Northeast Asia and the United States: a Korean perspective
-Proposals for NEADB and NASO-
A Keynote Address prepared
for the Wes Watkins Lectureship and presented
at Oklahoma State University,
September 12, 2005.
I would like to begin by saying that I am very much pleased to be back here at OSU for the second homecoming after my graduation in 1960. The first homecoming occurred in May 1987 when OSU was gracious enough to accord me the Henry G. Bennett Award in recognition of my public service at home for economic development. Being an octogenarian with precarious health at present, I have never dreamed I would be visiting OSU again in my lifetime. I owe this unexpected fortune to President Schmidly who kindly invited me to make a lecture at this distinguished podium of Wes Watkins Lectureship, for which I am very grateful.
Today I would like to share with you some of my thought on the current international economic and security relations among and between countries in Northeast Asia and the United States which, in my view, seems to be pointing to the need for institutionalizing economic and security cooperation in the region. For the purpose of analysis I may loosely define Northeast Asia to include Japan, China, two Koreas, Mongolia, and Russian Siberia. Regardless whether or not western most Alaska should be included as part of Northeast Asia, it is evident that we cannot talk about Northeast Asia without reference to the United States in terms of its geopolitical role in the region.
Let us first look at the economic scene in Northeast Asia. Today, the area covered by Japan, South Korea, and the eastern part of China is known to be one of the three pillars of the world economy together with the North America and the EU, while the western interior of China, Mongolia, North Korea and Russian Siberia still remain as a development frontier. In terms of relative position of Northeast Asia in the world economy based on 2002 statistics, Japan ranks the second, China, the seventh, and Korea, the 11th in the world in terms of GDP. Measured on a purchasing power parity (PPP) basis, however, China in 2004 stood as the second-largest economy in the world after the US, although per capita income still hovers around $1000. The three countries together share about 17.5% of the world GDP and if figures for developing counties in the region are added, Northeast Asia may well account for more than 20% of the world GDP.
Need for Regional Cooperation
There are many areas in which the mutual benefit can be derived for all countries in the region by means of regional cooperation. To name a few, the building of a transportation and communications network in the region, exploration of Siberian natural gas and its distribution to China, Korea, and Japan through pipe lines, and protection of environment from the aftermath of industrialization, particularly in China, all of which call for multilateral initiative and undertaking to make them a reality.
Let me illustrate some of them. In the area of railway, Korean peninsula can be made a land bridge between Japan and Europe through Trans Siberian Railroad (TSR) and the Trans China Railroad (TCR). Currently North and South Korea are planning to connect two main lines of Korean railroads to the Siberian railroads. When the connection is completed and necessary improvements in facilities and service are made, it will take 17 days to transport cargo from Japan to Finland, compared with 30 days in the case of maritime transport. Korea also can reduce shipping time by more than 20 days to reach Europe by switching from the marine route to the Siberian railroad.
Energy development is another area for regional cooperation. Energy security is a matter of concern for Japan, Korea, and China. At present, Japan depends on the Middle East for 85% of its oil imports, and the dependency is about 77% for Korea. China turned to a net importer of oil, beginning in 1993, currently sourcing 54% of the import requirement from the Middle East, and expects the ratio to go up to 77% in 2020. Hence the exploration and use of natural gas from Siberia will become imperative sooner or later for the sake of energy security. The pipeline network connecting supply sources in West and East Siberia with China, Korea, and Japan has been under discussion in various international forums including the Northeast Asia Economic Forum in which I am involved.
