South Korean soldiers patrol along a barbed-wire fence near the demilitarized zone separating the two Koreas, in Paju, South Korea, on 21 December 2017. REUTERS/Kim Hong-Ji Report 294 / Asia 23 January 2018 20+ minutes The Korean Peninsula Crisis (II): From Fire and Fury to Freeze-for-Freeze Brinksmanship on the Korean peninsula threatens a potentially catastrophic military escalation. In this second report of a two-part series, Crisis Group lays out the steps to de-escalate the crisis and buy time for a more durable solution. Share Facebook Twitter Email Linkedin Whatsapp Save Print Download PDF Also available in Chinese, Simplified Chinese, Simplified Korean English What’s new? The U.S. has responded to North Korean weapons tests with a campaign of “maximum pressure”, involving economic sanctions, diplomatic pressure on states with ties to North Korea and, most visibly, bellicose rhetoric that, together with military exercises, overflights and posturing, aims to signal Washington’s willingness to take preventive military action. Why does it matter? Even the harshest sanctions will not, in themselves, prompt Pyongyang to slow its weapons program within a reasonable timeframe, and they could do enormous harm to its people. By threatening or, worse, carrying out military strikes, the U.S. risks provoking a war with disastrous humanitarian, economic and geopolitical repercussions. What should be done? The U.S., working with regional powers, notably China, should explore a resumption of U.S.-North Korean talks and a deal whereby Pyongyang freezes its most sensitive tests and Washington freezes some military exercises and deployments, while fudging the issue of Pyongyang’s nuclear status. This could presage negotiations toward a durable resolution. Executive Summary The risk of catastrophic war on the Korean peninsula is higher than at any time in recent history. The “maximum pressure” strategy the U.S. has pursued in response to North Korea’s weapons tests could badly backfire. Its first track, economic pressure through sanctions, will not, on its own, prompt Pyongyang to slow down its weapons program within a reasonable timeframe, and could cause considerable harm to its people. The second, threatening or, worse, carrying out military action, risks uncontrolled escalation. Both tracks are hobbled by Washington’s objective – North Korea’s denuclearisation – which, while desirable, is unrealistic for the foreseeable future. Instead, the U.S. should use the reprieve provided by the February 2018 Winter Olympics, as well as Pyongyang’s need to improve the economy in 2018, North Korea’s 70th anniversary year, to explore resuming bilateral U.S.-North Korean talks. These would seek a more sustainable de-escalatory deal, whereby North Korea freezes its most sensitive tests and the U.S. some military exercises and deployments, while fudging the issue of Pyongyang’s nuclear status. This could presage negotiations aimed at a more durable solution. All of this requires the U.S. and regional powers, chiefly China, to work closely together. Since 2016, the quickening pace of North Korea’s nuclear and intercontinental ballistic missile (ICBM) tests has confirmed both its determination to achieve nuclear deterrence and significant advances in its arsenal. A new missile, tested in November 2017, in principle could strike U.S. cities, though most credible estimates say Pyongyang will not perfect the missiles’ re-entry systems or master the technology to reliably deliver nuclear warheads atop those missiles until one to five years from now. Top U.S. officials fear Pyongyang’s progress will shift the strategic balance in North Korea’s favour and limit U.S. options. Determined to prevent that, Washington has adopted a “maximum pressure” strategy, involving economic sanctions, diplomatic pressure on states with ties to North Korea and, most visibly, combative rhetoric that, together with military exercises, overflights and posturing, aims to signal Washington’s willingness to take preventive military action. U.S. officials cite China’s acceptance of harsher sanctions as evidence the strategy is working. The risk of catastrophic war on the Korean peninsula is higher than at any time in recent history. Maybe so, but maximum pressure is unlikely to bring much more than that and could provoke much worse. Sanctions have limited effect and will take time to bite, as U.S. officials themselves recognise. Recent UN sanctions – the Security Council’s toughest yet – will seriously hurt the North Korean populace long before they threaten the regime and are unlikely to keep pace with its weapons tests. More importantly, even the harshest sanctions will not induce North Korean leader Kim Jong-un to surrender a nuclear program he views as critical to his survival. If economic pressure has limits, bellicosity carries considerable risk. Some U.S. officials float a “bloody nose” theory: a targeted U.S. strike, they argue, could curb the regime’s nuclear ambitions or set back its program without prompting retaliation. They might well be wrong, and that would be an error with incalculable consequence. Kim could decide to hit back: to signal that the U.S. cannot strike at will, to avoid seeming weak to his generals or because he believes that his retaliation, in turn, would not elicit a U.S. response. Even an asymmetric counter-strike would force the U.S. to either back off and nurse its own bloody nose, thus eroding its deterrence, or respond to Kim’s response and spark an unpredictable and uncontrollable escalation. Even if belligerence is a bluff, designed to spook China to exert greater pressure on North Korea, or to push North Korea to change its own calculations, it is a dangerous one. Raising the temperature risks either side mistaking a test or exercise for the real thing. Brinkmanship has a shelf life: the longer threats are followed by inaction, the hollower they seem and the greater the pressure to make good on them. North Korea will participate in the Winter Olympics, but – absent an understanding with the U.S. – after those Games, its tests will likely resume, perhaps coinciding with joint U.S.-South Korean military exercises and putting pressure on the U.S. to respond. That is a terrifying prospect. Estimating precise costs of war on the Korean peninsula is impossible, but even conservative projections are staggering. A conventional North Korean attack on Seoul could kill hundreds of thousands in days. Add to that the risk that the regime fires missiles at heavily populated Japanese cities or launches a chemical, biological or even – were it to sense its demise – nuclear attack. Displacement would be massive. Reconstruction would take a generation. Any conflict could draw in China. Even if a war damaging the world’s largest economies did not prompt a global economic crisis, its effects would reverberate for years. North East Asia would be hit hardest, but the U.S. would not be spared: tens of thousands of civilians endangered, the military stretched, coffers emptied, commerce disrupted, credibility shattered and influence diminished. Thus far, the Trump administration has not prepared the country for such a war, and the U.S. people appear broadly unaware of both risks and costs. The limits of sanctions, perils of bellicosity and horrific toll of confrontation are compelling reasons for all parties to seek an off-ramp. An opportunity exists: the forthcoming Winter Games have prompted both sides toward parallel de-escalation. This window should be used to enable the U.S and North Korea to resume bilateral talks aimed at prolonging and formalising a freeze-for-freeze understanding. The following sequence could be used to achieve that goal and pave the way for a more ambitious bilateral diplomatic process: An informal halt to provocations: The thaw in Pyongyang’s relations with Seoul suggests more weapons tests are unlikely before or during the Olympics. U.S. President Donald Trump and his South Korean counterpart Moon Jae-in already have suspended joint military exercises until after the Games. This first step requires only that both sides stick to the script, refraining from provocative acts and muting belligerent rhetoric. Developing a “freeze-for-freeze” deal: Meanwhile, the U.S. and regional parties – notably China and South Korea, but also optimally Japan and Russia – would coordinate their positions on a formal U.S.