March 16, 2013.

27 CNN,
‌ “At the heart of China’s legal (and illegal) trade with North Korea, October 27,
2014, on line at: http://www.cnn.com/2014/10/17/world/asia/china-dandong-north-
korea-mckenzie/; “Talking Kimchi and Capitalism with a North Korean Businessman.”
28 ‌Andrei Lankov, “Kaesong serves as North Korea’s window into the world,” NK News.
Org, March 16, 2015, online at: http://www.nknews.org/2015/03/kaesong-serves-
as-north-koreas-window-into-the-world/; http://www.dailynk.com/english/read.
php?num=10544&cataId=nk01500
29 Lankov,
‌ “Kaesong serves as North Korea’s Window into the World.”
52
entrepreneurial spirit … Because of Kaesong, tens of thousands of
North Korean women today, though not paid market wages, still have
the experience of working in a modern South Korean-made factory and
receiving three meals a day in a clean cafeteria. These women will not
revolt against the government, but they will tell others of their experi-
ences … With each expedient nod to the market by the cash-strapped
economy, the regime is unwittingly exposing mothers, fathers, sons,
daughters, aunts and uncles to capitalism, to the generosity of outsiders,
and to the flaws of its own economic policies. The change is microscopic
but it is real.30
The influence of the market and its commodities on the reclu-
sive North can be seen everywhere. In Pyongyang, visitors talk of
stalls selling bread, soda, ice water and cigarettes at every inter-
section. In North Hamgyong, far from the capital but close to the
border with China, what started in the 1990s as a small trickle of
black market trade now delivers not only rice and bread in amounts
almost unheard of outside Pyongyang, but also includes appliances,
phones, clothes, DVDs, and more.31 In Chongjin, the “illegal” mar-
ketplace is now so accepted that when vendors bribe local author-
ities each day to secure their spots, they receive electronic vendor
cards they not only need to wear but are required to swipe through
a machine to indicate that they have paid all the necessary bribes to
conduct business.32 Military officers and local officials not only ig-
nore it all but will often help to transport goods across borders and
to markets for a price.33 Again, it is a long way from the emergence
of illegal markets filling local needs to joining the capitalist world
30 ‌Victor Cha, The Impossible State, (Ecco, 2012), p. 155-7

31 Washington
‌ Post, “Along the Chinese Border, Defectors say North Korean Province is
Quietly Liberalizing,” December 28, 2012.
32 New
‌ Focus International, “North Korea Implements Identity-Based Vendor System,”
July 29, 2013, on-line at: http://newfocusintl.com/north-korea-implements-identity-
based-vendor-system/
33 Washington
‌ Post, “The Other Side of North Korea,” December 5, 2013.
system but some realities are clear: a growing disenchantment with
the state for its inability to provide the basic necessities of life; an
emerging system of private property and competitive markets; and a
sense of individual enterprise and initiative, all of which are anath-
ema to the interests of the Kim regime. Overall, the impact on the
DPRK has been extraordinary; one defector, in an article entitled:
“The Market Shall Set North Korea Free,” concluded: “The umbilical
cord between the individual and the state has been severed. In the
people’s eyes, loyalty to the state has been replaced by the value of
hard cash. And the U.S. greenback is the currency of choice.”34 “Be-
fore my generation,” explained another, “my parents, they thought
the regime was everything for them. They fed them; they give ev-
erything to them. But, when I was born, I had to survive by myself
and we had to try to go to market and trading and selling and bar-
gaining. So that means we don’t need the regime any more. They
will be just only an obstacle for us for the private wealth.”35
The Power of Soft Power
The rise of the markets plays an important role in a second sign

of changes within the country: the growing presence of foreign
popular culture, especially that of the Korean Wave. The DPRK
constitution advocates the creation of a “truly popular, revolutionary
culture,” one built by the state in order to “oppose the cultural infil-
tration of imperialism and any tendency to return to the past.” The
Kim regime has thus long used arts, media, and popular culture
to spread a value system that serves the interest of the state, and
34 New
‌ York Times, “The Market Shall Set North Korea Free,”April 26, 2013.
35 ‌ABC (Australia) News, “Inside the Black Market of the World’s Most Repressive regime,”
July 28, 2014, n-line at: http://www.abc.net.au/news/2014-07-28/north-korea-black-
markets/5629736
54
which leaves little room for artistic freedom and creativity.36 Recent
years, however, have seen obvious signs that the state’s monopoly in
this area is under assault. Again, the famine of the 1990s played a
critical role, as it forced the North to open its official and unofficial
doors to outside traders, particularly from China, which meant not
only allowing foreigners in with elements of outside culture but also
sending DPRK officials overseas in search of currency and markets,
and even sending trade ships abroad, many of which returned with
sailors and workers carrying products from overseas. The famine
also forced many children (and teachers) to abandon school in order
to try to survive, weakening one of the government’s foremost ways
of spreading the traditional cultural values to the young. As a result,
the last decade has seen hints that the regime’s control of mass cul-
ture is on the steady and perhaps irreversible decline.
The most notable penetration into the DPRK over the past de-
cade has been elements of ROK popular culture, particularly televi-
sion shows. Evidence suggests that South Korean programs, along
with movies, music videos and music, fill mp3 players, DVDs, and
memory sticks, are being smuggled into the country with increasing
ease; in a 2012study of hundreds of defectors, nearly half of them
said they had watched a foreign DVD, most of which were South
Korean television dramas.37 “I was often,” recalled a former British
Ambassador to the North, “asked for medicines, but not as often
as I was asked for DVDs of television soap operas, usually but not
36 ‌See for example, NK News, “Inside North Korean Television: The Wooden Box of
Wonder,” March 10, 2015, on-line at: http://www.nknews.org/2015/03/a-wooden-box-
wonder-inside-north-korean-tv/; and The Guardian, “A Propaganda Merry Go-Round,”
March 10, 2015, on-line at: http://www.theguardian.com/world/2015/mar/10/north-
korea-tv-propaganda-kim-jong-il .
37 Los
‌ Angeles Times, “News from around the World,” May 11, 2012, on-line at: http://
latimesblogs.latimes.com/world_now/2012/05/study-north-koreans-getting-
more-foreign-media-than-ever-before.html; Daily NK, “Young People Surfing the
Korean Wave,” June 21, 2011, on-line at: http://www.dailynk.com/english/read.
php?cataId=nk00400&num=7856 .
always from South Korea. These portrayed a world of which North
Koreans can only dream – of people who eat well in smart restau-
rants, have their own cars and live in flats where the heating always
works – and my contacts devoured them ravenously.”38 Foreign
DVDs have even become a social event, as groups of friends gather
to watch them despite the restrictions imposed by the state, a reflec-
tion of the growing acceptability of the practice and the declining
hold the government has on its residents. “My generation has a very
different view of the society than generations before us,” explained
one defector. “Even though many North Koreans risk their lives
to access this information, they do it as a kind of rebellion against
the regime.”39 Among other television shows, Running Man, In-
finite Challenge, The King of Two Hearts, and Strong Heart are all
alleged to be popular, as are various ROK actors and actresses and
musical performers.40 The recent series Reply 1997 is so popular
that according to DPRK sources, North Korean youth emulate the
expressions of its main characters, and are mocked by their peers
if they are not watching it; flash drives containing the entire series
are said to circulate openly for the price of about $20 (US).41 Even
Doctor Stranger, a drama about a South Korean doctor trapped in
the DPRK, is immensely popular, especially with the families of the
elite in Pyongyang.42 “No matter how much [authorities] try to step
up the crackdowns,” noted one North Korean, “there are already
many people for whom watching South Korean dramas is part of
38 ‌The Independent, “The Secret Lives of North Korea,” January 27, 2013.
39 http://www.thedailybeast.com/articles/2014/12/22/north-korea-s-secret-movie-
‌
bootleggers-how-western-films-make-it-into-the-hermit-kingdom.html
40 http://www.koreabang.com/2012/stories/korean-wave-is-flourishing-in-north-korea-
‌
says-report.html; http://www.theguardian.com/world/2014/jun/18/north-korea-dr-
stranger; http://english.chosun.com/site/data/html_dir/2011/08/19/2011081900681.
html
41 http://www.rfa.org/english/news/korea/tv-show-11262013194642.html
‌
42 ‌The Guardian, “Why North Korean Students are Tuning in to South Korean Soap Opera,”
June 18, 2014.
56
life. In fact, it is Party officials, their children and students who are
driving the popularity.”43
The cultural penetration of the North, however, goes beyond the
Korean Wave. Defectors and travelers speak often of the availabili-
ty of Chinese and Russian films and television shows.44 American
media is easily accessible as well; one recent story in Wired Mag-
azine recounted the smuggling process into the North, describing
in detail the trafficking of 200 USB drives and 300 micro SD cards,
each carrying 16 gigabytes of videos including such films as Lucy,
Son of God, and 22 Jump Street.45 Other reports cite American dra-
mas such as Sex and the City, Desperate Housewives, Friends, The
Mentalist, as well as DVDs of American professional wrestling and
even pornographic films, which are apparently in high demand; “I
never met a North Korean diplomat who did not want porn, either
for personal use or resale,” explained one former American CIA
agent.46 A Vanity Fair author, recently touring the DPRK for its in-
ternational film festival, engaged in discussions with locals about
films they had seen and found them familiar with Argo, Frozen,
Casino Royale, and the Bourne Identity, among others; “I hate [The
Sound of Music]” one exclaimed, “It’s a nice movie, but I’ve watched
it more than a hundred times!”47 Even The Interview, Sony’s recent
43 “Why
‌ North Korean Students are Tuning in to South Korean Soap Opera,”
44 http://www.nytimes.com/2013/04/27/opinion/global/The-Market-Shall-Set-North-
‌
Korea-Free.html?pagewanted=all&_r=0
45 Wired
‌ Magazine, “The Plot to Free North Korea with Smuggled Episodes of “Friends’,”
March 1, 2015.
46 ‌Agent in Haryy Crompton, The Art of Intelligence (Penguin, 2012); Shows in “The
Plot to Free North Korea with Smuggled Episodes of “Friends’,”; Atlantic Magazine,
“We Hacked North Korea with Balloons and USB Drives, January 15, 2014; Wall Street
Journal, “Corpses and Soap Operas,” December 5, 2014, on line at: http://blogs.wsj.
com/korearealtime/2014/12/05/cartoons-or-soap-operas-south-korea-debates-
tackling-north-korean-human-rights/; and Washington Post, “Yeon-mi Park: The Hopes
of North Korea’s Black Market Generation, May 25, 2014, on-line at: http://www.
washingtonpost.com/opinions/yeon-mi-park-the-hopes-of-north-koreas-black-market-
generation/2014/05/25/dcab911c-dc49-11e3-8009-71de85b9c527_story.html
47 ‌Vanity Fair, “A Rare Glimpse Inside North Korea’s Pyongyang International Film Festival,”
film that was allegedly the cause of a DPRK cyber attack against
the company, has infiltrated the reclusive North (to much criticism
from its viewers, who––showing they share some Western sensibil-
ities and a modicum of good taste––found little of redeeming value
in the film).48 Still, American films have proven to be remarkably
popular overall. “The men prefer watching action films,” noted one
resident “The women enjoy watching soap operas and dramas. The
more people are exposed to such media, the more likely they are
to become disillusioned with the regime and start wanting to live
differently. Popular culture has the most important role in bringing
about democracy in North Korea.”49
This emerging soft power goes beyond movies and television.
Visitors tell stories of the growing number of Audis and Mercedes
in the streets of Pyongyang, the Chinese bed sheets that are in-
creasingly popular, and the skinny jeans that are in recent fashion
among Pyongyang teens. German shampoo and toothpaste are
growing in popularity, asis Japanese mayonnaise and digital cam-
eras. Inline skating is reportedly popular among the younger gener-
ation, and their elders can purchase expensive and imported Scot-
tish and Irish whisky, and cognac and steak that are now sold in
exclusive shopping centers in Pyongyang. South Korean makeup is
undergoing a particular boom in popularity, especially with female
university students in Pyongyang. And officials with Koryo Tours, a
company that leads foreigners on tours of the reclusive nation, tells
tales of a growing network of pubs and nightlife; their favorite pub
brews eight kinds of beer (labeled “beer #1,” “beer #2,” “beer #3,”
and so on), from equipment purchased from a former British brew-
March 2015.
48 “The
‌ Plot to Free North Korea with Smuggled Episodes of “Friends’,”; NK News, “NK
Tightens Border to Block ‘The Interview,’ December 31, 2014, on-line at: http://www.
dailynk.com/english/read.php?num=12742&cataId=nk01500 .
49 PBS,
‌ Frontline, “Using ‘Skyfall’ to Fight Back against Kim Jong-un,” January 14, 2014.
58
ery. Koryo Tours is even working with a Chinese pub chain called
“The Great Leap” to come to North Korea to help improve the quali-
ty of beer.50
The impact of this cultural penetration of the North is clear, es-
pecially among the younger generation. Perhaps the most detailed
study of defectors found, among other things: a clear correlation
between exposure to foreign media and more positive beliefs about
the US, South Korea, and the outside world overall; a surprisingly
strong trust of outside media; and a powerful multiplier effect that
reflected the North’s heavy “word of mouth” approach to sharing
news, especially in the rural areas.51 The study also noted that
almost 50% of defectors reported having watched a foreign DVD
in North Korea, while close to 25% watched foreign TV shows or
listened to foreign radio broadcasts; many of those who admitted
watching or listening to these illegal shows, revealingly, explained
that they learned how to modify their appliances to receive these
signals at the local markets.52 This emerging influence, the study
concluded, is “creating greater space between North Korean citi-
zens and their leaders, and between the regime’s portrayal of North
Korea and the prevailing reality on the ground…it also [is] foster-
ing the creation of horizontal connections between North Korean
citizens[that] are a breeding ground for ideas that go beyond or
run counter to the regime’s espoused reality. In these most nascent
seeds of civil society lies the potential for continued change on the
50 ‌Open Radio for North Korea, “Korean Wave Spreads even during North/South
Tensions,” April 22, 2013, on-line at: http://english.nkradio.org/news/526http://
m.theatlantic.com/international/archive/2013/09/get ting-drunk-in-nor th-
korea/279310/; Christian Science Monitor, “From Mickey Mouse to Mayonnaise, Kim
Jong Un Opens North a Crack,” January 24, 2015; The Atlantic, “Getting Drink in North
Korea,” September 4, 2013; Korea Joongang Daily, “Cosmetics Smuggled from South
boom in North,” March 3, 2015.
51 ‌Matt Kretchun and Jane Kim, “A Quiet Opening: North Koreans in a Changing Media
Environment,” Intermedia publishing, on line at www.intermedia.org.
52 “A
‌ Quiet Opening: North Koreans in a Changing Media Environment.”
ground level in the lives of ordinary North Koreans.”53
Specific stories from defectors detail the immense impact of the
new media, fostering everything from a more positive view of the
world and a desire for greater personal prosperity to smaller things
such as new styles in the fashion realm.54 Jeon Hyo jin, a DPRK
defector, specifically credits South Korean dramas for her decision
to flee. “The kitchens with hot and cold tap water, people dating in
a cafe, cars clogging streets, women wearing different clothes each
day,” she explained, “unlike us who wore the same padded jacket,
day in day out. Through the dramas, I learned how strange my own
country was, how full of lies…. In North Korean movies, it’s all
about loyalty to the leader and the party; the state before love. You
should be ready to die for the leader, blah blah. In South Korean
dramas, it was different. I found a whole new world there.”55 It is
hardly a unique experience. In fact, when a boat of nine defectors
reached the west coast of Japan in 2011, one admitted that he had
been inspired to defect by ROK dramas, which taught him that
there were places where people used electricity any time they want-
ed.56 Explained another defector, “I felt sad about the state of my
country when I watched the DVDs. I could see Hong Kong, Taiwan,
South Korea, the United States ... these other places were so much
better off.”57 Smugglers agree as well. “When North Koreans watch
Desperate Housewives,” explained one, “they see that Americans
aren’t all war-loving imperialists. They’re just people having affairs
or whatever. They see the leisure, the freedom. They realize that
53 ‌“A Quiet Opening: North Koreans in a Changing Media Environment,” p. 3.

