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Prospects for
International Relations in 2005
THE INSTITUTE OF FOREIGN AFFAIRS
AND NATIONAL SECURITY
CONTENTS
ABSTRACT ···················································································· 1
1. International Political and Economic Situation ····················· 9
1.1 International Politics: “Post–September 11 Global Order”
Enters Adjustment Stage·······························································9
1.1.1 Crisscross of Major-Power Cooperation and
Rivalry Over Major Global Issues ·······································9
1.1.2 Middle East Peace Stands at a Juncture·····························11
1.1.3 Mounting Challenges to
Nuclear Nonproliferation Regime·······································12
1.1.4 UNSC Reform and Possible Shift in
International Political Topography ····································14
1.2 International Economy: Persisting Uncertainties and
Recovery Slowdown····································································15
1.2.1 Differential Growth per Bloc················································15
1.2.2 Unstable International Oil Prices and
Exchange Rates Prevail························································18
1.2.3 Mounting Challenges to Globalization ································20
1.2.4 Regionalism Develops in Depth and Breadth·······················22 2. Northeast Asia Situation······················································· 27
2.1 Politics in the Region ···································································27
2.1.1 United Front Against Terrorism and
Proliferation Lives on···························································27
2.1.2 Emergence of New US-China-Japan Triangle······················28
2.1.3 Nationalist Tendencies Rise to Surface;
Traditional Sources of Conflict Linger·································30
2.1.4 Continued Efforts Toward Resolution of
North Korean Nuclear Issue via Six-Party Talks··················31
2.2 Regional Cooperation in Northeast Asia ···································33
2.2.1. Multidimensional Cooperation Gains Speed·······················33
2.2.2 Economic Cooperation Takes Concrete Shape·····················35
2.2.3 Selective Solicitation of Security Cooperation ·····················38
2.2.4 East Asia Summit Alongside ASEAN-Plus-Three Summit ····40
ABSTRACT
Phasing Into US-Centered Global Order
Reelections and power transitions have reshaped domestic political
landscapes in key major powers such as the United States, China, Japan,
and the European Union (EU) over the past year. The respective
governments have strengthened or rebuilt their power bases as a result,
leading to stronger self-centered tendencies and growing demands for
higher economic benefits. In 2005, major powers will be locked in patently
contradictory relationships of cooperation and rivalry over key
international issues, ushering in an “adjustment phase” in which the post–
September 11 US-centered, unilateral global order takes on new
characteristics. Major powers will remain united in the US-led
international counterterrorism and counterproliferation campaign. However,
the Iranian nuclear program, the establishment of a democratic government
in Iraq, Middle East peace in a post-Arafat era, and economic and trade
issues will trigger more intense rivalry and friction among key players on
the global scene, for these are prime issues through which each country can
augment its influence and interests. The launch of a second-term Bush
administration will effect a “stylistic” change to the diplomatic tactics
employed during the first four years of Bush’s tenure: Washington will
now seek closer consultations with allies on key international issues.
At the regional level, 2005 will be a landmark year for the Middle East.
The outcome of the Iraqi general elections in January and the new
Palestinian leadership after Arafat’s death may bring cataclysmic
transformation to the region’s political terrain. A change in the Middle East 2 Prospects for International Relations in 2005
order is likely to have far-reaching implications for the overall global order
and stability. To recapitulate, the Middle East stands at a crossroads
between finding a framework for a peace settlement and lapsing into a
vicious cycle of worsening conflict and terrorism, and the Iraqi general
elections in January and Arafat’s successor hold the key to the fate of the
region. Whatever the outcome, it will be felt immediately and deeply in
every part of the world.
Meanwhile, parties to the Nuclear Nonproliferation Treaty (NPT) will
gather for the seventh time in a quinquennial review conference in the first
half of 2005. Although the meeting will breathe new life into the
international discourse on nuclear nonproliferation, the protracted
difficulties of the Iranian and North Korean nuclear conundrums will place
more serious hurdles in the way of the NPT-centered “nuclear
nonproliferation regime.”
