Rethinking Economic Statecraft? Lessons drawn from Chinese and South Korean engagement of the DPRK

Abstract

The present study looks at the use of economic engagement as a tool of foreign policy. The capacity of economic statecraft to achieve concessions beyond trade or a transformation of the targeted states behavior has garnered more interest in recent years, in part due to the growing cost of military intervention. As such, additional studies in the field of both sanctions as of economic engagement are necessary to inform policy choices, both through a theoretic approach, as by looking at past practices, their successes and limitations. In the present case, the main part of the analysis seeks to test the existing theory on two specific cases of engagement, that of South Koreas Sunshine Policy, as well as Chinas own engagement policy towards North Korea after the onset of the first nuclear crisis of the 1990s. It will be shown that in order for engagement to be pursued instead of sanctions, a specific set of conditions must be achieved, and also that unconditional engagement is a long-term approach which is particularly difficult to maintain over time in the absence of reciprocity or any signal of change. The success of South Koreas Sunshine Policy is debated by scholars. While the projects and co-operation initiated under the leadership of Kim Dae-jung have since then ended through lack of sustained political and popular support, with Kaesong Industrial Complex being the last and latest project to be closed just earlier this year, the relative welfare of the North Korean people as well as their awareness of life beyond North Koreas borders has improved over the past years. It may be that in the longer term this might contribute towards the weakening of state control and a change of government policy, but presently little indications to these respects can be observed. Meanwhile, Chinas economic engagement with North Korea exhibits great potential for translating economic influence into political one, yet there are few official signs given that Beijing would seek to exert such leverage over its neighbor, at least at present. While this is no guarantee, a certain degree of restraint can be identified in the current Chinese approach to North Korea. Compared to South Koreas engagement, the Chinese approach seems more sustainable over time due to the nature of the Chinese decision-making mechanisms, which ensure longer-term visions are more easily adhered to and maintained.