54 ‌See, for example, http://bigstory.ap.org/article/north-korea-cracks-down-knowledge-
smugglers; http://newfocusintl.com/soap-operas-north-korea/;
55 New
‌ York Times, “North Korea’s Forbidden Love,” January 24, 2015.
56 Daily
‌ NK, “The Mighty Power of Pop Culture,” September 22, 2011, on-line at: http://
www.dailynk.com/english/read.php?cataId=nk03600&num=8202 .
57 ‌AP, “North Korea Cracks Down on Knowledge Smugglers,” December 31, 2012, on-line
at: http://bigstory.ap.org/article/north-korea-cracks-down-knowledge-smugglers.”
60
this isn’t the enemy; it’s what they want for themselves. It cancels
out everything they’ve been told. And when that happens, it starts a
revolution in their mind.”58 Even members of the state security ap-
paratus are being affected. Kim Hueng Kwang, a DPRK official with
a military division tasked with ferreting out such illegal media,
recalled reading various history books and other forms of Western
media he found through his job; “Reading about the crimes hap-
pening in these countries, I began to realize that those crimes were
happening in my country too,” he explained. “That was the starting
point of the logic shifting in my brain. I began to understand the
nature of dictatorship.”59
Conclusion :
Technology and Its Consequences
A final and clearly related factor in the soft power penetration of