-North Korean understanding expanding upon the informal one. This arrangement likely would include North Korea freezing all nuclear tests and intercontinental and intermediate-range missile tests that extend their capability of striking the mainland U.S. and U.S. territories in the Pacific, as well as desisting from overflying other countries’ airspace. For its part, the U.S. would redesign its joint exercises with South Korea: freezing those that particularly rankle Pyongyang (such as “decapitation drills” aimed at Kim and exercises whose timing Pyongyang finds particularly insulting, such as during national days, planting or harvest seasons); and scaling back some regular exercises; while freezing the deployment of some strategic assets to South Korea. A role for China: Beijing, which has mooted a freeze-for-freeze since last summer, will have to play an important facilitation role, despite its reluctance to do so. As a regional and global power, and North Korea’s economic lynchpin, it could sweeten the proposed deal for Pyongyang and Washington, offering the former incentives for accepting it and promising the latter to hold the Kim regime accountable for any rejection or violation. Here Beijing could work with Moscow (which largely shares its view of the crisis): Pyongyang’s relations with Beijing have soured but it still needs China and welcomes Russian diplomats. Launch of formal bilateral talks: After the Olympics, the informal freeze would continue and formal U.S.-North Korean talks commence. These talks would first seek to reach agreement on the freeze-for-freeze deal described above before moving to broader issues concerning the nuclear program and its safety. In entering these talks, the U.S. would stand by its position that the ultimate outcome must be denuclearisation of the peninsula, a view with which North Korea would disagree. Such a deal would be imperfect. All sides would sacrifice something. But they would gain, too. Kim would stop tests, but could claim to have achieved his goals and pivot to fulfilling economic pledges equally critical for his legitimacy at home. President Trump could claim he had significantly slowed development of nuclear-tipped missiles able to hit the U.S. homeland – arguably a better score sheet than his predecessor, all the more so if subsequent negotiations succeed. For South Korea, Japan and Russia, de-escalation would reduce the risks inherent to both U.S. military action and Pyongyang’s tests. Beijing risks further fuelling Pyongyang’s hostility but gets to de-escalate the crisis, preserve a status quo that works to its benefit and burnish its claims of global leadership. All would lower the threat of a war that could devastate the region and its people and provoke dreadful geopolitical upheaval. Seoul/Beijing/Washington/New York/Brussels, 23 January 2018 I. Introduction The threat of war on the Korean peninsula is higher than at any time in recent history, due to the combination of nuclear and missile testing by the Democratic Republic of North Korea (DPRK) and the increasing bellicosity of the U.S.[fn]In this report and its companion (Crisis Group Asia Report N°293, The Korean Peninsula Crisis (I): In the Line of Fire and Fury, 23 January 2018) various commonly accepted names for the two Koreas are used: the official DPRK (Democratic People's Republic of Korea) and DPR Korea, and ROK (Republic of Korea), and the English vernacular North Korea and South Korea. This usage is for readability and is not an endorsement of the unofficial names. All spellings of DPRK names are derived from the English-language version of the Korean Workers’ Party bulletin Rodong Sinmun, and of ROK names from the Yonhap News Agency. Where there is no commonly accepted variant, Korean names are romanised using the McCune-Reischauer romanisation system. All Korean names are hyphenated to distinguish family from given names, though this runs contrary to DPRK convention.Hide Footnote Since 2016, Pyongyang has conducted three nuclear tests, one on 6 January 2016, a second on 9 September 2016 and a third on 3 September 2017. [The original version of this report misstated the number of tests. It has been corrected.] In the summer of 2017, it twice tested a new intercontinental ballistic missile (ICBM), the Hwasong-14. In November, it tested another, the Hwasong-15, which was noticeably larger and appeared to have a more mobile and sophisticated launch mechanism.[fn]See Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote In principle, the latter could strike any locale in the continental U.S., a possibility that some in the U.S. see as a strategic game changer. Pyongyang does not yet appear to be capable of fitting nuclear warheads onto missiles or to have mastered technology that protects those warheads during re-entry into the earth’s atmosphere; one well-informed observer argues that it is several years from being able to do either.[fn]Former director of the Los Alamos National Laboratory Siegfried Hecker, who has visited North Korean nuclear facilities on multiple occasions, believes the country is one or two years away from mastering ICBM technology. The advanced re-entry systems needed to house nuclear warheads could be “five or so years away”. Elisabeth Eaves, “Talk to North Korea to avert a nuclear disaster: an interview with Siegfried Hecker”, Bulletin of the Atomic Scientists (https://thebulletin.org/), 7 August 2017; “North Korea now making missile-ready nuclear weapons, U.S. analysts say”, Washington Post, 8 August 2017; Elisabeth Eaves, “North Korean nuclear test shows steady advance: interview with Siegfried Hecker”, Bulletin of the Atomic Scientists (https://thebulletin.org/), 7 September 2017. Other experts cite shorter timelines: Michael Elleman, “North Korea’s third ICBM launch”, 38 North (www.38north.org), 29 November 2017.Hide Footnote Also debated is the number of nuclear devices in North Korea’s stockpile.[fn]Hecker disagrees with the leaked U.S. Defense Intelligence Agency estimate that North Korea has 60 nuclear weapons, some missile-ready. He argues that, as of the end of 2016, North Korea had fissile material for twenty-25 weapons and could produce six-seven per year. See the articles in footnote 2.Hide Footnote The U.S. has responded to North Korean weapons testing with a campaign of “maximum pressure”: economic sanctions, diplomatic pressure on states with ties to North Korea and, most visibly, bellicose rhetoric. On 8 August 2017, Trump vowed that, were North Korea to threaten the U.S., he would respond with “fire, fury and frankly power, the likes of which this world has never seen before”.