Institutionalizing Economic Cooperation
Unfortunately, however, these potential cooperative development projects remain on the paper for the reason, among others, that there is no institutional mechanism by which to push forward such regional projects, which in turn attributable to the inexperience and lack of international leadership in the region, combined with political barriers inherited from the past
This observation motivated me to propose the creation of a Northeast Asia Development Bank as a first step toward institutionalizing economic cooperation in Northeast Asia. My proposal dates back to 1990 when I attended a Seminar on a “New Order in East Asia” held by the Institute of East Asian Studies, University of California at Berkeley. Since then I have been trying to sell the idea whenever and wherever the occasion was available. The proposal is gaining increasing support from both private and public sector within the region and but where the top leaders are concerned, a final decision is still being awaited
The U.S. interest
Needless to say, the U.S. economic interest is at stake in Northeast Asia. In particular, China is said to be the black hole of the manufacturing industry absorbing a variety of manufacturing enterprises from Japan, Korea, and the United States, all of which have lost their comparative advantage to China in terms of price. On the other hand, however, China provides a great opportunity to the United States and other countries particularly in terms of an expanding market and investment opportunity.
Given its population of 1.3 billion and the rapid increase and diffusion of income, China 's potential market for sophisticated consumer goods and capital goods will increase at an unimaginable speed and magnitude. For example, it is a well known fact that as household income increases in developing countries, the consumption of dairy products is bound to increase at a faster rate than income. According to the projection of the Chinese government, grain imports will reach 175 million tons in 2025. The day will come when the export capacity of the grain producing countries will be strained. In another example, the Chinese government proudly announced that China had the second-largest number of Internet users in the world at the end of 2002, yet the Internet users in China represent only 2% of the total population, compared with the USA's 45%, South Korea's 21%, and Japan's 15.5%, which means that the potential market for telecommunication equipment remains virtually unlimited.
All told, the expansion of trade and investment, exchange of technology, development of natural resources, and building up of infrastructure in Northeast Asia all call for the active participation of American businesses. In this light the participation of the U.S. government in the proposed Northeast Asian Development bank will provide an institutional base in Northeast Asia which can help American businesses and the government play the needed role in the unfolding economic drama in China.
Although the outlook of economic relations among regional countries and the United States are quite exiting, it is tempered by the highly complex and entangled political relations, which are largely defined by the unfortunate historical legacy, different political and economic system, and the global strategy of the United States. Since the U.S. foreign policy and global leadership is the pivot around which the regional security issues rotate, I may focus my discussion on the security relationship between the United States and Northeast Asian countries. Let me summarize very briefly the overall picture of those relations.
The U.S. and Russia
I may begin with the U.S.- Russia relationship. When the Soviet Union collapsed, the world’s free countries generally supported the Yeltsin administration hoping that it remains committed to economic reform based upon market principles, and to political democracy. Yet the later development in Russia fell short of that expectation. At present, Russian nationalism calls for restoration of Russia as a global power playing a leading role in the East as well as in the West. And Russia and China have committed to “strategic partnership” dedicated to sanctifying national sovereignty and opposing presumably “unipolarism,” of the United States. It was reported a few weeks ago that the two countries conducted the first major joint military exercises.
On the other hand, the Vladimir Putin administration has taken a common stance with United States against terrorism, and against nuclear program of North Korea notwithstanding its traditional tie with the country for the obvious reason that if North Korea is permitted to go nuclear, it would lead to nuclear proliferation in other countries including Japan which would pose a great threat to Russia itself, as well as to other nations.
The U.S. and China
Turning to the U.S.-China relation, Beijing has been cooperating with Washington and Seoul in dealing with North Korean nuclear problem, exerting some pressure on Pyongyang to resolve the problem through the six-party dialogue. However, the U.S.-China relationship reminds me of the Chinese and Korean idiom: “different dreams on the same bed.” The both countries want a positive relationship but in different context and they are on their guard against each other to protect their perceived security interest in Northeast Asia. In this respect a political analyst characterized the U.S strategy toward the PRC as “congagement,” meaning the bifurcated policy of economic engagement and military containment.
The U.S. is apprehensive of China’s military expansion accompanying the rapid economic growth, and possible use of force to unify Taiwan with China, and finally growing influence in the Southeast Asia, Washington, therefore, is poised for closer strategic ties with Japan and India to curve Chinese influence, and for its periodic upgrading of Taiwan’s defense by continuing to furnish Taiwan with military equipment. Moreover, the U.S. policy was renewed to include human rights issues in China.
