Another Form Diplomacy

Following is an excerpt from “America’s Germany”

On a bright, crisp March afternoon in 1989 more than five hundred friends and associates of the man once dubbed the “Chairman of the Establishment” gathered in Park Avenue’s Brick Presbyterian Church to pay tribute to John J. McCloy. Perhaps most impressive were the representatives from the Federal Republic of Germany, among them the former President, Karl Carstens, and the former Chancellor, Helmut Schmidt. Schmidt praised McCloy as “our very reliable friend,” who had “rendered outstanding service to the world at large and Germany in particular.” In a voice filled with emotion, he told a story about Abram Lincoln to express his own understanding of McCloy’s achievement as High Commissioner in post war Germany. Advised to “destroy” his enemies, Lincoln responded, “Am I not destroying my enemies when I make friends of them?”

Four decades earlier few would have imagined a scene in which a German leader would quote and American President in tribute to an American statesman. In a may 1949 profile of McCloy, then newly appointed as American Commissioner for Germany, the New York Times commented, “There are many, indeed, who believe that peace in this age depends on the way American leadership is exercised in the boiling cauldron of postwar Germany.” Having fought two wars within less than a quarter-century, American leaders were justly nervous about Germany’s position at the center of the Cold War with the Soviet Union. Would a divided Germany trigger conflict between the superpowers? Would an upsurge of German nationalism and a desire for reunification jeopardize the peace and stability of Europe? Could the Continent recover and be defended without German participation? If Germany’s revival was necessary to Europe’s defense how could the United States reconcile the concerns of its Allies, Great Britain and France, with such a potentially dangerous policy? How should America deal with the legacies of Nazism and encourage the creation of a healthy German democracy? In view of all these dilemmas and the many powers and interests at work in Central Europe, few observers were optimistic about the chances for peace. As one expert on Germany told a reporter for Time magazine, “Whenever you think you have the answer to a German problem, you have to box the compass to see how it checks with all the major forces. You usually wind up finding that you’ve boxed yourself – and have to start over.”

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As you can see very complicated and delicate situations are not uncommon to this world, what seems uncommon is the maturity and wisdom to deal with them. An overly hawkish right should remind themselves that there are many ways to deal with dictators, I believe it was Henry Stimpson (and the legacy he left) who used to say “you make a man trustworthy by trusting him.”

At least thus far there appears to be a willingness, perhaps if only out of necessity to look at alternative solutions for N. Korea. The following is another quote from the Asia Wall Street Journal.

Money isn’t everything, but it comes in handy if you’re running a dictatorship, with generals to pay. That’s why China’s decision to freeze North Korean dictator Kim Jong II’s financial assets is a welcome move. Beijing may finally be helping to rain in its nuclear client state in Pyongyang.

These columns don’t often cheer Beijing’s relationship with its northeastern neighbor. Sinc ethe Soviet Union’s collapse, China’s Communist Party has served as Pyonyang’s closest ally, its largest trading partner, and a bulwark against international pressure for political change. Last year Beijing’s trade accounted for about 40% of North Korea’s total foreign trade flows, and China was its largest food and fuel donor by a massive margin.

Given that cozy pairing, any change of tack on Beijing’s part is worth noting. Here’s a big one: Last September, we’re told, Beijing instructed its Bank of China branch in Macau to freeze North Korea’s accounts, following the U.S. declaration of another Macau bank, Banco Delta Asia, as a “money laundering concern” under America’s Patriot Act. The U.S. operations froze about $24 million of North Korean cash – small potatoes for most countries, but not for impoverished Mr. Kim. And when Pyongyang’s dirty affiliates moved to Zhuhai, a mainland city just over the border from Macau, the Chinese authorities kept them on a tight leash.

Cutting down on North Korea’s financing has a huge impact because the North’s economy simply isn’t that big. The American Enterprise Institute’s Nick Eberstadt estimates that imports total about $3 billion a year, and exports about $1.3 billion the volume of, say, a small Pacific Island economy. No wonder Mr. Kim has pulled out of the six-party talks until his money lifeline is reinstated.

Pyongyang’s July 4 missile tests could be construed as an effort to blackmail the international community into turning on the taps again. North Korea’s Foreign Minister, Paek Nam Sun, stopped by Beijing this week on his way to an Association of Southeast Asian Nations conference in Kuala Lumpur, presumably to beg for help. In K.L. yesterday, North Korea rejected a U.S. invitation for an informal multilateral gathering, saying it won’t talk until the financial sanction are lifted.

Mr. Paek and his bosses have reason to worry. The United Nations resolution passed earlier this month supports financial and weapons proliferation sanctions. To garner support, U.S. Undersecretary of Treasury Stuart Levey toured Asia this month, with stops in South Korea, Japan, Vietnam and Singapore. His trip has already reaped benefits. Tokyo announced last week that it will tighten controls on high-tech exports to the North, clamp down on cash remittances from ethnic Koreans in Japan (to the tune of around $2 million annually), and contemplate tightening the financial noose further.

That leaves South Korea’s declared, and undeclared, aid to the North. Throughout his administration, President Roh Moo Hyun has proved himself a staunch apologist for Kim Jong II’s nuclear ambitions and repression of his Korean “brothers.” In May, Mr. Roh even declared support “without conditions” for the North. After the July missile tests, the president seemed more upset that Japan decried the launches.

Mr. Roh has clung to these positions even as his domestic political support melts away. The ruling Uri Party suffered a blow in local elections in May; on Wednesday it lost another four parliamentary seats in a by-election. It will be instructive to see how Seoul reacts if China’s recent bank actions underline a broader effort to clamp down on Pyongyang’s money bags.

That’s by no means a sure bet. Beijing has a rainbow of reasons to resist putting Pyongyang under serious economic pressure. Unwanted North Korean refugees already flood illegally into China’s northern provinces. Were Kim Jong II’s regime to fall – and the Koreans to unify – China could face a stronger, democratic nation on its northeastern border.

China also hadn’t demonstrated a consistent commitment to curbing North Korea’s various forms of weapons proliferation; the U.S. Department of Homeland Security recently delivered a stern message to Beijing on the topic. Given that Premier Wen Jiabao publicly asked Mr. Kim not to launch his missiles – and Mr. Kim did so anyway – its not unreasonable to suspect that Beijing’s confidence in the North Korean leader may be weakening.

It’s encouraging that Beijing clamped down on funding before the missile launch. Going forward, the challenge for Washington is to use China’s nascent cooperation as an anchor for a unified voice in the six-party talks. Now that would be progress. Money talks.

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It is has been my opinion for some time that we should not be worried about China, as our economies become closely linked (and I will talk more about this as I review The World is Flat) they will not want to do anything to “upset that apple cart.” I think that the Korea situation could well resolve itself, and while the transition could be difficult and represent a threat the net result could be a much more stable region. Perhaps the best thing Japan could have done when Kim Jong’s son tried to sneak into Disneyland Tokyo was given him a VIP tour ;o)

David