[fn]“Trump: North Korea will be met ‘with fire and fury like the world has never seen’ if more threats emerge”, Fox News, 9 August 2017.Hide Footnote Soon thereafter, his national security adviser, H.R. McMaster, warned that the U.S. “cannot tolerate, will not tolerate, a threat to the United States from North Korea involving nuclear weapons”.[fn]A transcript of McMaster’s remarks is at http://abcnews.go.com/Politics/week-transcript-13-17-lt-gen-mcmaster-anthony/story?id=49177024.Hide Footnote After meeting White House officials, Admiral Mike Mullen, former chairman of the Joint Chiefs of Staff, warned that the U.S. is “closer to a nuclear war with North Korea” than ever before.[fn]“Former joint chief chairman: Nuclear war with North Korea closer than ever”, CNN, 1 January 2018.Hide Footnote U.S. officials speak of a narrow strike aimed at either sending a message of deterrence to Kim or damaging his nuclear program. Within the administration, views on North Korea policy appear to vary, with McMaster widely perceived as more hawkish and the secretaries of state and defence, Rex Tillerson and James Mattis, respectively, believed to be more cautious.[fn]Crisis Group interviews, U.S. officials, Washington, November 2017-January 2018. Uri Friedman, “The world according to H.R. McMaster”, The Atlantic, 9 January 2018; Jim Mattis and Rex Tillerson, “We’re holding Pyongyang to account”, Wall Street Journal, 13 August 2017.Hide Footnote The administration’s signals on diplomacy have been mixed. Tillerson at one point suggested direct and unconditional talks with Pyongyang but was quickly countermanded by the White House.[fn]“Trump says Tillerson is ‘wasting his time’ on North Korea”, The New York Times, 1 October 2017.Hide Footnote Trump has punctuated his insults of Kim with sporadic suggestions he would be willing to meet the North Korean leader; in one case, he said he expected the two of them would get along well.[fn]“Trump says he ‘would be honoured’ to meet N. Korea’s Kim Jong Un”, Financial Times, 2 May 2017; “Donald Trump offers to meet Kim Jong-un as Pentagon warns only invasion can disarm North Korea”, The Telegraph, 5 November 2017.Hide Footnote Privately, U.S. officials and unofficial intermediaries claim an offer for direct, unconditional talks was made and that North Korea rejected it.[fn]Crisis Group interviews, U.S. officials, third party intermediaries, Washington, New York, November 2017-January 2018.Hide Footnote The U.S. has responded to North Korean weapons testing with a campaign of 'maximum pressure': economic sanctions, diplomatic pressure on states with ties to North Korea and, most visibly, bellicose rhetoric. Nor is it clear whether threats of military action are sincere, reflecting conviction that the U.S. cannot live with the strategic shift that North Korea’s capability to strike the continent with a nuclear device would bring; a bluff, aimed at persuading China to exert greater pressure on Pyongyang, and at getting Pyongyang to curb its nuclear ambitions; or a combination of both. Overall, though, the net effect of the threats has been to project a readiness to use force that, while falling far short of a public relations campaign to prepare the country for war, has shifted the national conversation about how far the administration might go to achieve its objectives. In North East Asian capitals, Pyongyang’s weapons tests, along with alarm that a preventive U.S. strike might provoke North Korean retaliation and an uncontrollable escalation, have set in motion an evolving geostrategic recalibration.[fn]For North East Asia’s evolving geopolitics, see Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote For its part, Pyongyang, whether out of fear of U.S. military action, or as part of a longer-term divide-and-conquer strategy, has opened indirect channels of communication with the U.S., while apparently rejecting direct talks.[fn]Crisis Group interviews, senior U.S. official, Washington, December 2017; UN official, January 2018.Hide Footnote It began by permitting a number of high-profile U.S. journalists into the country as tensions peaked in the early fall of 2017.[fn]Evan Osnos, “The risk of nuclear war with North Korea”, The New Yorker, 18 September 2017.Hide Footnote Track II talks and discussions through a channel involving the U.S. special representative for North Korea Policy, Joseph Y. Yun, also have taken place, although Pyongyang questioned the value of these talks on the grounds that only Trump can speak for Trump.[fn]Crisis Group interviews, Track II participants, December 2017-January 2018.Hide Footnote After several months of growing tension, North Korea used more formal routes to disseminate its mixed message. UN Political Affairs Chief Jeffrey Feltman, a U.S. citizen and the highest-ranking UN official to visit Pyongyang since 2011, held fifteen and a half hours of talks with North Korean diplomats including Foreign Minister Ri Yong-ho in Pyongyang in early December. Feltman came away convinced that North Korea wanted “some kind of policy dialogue after not having had [one] for a long time”. But he reportedly concluded that Pyongyang was not yet ready for direct talks with the U.S. – possibly because Kim first wanted to make more progress on his nuclear program.[fn]Crisis Group interviews, UN and diplomatic envoys, New York, December 2017-January 2018. See also “North Korea’s ‘nuclear button’ might be symbolic, but war risk is real: UN official”, ABC News, 3 January 2018.Hide Footnote Over the past month, relations between North and South Korea have thawed. Over the past month, relations between North and South Korea, often a bellwether for dynamics between the U.S. and North Korea, have thawed. The South Korean president, Moon Jae-in, responded quickly and positively to Kim Jong-un’s announcement in his 1 January 2018 New Year Address that North Korea was willing to participate in the 2018 Winter Olympic Games, hosted in the South Korean city of Pyeongchang. Moon also welcomed Kim’s suggestion that the two Koreas meet to discuss the Games.[fn]“N.K. open to sending delegation to PyeongChang Olympics: leader”, Yonhap, 1 January 2018.Hide Footnote Kim’s proposal was preceded by several informal contacts between officials from the two Koreas; around the same time, South Korea announced it would delay joint military exercises with the U.S. until after the Olympics and subsequent Paralympics.[fn]Crisis Group interview, former National Intelligence Service official, January 2018; “Choe Mun-sun, ‘Contact with North Korea two weeks ago … North, 100% certain to attend Pyeongchang”, Hankyoreh, 2 January 2018; “Several meetings led to Olympics breakthrough: Sources”, Joongang Daily, 3 January 2018. For the suspension of exercises, see “Seoul asks US to delay military exercises until after Winter Olympics”, Financial Times, 12 December 2017. The Olympics run until 25 February, followed by the Winter Paralympics from 8-18 March.Hide Footnote The day after Kim’s address, Moon offered to hold high-level talks with North Korea on 9 January; in order to plan the meeting, Pyongyang reconnected an inter-Korean phone line that had been out of use for 23 months. In a joint statement after the 9 January meeting, the two sides stated they were committed to the success of the Winter Games, had agreed to military-to-military talks to ease tensions and wished to resolve issues through negotiations, including a high-level meeting.