In December 2004, the UN High-level Panel released a report with
recommendations for countering international security threats and
reforming the UN system. The report could have the effect of transforming
the international political topography should the international community
be moved to an earnest discussion on the reform recommendations, one of
which includes the enlargement of the UN Security Council (UNSC), and
settle on an action plan. The main bone of contention concerning UNSC
reform is the expansion of the pool of permanent members. A seat on the
UNSC oftentimes translates into an increased say as well as an enhanced
status within the UN and in the international community; for this reason,
Japan, Germany, Brazil, and a handful of other countries that have eyed
permanent membership of the Security Council will engage in a fierce
competition.
Economically, the world’s advanced and developing blocs will
experience differential growth in 2005. Advanced countries will undergo Abstract 3
economic downturns; Brazil, Russia, India, and China, a group of nations
that has come be known as the BRICs, will record the world’s highest
growth rates. International oil prices look set to remain high for the time
being owing to a combination of factors: political instability in Middle
Eastern oil-producing countries, primarily tensions in Iraq, and the rush of
speculative funds into the international oil market. America’s widening
current-account deficits may possibly lead to an additional devaluation of
the dollar. The prospects for an early conclusion of the Doha Development
Agenda (DDA) process, or global multilateral trade negotiations, remain
uncertain. Thus, bilateral free trade agreements (FTA) will proliferate, and
regionalism is highly likely to govern the global trade order.
Emergence of New US-China-Japan Triangle Amid Multilayered
Regional Cooperation
The prolongation of the North Korean nuclear issue since 2002 will
serve as the litmus test that determines the stability of the security order in
Northeast Asia, and the countries concerned will make concerted efforts to
launch diplomacy of intervention vis-à-vis North Korea in 2005 within the
existing framework of the six-party talks. For the six countries to sketch a
solution to the nuclear problem and devise concrete follow-on steps at the
next six-party talks, an audacious determination is called for on the part of
the Pyongyang regime—a decision that is premised on a complete
dismantlement of its nuclear program. Depending on its nature,
Pyongyang’s verdict just may mark a critical watershed in the North
Korean nuclear issue.
In the meantime, Northeast Asian countries will continue to espouse a
system of regional cooperation in counterterrorism and counterproliferation
as part of the global campaign organized in the aftermath of September 11 4 Prospects for International Relations in 2005
to combat terrorism and curb weapons of mass destruction (WMD)
proliferation. Nevertheless, nationalism has recently taken root as a key
source of inter-state conflict in Northeast Asia, and this trend will further
intensify in 2005. Buoyed by economic dynamism and deepening
economic interdependence in the region following the end of the Cold War,
Northeast Asia is on the track to becoming one of the world’s central
strategic pillars. Major powers’ nationalism-driven competition to expand
their spheres of influence, however, is quickly surfacing as a destabilizing
factor in the region.
The US-China-Japan relationship is another dilemma that has lent a
distinct shade to the Northeast Asian situation since September 11, 2001:
the US-China cooperation in counterterrorism and counterproliferation
continues while the US-Japan alliance solidifies. While Washington enjoys
cooperation-oriented bilateralism with Beijing and Tokyo, confrontationoriented
bilateralism has sprouted between Japan and China, the two
neighbors that have harbored deepening mutual distrust over the other’s
expansion of influence in the region. The duality of the trilateral ties will
be made even plainer in 2005. It also signals the advent of a US-ChinaJapan
triangle that is fundamentally different from the preexisting model.
The US-China-Japan triangle played the role of a balancer in Sino-Japan
relations during the Clinton era: the United States maintained the status
quo of its alliance with Japan while defining its relations with China as a
strategic partnership. Conversely, the Bush administration has bolstered the
US-Japan alliance while maintaining cooperation with China on
counterterrorism and counterproliferation with a view to countering global
security threats in the short term and gearing up for a Chinese strategic
challenge over the middle to long term. Abstract 5
Accelerated Reshuffling of North Korea’s Power Structure
Zooming in on the Korean peninsula, North Korea has reshuffled the
regime’s power structure rather hurriedly in recent years. In 2004 alone, it
replaced 10 Cabinet officials in managerial positions and appointed a large
number of up-and-coming technocrats in their 30s and 40s to bureau
directorships. The wave of fresh recruitments points to the likely birth of a
new lineup in the core class of elites surrounding Kim Jong-il in 2005
targeted at consolidating his personal rule. An abrupt generational change
and the reorganization of the power lineup in the North Korean
government are thought to be closely linked to the enigma surrounding the
country’s successor issue, and Kim Jong-il’s inner circles will move briskly
to ensure a smooth transition of power.