the North is the significant impact of technology, and the unprece-
dented ways that it is allowing information about the outside world
to permeate the nation. For half a century, the DPRK relied on an
effective blackout of foreign information to present an image of the
world that advanced the position of the nation’s elite. Maintaining
such tight controls of information in the current technological age,
however, is proving to be impossible. The emergence of cellular
telephones stands as an obvious example, as an estimated two mil-
lion cell phones are currently active in the North, most of which
are made by Chinese firms and then “rebranded” as made in the
DPRK.60 Cell phones have particularly exploded over the past few
58 “The
‌ Plot to Free North Korea with Smuggled Episodes of Friends.”
59 “The
60 ‌On cellphones in the DPRK, see especially Yonho Kim, “Cell Phones in North Korea,” US-
years. Orascom, the Egyptian-based cell-service provider that has
access to North Korea, reports that the number of mobile-phone
subscribers doubled in just a 14-month span between 2012 and
2013.61 Cell phones, particularly newer models that are smaller and
lighter and hence easier to smuggle, allow careful DPRK citizens
the ability to make international calls that are not monitored by
the state. According to one study, only 3% of North Korean mobile
phone owners used their device solely for domestic calls, while 89%
admitted to calling China and 36% to calling the ROK.62 Precau-
tions obviously have to be taken for international use, so phones
are typically used in more remote areas along the Chinese border,
where Chinese networks can be accessed and where government
jamming devices are less effective, or with other steps taken to
avoid government monitoring, but the results seem clear: North
Korean residents are using the new technology to connect to the
outside world to an unprecedented degree.63
The phones do more than just bring information into the North.
Teens use them to develop and maintain networks of friends that
expand far beyond the traditional local networks; recently, North
Korean teens have also started to share multi-media files through
texts that pass along content connected to ROK or Western culture
(and while circumstances are of course different, it is hard not to at
least consider the impact of cell phones in the 2001 “text-message
revolution” in the Philippines and the Jasmine Revolutions in the
Korea Institute at SAIS Report, 2014, and Wall Street Journal, “Cellphones can Spark
Change in North Korea,” December 7, 2014. The “2 million” number is the source of
much debate and is probably artificially high, but the sudden and dramatic increase in
cell phones in general cannot be debated.
61 ‌Radio Free Asia, “Chinese Border Shops Market Cheap Cell Phones to North Koreans,”
June 23, 2014; “Cell phones can Spark Change in North Korea.”
62 ‌A Quiet Opening, p. 56.
63 ‌Radio Free Asia, “North Korea Expands Jamming, Surveillance of Chinese Cell Phones,”
July 3, 2014.
62
Middle East).64 Again anecdotes support these findings, as foreign
visitors, especially in Pyongyang, often remark on the number
of such phones in everyday usage, particularly with the younger
generation.65 Market traders also use them to obtain and transmit
information about prices and exchange rates, and small farmers use
them to coordinate trade with merchants in the big cities. Without
a functioning national delivery system, much of the DPRK trade
is sent by train, with cell phones being the critical component to
coordinate delivery and pickup, provide photos of the goods being
shipped, check different prices in different regions in order to max-
imize profits, and warn of potential interference from the author-
ities.66 Phones have become so valuable that one defector spoke of
people without significant assets still selling their possessions to try
to obtain phones in order to benefit from the social status they con-
vey, a small but significant example of what sociologist Thorstein
Veblen famously described as the “conspicuous consumption” hab-
its of emerging social and economic elites.67
Cell phones are not the only aspect of technology that appears
to be loosening the control of the regime. Thumb drives and MP3
players, easily smuggled into the nation because of their small size,
are even more potentially revolutionary. One dissident group has
produced a 200 page e-book about life beyond North Korean bor-
ders, embedded it with photos, voice files, video and music, and
even a children’s game about the outside world, and then disguised
so it appears as empty when plugged into a computer unless the
64 ‌NK News, “Younger N. Koreans Increasingly Sharing Pictures, Video between Cell
phones”, January 26, 2015, on-line at: http://www.nknews.org/2015/01/younger-n-
koreans-increasingly-sharing-pictures-video-between-cellphones/ .
65 38
‌ North, “A Closer Look at the ‘Explosion of Cell Phone Subscribers’ in North Korea,”
November 26, 2013, on-line at: http://38north.org/2013/11/ykim112613/ .
66 “Cell
‌ Phones in North Korea,” p. 31-32; “Younger N. Koreans Increasingly Sharing
Pictures, Video between Cell phones.”
67 “Cell
‌ Phones in North Korea,” p. 13; Thorstein Veblen, The Theory of the Leisure Class,
MacMillan, 1899).
owner knows how to launch it.68 Another organization is working
with the Wikimedia Foundation to put a North Korean edition of
Wikipedia on every one of the 10,000 flash drives it hopes to send
into the North each year, a step that a number of groups have al-
ready implemented on a smaller scale; these flash drives often also
include explanations about democracy, images of bookstores and
grocery stores, and other images designed to broaden the knowl-
edge base of the viewer about the outside world.69 Radios, a long-
time staple in the North, continue to play an important role, es-
pecially aftera series of regulatory changes in South Korea in 2013
that loosened restrictions on foreign broadcasting in the South, thus
opening the door to more Western programming targeted at the
North. The breakdown of the distribution system in the last 1990s
also further pushed people towards these broadcasts, as it shepherd-
ed in a growing distrust of the regime that encouraged them to seek
information elsewhere.70 Defectors, particularly those from the rural
areas closer to the Chinese border, often speak of the importance
of broadcasts from South Korea’s KBS as well as Voice of America
and Radio Free Asia; 18.4% of DPRK refugees listened to a VOA or
RFA broadcast weekly, according to a recent study by the US Broad-
casting Board of Governors, while another study of refugees found
21% of them admitting to getting their information from ROK radio
(while only 4% did from North Korean radio).71 Kang Choll Hwan,
one of the nation’s most famous defectors, notes the importance of
radio broadcasts in influencing his views of the regime and the out-
68 ‌The Atlantic, “North Korea’s Digital Underground,” February 24, 2011; “The Plot to Free
North Korea with Smuggled Episodes of Friends.”
69 ‌Taipei Times, “Activists Send USB Keys into N Korea,” January 16, 2014, on-line at:
http://www.taipeitimes.com/News/world/archives/2014/01/16/2003581435 ; “The
Plot to Free North Korea with Smuggled Episodes of Friends.”
70 ‌A Quiet Opening, p. 12-13.
71 ‌An Unmet Need: A Proposal for the BBC to Broadcast a World Service in the Korean
Language, European Alliance for Human Rights in North Korea Policy Paper, December
2013, p. 8; A Quiet Opening, p. 10.
64
side world. “At first I didn’t believe it,” he recalled. “Then I started
to believe but felt guilty for listening. Eventually, I couldn’t stop…
Listening to the radio gave us the words we needed to express our
dissatisfaction. Every program, each new discovery, helped us tear a
little freer from the enveloping web of deception.”72
For those looking for dramatic and immediate solutions, a po-
sition of strategic patience predicated on the impact of the cultural
and market penetration of the North is a difficult course to follow.
For those viewing the North from a moralistic perspective that sees
it as a repugnant dictatorship with an abhorrent human rights re-
cord, the path is equally as unappealing. Nevertheless, sometimes
the best course of action is to let a promising chain of events prog-
ress. Current trends suggest that the steady influx of technology, of
culture, and of markets seem to be combining to do one thing above
all else: dragging DPRK citizens out of their artificially-created and
state-enforced box and exposing them to information that challeng-
es the ideological framework that has justified the repressive rule
of the Kim family for more than a half-century. Even the regimes
seems to be growing worried about events, warning its people that:
imperialists have used reactionary state-controlled such as print,
audio, and television to viciously slander the progressive nations to
indoctrinate the people in the superiority of capitalism and freedom.
They are using this force upon the anti-imperialist, independent na-
tions’ newspapers, books, magazines, photographs, movies, music, and
CDs filled with superstition, pornography, debauchery, and hatred…
The infiltration of the culture of bourgeois ideology causes serious
harm to the youth in particular. When contaminated by such ideolo-
gy, young people become extreme individuals who defy political and
organizational activities.73
72 “The
73 ‌Kim Jong Son, “We Must Pulverize the Ideological and cultural Infiltration of the
The powerful and repressive regime in Pyongyang has survived
war, famine, and poverty. It has outlasted allies and enemies, and
withstood direct and indirect assaults. Its power and control, how-
ever, may finally have met its match in the markets and soft power
of the outside world. “No matter how many people die,” explained
one defector, “the sensational popularity doesn’t die. That is the
power of culture.”74
Imperialists,” Rodong Sinmun, January 30, 2012.

74 ‌A Quiet Opening, p. 20.
66
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68
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70
International Cooperation for the Construction
of South Korea - North Korea - Russia Pipeline
Natural Gas (PNG) : Effectiveness and Restrictions
Ji Won Yun
Pyeongtaek University
Abstract
The main purpose of this article is to examine the process and restrictions of
the energy cooperation between South Korea and Russia which began with the
initiation of the Kovykta gas field project of Irkutsk in the mid-1990s. However,
Russia’s state-operated gas corporation, Gazprom, reinforced and controlled the
governance over the gas field project. Due to Russia’s decision to use Kovykta gas
for its domestic consumption, the development project was suspended in 2004.
In particular, the South Korea - North Korea - Russia PNG cooperative discussion
led to a South Korea-Russia MOU in late September 2008, followed by the active
discussion between Russian ex-President Medvedev and North Korea’ leader Kim,
Jong-il, in late August 2011. This project was ultimately predicted to contribute to
the stability and peace of the Korean Peninsula and Northeast Asia, and to induce
the disclosure and pressing of North Korea’s denuclearization. However, regardless
of such possibility of expanded political and economic cooperation through the
South Korea - North Korea - Russia PNG connection, the short-term continuation
of the PNG discussions among the three countries is difficult due to variables
in North Korea. With regard to the expected effects of this project, internal
changes and developments in North Korea will be considered. Although there
are such realistic restrictions, this article will explore and analyze the implications
of the international cooperation of the South Korea - North Korea - Russia PNG
connection project.
Key words: energy cooperation, Russia’s energy policy, gas pipelines, South Korea -
North Korea - Russia PNG connection project. Nuclear problem
International Cooperation for the Construction of South Korea - North Korea - Russia Pipeline Natural Gas (PNG) 71
Introduction
The energy cooperation between South Korea and Russia began

with the initiation of the Kovykta gas field project of Irkutsk, which
was owned by England’s TNK-BP, in the mid-1990s. At the time,
South Korea and China planned to implement 1 million m3 and 3.8
million m3 of gas from the Kovykta gas field in Siberia. In 1996, the
South Korea Gas Corporation (KOGAS) participated in the prelimi-
nary feasibility research on the Kovykta gas field development proj-
ect; and in 1999, official discussions on the development of the gas
field began with President Kim Dae-Joong’s visit to Russia. Howev-
er, Russia’s state-operated gas corporation, Gazprom, reinforced and
controlled governance over the gas field project, which led the BP to
withdraw from development of the Kovykta gas field. Due to Rus-
sia’s decision to utilize Kovykta gas for its domestic consumption,
the development project was suspended in 2004. However, Russia
proposed to supply Sakhalin gas to South Korea and China, over
which America and Japan had priority. As a result, South Korea
concluded a Memorandum of Understanding (MOU) with Russia
to import 7.5 billion tons of natural gas for 30 years via the pipeline
natural gas (PNG) from Sakhalin III in August 2008. KOGAS also
agreed to import 2 billion tons of liquefied natural gas (LNG) in
April 2009 from Sakhalin II.1
Meanwhile, the South Korea - North Korea - Russia PNG co-
operative discussion led to a South Korea-Russia MOU in late Sep-
1 ‌South Korea imported 1.526 million tons of LNG from 2009 to 2010. Meanwhile, Russia
participated in price negotiations after deciding to sell 70 trillion m3 of natural gas
annually for 30 years from 2015, through the Altai gas pipelines that connect Altai,
Siberia to the Northwestern region of China. Altai’s 2,600-km pipeline extends from
Siberia to the connective region and borderline of Novosibirsk, which is connected to
the coastline of Southern China. Bae Kyu-sung, “Possibilities and Restrictions of the
South Korea-North Korea-Russia Gas Pipeline Connection Project: With Focus on the
North Korea-Russia Relationship,” paper was presented at the Korea-Siberia Center A
Seminar, Nov. 24, 2011, pp. 71-72.
72
tember 2008, followed by the active discussion between Russian
President Medvedev and North Korea’ leader Kim Jong-il, in late
August 2011 since the summit meeting.2South Korea reduced its
dependency on the Middle East and Southeast Asia, from which it
had the largest natural gas imports, and promoted diversification
of its energy income by expanding its imports from Russia. Russia
also expanded its exports of gas to South Korea, the world’s second
largest LNG-importing country, followed by Japan, with which it
expected to prepare the basis for activating the economy of the Far
Eastern region. North Korea was also analyzed to potentially have
an opportunity for economic revival with the significant income
from the PNG Customs Commission. This project was ultimately
predicted to contribute to the stability and peace of the Korean Pen-
insula and Northeast Asia, and to induce the disclosure and press-
ing of North Korea’s denuclearization.
Regardless of the possibility of an expanded political and
economic cooperation through the South Korea - North Korea -
Russia PNG connection, the short-term continuation of the PNG
discussions among the three countries is difficult due to variables
in North Korea. Under the post Kim Jong-il system, Kim, Jong-un
is devoting strength and efforts to the solidarity of the country’s
internal system and the consolidation of his own power. Thus,
the discussions must be made using a long-term approach. Even
though there are such realistic restrictions, this article is to intend
to consider the implications of the international cooperation for the
South Korea - North Korea - Russia PNG Connection Project. Thus,
the main points of this article are consisted of the following; First,
the Russian energy easting policy will be examined by analyzing
the effectiveness of the Energy Policy and the construction of the
Northeast Asian Energy Transportation System(ESPO)and Unified
2 World Tribute, Oct. 6, 2011.
Gas Supply System UGSS). And then, the setting of the Korea-Rus-
sia energy cooperative relationship with regard to the South Korea
- North Korea - Russia PNG connection and the expected effects of
this project on the internal changes and developments in North Ko-
rea will be considered, along with the largest restriction and task of
the South Korea - North Korea - Russia PNG Project.
Effectiveness of Russia’s Energy