[fn]“S. Korea offers high-level talks with N.K. next week”, Yonhap, 2 January 2018; “Joint press statement of high-level inter-Korean talks”, Korea Herald, 9 January 2018.Hide Footnote The Trump administration, which has welcomed the inter-Korean dialogue and agreed to postpone joint exercises, now faces a dilemma: continue with maximum pressure, including by escalating, presumably after the Winter Games, its belligerent rhetoric; or use the short window ahead of the Games to seek a way out of the crisis.[fn]“U.S. hails Korea talks, despite North’s rejection of denuclearisation”, Reuters, 9 January 2018.Hide Footnote This report, one of two published simultaneously on the Korean crisis, examines that choice and what it means for the crisis, for states in North East Asia and for the U.S. itself. It looks at the gains, limits and dangers of the administration’s maximum pressure strategy, sketches the potential toll of a war on the Korean peninsula and offers a path to dialling down the tension. Its companion, The Korean Peninsula Crisis (I): In the Line of Fire and Fury, provides background, examining perspectives from Pyongyang, Washington, Seoul and Beijing, as well as Tokyo and Moscow.[fn]Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote II. Limits of Economic Pressure The first track of maximum pressure has succeeded in tightening the economic noose around North Korea’s neck. Over the latter half of 2017, the U.S. shepherded through the UN Security Council the toughest sanctions yet, leaving precious little of the North Korean economy untouched.[fn]Ibid.Hide Footnote These measures would sanction an estimated 90 per cent of the routes by which the impoverished nation earns its hard currency.[fn]This claim was made by an informed U.S. official in October 2017, prior to passage of the latest UN Security Council resolution on 22 December 2017. Crisis Group interview, New York, October 2017.Hide Footnote In concert, the U.S. has applied increasing pressure on China, the lynchpin of North Korea’s economy, to enforce the UN sanctions strictly. Secondary U.S. sanctions on Chinese entities aim to curtail trade with North Korea and, together with U.S. diplomatic pressure and fear of U.S. military action, have pushed Beijing to do as Washington wished. Economic strangulation, the administration hopes – albeit not with great conviction – will leave Pyongyang sucking so much wind it will temper its nuclear aspirations. Sanctions have their limits, however, as U.S. officials themselves recognise.[fn]Crisis Group interview, senior U.S. official, Washington DC, December 2017.Hide Footnote First, the noose will take time to tighten, and the civilian population will be gasping for air long before the regime, which has a track record of withstanding its people’s suffering. The effects of sanctions, in other words, are unlikely to keep pace with the regime’s weapons development. Second, sanctions almost certainly will not bite as hard as the U.S. would like, given China’s reluctance to enforce them fully. Partly Beijing fears the humanitarian repercussions of doing so. Mostly, though, it wants to avoid precipitating the regime’s collapse or incurring its enmity, or otherwise upsetting the regional strategic balance.[fn]Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote Sanctions have their limits, as U.S. officials themselves recognise. True, Chinese President Xi Jinping has brought an indisputably harder line toward North Korea. Beijing’s patience with Pyongyang’s missiles and nuclear tests is wearing thin; Chinese officials view these efforts as adventurism. Combined with U.S. pressure, Beijing’s annoyance has led it to curtail economic cooperation initiatives and enforce sanctions more rigorously than ever before. But Xi will only go so far; Beijing’s perceptions of its core strategic interests are unlikely to change. Even as China insists that it is “comprehensively, accurately, faithfully and strictly implementing the Security Council’s DPRK-related resolutions”, reports by journalists and the UN Panel of Experts say otherwise.[fn]PRC Foreign Ministry Spokesperson Hua Chunying’s Regular Press Conference, 27 December 2017. For violations, see “Report of the Panel of Experts established pursuant to resolution 1874 (2009) S/2017/150”, UN, 27 February 2017.Hide Footnote More importantly, even the toughest sanctions will not persuade the Kim regime itself to surrender a weapons program it regards as critical to its own survival.[fn]Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote Alone, no sanctions can change that calculation, all the more so if inconsistent Chinese enforcement takes the edge off. Severe sanctions bring still another potential pitfall: they will induce further deprivation among a population already ravaged by it. While famine remains unlikely, the humanitarian situation is dire: in 2016, 41 per cent of the population was estimated to be undernourished; infant mortality, under-five mortality and maternal mortality rates were well above the global average; and rates of tuberculosis infection were among the world’s highest.[fn]“2017 DPR Korea Needs and Priorities”, UN in DPR Korea, March 2017.Hide Footnote Over time, even sanctions that carefully target the regime have dangerous negative effects on the health and livelihoods of ordinary people. State control over health care, for example, means that sanctions curtailing the state’s power supplies leave hospitals without electricity. Ordinary people pay the price.[fn]In October, the UN resident coordinator in Pyongyang explained some of the difficulties faced by UN agencies working in the country, including protracted delays delivering medical equipment and drugs due to logistics firms’ reluctance to deal with cargo to North Korea for fear that they might be implicated in trading with a sanctioned entity – even when the paperwork for the cargo is in order. In December, North Korea’s only WHO-certified pharmaceuticals manufacturer, Pyongsu Pharma, warned it would have to close “within weeks” if it were not exempted from new sanctions. Pyongsu Pharma runs pharmacies in several urban locations nationwide. “Sanctions endanger drug maker”, The Wall Street Journal, 8 December 2017. See also “‘Serious concern’ about sanctions’ impact on North Korea aid work: UN DPRK rep”, NK News, 7 December 2017. Despite the dire humanitarian situation, the marketisation of the economy (which in effect privatised landholdings and food production); gradual erosion of public distribution systems; and hefty assistance from the World Food Programme reduce the risk of famine.Hide Footnote Sanctions on the textiles sector introduced in September will likely have a direct impact on the livelihoods of thousands of workers in that sector.[fn]This is similar to the impact of the temporary closure of the Kaesong Industrial Complex in 2013. Christopher Green, “A Kaesong closure story: The inside track”, Sino-NK (www.sinonk.com), 10 February 2016; “U.N. ban on North Korean textiles will disrupt industry and ordinary lives, experts say”, Reuters, 12 September 2017.Hide Footnote Sanctions should be part of the world response to the DPRK’s nuclear crisis. On some issues, trade restrictions can serve as leverage. North Korea’s economy desperately needs cash. Kim’s “pyŏngjin line” promises both nuclear and economic development. The Kim regime needs to deliver on its economic pledges, especially with the 70th anniversary of North Korea’s founding around the corner in September 2018.