China in turn has sought to strengthen its military power in terms of nuclear weapons and ballistic missile modernization, as well as to improve bilateral relations with all of its neighbors in part to create a buffer against perceived American “hegemonism.”
The U.S. and Japan
Currently, the need for closer alliance relationship between the United States and Japan is being stressed in Tokyo and Washington on the assumption of a perceived threat from China and continuing strategic uncertainties on the Korean peninsula. Washington and Tokyo signed revised Guidelines for Defense Cooperation in September 1997, which gave Japan an extended security role related to its ‘adjacent’ areas, presumably Korea and Taiwan. Cooperation in TMD (theater missile defense) research is ongoing, together with close interaction in terms of military exercises and other defense matters.
The problem is that the closer alliance between the U.S and Japan is perceived by China as a growing threat to its security, which accordingly leads to a chain reaction of escalating armament in the three countries. What is more, the American military base in Okinawa and its escalating expenditure remain controversial in Japan while chronic trade imbalance is a matter of concern for the U.S.
The U.S and Two Koreas
Finally, I come the relationship between the United States and the two Koreas. As we are well aware, North Korea’s nuclear ploy and security threat are a vexing problem for the rest of countries in Northeast Asia and the United States. Under the growing international pressure and impending necessity for rescuing the regime from collapse, the North finally came back to the conference table in the fourth six-party talk in Beijing on July 26. Following the Pyongyang announcement, the ROK’s Unification Minister announced July 12 that in return for the complete dismantling of its nuclear weapons program, South Korea will provide the North two million kilowatts of electricity annually in lieu of the LWR (light water reactor for power generation) projects which was suspended when North Korea in October 2002 admitted that it has been advancing a major secrete nuclear weapons program in violation of the 1994 Agreed Framework.
As for the South Korea, given the military confrontation with the communist North across the DMZ (Demilitarized Zone) with belligerent provocations from time to time in the past, South Korea is preoccupied with the maintenance of peace in Korean Peninsula in one way or another. In this interest, President D.J. Kim introduced the so-called "sun-shine policy" in 2000. It was named after one of Aesop's fables in which sunshine proves more effective than wind in persuading a traveler to shed his clothes. The analogy is that engagement and not containment will be more effective in inducing positive changes in North Korea . The incumbent Roh Moo Hyun administration has been following the sunshine policy faithfully, pushing ahead with a variety of economic aid programs as well as cultural and sports exchanges.
The sunshine policy, however, has had limited success in translating economic aid into confidence-building and enhancing consistency in North Korea's behavior. Above all it has failed so far in attaining the primary goal of halting North Korea's nuclear program and dismantling missile related facilities. Moreover, the sunshine policy, with its controversial political background, has brought about sharp ideological division and conflict in the Korean society, adversely affecting the traditionally amicable relationship with the United States.
Reportedly, there are some differences between Seoul and Washington regarding how to deal with North Korea. In simple terms, Washington intends to use both carrots and stick, whereas Seoul is committed to use only carrots up until the last possible moment for the fear that the use of stick, such as a pre-emptive surgical strike on nuclear facilities in the North, might provoke another Korean War. Rest is assured though that Washington has repeatedly announced that North Korean Nuclear issue will be resolved solely by peaceful and diplomatic means, and I trust that close policy coordination between Washington and Seoul has been maintained in the context of alliance.
At this point you may ask why anti-Americanism is in place in South Korea today. Let me explain very briefly to put it in proper perspective. South Korea’s political system has now been fully democratized on the basis of its economic development achieved in the past 40 years. Democracy means pluralism and in the pluralist society any things can happen including anti-Americanism, particularly when it is rooted in the communist ideology of the North as well as in the rising nationalism through out Asia today.
Unfortunately part of younger generation has been exposed to the influence of the decedent intellectuals who were sympathetic with North Korea and old style nationalism. The young generation has little knowledge about the historical back ground of the bilateral relationship between Korea and the United States in which both countries fought together in Korean War and the Vietnam War to safeguard our free society from communism; the U.S. military presence in Korea under the defense treaty has been a pivot maintaining peace in Korean Peninsula; and the economic aid and the wide open American market has made Korea’s rapid economic growth possible.