East BOUNDING Policy
1. Purpose and Properties of the ESPO Policy
The energy power, Russia, is the world’s second largest crude

oil producing and exporting country after Saudi Arabia, and is the
world’s largest producer and exporter of natural gas. The amount of
the country’s confirmed natural gas reserves is 44.38 trillion m3,
accounting for 23.7% of the world’s total confirmed reserves, and
its proven annual production is estimated to be 84 years. Russia’s
confirmed natural gas reserves accounts for 25% of the world’s to-
tal export of natural gases, which are mostly exported to European
regions.3 Meanwhile, Russia’s population is continuing to decrease;
and for the development of its lagging East Siberia and Far East-
ern regions, policies devoted to the development and export of the
regions’ most important resources, coal and natural gas, are being
actively initiated. Simultaneously, Russia has also been developing
energy resources for the reinforcement of its incorporation of and
3 ‌Iran, Qatar, Saudi Arabia, and Russia have the main confirmed natural gas reserves.
Globally, the ratios of natural gas, which point to it as a primary energy source, are 27%
in America, 25.5% in Europe, 25% on the average in OECD countries, and 15% in Korea.
The use of natural gases increases each year, and by 2035, it is prospected to be the
second most important energy source after oil. The largest LNG natural gas-importing
countries are Japan and Korea.
74
cooperation with the energy export market that is currently con-
centrated in European regions, as well as in the economic regions
of the Asian Pacific. Russia is particularly actively constructing
infrastructure facilities and transportation facilities for its export
of its developed energy resources. In support of such policies, the
ESPO Oil Pipeline Project was actively initiated to secure the effec-
tive transportation, exploration, and development of Russia’s energy
resources.4 Through the ESPO, Russia accounts for approximately
25% of all the oil exported to Asia, and for 20% for natural gas. The
ESPO is greatly affecting eastern-oriented policies, the development
of East Siberia and the Far Eastern region, and the South Korea -
North Korea - Russia PNG Connection Project.
As such, the ESPO is an important part of Russia’s energy pol-
icy, as it enters the oil and natural gas markets of the Asia Pacific
region. In late December 2004, Russia announced its plan to con-
struct a 4,663-km pipeline from Taishet near Lake Baikal in Irkutsk
to Perevoznaya, the port city near Nakhodka in the Maritime Prov-
ince. The line of the first stage of the project, the construction of
which began in April 2006, refers to the region of the pipeline that
connects Taishet, Irkutsk to Skovorodino, Amur. The line of the sec-
ond stage refers to the region of the 1,919-km pipeline from Skov-
orodino to the Kozmino Oil Export Terminal in Vladivostok in the
Far Eastern region (See Figure 1).5 Russia has invested 29.5 trillion
dollars since 2005 for the construction of the ESPO. The end point
of the ESPO is the Kozmino Crude Oil Shipping Terminal.6 Russia’s
4 Lee, Young-hyung, “Possibilities and Restrictions of the South Korea-North Korea-Russia

Gas Pipeline Connection Project: With Focus on the North Korea-Russia Relationship,”
paper was presented at the Korea-Siberia Center Seminar, Nov. 24, 2011, p. 44; Han,
Jong-man et al., The Starting Point of the South Korea-North Korea-Russia Gas Pipeline
Connection: Gas Pipeline Project (Seoul: Purungil, 2012), pp. 154-155.
5 Yun, Yeong-mi, Diplomacy and Security of Northeastern Asia (Seoul: Dunam, 2012), pp.
139-142.
6 Kim, Yeon-gyu, “ESPO and Sakhalin I and II Mines,” Russia-CIS Focus, Hankuk University
of Foreign Studies Russian Research Center, August 8, 2011, p. 1.
state-operated pipeline corporation, Transneft, has completed the
first stage of the construction of the 2,700-km line from Taishet
to Skovorodino. With the regional opening of the first stage of the
ESPO in late December 2009, 600 thousand barrels of oil from East
Siberia have been exported to Northeast Asian countries daily, 300
thousand barrels of which have been transported to China’s Daging
line.7
Figure 1. East Siberian-Pacific Ocean Pipeline(ESPO)
Source: gif.remixxworld.blogspot (accessed Jul. 4, 2013).
The region of the second stage of the ESPO, which extends

for 2,046 km from Skovorodino to Kozmino, was completed in
mid-December 2012, and is currently in operation. The completion
7 In mid-June 2013, Russia agreed to export 60 trillion dollars of Russian oil to China.
Moscow News, June 20, 2013; The amount of oil exported through the Kozmino
Terminal as of 2012 was 16.3 million tons. The main exporting countries included Japan
(30%), China (25%), and America (18%), and a total of 6 million tons of oil was exported
to Korea, Thailand, and the Philippines. In 2011, the ratio of exporting countries included
America (27.5%), Japan (19%), and China (18%). These calculations show that the amount
of exported oil to Japan in 2012 greatly increased compared to the previous year.
Environmental Daily, March 20, 2013.
76
of the second stage increased the transport of oil to 1 million barrels
daily through the Trans-Siberian Railway (TSR), and will further
increase it to 1.6 million barrels. The Kozmino Crude Oil Shipping
Terminal currently accommodates 150-thousand-ton oil tankers,
which capacity was scheduled to be expanded by 65 million tons
annually in 2014. Additionally, a 350-thousand-ton crude oil storage
facility is being planned. The completion of the second stage has
allowed the export of 1.6 million barrels of crude oil daily to Asia
Pacific regions, including China and Korea. The amount of oil ex-
ported by Russia is estimated at 4.4 million barrels each day. Only
3.8% of such total amount is exported to the Asia Pacific region,
but this will increase to around one-third of the total amount (to 80
million tons annually). Russian oil transported through the ESPO
is substituting for the import of Middle Eastern oil by Northeastern
countries. The transportation time from Kozmino Harbor to the
Northeastern countries is around five days, which is much shorter
than the two weeks required transporting oil from the Middle East-
ern region.8
2. Appearance and State of the UGSS Construction
Russia is the main exporter of natural gas to Northeast Asia. It

entered the LNG market in Northeast Asia in 2009. In mid-Feb-
ruary 2009, Russia’s Gazprom opened an LNG plant as part of the
Sakhalin II project in Prigorodnoye, Southern Sakhalin. Since the
completion of the Sakhalin II mine lot, 12.5 million tons of natural
8 The use of gas within China is increasing. In 2008, China consumed a total of 80.7bcm
of natural gas, 77.5bcmof which was supplied from domestic production, and 4.4bcm
was imported. Particularly, since 2009, the inflow of gas has been achieved through the
connection pipeline (PNG) with the Central Asian region, but many LNG terminals along
the coastline are also being constructed. The world’s largest natural gas-consuming
country, Japan, has imported 92.13bcm of gas, compared to the 36.55bcm imported by
Korea. Geographically, the form of natural gas imported by Korea and Japan is LNG. Kim,
Yeon-gyu (2011), p. 2; and Han, Jong-man et al., (2012), p. 156.
gas has been exported to Japan, China, Korea, India, and Taiwan
through LNG ships. This scale accounts for 9% of the European
gas export of Russia, and 5% of the world’s LNG market. Currently,
Russia is also constructing an LNG liquefaction factory and an oil
chemical facility in its Maritime Province (See Table 1).9
Table 1. Sakhalin, East Siberia’s Oil and Gas Supply to Northeast Asia
Resource Region
East Siberia
- With
‌ the completion of the first step of the construction of ESPO from Taishet
to Skovorodino in December 2009, It is now used to supply 600 thousand
barrels of oil daily: 300 thousand barrels to China via the Daqing line, and the
remaining 300 thousand barrels, transported via railroad to Kozmino Harbor near
Oil
Nakhodka.
Sakhalin
- ‌Of the 250 thousand barrels (as of 2009) of oil produced daily in the Sakhalin
I and II mines, 39.6% is exported to Korea and 38.4%, to Japan. The remaining
barrels are shipped to China, USA, the Philippines, Taiwan, and New Zealand.
Sakhalin
- ‌Sakhalin II: 1.5 billion tons to Korea over 20 years (LNG)
- ‌Sakhalin III: 7.5 billion tons to Korea over 30 years (South Korea - North Korea -
Russia PNG method)
Gas
East Siberia
- Each
‌ year, 68 million m3 of natural gas has been agreed to be exported to China
over 30 years, based on which the two countries are currently negotiating the
price.
Source: Han, Jong-man et al., The Starting Point of the South Korea - North Korea - Russia Gas
Pipeline Connection: Gas Pipeline Project (Seoul: Purungil, 2012), p. 158.
Russia’s energy policy is being initiated based on the long-term

strategy Energy Strategy 2030 established in early November 2009,
the purpose of which is to efficiently use the nation’s energy poten-
tial for enhanced welfare and economic development.10 Through
9 More than 60% is exported to Japan, which accounts for 4.4% of Japan’s LNG imports.
Russia maintains a priority LNG market policy for Sakhalin gas. There are differences
between the existing Kovyktagas field’s PNG development and transportation policy.
Han, Jong-man et al., (2012), p. 9.
10 http://minenergo. Gov.ru/activity/energy strategy/ (accessed January 13, 2014).
78
Energy Strategy 2030, Russia is initiating the construction of a
UGSS with the former Soviet Union and nations outside the Assem-
bly, as well as with Russia’s own gas pipelines.11 Gazprom is execut-
ing the 2030 Eastern Gas Network Program construction project as
part of the UGSS. The main purpose of this project is to supply gas
to the regions of the Maritime Province, which lack energy, and to
expand the export of natural gas to Northeast Asian countries (See
Table 2). Russia is diversifying its energy-exporting regions while
increasing the amount of its oil exports to Asian Pacific regions
to 22-25% and of its gas exports, to 19-20%, by 2030. Specifically,
the four gas production centers in the Eastern region are Sakhalin,
Yakutsk, Irkutsk, and Krasnoyarsk. Surrounding these centers,
projects such as gas field development, domestic gasification, and
construction of gas pipelines from gas fields to consuming regions
are being initiated. To achieve this, a large-scale LNG plant facility
will be constructed in Vladivostok, and an annual 6 bcm of gas val-
ued at 11 trillion dollars will be supplied through the 1,800-km-long
gas pipeline to Sakhalin.12
Table 2. Russia’s Energy Strategy 2030