[fn]Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote Yet binge spending on weapons tests over the past few years has sapped its efforts to revive the economy. Sanctions thus obstruct the regime’s economic plans and ability to shore up domestic legitimacy over and above the project of nuclear deterrence. They must, however, be carefully calibrated to avoid worsening the plight of North Koreans. And, alone, sanctions will not change the regime’s core calculations about its nuclear program. III. Dangers of Belligerence The limits of sanctions enhance the attractions to U.S. officials of a second track in the “maximum pressure” strategy: bellicose rhetoric designed to signal a readiness to take military action. That North Korea’s most sensitive installations are dispersed and some hidden underground means the wholesale destruction of its nuclear and missile capability almost certainly is out of the question; an attack of that scale would likely destroy not only weapons, but also the country itself.[fn]C. Kenneth Quinones, “North Korea’s Underground Construction”, NAPSNet Policy Forum, 5 October 1998.Hide Footnote But U.S. officials envision a lesser strike that would target facilities of missile production and staging, as well as command and control and communications. Giving the regime what U.S. officials refer to as “a bloody nose” would set back its weapons program, they calculate, and lead Pyongyang to question the viability of nuclearisation.[fn]“Exclusive: U.S. making plans for ‘bloody nose’ military attack on North Korea”, The Telegraph, 20 December 2017. Crisis Group interviews, former U.S. officials, Washington, November-December 2017.Hide Footnote Some within the administration appear to believe they could launch such an attack without provoking retaliation, provided it were accompanied by messaging that any military response would be met by a far larger attack and that the U.S. was not pursuing regime change.[fn]Crisis Group interviews, former U.S. official with White House contacts, senior security establishment official, Washington, November-December 2017.Hide Footnote Flaws in this theory are manifold. It presupposes that Kim would not himself believe he could attempt a counter-strike of his own without facing retaliation. It overlooks that he might feel the need to react so as to signal to the U.S. that it cannot strike him at will. It assumes he would trust Washington’s assurances that his regime was safe even as the U.S. targeted weapons programs he views as essential to regime survival. The longer the stalemate continues, the more the administration’s implicit threats of coercion will be at odds with its actions, further clouding Pyongyang’s view of its signals. It also misreads the regime, whose military strategy traditionally has placed no value on restraint in the face of aggression. In fact, the regime’s publicly stated ideology would likely not permit it to back down.[fn]Van Jackson, “The EC-121 Shoot Down and North Korea’s Coercive Theory of Victory”, Sources and Methods, 13 April 2017.Hide Footnote While it might, perhaps, conceal a U.S. strike from the North Korean populace, it could not hide the attack from the military brass, in whose eyes the failure to respond would undermine Kim’s credibility as leader. At a stretch, Kim could assert internally that he can afford to show restraint on the grounds that, as a nuclear-armed state, North Korea need no longer respond to every provocation.[fn]For this argument, see “Nukes enable N. Korea to control own military, ex-N. Korean diplomat says”, Mainichi Japan, 1 January 2018.Hide Footnote But given that Kim’s principal weakness at home is his lack of military experience, banking on him to stand up to his generals, and thus jeopardise his perch atop the heavily militarised state, would be an enormous gamble. Far more probable is some form of North Korean retaliation. That might not entail a direct response against the U.S. mainland, unless the leadership was already gripped by existential fear (in which case the “bloody nose” plan – which hinges on Kim remaining confident in his grip on power – would anyway have failed). The regime would likely respond asymmetrically, with an attack on a soft South Korean target; a strike against U.S. assets on or around the peninsula; or crippling cyber-attacks. That would leave the U.S. with the options of backing down, and thus losing face; or responding to North Korea’s response. The latter would set off a conventional or non-conventional escalatory dynamic endangering major cities in South Korea and Japan, as well as U.S. troops in the region. The administration’s threats could, of course, be a feint aimed at changing calculations in Beijing and Pyongyang. Indeed, some officials argue – with some justification – that Washington’s more aggressive stand has moved the needle in the region, in particular prompting China to assume its own tougher stance toward Pyongyang.[fn]Crisis Group interview, senior U.S. official, other U.S. officials, Washington, New York, November-December 2017.Hide Footnote But even bluffing entails enormous risk. The mere prospect of the U.S. contemplating preventive military action raises the likelihood of war, with each of the two sides fearing surprise attack from the other. Most obviously, either side could mistake a test or exercise for the real thing and react as though attacked. The dangers are all the graver given that intrinsic to the administration’s approach is its desire to keep Pyongyang guessing; its strategy thus allows little room for clarity on red lines. Between President Trump’s erratic tweets and statements, and his top officials’ frequent attempts to temper them, the administration’s messages have repeatedly been mixed.[fn]Crisis Group Report, The Korean Peninsula Crisis (I), op. cit. For example, in August 2017, hours after a tweet from the president dismissing the utility of dialogue with North Korea and claiming that “talking is not the answer”, U.S. Secretary of Defense James Mattis told reporters: “We’re never out of diplomatic solutions”. “Defense secretary quickly contradicts Trump over North Korea diplomacy”, The Guardian, 30 August 2017. Following DPRK Foreign Minister Ri Yong-ho’s speech at the September 2017 UN General Assembly, Trump tweeted that North Korea “won’t be around much longer”; White House Press Secretary Sarah Huckabee Sanders later denied claims by Ri that the tweet was tantamount to a declaration of war on Pyongyang. “White House: ‘We have not declared war on North Korea”, Politico, 26 September 2017. Signals appear to have been particularly mixed leading up to North Korea’s 29 November 2017 missile test, with U.S. officials reportedly informally indicating, beforehand, that any launch might provoke a response. Crisis Group correspondence, person present at meetings between U.S. officials and interlocutors and those same interlocutors and North Korean officials, December 2017. The official statement after the test then noted, “The North American Aerospace Defense Command (NORAD) determined the missile launch from North Korea