Fortunately, the free society has a self-correcting mechanism. Today more and more young people say that the Anti-America is wrong because Korea’s economic and security interest is not separable from that of the United States. After all, the majority of Korean people remain pro-American and they believe Korean society can withstand the current anti-American episode and sustain the traditional allied relationship with the United Sates.
Returning to the main stream of my topic, the China-ROK relationship has changed significantly since the normalization of diplomatic relation in 1992. China values a closer bilateral relationship with South Korea, who in turn looks to China as its largest trade and investment partner. The two nations have been taking common stance against Japan on matters such as the distortion of history concerning Japanese atrocities in the past wars against China and in the past colonial rule against Korea, which were misrepresented in some of the government-approved high school text book. There is also the issue of Japan’s territorial dispute with China over Senkaku or Diaoyuti Island, as well as with Korea over Docto Island. One implication of this situation is that when South Korea is hostile to Japan and appears to be distancing itself from the United States, it may be a cause for a smile for the PRC.
What are then the implications of these security relationships in Northeast Asia with respect to the U.S. Foreign Policy? The September 11, 2001 terrorist attack in New York and Washington prompted the U.S. government to reconsider its global strategy. Its predominant concern shifted from the traditional state-centric rivals to terrorist or sub-state threats. The U.S. visions of future strategic missions, as stipulated in National Security Strategy, which was released in September 2002, emphasized the use of preemption strategy in the context of how to deal with terrorists of ‘global reach’ and ‘rogue states’. The U.S. military interventions against the Taliban in Afghanistan and against Saddam Hussein in Iraq were predicated on this strategy.
The U.S, military intervention in Iraq, however, has not been quite successful. The U.S. failed to command international support of the world’s free countries, placing governments of its closest allies taking part in the war in a difficult position internally and externally. At present the U.S. emphasis seems to be shifting from the removal of weapons of mass destruction, which it has yet to achieve, to the removal of a dictatorial regime in Iraq. What is illustrated by the Iraqi war is that a preemptive strike may destroy a political regime and its people, but it cannot stop the proliferation of terrorism in the world..
It is the common interest of the U.S. Japan and ROK to promote democracy, free markets, human dignity, and their common stance in the world affairs is as essential as ever. However, the changing security vision in Washington implies a departure from the conventional thinking on the national security. By nature of terrorism it requires police rather than military action for which closer international networking and cooperation is indispensable. The prevention of terrorisms also requires political rather than military approach to the heart of the problem related to terrorism.
Yet, as we have seen, state-centric rivalry remains as a critical issue in Northeast Asia, whereas Euro-Atlantic nations have been successful in improving security and stability in the area by means of NATO and OSCE (Organization for Security and Cooperation in Europe.) From this observation, I have been arguing in various forum at home and abroad that the excessive mistrust, suspicion and the traditional balance of power mentality among the big four (the U.S., China, Japan and Russia) is source of instability in the Northeast Asia, and in order for us to be freed from this instability and anxiety we must establish a multilateral security cooperative body, which could be dubbed the Northeast Asian Security Organization (NASO).
In fact the earliest inception of a Northeast Asian security regime began with U.S. proposals in the early 1970s for multilateral talks among all regional powers aimed at reducing tensions on the Korean peninsula, and there followed creation of a number of multilateral forums across the Pacific Ocean including Northeast Asia Security Dialogue (NEASED) sponsored by South Korea in 1994.
Fortunately, or unfortunately, we already have a multilateral framework in the ongoing six-party talk on the North Korean nuclear issue, which can be made into a basis for creating such an organization. I have no time to discuss my proposal in detail but I am simply hoping that the resumed six-party dialogue goes well and comes to a successful conclusion as quickly as possible and that they move on to discuss more positive issues of establishing an institutional mechanism dedicated to preserving peace in Northeast Asia, that can contribute to effective conflict prevention, combating terrorism, arm control, and democratization
I know that multilateral security institutions admittedly may not guarantee the prevention of armed conflicts, yet, they do have the ability to promote confidence, foster trust, and improve regional relations. There is no reason to believe that what has been done in Europe for safeguarding regional security cannot be done in Northeast Asia. What is needed is the insight and will of political leaders in Northeast Asian countries and the United States.