Category Core Main Contents
Preparation of a stable financial basis

Investment in Establishment
‌ of an investment plan in important sectors,
Stage 1
energy resource construction of development/production infrastructure and
(‘06-‘10)
development main facilities, and construction of a cooperation system
between the government and corporations
Establishment
‌ of a large-scale project (involving
Development modernization of facilities and technology development)
Stage 2 of investments Construction
‌ of main production facilities based on the
(‘11-‘20) and innovative funds generated in Stage 1, development of innovative
technology technologies, development of prospective oil and gas fields,
and initiation of overseas investment projects
11 Today Energy, September 29, 2009.

12 Han, Jong-man et al., (2012), pp. 7-9.
Category Core Main Contents
Continued
Stage 3 Economic
‌ profit based on the investments and innovations
economic
(‘21-‘30) initiated in Stage 2
development
Source: http://minenergo.gov.ru/activity/energostrategy/ (accessed: January 13, 2014); Han,
Jong-Man et al., (2012), p. 151.
Russia has initiated a plan to supply Sakhalin gas in the form

of PNG to the Maritime Province, China, and Korea. In Septem-
ber 2007, the country’s Minister of Industrial Energy approved
the Eastern Line PNG Connection Project that connects Sakha-
lin-Nevelsk-Khabarovsk-Vladivostok. The design and exploration
of gas pipes was completed in November 2008. In late July 2009,
the groundbreaking ceremony was held in the SKV (Sakha-
lin-Khabarovsk-Vladivostok) region for the transport of the gas pro-
duced in Sakhalin I to the Maritime Province. The total length of
this region is 1,822 km, and its maximum annual capacity is 36.5
trillion m3, for which a 502-km pipeline that connects Sakhalin
to Khabarovsk was completed in September 2011. To continue the
project toward the SKV region in 2012, the Yakutsk-Khabarovsk gas
pipeline will also be constructed in 2015. After 2016, the changes in
the Russian and Northeast Asian gas markets will be analyzed, and
gas pipelines will also be constructed from the Kovykta gas field of
Irkutsk to Yakutsk.13
Ultimately, the political implications of Russia’s Northeast Asian
energy policy are the reinforcement of the country’s national ener-
gy security vis-a-vis the reduction of its dependency on European
imports, the expansion of the nation’s influence through reinforced
13 ‌Russia has also initiated the supply of electricity to Northeast Asian countries based on
Sakhalin gas. The plan involves the export of electricity produced at the gas plant to
North Korea and China. A transmission network that connects Vladivostok and Chungjin
in North Korea is being constructed. Yun, Sung-hak, “Moscow is the Hope of Uniting
South Korea and North Korea as Led by South Korea” Shin Donga, Jan. 2007, pp. 456-
465.
80
energy cooperation with Northeast Asian countries, and the eco-
nomic development of East Siberia and the Far Eastern region
through the provision of an alternative energy source for West Sibe-
ria. This involves a strategy for the construction of an energy-orient-
ed cooperative relationship with China, Japan, and Korea through
the PNG connection and the expansion of LNG supply.14 In this
regard, Russia is more devoted to the South Korea - North Korea -
Russia PNG Connection Project, which can expand its influence on
the realization of gas exports to Korea as well as on the problem of
North Korea and the Korean peninsula. Gazprom has actively nego-
tiated the PNG project with South Korea, which involves supplying
natural gas buried in Sakhalin to South Korea by passing through
Najin Harbor in North Korea, Hasan Mountain on the border of
North Korea, Vladivostok, the Maritime Province of Nakhodka, and
Khabarovsk.15
Relationship for THE South Korea-Russia

Energy Cooperation
According to the main statistics of Korea’s energy industry

announced by the Ministry of Knowledge Economy in 2010, the
proportion of the LNG in the country’s total primary energy con-
sumption is calculated at 13.3%, placing third after oil’s 42.2% and
coal’s 28.3%.16 South Korea’s consumption of natural gas is estimat-
ed at 35 million tons per annum by 2015. The Ministry of Knowl-
edge Economy has prospected that the proportion of LNG imports
14 ‌Go, Jae-nam & Eom, Gu-ho (eds.), The Future of Russia and the Korean Peninsula (Paju:
Korea Academic Institution, 2009), p. 321.
15 Han, Jong-man et al., (2012), p. 160.
16 Lee, Kyung-ho, “The Korea-Japan LNG Friendship,” Asia Economy, Mar. 17, 2011.
will significantly expand to 27.4% (7.5 million tons) by 2024 from
9.2% with the importation of Russian gas based on the diversifica-
tion policy of natural gas suppliers. Additionally, the participation
of domestic corporations in gas pipeline connection projects will
be made possible, and the initiation of complex oil chemical con-
struction projects that produce polyethylene, etc. will also be made
possible with the use of South Korea’s oil chemical technology and
Russia’s abundant natural gas in the Far Eastern region. Currently,
South Korea’s main natural gas LNG-importing countries, including
Qatar, Oman, and other Middle Eastern countries, and Southeast
Asian countries, including Indonesia and Malaysia, are importing
more than 90% of their LNG from specific countries, 43% from the
Middle Eastern region. The LNG import price is expensive, partic-
ularly with the imposition of added fees (See Table 3). Natural gas is
mostly imported through a 20-year long-term contract, and South
Korea is facing the expiration of its importation contracts with
various Asian and Middle Eastern countries. For example, its gas
import contract with Brunei expired in 2013, and its contract with
Indonesia expired in 2014, and with Malaysia, in 2015.17
Table 3. Korea’s Natural Gas Imports (%)

Region 2008 (%) 2010 (%)
Middle East 49.3 44.5
Southeast Asia 37.0 31.3
Russia 0.0 8.8
Other 13.7 15.4
Total (10 thousand tons) 2,794 3,182
Source: Han, Jong-Man et al., (2012), p. 161.
In late 2010, the South Korean government concluded a 3.5-mil-
82
lion-ton-per-annum gas implementation contract for the first time
with Australia for the diversification of its imports to achieve stable
natural gas supply. South Korea’s importation of gas from Austra-
lia will begin in 2015. Gas is commonly supplied three years after
concluding the contract, so the government will need to sign a
contract renewal. South Korea must achieve a minimum domestic
gas consumption of 30 million tons, but the international natural
gas market is unstable due to the price increase caused by increased
consumption and the unstable supply of the LNG. Particularly after
the nuclear accident in Japan, concerns about the construction and
operation of nuclear power plants exponentially increased in the
international society, which led to the increased consumption of the
LNG, and the gas market became unstable due to the democratiza-
tion of the Middle East after 2011. Yemen, which has been import-
ing 2 million tons of gas annually since 2009, has suspended its gas
supply due to its unstable situation.18
South Korea has evaluated the stability of its customs fee and
supply costs for the importation of Russian natural gas. South
Korea’s purchase of a large quantity of Russian gas in a long-term
contract would be more economically beneficial to it than its pur-
chase of Middle Eastern and Southeast Asian gas, which account for
75.8% (2010) of its imported gas. If it imports gas via the pipeline
that is connected to Vladivostok through North Korea, the econom-
ic efficiency will be higher than if it imports the LNG. Thus, South
Korea and Russia have negotiated on the stable supply of 7.5 million
tons of natural gas annually for 30 years, which will account for
30% of South Korea’s consumed natural gas.19
18 Green Daily, January 3, 2011.

19 ‌The main methods of transporting natural gas include PNG transportation and LNG
method. PNG transportation is more effective for large quantities and LNG transport
additionally requires various facilities and a ship, which increase the prime costs.
Table 4. Economic Evaluation of Korea’s Russian Natural Gas Importation Plan
Investment and Operation Cost (Unit: Dollars) Prime Transportation Cost per Unit
PNG 4.798 billion 0.31
LNG 22.643 billion 0.94
CNG 10.552 billion 0.60

Source: KOGAS, 2011 data.
Additionally, according to the results of the joint study of KO-

GAS and Gazprom announced in April 2010, importing PNG via
North Korea would be more economically efficient than import-
ing LNG and CNG. South Korea’s economic benefits through the
South Korea - North Korea - Russia gas pipeline project include
its importation of Russian gas at a more affordable price than the
LNG import price. It would be more affordable for South Korea to
transport natural gas via pipelines rather than to ship the liquefied
or compressed form of natural gas. In other words, the South Korea
- North Korea - Russia PNG gas pipeline connection project does
not have a liquefaction cost such as for LNG, and does not require a
large-scale storage facility. South Korea can import gas through land
transport at a price 30-70% lower than by sea. The PNG project will
allow a one-third reduction in the distribution cost compared to the
cost of transporting LNG by sea (See Table 4).20
For example, the short-term quantity of LNG brought in from
the Middle East equates to 9 dollars per 1 billion BTU (LNG ener-
gy unit). This is more than double the cost of purchasing the same
amount from the U.S., which is 4 dollars per 1 billion BTU, and 2
dollars higher than European imports. When Middle Eastern coun-
tries sell oil or gas to Korea, China, Japan, and other Asian coun-
tries, the Asian Premium imposes a 5-20% increase in the original
20 Yeonhap News, August 25, 2011.
84
cost due to the transport distance.21 This price is 10-20% higher
than that of the amount previously imported.22 Russian natural gas
takes four days to transport, which is 15 days and 7 days less than
the length of time it takes from the Middle East and Southeast Asia,
respectively, and the cost per ton is up to 50% lower than that of
the imports from the Middle East and Southeast Asia.23 The unit
price of natural gas from European countries is less than 410dollars,
but Korea imports LNG at an average price of 413-452 dollars per
1,000 m3.24
Efficiency and Restrictions

of the South Korea - North Korea -
Russia PNG Connection Project
1. Implications
‌ of the South Korea - North Korea – Russia PNG
Connection
President Lee, Myung-bak and President Medvedev had been

discussing various resource cooperation plans, with a focus on the
Far Eastern region of Russia. The South Korea - North Korea - Rus-
sia PNG construction acts as an important variable in the progress
of the South Korea - North Korea relationship, as a part of that plan.
Although the South Korea - North Korea PNG connection coopera-
tion project was suspended, the South Korea - North Korea - Russia
PNG construction began through the PNG connection project and
the development of the Yakutiya of Sakha Republic and the Kovyk-
21 Green Daily, January 3, 2011.