did not pose a threat to North America, our territories or our allies”, suggesting that only a strike that did so would elicit a reaction. See “Statement by Pentagon Spokesman Col. Robert Manning on North Korea ICBM Launch”, U.S. Department of Defense, 28 November 2017 (so dated because of the time difference). The 29 November missile ended up flying for 53 minutes, covering 950km and landing hundreds of kilometres west of Japan.Hide Footnote What conclusion should Pyongyang draw? That missile tests, as the most visible manifestation of its weapons development, risk provoking a military response; that Washington’s reaction would hinge on the reach or path of the launched missile and, if so, what reach and what path; or that bellicosity is simply bluster? Moreover, brinksmanship has a limited shelf life: indeed, if sanctions kick in only with time, threats of military action face the opposite constraint. The longer the stalemate continues, the more the administration’s implicit threats of coercion will be at odds with its actions, further clouding Pyongyang’s view of its signals. Plus, if the U.S. continues with its aggressive rhetoric without taking military action, its warnings lose credibility, while pressure on it to act increases. A fresh round of North Korean weapons testing after the Winter Olympics risks putting this track of the U.S. maximum pressure strategy to the test. According to one former senior U.S. military official: President Trump might be borrowing a page from Nixon’s playbook by creating the impression that he could do something unthinkable, like attack North Korea. But the madman theory works only if the other side is deterred by your madness. If it isn’t – and in this case, Kim might not be – all bets are off.[fn]Crisis Group interview, Washington, November 2017.Hide Footnote In reality, the U.S. would struggle to prepare military action without Pyongyang noticing.[fn]The U.S. conducted a regular evacuation drill in October, but with greater attention to the public relations surrounding it. “U.S. evacuation drills in South Korea heighten fears of military action”, The New York Times, 16 October 2017. In December, Senator Lindsey Graham suggested it was time to evacuate dependents, a claim that Defense Secretary Mattis swiftly rejected. “Lindsey Graham is right: it’s time to evacuate US dependents from South Korea”, Washington Examiner, 4 December 2017; “‘Storm clouds are gathering over the Korean Peninsula’, warns US Defense Secretary Jim Mattis”, Associated Press, 22 December 2017.Hide Footnote Even if top officials believe they can deter a response, they would be unlikely – and irresponsible – to chance leaving large numbers of U.S. civilians in harm’s way. It would be hard to avoid giving advance warning to allies in Seoul and Tokyo, one of which publicly opposes military action and the other almost certainly harbours grave misgivings. Those two allies would need time to alert their militaries and take measures to protect citizens.[fn]See Abraham N. Denmark, “The myth of the limited strike on North Korea: Any U.S. attack would risk a war”, Foreign Affairs, 9 January 2018.Hide Footnote This reality inevitably undercuts the credibility of threats of military action unaccompanied by noticeable preparations. It also means that were the administration to enact such measures as part of a feint, it would risk Pyongyang perceiving the subterfuge as sufficiently threatening to warrant its own pre-emptive strike. IV. The Costs of War The potential toll of war on the Korean peninsula makes the brinkmanship all the more alarming. Estimating costs is an inexact science, given the difficulty of predicting the trajectory and nature of such a war. Variables include whether confrontation would involve the Kim regime limiting its actions to artillery strikes on Seoul, hitting Japan with ballistic missiles or using chemical, biological or even nuclear weapons; whether the North Korean army would assault South Korea; whether U.S. and South Korean forces would resort to airpower only or deploy infantry and armour north and with what purpose; and whether China or even Russia would get involved; among others. But even conservative estimates project a staggering price – for the region and for the U.S. First come the humanitarian costs. An escalatory cycle leading to a conventional North Korean artillery attack on South Korea would leave at least tens, and more likely hundreds, of thousands dead in the first days of fighting, given the capability of Pyongyang’s weapons pointed at Seoul.[fn]Kathleen J. McInnis, et al., “The North Korean Nuclear Challenge: Military Options and Issues for Congress”, Congressional Research Service, 6 November 2017, pp. 18-20.Hide Footnote These calculations leave aside the all too plausible scenario that North Korean forces target not only South Korea, but also densely populated Japanese cities with ballistic missiles. They also leave aside the risk of chemical and biological weapons. Were Kim to believe his regime’s grip on power endangered, it is fair to assume at least a possibility he would use his nuclear weapons, which could kill millions and wreak irreparable environmental destruction. Any sustained confrontation would almost certainly trigger massive displacement from the Korean peninsula into China and, if the border between North and South Korea were opened, potentially from north to south, too.[fn]Crisis Group interview, senior Department of Defense official, December 2017.Hide Footnote The sheer number of people affected would likely force relief efforts in North East Asia outstripping anything seen in recent decades, including the many humanitarian disasters caused by other conflicts today. An escalatory cycle leading to a conventional North Korean artillery attack on South Korea would leave at least tens, and more likely hundreds, of thousands dead in the first days of fighting. Second would be geopolitical repercussions. A conflict provoked by a U.S. preventive strike, particularly after warnings by allies and rivals alike about the dangers of such a strike, would not only leave U.S. credibility in tatters but also jeopardise U.S. alliances, given the potential for catastrophic fallout in South Korea and Japan. Such a war would imperil a core strategic concern of Beijing: North Korea’s survival in its current form. There are indications of preliminary, tentative steps toward understandings between the U.S. and China on de-conflicting forces and jointly securing and destroying Pyongyang’s nuclear weapons in the event of instability or collapse; others suggest that Chinese forces might secure the China-North Korea border to manage refugee flows in a manner that does not obstruct U.S. ends.[fn]Crisis Group discussions, current and former government officials and analysts, Beijing, Hong Kong, Jilin, Liaoning, Shanghai and Washington, February 2017-January 2018. “Pentagon’s top general signs a new deal with China as Trump signals an easing of tension with North Korea”, Washington Post, 16 August 2017; “Top U.S. general breaks bread with Chinese soldiers on North Korea’s doorstep”, Wall Street Journal, 16 August 2017; “There’s one North Korea taboo China’s leaders won’t talk about”, Bloomberg, 27 September 2017.Hide Footnote But these scenarios ignore both the messiness of war and the strong incentive Beijing would have to protect other core interests. To prevent or stall the loss of a critical strategic asset, it could directly intervene in North Korea – an option to which some U.S. officials seemed at least not hostile, provided it rid Pyongyang of its current leadership,[fn]Crisis Group interviews, Chinese analysts, Beijing, October-December 2017; senior U.S. official, Washington, November 2017. The official said that U.S. intelligence agencies had not ruled out the possibility that President Xi might order an operation to oust the current North Korean leadership in order to protect vital Chinese interests: ensuring a friendly regime in Pyongyang; averting a U.S.