On the economic front, Pyongyang has decisively executed sweeping
reforms in the name of the “July 1 economic management reform
measures,” the crux of which included foreign exchange rates and prices
geared to realistic levels, extensive wage increases, and greater autonomy
to businesses. More recently, North Korea has reinforced accountability in
corporate management by promoting market-oriented self-financing and
deregulation. It has also done away with egalitarian distribution and
instead introduced a new incentive system based on the principle
“distribute only what one has earned,” hence boosting the morale of the
North Korean working class. There is a possibility that the North will scale
back some of its reform measures in 2005 in an attempt to regulate the
speed of the flurry of reforms and mollify a populace that is growing
increasingly disenchanted. However, Pyongyang will have no option but to
maintain the basic policy line of pursuing market-inclined changes.
Societally, a rise in social problems will likely push North Korea to
tighten the grip on its populace. A combination of internal and external 6 Prospects for International Relations in 2005
factors will give way to grim side effects such as irregularities, corruption,
and defections: overseas, North Korea’s nuclear program will intensify its
ongoing discord with the international community; at home, the masses
will remain as vulnerable as ever to unrelenting economic difficulties, a
sudden string of economic reforms, and Pyongyang’s overdrive to acquire
hard foreign currency. The North Korean government will attempt to stem
mounting societal problems by stepping up ideological education through
mobilized mass activities and the mass media, and through social
organizations.
Revisiting the North Korean nuclear predicament, any hope that
Pyongyang may have nursed for bilateral talks with the United States
vanished almost instantaneously with President Bush’s reelection. The
second-term Bush administration is expected to conduct a “carrot-andstick”
strategy to resolve the nuclear issue, and only when Pyongyang
proclaims a willingness to scrap its nuclear program will Washington
employ a “bold approach.”
North Korea’s return to the nuclear negotiating table will run parallel to
endeavors to maximize opportunities for direct bilateral talks with the
United States. By accentuating Washington’s rescindment of hostile policy
as fundamental to the solution of the nuclear problem and reiterating the
position that US security assurances are imperative for regime stability,
Pyongyang will attempt to build a consensus that North Korea–US bilateral
talks are not optional but essential.
Opening a New Chapter in North Korean Nuclear Issue and
South-North Relations
The two Koreas are on the threshold of greeting the most momentous
turning point in their relationship since the dawn of the Cold War. South Abstract 7
Korea’s Participatory Government has consistently implemented policies
of consolidating the basis for a peace system on the Korean peninsula. One
example is Seoul’s ambition to broaden economic cooperation with North
Korea, as evidenced by its recent construction of the Kaesong Industrial
Zone. The year 2005 is thus highly likely to provide a milestone for the
two Koreas to induce qualitative changes in their relationship and to
embark on a road to coprosperity within a framework of peaceful
coexistence. The reelected Bush administration’s Korean peninsula policy
and North Korea’s strategic choices concerning the nuclear quagmire are
the two main variables that will shape the future of the Korean peninsula’s
security. Still mired in postwar reconstruction in Iraq, the United States
will wish to settle the North Korean nuclear issue via the six-party talks.
Should the six nations’ diplomatic efforts yield a smooth bargaining
process which begins with North Korea’s dismantlement of the nuclear
program and ends with the international community’s corresponding
measures, the Seoul government’s tenet of engagement toward North
Korea will gain further credence. It may be possible that South Korea,
bearing these prospects in mind, will dispatch a working-level official as a
special envoy to the North in 2005 for an early resolution of the nuclear
issue and for the establishment of a framework for South-North exchange
and cooperation and coexistence and coprosperity in Northeast Asia. A
special envoy should be able to exchange in-depth opinions with the North
Koreans on ways to advance inter-Korean relations and surmount the
nuclear dilemma.
A second inter-Korean summit is not on the agenda of concrete
discussion between Seoul and Pyongyang at the moment. Seoul must view
a second South-North summit from every angle possible before pushing
forward with it. It should, for one, be linked to progress in the North
Korean nuclear issue; it should also be preceded by the resumption of 8 Prospects for International Relations in 2005
inter-Korean government-level talks. The effect of a second summit will
redouble only when such a summit is backed up by public consensus and
anteceded by sufficient fine-tuning with the United States, South Korea’s
ally.
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