22 ChosunIlbo, April 23, 2011.
23 Newsis, April 13, 2009; Aju News, December 1, 2010.
24 Resource Investing News, June 21, 2011.
ta gas field in Irkutsk in the 1990s. At that time, the development
of the Kovykta gas field was much like the Korea – China - Russia
or South Korea - North Korea - Russia energy cooperation projects.
The South Korea - North Korea - Russia PNG connection project,
which directly passes through North Korea, was first proposed by
President Putin in 2002. For this project, an MOU was concluded
that specified the annual importation of 7.5 billion tons of Russian
natural gas by Korea for 30 years from 2015 at the Korea-Russia
Summit in September 2008 after the conclusion of a Cooperation
Protocol between KOGAS and Gazprom in October 2006. The
method of transporting nearly 1000-1100 km of PNG through
North Korea was officially discussed. However, there has been no
particular progress on the PNG connection due to the repeated ten-
sions, including North Korea’s nuclear problem, the slow progress
of the South Korea - North Korea relationship, the UN’s sanction of
North Korea, the attack of the Cheonan warship, and the bombard-
ment of Yeonpyeong island.25
For a few years, discussions on the South Korea - North Ko-
rea - Russia PNG connection were actively conducted. The project
became of great interest to the three countries again due to the
Summit at the outskirts of Ulan-Ude, the capital of Buryatia, at-
tended by President Medvedev and North Korea’s leader, Kim, Jong-
il, on August 24, 2011. An important issue agreed upon during the
Summit included the reopening of six-party talks, the expansion of
the countries’ economic cooperation, and the South Korea - North
Korea - Russia economic cooperation (See Table 5). President Med-
vedev was optimistic about the PNG construction connection to
South Korea through the territory of North Korea, and agreed to
inaugurate a special commission among the three countries for the
86
PNG construction.26 Kim, Jong-il, also expressed a positive stand on
the PNG connection project before his death in late December 2011.
Russia had already established a bond of sympathy with South
Korea and North Korea individually, so it had greater expectations
from the inauguration of the special commission. Accordingly, the
composition of an executive group for the progress of the PNG con-
nection project was discussed between energy directors of North
Korea and Russia in September, immediately after the Summit in
Ulan-Ude. In mid-September, Kim, Hee-young of Oil Industries in
North Korea and Gazprom CEO Alexei Miler met in Moscow. After
discussing PNG, the two concluded an MOU to compose a joint ex-
ecutive group.27 Additionally, KOGAS CEO Joo, Gang-soo and Gaz-
prom CEO Miler signed a roadmap for the realization of the South
Korea-Russia Gas Pipeline Project. In late September, Denisov, Rus-
sia’s Vice Minister for Land, Water, and Construction, visited North
Korea to discuss problems with constructing gas pipelines and
power lines, as well as with connecting railroads in the country.28
Furthermore, in late October, Gazprom Vice President Alex-
ander made a significantly detailed statement that “Korea will be
supplied with gas via North Korea by 2017.” In early November,
Nikolai Duvik of Gazprom’s Legal Affairs unit announced a road-
map that reconfirmed the aforementioned statement at the second
Korea-Russia Discussion (KRD) Forum at Grand Hotel Europe in
Saint Petersburg. The roadmap proposed a schedule for concluding
the gas supply agreement and the basic agreement between October
2011 and January 2012, concluding the official agreement in Janu-
ary to April 2012, preparing a PNG line plan between March and
September 2013, beginning the PNG construction in September
and completing the construction in December 2016, and supplying
26 Российская газета, August 24, 2011.

27 Российская газета, September 28, 2011.
28 Labor News, October 30, 2011.
gas from January 2017. Additionally, at the South Korean-Russian
Summit, Russian President Medvedev stated that Russia would take
full responsibility for any risk involved in passing through North
Korea, and actively quelled anxiety with regard to North Korea, as
one of the most important variables of the agreement. As such, Rus-
sia pushed forward active energy ‘sales’ diplomacy by announcing
the roadmap, while South Korea expressed a slightly more cautious
stance (See Table 5).29
Table 5. Progress of the South Korea - North Korea - Russia PNG Project
Date Content
Sept. ‘08 ‌South Korea-Russia Summit (Agreement on the form of imported PNG)
Sept. ‘09 Conclusion

‌ of a joint research agreement between KOGAS and Gazprom
Aug. ‘10 8‌ th KOGAS-Gazprom executive meeting
‌Kim, Jong-il& Medvedev Summit negotiations on the passing of the gas

Aug. ‘11
pipeline through North Korea
Sept. ‘11 C
‌ ompletion of the Sakhalin-Khabarovska-Vladivostok pipeline
‌Meetings between KOGAS CEO Joo, Gang-soo,, Gazprom CEO Miler, and Oil
Oct. ‘11
Industries (North Korea) Director Kim, Hee-young
Nov. ‘11 Confirmation

‌ of will to initiate the project at the Korea-Russia Summit
‌Scheduled construction of the Sakha Republic – Sakhalin - Vladivostok gas

‘12-‘16
pipeline
Construction
‌ and completion of the Vladivostok - North Korea - South Korea
‘13-‘16
gas pipeline
‘17 C
‌ ommencement of the gas supply
A high-ranking KOGAS executive stated that “It is true that

there have been such discussions between the KOGAS and the Gaz-
prom,” thus implying the possibility of the progress of the project
based on the aforementioned three-step plan. South Korea would
29 ‌Joongang Sunday, No. 243, November 5, 2011; Han, Jong-man et al., (2012), pp. 166-
167.
88
be stably supplied a gas source on a long-term basis and the diver-
sification of its gas import sources through the PNG connection
project, but the restrictions caused by the passing of the pipeline
through North Korea, the pipeline route, and the total construction
cost have not yet been determined. Thus, caution is needed.30 First,
the South Korea - North Korea relationship must be improved, and
the six-party talks must be restarted, to realize the inauguration
and activities of the Special Three-Country Commission. Until
there is practical progress, there will be complex variables, includ-
ing environmental problems and technical issues. Currently, the
focus of the South Korea - North Korea - Russia PNG connection
is Korea’s importation of 7.5 billion tons (25-30% of its total annual
consumption) of Russian gas from the Far Eastern region, valued at
10 trillion m3 each year, for 25-30 years from 2017, through a gas
pipeline that will pass through North Korea from Vladivostok. This
project is regarded as a mega-ton project. The aforesaid cost does
not include North Korea’s land rental cost, environmental cost, tax-
es, rewards, and regional restriction cost (See Table 6).31
Table 6. Outline of the South Korea - North Korea - Russia PNG Project
Outline Main Content
3‌ .4 billion dollars

Total Investment Cost
‌Operation Cost: 1.4 billion dollars over 25 years
Pipeline 1‌ 22 km
Construction Period ‌Sept. 2013 - end of 2016
Commencement of Supply ‌Supply begins in 2017
30 ‌Korea’s LNG terminal facilities are located in the Tongyoung, Pyeongtek Terminal, and
Incheon. Their total LNG storage capacity is 3.3 million tons, and their total length,
2,789km. KOGAS is scheduled to construct a 1.3-million-ton gas storage base to
complete the fourth LNG terminal facility in Samcheok by 2015.
Outline Main Content
7.5
‌ billion tons per annum (10 trillion m3, 25-30% of annual
Supplied Amount
consumption)
Primary
‌ - Sakhalin gas; Secondary - Yakutiya and
Supplied Region
Chayandinskoye
With the completion of the PNG from Sakhalin to Vladivostok

in September 2011, the total length of the pipelines that will carry
Russian gas to Korea in 2017 is estimated as 1,122 km, including
150 km from Vladivostok to the borderline of North Korea, 740 km
in the North Korean region, and 232 km in South Korea. This line
will connect Vladivostok to Chungjin in North Korea to Wonsan to
Gosan to Incheon and Pyeongtek, with 60% of the total pipelines
constructed in North Korea.32 A total annual LNG importation of 7.5
million tons will require an investment cost of 3.43 million dollars,
as well as 1.395 million dollars for annual operation, and 0.31 dol-
lars in transport per unit. Meanwhile, the LNG incurs investment
and operating costs of 6.823 billion dollars and 15.82 billion dollars,
respectively, with a transportation cost of 0.94 dollars per unit.33
According to recent analysis data, the unit cost of importing gas to
Korea from Russia through North Korea with the PNG method is 16
dollars per ton, whereas the prime costs of importing both the LNG
and the CNG are 48.70 dollars and 31.10dollars, respectively, two to
three times higher.34
The LNG method has a two times higher investment cost than
the PNG; and including the establishment of a factory that liquefies
natural gas in Vladivostok, an 11 times higher operating cost over
25 years. With regard to the installation of a base near Pyeongtek
in South Korea and a liquefaction terminal in Pereboznaya, and
32 Российская газета, September 28, 2011.