-led war; and limiting the U.S. footprint in North East Asia. Some Chinese analysts speculate about similar scenarios.Hide Footnote though senior Chinese officials dismiss it out of hand, noting its unpredictable consequences.[fn]“We will not repeat the U.S. mistake in Iraq. Military intervention carries too many unpredictable consequences. And a people under foreign occupation always resists the occupier”. Crisis Group interview, senior Chinese official, December 2017.Hide Footnote Alternatively, China might seize the opportunity of a distracted and thinly spread U.S. to advance other strategic interests, with Taiwan or in the South China Sea. Any conflict would carry risks of a deliberate or accidental face-off between Chinese and U.S. forces. Russia’s interests in North Korea are less immediate, but it could nonetheless be drawn in – overtly or covertly – given its renewed relationship with Pyongyang and shared determination with Beijing to limit U.S. influence. Few military analysts would give North Korea’s 1.3 million-strong but ill-trained and ill-equipped army a chance to withstand an assault by U.S. and South Korean forces. Nonetheless, those forces, were they to deploy north, would face an adversary with sophisticated air defences, tanks, infantry, naval power and cyberweapons in a theatre complicated by the presence of weapons of mass destruction.[fn]When the Clinton administration was contemplating military action against DPRK nuclear sites in 1993, the Department of Defense estimated that 52,000 U.S. and almost 500,000 South Korean soldiers would be killed. Death toll projections would almost certainly be much greater now, given the regime’s increasing conventional and non-conventional weapons capability. Emma Chanlett-Avery and Sharon Squassoni, “North Korea’s Nuclear Test: Motivations, Implications, and U.S. Options”, Congressional Research Service, 12 December 2006.Hide Footnote The reported anxiety of top U.S. military officials is easy to fathom: the challenge would supersede anything they have faced over the past decade and a half in South Asia or the Middle East.[fn]“Military quietly prepares for a last resort: war with North Korea”, The New York Times, 14 January 2018.Hide Footnote Even without direct Chinese or Russian involvement, some form of insurgency would follow the regime’s defeat. Reconstruction of a state whose institutions and social fabric has been decimated would take a generation, as would its integration into a unified Korean peninsula. Enduring mistrust among regional powers would hardly make things easier. Any conflict would carry risks of a deliberate or accidental face-off between Chinese and U.S. forces. Russia’s interests in North Korea are less immediate, but it could nonetheless be drawn in. The U.S., already committed elsewhere, could find itself stretched across multiple fronts: engaging North Korean forces while attempting to prevent a humanitarian catastrophe and secure Kim’s most dangerous weapons; protecting allies South Korea and Japan; feeling pressure to assist Taiwan; all the while seeking to maintain its strategic posture in the South China Sea and Western Pacific. No serious “day-after” plan appears to exist that lays out how Washington would manage a protracted war, relief and reconstruction efforts, or wider geopolitical upheaval. The challenges the U.S. faced – indeed still faces – in Afghanistan and Iraq and the deleterious effects of those campaigns upon its global influence give scant reason to believe such a scenario would serve U.S. interests. Then there are financial repercussions. Any war in North Korea is likely to be messier, costlier and more militarily damaging to the U.S. than those in Iraq and Afghanistan (the total costs of which a U.S. Congressional Budget Office put at $2.4 trillion).[fn]“U.S. CBO estimates $2.4 trillion long-term war costs”, Reuters, 24 October 2007.Hide Footnote Add to the direct costs of war drops in trade and the risk of economic downturn. The three states (bar North Korea) that would bear the brunt of any conflict – South Korea, China and Japan – are among the world’s largest economies: some estimates suggest that war on the Korean peninsula would knock half a percentage point, or $350 billion, off world GDP.[fn]Daniel Altman, “The economics of war with North Korea”, Foreign Policy, 15 April 2013; Anthony Fensom, “Why war with North Korea could cost trillions of dollars”, The National Interest, 11 September 2017.Hide Footnote South Korea, the world’s eleventh biggest economy, would be hit particularly hard. China and Japan, the world’s second and third biggest economies, could face major disruption.[fn]World Bank data, updated 1 July 2017: https://data.worldbank.org/data-catalog/GDP-ranking-table.Hide Footnote With China topping the list of U.S. trading partners, Japan at number four and South Korea at number six, U.S. commerce would suffer directly as well as through slumps in the global economy. Such a war would raise the U.S. federal debt. Even if it did not provoke a global economic crisis, the impact would reverberate worldwide for at least several years. In this light, the strong consensus across North East Asian capitals against preventive U.S. action should come as no surprise.[fn]See Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote Nor is there any indication the U.S. public is ready for such a conflict. Unlike ahead of the Iraq War, the narrative of a war on North Korea thus far has gained little traction; indeed, President Trump partly owes his election victory to pledges he would avoid such entanglements. The region would suffer most, but costs to the U.S. in terms of lives lost, military spending and repair, humanitarian and reconstruction efforts, and squandered geostrategic influence, plus the toll on its commerce and economy, would be vast. If the administration plans on heading down this path, it will need to prepare the country in order to ensure public support. Yet, the more ordinary U.S. citizens and member of Congress become aware of the price tag and the risks entailed, the harder it will become to enlist their backing. V. A Way Out The limits and dangers of maximum pressure and potential horrors of a war on the Korean peninsula all offer strong reasons for the U.S. to seek to leverage those gains its strategy has delivered into some form of de-escalatory deal that buys time for renewed diplomacy. Today’s perilous standoff requires at least a temporary fix, but one that should lay the groundwork for efforts to find a more durable solution. Without this prospect, today’s dynamics – the Kim regime close to developing the capability to strike the mainland U.S. with a nuclear warhead and top U.S. officials openly contemplating military action to stop that from happening – would remain just below the surface, keeping the region on a knife’s edge and risking a nuclear confrontation for the sake of avoiding one. The good news is that the Winter Olympics and subsequent Paralympics (which end on 18 March) offer an opportunity. Regardless of Kim’s motives, his outreach to Seoul, together with North Korea’s participation in the Winter Olympics, the thaw in North-South relations, and Presidents Trump’s and Moon’s suspension of military drills suggest all sides intend to show restraint (while not ruling out flare-ups) until then. The bad news is that the months afterwards are likely to be fraught. For Pyongyang, April is prime time for missile tests. The anniversary of the birthday of North Korea’s first leader and Kim’s grandfather, Kim Il-sung, on 15 April, is the country’s most celebrated national holiday. It is commonly an occasion for the regime to show off military prowess; three missiles were tested in April 2017. Deferred U.S.