In conclusion, let me say that the best wisdom is needed for preserving peace in Northeast Asia. Once the confidence in peace prevails in this region, economic development and regional economic cooperation will become a self-sustained process, enhancing economic interdependence among the regional countries and the United States, which will help in it self promote friendship and peace in Northeast Asia.
In this interest I have proposed two sets of instruments of regional cooperation: Northeast Asia Development Bank (NEADB-needy bee) for economic cooperation and Northeast Asia Security Organization (NASO) for security cooperation, both of which are aimed at contributing to the peace and prosperity of countries in Northeast Asia and the United States. I sincerely hope that this proposal receives favorable consideration from the policy makers in all countries concerned including the United States.
Thank you for your patience.
 Illustrative of this, while the APEC map is covered by three sub-regional groupings: NAFTA, ASEAN, and ANZCER (Australia-New Zealand Closer Economic Relations Trade Agreement), Northeast Asia alone remains without any sub-regional grouping.
 D.W. Nam, "Changing Pattern of Economic Interaction in East Asia," Chong-Sik Lee, ed., In Search of a New Order in East Asia, Institute of East Asian Studies, University of California, Berkeley, 1991, pp. 109-121.
 D.. W. Nam. “The Prospects of Economic Cooperation in Northeast Asia.” Paper presented at the Conference of the Northeast Asia Economic Forum at Tianjin, China, 2-7 September 1991. Northeast Asia Economic Forum, East-West Center, Honolulu, Hawaii
D.W. Nam, “Why a NEADB is needed” http://www.dwnam.pe.kr/
Burnham O. Campbell, " Financial Cooperation in Northeast Asia: An Overview of the Case for a Northeast Asian Development Bank," and Hiroshi Kakazu, "Organizational Structure and Funding Sources of a Northeast Asian Development Bank," in Proceedings of the Yongpyeong Conference, 26-28 September 1993, Northeast Asia Economic Forum.
Duck-Woo Nam. “Multilateral Economic Cooperation in Northeast Asia. “ Keynote address in Proceedings of the Fifth Meeting of Northeast Asia Economic Forum, Niigata, Japan, 16-17 February 1995. (Northeast Asia Economic Forum, East-West Center, Honolulu, Hawaii )
Hiroshi Kakazu. “Regional Cooperation and the Northeast Asia Development Bank.” Proceedings of the Fifth Meeting of the Northeast Asia Economic Forum,16-17 February 1995, Niigata, Japan. (Northeast Asia Economic Forum, East-West Center, Honolulu, Hawaii)
Jan P. M. van Heeswijk. “Development Financing and Banking.” Proceeding of the Fifth Meeting of the Northeast Asia Economic Forum, 16-17 February 1995, Niigata, Japan. (Northeast Asia Economic Forum, East-West Center, Honolulu, Hawaii)
S. Stanley Katz. “Major Points Emerged from the Session.” Commentary in Proceeding of the Fifth Meeting of the Northeast Asia Economic Forum, 16-17 February 1995, Niigata, Japan. (Northeast Asia Economic Forum, East-West Center, Honolulu, Hawaii )
S. Stanley Katz. “The Role of a Northeast Asian Development Bank in Northeast Asia’s Future Development.” Proceedings of the Ninth Meeting of the Northeast Asia Economic Forum, 26-29 October 1999, Tianjin, China. (Northeast Asia Economic Forum, East-West Center, Honolulu, Hawaii )
 PRC government home page.
 Robert A. Scalapino, ibid
 One notable discourse in this Dialogue is that the formation of the multilateral security framework is possible without negating existing bilateral military alliance of the U.S-Japan and the U.S.-ROK, if they follow precedent of Organization for Security and Cooperation in Europe . (OSCE), the world's largest regional security organization .