33 Moscow News, May 18, 2010.
34 JoongangIlbo, October 26, 2010.
90
then the bringing in of the product after passing through a lique-
faction process, the LNG is the most expensive method, with an
investment cost of 6.823 billion dollars, an operating cost of 15.82
billion dollars, and a prime transportation cost of 0.94 dollars. The
method of importing the CNG through Gosung or Incheon from
Pereboznaya via the Pyeongtek terminal has an investment cost of
6.074 billion dollars, an operating cost of 4.478 billion dollars, and a
transportation cost of 0.60 dollars. However, for stable gas supply, a
vessel with suitable facilities is needed, but it has a high risk, and is
thus unsuitable for the transport of 7.5 million tons of LNG.35
2. ‌Restrictions of the South Korea - North Korea - Russia PNG

Connection in the Post-Kim Jong-Il Period
The greatest obstacle to the South Korea - North Korea - Russia

PNG Connection is the regional transport safety problem when
passing through North Korea, based on the unstable system of the
country as well as the strained relationship between South Korea
and North Korea. There is a possibility of North Korea’s discretion-
ary destruction or cutting off of the gas pipes. To prevent this, the ‘J’
line was brought up, which involves supplying gas by passing along
the east coast of North Korea and through Gaseong and Samcheok
to reach the metropolitan PNG line, and again reaching Gaseong
and Pyeongyang in North Korea. If North Korea shuts off the pipe-
lines of the PNG line in the country, South Korea could also shut
off the gas supply to North Korea in response. However, the length
of the line must be extended, which will increase the construction
cost.36

36 ‌Voice of the People, September 15, 2011; Stephan M. Haggard, “More on the
Pipeline,”North Korea Witness to Transformation, September 20, 2011; http://www.
piie.com/blogs/nk/?p=2887 (accessed December 1, 2014); In 2013 Russia completed
the modernization of 54km of railroad in Hasan Mountain and Najin with the
Meanwhile, about 100 km of pipe can be saved if the plan
proposed by Russia, which runs from Vladivostok to Wonsan to
Goseong to Incheon and Pyeongtek, will be used. Furthermore, the
gas pipeline network that is currently under construction can be
used for the transport of gas from Samcheok to the metropolitan
area. The KOGAS has been constructing a highly advanced LNG
production base and storage facility in Samcheok. Importing natu-
ral gas that passed the east coast signifies entry into the continent
(See Figure 2). As a large-scale project that exceeds 1,000 km, the
connection of the Samcheok connection pipeline will enable the gas
pipeline to use various nonferrous materials, which will contribute
to the activate fostering of related industries.37
Figure 2. Existing and Planned Natural Gas Pipeline
Source: http://conexkorea.org/english/images/contents/s12img02.jpg (accessed Feb. 15, 2015).
construction of a harbor terminal under a 49-year lease of the three piers of Najin
Harbor. North Korea has expressed an active position on attracting foreign investments
such as from Russia to achieve the goal of constructing an international port in Najin for
the development of a special economic zone.
37 ChosunIlbo, October 19, 2011; Han, Jong-man et al., (2012), pp. 169-170.
92
Meanwhile, about 100 km of pipe can be saved if the plan
proposed by Russia, which runs from Vladivostok to Wonsan to
Goseong to Incheon and Pyeongtek, will be used. Furthermore, the
gas pipeline network that is currently under construction can be
used for the transport of gas from Samcheok to the metropolitan
area. The KOGAS has been constructing a highly advanced LNG
production base and storage facility in Samcheok. Importing nat-
ural gas that passes through the east coast signifies entry into the
continent (See Figure 2). As a large-scale project that exceeds 1,000
km, the connection of the Samcheok connection pipeline will en-
able the gas pipeline to use various nonferrous materials, which will
contribute to the fostering of related industries.38
The following four plans have been discussed as safety plans for
a transportation method that can respond to North Korea’s ‘hostage
strategy’ and the passing of the PNG line through North Korea. The
first plan is for the conclusion of a supply stability guarantee agree-
ment among the three countries. This plan involves the conclusion
of an Intergovernmental Agreement (IGA) among the three coun-
tries, which will guarantee the stability of gas supply through pipe-
lines that pass through North Korea, as well as the conclusion of a
Host Government Agreement (HGA) between Russia, as the trans-
porter, and North Korea, as the country through which the pipeline
will pass during the gas transport. The second plan is for the spec-
ification of detailed conditions for the securing of stable gas supply
on the purchase contract. This plan involves the reinforcement of
Russia’s supply obligation by specifying the point-of-importation
as the South-North borderline on the purchase contract. The third
plan involves the organizing of a PNG ownership and operation
structure and surveillance committee. The fourth and final plan is
for the construction of a natural gas supply and consumption struc-
38 ChosunIlbo, October 19, 2011; Han, Jong-man et al., (2012), pp. 169-170.
ture in North Korea, which can become a safety device. This plan
will also bring about the benefit of reducing the risk of supply dis-
turbance by preventing Russia from supplying gas to North Korea
through the use of energy with the gas supply via the imposition of
a toll fee while simultaneously supporting conditions for the use of
natural gas in North Korea, such as the construction of natural gas
plants and city gas pipeline networks.39
The next task involves the problem with a toll fee. The financial
burdens of PNG construction and management are still important
obstacles to overcome. The region that will connect Russia and
South Korea will be determined by the costs of each country. How-
ever, the cost of constructing the North Korea line will be covered
by a multinational consortium or a Russian-exclusive consortium,
or a consortium between Russia and Korea. The composition and
activities of the three-country high-level and executive commission
among South Korea, North Korea, and Russia are prerequisites for
the expansion of the PNG project, but there has been no contact
among the three countries for this project so far. Even the approxi-
mate costs of the 700-km pipeline that will pass through North Ko-
rea and the PNG construction vary based on professional estimates
and the governments of the three countries. KOGAS subsidiary
KOGAS Vostok, estimated the cost at 2.5 billion dollars;40 the Kore-
an government, 3.4 billion dollars (approximately 4 trillion won);41
and ex-President Medvedev, 6 billion dollars. These estimates also
suggest the possibility of fluctuations based on the determination of
the labor cost, transportation cost, number of pressurized installa-
tion constructions, and diameter of the pipelines.42

40 Российская газета, November 2, 2011.
41 Aju News, November 1, 2011; Han, Jong-man et al., (2012), p. 172.
42 “Russia,
‌ South Korea Discuss Gas Pipeline,” RIA Novosti, October 24, 2011; Han, Jong-
man et al., (2012), p. 172.
94
The toll fee of the North Korean region upon the construction
of the PNG is estimated at 140-150 million dollars per annum.
This cost will greatly contribute to the revival of the North Korean
economy. However, the instability of the North Korean system, the
possibility of the extravagance of the North Korean leadership class,
and particularly, North Korea’s development of military and nuclear
weapons are further obstacles. Payment in kind instead of cash has
been proposed. However, the UN’s disciplinary action against North
Korea and related issues propose new problems. It is considered
that barter trade and payment in kind such as in gas, oil, and elec-
tricity will resolve this problem to a certain degree, but it also car-
ries the additional disadvantage of trade costs for the needed value
evaluation or for the determination of a price that could be mutually
agreed upon. Accordingly, Russia’s plan to make payments in elec-
tricity is a leading plan, but would require a significant budget of 5
billion dollars solely to replace the electrical facility in North Korea.
According to the KOGAS, there has been no discussion between
South Korea and Russia on the details of such plan.43
In the meantime, North Korea is further requesting various
forms of economic support other than the toll fee.44 Thus, it would
be difficult to negotiate with North Korea. North Korea is expect-
ed to participate in the construction of the pipelines and in the
negotiation of the toll fee for the gas pipelines between Russia and
Korea, and to demand economic and energy resources. For the
construction of the pipelines, North Korea also further demanded
the resolution of the problems expected upon the connection of the
transmission networks and the expansion of the railroad networks
between North Korea and Russia. North Korea also could also re-
43 Joongang Sunday, No. 243, November 5, 2011; Han, Jong-man et al., (2012), p. 176.
44 Lee,
‌ Sung-gyu, “Method of Participation and Economic Effect of the South Korea-North
Korea-Russia Gas Pipeline Project,” KDI North Korea Economic Review, Vol. 13, No. 10,
October 2011, pp. 44-45.
quire the writing off of its 10.1 billion-dollar debts from the former
Soviet Union.45
Conclusion
After North Korean Supreme Leader Kim, Jong-un abruptly as-

sumed power following the death of his father, Kim Jong-il, he con-
centrated forces on reinforcing his country’s internal unity. North
Korea reinforced the governance of Kim, Jong-un and the governing
elites through the New Year Common Editorial on January 1, 2014.
As such, Kim, Jong-un is devoting his force to the stabilization of
the existing system rather than to change, to minimize the power
vacuum in North Korea.46 Meanwhile, in her second term, South
Korean President Park Geun-hye has opened up a unification plan
by promoting discussions between South Korea and North Korea
and driving the practical achievement of the credibility process in
the Korean Peninsula.
Currently, North Korea must firmly clarify its nuclear weapons
policy through the construction of a line substantially in a bat-
tlefield, because the problem of nuclear weapons is becoming the
greatest obstacle to the discussions between it and South Korea and
to the holding of the six-party talks. Furthermore, Kim, Jong-un
45 ‌In September 23 2013, the 54-kilometre (33-mile) track from the Russian border town
of Khasan to the North Korean port of Rajin was opened. In June 2011, North Korea was
known to have postponed its payment of approximately 90% of the interest on its debt
to Russia. Han, Jong-man et al., (2012), p. 176; In May 2014 Russia waived 90 percent of
a $10.1 billion debt owed by the North, while the rest could be repaid over 20 years and
be reinvested in North Korea. Korea Times, May 28 2014.
46 ‌The procedure began with the selection of the highest position in the military, party,
and nation. Kim Jong-Un was selected as the highest-ranking commander in the military
at the Labor Party Politburo meeting on December 30, 2011, just 13 days after the
death of Kim Jong-Il. Oh, Kyung-seob, “Analysis of the 2012 New Year Common Editorial:
Ruling with Dying Instructions for the Stabilization of Kim Jong-un’s Power,” Sejong
Review, No. 239, January 2, 2012, pp. 1-2;
96
is emphasizing the continuation of past policies, so there is a low
possibility of his revising the current policy toward reformation and
open lines. Regardless of the possibility of North Korea’s achieve-
ment of combined economic profit, Kim, Jong-un is passive towards
the South Korea - North Korea - Russia PNG project. If this project
is realized, North Korea would obtain a stable profit of over 100
million dollars annually through toll fees. The main problem with
the passing of the PNG through North Korea is related to North
Korea’s toll fee and participation in the construction project, as well
as to obstacles such as North Korea’s additional demands, for exam-
ple, the writing off debt to the former Soviet Union and a desired
electricity supply from Russia. Although the connection of the gas
pipelines is a part of Kim Jong-il’s dying instructions, Kim Jong-
un is not showing a desire for accelerated participation in the PNG
connection because it may become an obstacle to North Korea’s in-
ternal solidarity and may cause internally uncontrollable problems.
The PNG connection project now actually faces more problems after
the death of Kim Jong-il.
Having winning a third term as Russian President at the elec-
tions in early March 2012, President Putin does not desire North
Korean instability under the Kim, Jong-un system. Russia is reject-
ing North Korea’s excessive pro-Chinese position and will pursue
the stabilization of borderline regions upon the occurrence of a
rapid change in North Korea and the checking of China’s influence
over North Korea for an enhanced relationship with North Korea.47
Additionally, in early February 2013, President Putin clarified his
will with regard to the PNG connection, to continue negotiations
with Korea regardless of the passing of the pipeline through North
Korea.48 If Korea imports gas from Russia by sea or via North Korea,
47 National Defense Daily, Dec. 27, 2011.

48 Moscow News, February 12, 2013.
it will secure its supply of natural gas, which accounts for 20% of its
annual energy consumption. Furthermore, the stability of Korea’s
gas supply will increase through the diversification of its natural gas
import sources, which were mainly focused on the Middle East and
Southeast Asia, by allowing East Siberian resources to dominate the
competition.
If the PNG that passes through North Korea is constructed, it
will obviously contribute to the peace and stability in the Korean
peninsula and in Northeast Asia, and will realize economic cooper-
ation among South Korea, North Korea, and Russia. Furthermore, it
will present a suitable opportunity for rapid progress in the South
Korea - North Korea - Russia reciprocal and mutual politics and
economic cooperation relationship. However, the post-Kim Jong-
Il system faces many problems regarding legal and institutional
preparations, such as the composition of a cooperative commission
and the discussion of the connection of a PNG among the three
countries of South Korea, North Korea, and Russia. Moreover, the
approach of the separation of the economy and politics among
South Korea, North Korea, and Russia will not be easy unless the
North Korean nuclear problem is eliminated. In other words, the
PNG connection will not be possible without the resolution of the
North Korean nuclear problem. There is a need for prior cultivation
of trust between South Korea and North Korea and for elimination
of North Korea’s risk, including the resolution of North Korea’s
nuclear problem, of the instability of the North Korean system, of
North Korea’s conflict with South Korea, the high PNG construc-
tion cost, and the suspended discussions between South Korea and
North Korea.
98
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100
CONTRIBUTORS
Dr. John Lee is a senior fellow at the Hudson Institute, an Ad-

junct Associate Professor at the Strategic and Defence Studies Cen-
tre at the Australian National University, and a Director of the Insti-
tute for Regional Security in Canberra. He is the author of the book
Will China Fail? (2007 1st edition and 2009 2nd edition), and has
published over fifty monograph, articles and reports on the Chinese
political-economy, the foreign and security policies of East Asian
countries, the United States, Australia and India, economic and se-
curity futures in the region, and strategic and defence planning. He
is periodically asked to brief elected, bureaucratic and military offi-
cials at the very senior levels in the United States, Australia, Japan
and Singapore. He gained his Masters and Doctorate degrees from
the University of Oxford.
Dr. Young Hwan Park is an instructor of Department of Polit-

ical Science at Yeungnam University. He was a postdoctoral fellow
of Department of Political Science at the University of Alabama. He
obtained his Ph.D. from the University of Alabama. His research
interests are American politics, the linkage between domestic poli-
tics and international politics, foreign policy, third-party mediation,
and comparative political behavior. Park has published numerous
articles and book chapters in political science. His latest articles and
book chapters include “Explaining Exceptional Pattern of Job Ap-
proval in the Early Phase of President Park Guen-hye’s Term” (2015),
“Public Opinion and Perception in Foreign Policy: The Case of the
Korea-U.S. Free Trade Agreement (in Korean)” (2014), “Ambivalence,
Predisposition, and American Foreign Policy Opinion” (2013), “Pres-
idential Candidates’ Issue Positions in the 2012 U.S. Presidential
Election and Korea Media’s Response (in Korean)” (2013), etc.
Dr. Mitchell Lerner is Associate Professor of History Department
and Director of the Institute for Korean Studies at the Ohio State
University. He is the author of The Pueblo Incident: A Spy ship and
the Failure of American Foreign Policy (Kansas, 2002) and numer-
ous articles about American foreign policy in such journals as Dip-
lomatic History, The Journal of Cold War Studies, and Diplomacy
and Statecraft. He has served on the governing council of the Soci-
ety for Historians of American Foreign Relations, and the Advisory
Board of the North Korea International Documentation Project.
Dr. Ji Won Yun received a Master’s degree in International Re-

lations from University of Aberdeen in 1993, and Ph.D in Political
Sciences from Glasgow University in 2001. She is a professor at
Pyeongtaek University, where she has taught diplomacy & security
in Northeast Asia, Division of General Education since 2005. She
has served as a head of Institute for South-North Korean Affairs
since 2014, and also an Advisory Council Member in the Ministry
of National Defense since 2012. She worked as a Presenter at KFN
and KTV. Her research interests have been focused on an issues of
Russian & Northeast Asian diplomacy and International relations.
She is author and co-author over numerous scholarly articles, and
author or co-translator of several books including; Northeast Asian
Security order & Diplomacy under the new Globalism(2014); Korea
& International Cooperation in the Global Era(2012); Contempo-
rary Russian Politics and International Relations(2011); Capitalism
Revolution of Russia(2010), and so on. Also, her recent articles are
include the following; An Analysis of Strategic Effects of the ROK-U.
S. Alliance and Relocation of the USFK: Implementation and Pros-
pects; An Analysis of the Multilateral Cooperation and Competition
between Russia and China in the Shanghai Cooperation Organiza-
tion: Issues and Prospects (SSCI), and so on.
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Young Ja Park
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The Threat of Soft Power On North Korea

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The Journal of

Vol.29 Spring/Summer 2015 No.1

China’s Economic Leverage in Southeast Asia 1

Peace Agreement, Democratization, and Its

Markets, Movies, and Media:

International Cooperation for the Construction

Key words: Sino-Southeast Asia relations; regional trade; Asian economic

China’s Economic Leverage in Southeast Asia 1

In August 2010, China officially surpassed Japan as the largest

Hedging and Balancing against

If economic trends point to a China that is poised to dominate

China’s Economic Leverage in Southeast Asia 3

China’s Economic Leverage in Southeast Asia 5

The belief that China’s economic importance in the region will

The argument for Chinese economic centrality in the East Asian

China’s Economic Leverage in Southeast Asia 7

China’s Economic Leverage in Southeast Asia 9

Looking at the structure and nature of trade between countries

China’s Economic Leverage in Southeast Asia 11

China’s Economic Leverage in Southeast Asia 13

China’s Economic Leverage in Southeast Asia 15

If China’s capacity to use economics to exercise strategic and

China’s Economic Leverage in Southeast Asia 17

Book and Monographs: Single Author

China’s Economic Leverage in Southeast Asia 19

China’s Economic Leverage in Southeast Asia 21

Young Hwan Park

This article explores how peace agreements facilitate democratization. To this

Key words: Peace agreement, Legalization, Democratization, Civil war

Little is known about the consequences of a peace process after

Peace Agreement, Democratization, and Its Implication in East Asia 23

Civil War, Peace, and Democracy

Peace Agreement, Democratization, and Its Implication in East Asia 25

The Theoretical Context for Peace

Previous literature on peace agreement implementation has not

Peace Agreement, Democratization, and Its Implication in East Asia 27

Peace Agreement, Democratization, and Its Implication in East Asia 29

Data, Variables, and Measurements

The dependent variable in both models is an increase/decrease

Peace Agreement, Democratization, and Its Implication in East Asia 31

Logistic regression is conducted to test the direct effect of the

Table 1. The Effect of the Peace Agreement on Democratization

1.926** 2.434** 2.295**

-.292 .694 .275

2 year lagged GDP .00015* .00002 .00015*

-2.283*** -1.289** -2.523***

Log likelihood -34.106816 -43.598739 -41.486263

11.39 11.91 14.69

Pseudo R² .1431 .1202 .1504

Peace Agreement, Democratization, and Its Implication in East Asia 33

Table 2. The Effect of the Peace Agreement

1.828** 1.111** 1.821***

2 year lagged GDP -.00009 -.00013 -.00006

-2.308** -1.445* -2.635***

Log likelihood -39.048184 -57.340732 -53.986614

16.22 17.06 23.77

Pseudo R² .1720 .1295 .1804

In the appendix, I provide the results demonstrating the effect

Peace Agreement, Democratization, and Its Implication in East Asia 35

1.926 2.434 2.295**

-2.283* -1.289 -2.523***

1.828 1.111 1.821***

2.883* 5.146* 1.497

1 ‌Bruce Cumings, “Korea: Forgotten Nuclear Threats,” in Le Monde Diplomatique,

8 ‌McCain in Bloomberg Business, April 7, 2013; Schumer and Graham in Washington

14 “North Korean Attitudes Toward China: A Historical View of Contemporary Difficulties”;

30 ‌Victor Cha, The Impossible State, (Ecco, 2012), p. 155-7

53 ‌“A Quiet Opening: North Koreans in a Changing Media Environment,” p. 3.

2 World Tribute, Oct. 6, 2011.

4 Lee, Young-hyung, “Possibilities and Restrictions of the South Korea-North Korea-Russia

Aug. ‘10 8‌ th KOGAS-Gazprom executive meeting

‌Kim, Jong-il& Medvedev Summit negotiations on the passing of the gas

‌Scheduled construction of the Sakha Republic – Sakhalin - Vladivostok gas