-South Korean military exercises are likely to restart at about the same time. The period after the Olympics thus could bring joint ground and naval manoeuvres, just as North Korean launches test the credibility of the bellicose track of the U.S. maximum pressure strategy. Washington’s failure to act after its repeated implicit threats would risk leaving those threats shorn of credibility and likely signal the end of that strategy. The Olympics offer breathing room, but – absent further steps – only as far as mid-March. The most viable and realistic, if unsatisfactory, option for de-escalation remains some form of “freeze-for-freeze”, a deal along the lines mooted by China and, sometimes, Russia, since July 2017. Precise details would be fleshed out in talks, but such a deal would likely include: North Korea, at a minimum, freezing all nuclear tests, as well as any test of a missile with a greater range than that it already has or that allows it to progress toward its goal of threatening the mainland U.S.; and, potentially, refraining from overflying other countries’ territory and airspace; The U.S. redesigning its joint exercises with South Korea, including by freezing those that are most provocative to the North Koreans, such as “decapitation drills” and exercises whose timing Pyongyang finds particularly insulting, such as during national days, spring planting or autumn harvest seasons; scaling back some of its regular exercises; and pledging not to send strategic assets (like B-1 bombers, aircraft carriers and nuclear submarines) to the Korean peninsula. In principle, both Pyongyang and Washington reject such a deal and prospects for direct talks more broadly. The Kim regime asserts that the Trump administration’s maximum pressure approach creates an atmosphere that is not conducive to dialogue.[fn]Crisis Group interview, North Korean official, November 2017. Also see “DPRK people demand US be punished by ‘hail of fire’ for aggressive policy – top diplomat”, TASS, 11 October 2017.Hide Footnote While one senior North Korean official told Crisis Group that his country was open to direct, unconditional bilateral talks with the U.S., other credible reports suggest Pyongyang rejected several such U.S. offers conveyed directly and indirectly, insisting instead as a prerequisite on a halt to “hostile U.S. policy”.[fn]Crisis Group interviews, North Korean official, November 2017; senior U.S. officials, Washington, December 2017-January 2018; individuals involved in Track II efforts, New York, Washington, December 2017-January 2018.Hide Footnote That standard is vague enough to suggest that at least at the time Kim did not believe the omens for direct talks were good, and was awaiting either greater progress in his missile and nuclear tests or a greater wedge between Washington and Seoul. As for the concept of freeze-for-freeze, Pyongyang’s position remains murky. Officially, the regime has rejected it, and U.S. officials believe that Pyongyang would resist such a deal.[fn]Crisis Group interview, senior U.S. official, Washington, December 2017.Hide Footnote Yet a North Korean official offered a different perspective: given that Pyongyang had mooted this option in the past, only to be rebuffed by the Obama administration, the onus of offering a reciprocal freeze now should fall on the U.S. This is all the truer in his eyes since Washington responded to what Pyongyang says it regards as its last freeze – 60 test-free days in October and November – by redesignating the country a state sponsor of terror.[fn]Crisis Group interview, North Korean official, December 2017. U.S. officials argue that they never were notified in advance of the decision to freeze tests for 60 days, and thus that the “clock never started” in their eyes. Crisis Group interview, U.S. official, Washington, January 2018. Moreover, the hiatus in testing coincided almost perfectly with the harvest season, traditionally a period during which North Korea pauses military activities, weakening the impression DPRK officials convey that the pause was an olive branch.Hide Footnote He claimed that, if a third party told North Korea that the U.S. had agreed to a freeze-for-freeze subject to the regime’s acceptance, Pyongyang would study the proposal “positively”.[fn]Crisis Group interview, North Korean official, November 2017.Hide Footnote The U.S. position has been at times equally confusing. The back-and-forth between President Trump and his secretary of state left it unclear whether the U.S. would agree to unconditional talks, or whether those talks could only take place if Pyongyang committed to denuclearisation or took other steps.[fn]Tillerson himself walked back his comments that the U.S. was ready to meet Kim Jong-un’s regime for talks “without precondition”, telling the UN Security Council that there must first be a “sustained cessation of North Korea’s threatening behaviour … before talks can begin”. See “Rex Tillerson scales back offer of opening dialogue with North Korea”, The Guardian, 15 December 2017.Hide Footnote Officials rejected the Chinese-Russian proposal days after it was floated and have regularly dismissed the notion of freeze-for-freeze ever since.[fn]Crisis Group interview, senior U.S. official, December 2017. Also see “US rejects ‘freeze-for-freeze’ proposal from China, Russia to break North Korea impasse”, Straits Times, 7 July 2017.Hide Footnote Tillerson expressly rejected the idea at a 16 January 2018 meeting of foreign ministers of twenty countries, including South Korea, as well as European and other Asian U.S. allies, in Vancouver.[fn]“Rex Tillerson: No freeze in military exercises to appease North Korea”, Washington Examiner, 17 January 2018.Hide Footnote A principal objection is that of equivalence: why should the U.S. refrain from exercising its sovereign rights in return for North Korea stopping activities that are illegal? Some officials believe a freeze-for-freeze simply would not help; according to one, for example, suspending joint exercises would matter little to Pyongyang, while it would matter enormously to the U.S. military, which needs to keep its planning and readiness fresh.[fn]According to one senior official: “From their actual responses to the exercises (rather than propaganda and rhetoric) there is almost zero indication they feel threatened. They don’t mobilise at all in response. That puts the lie to the notion that freeze-for-freeze would help. In that scenario the North Koreans give up something nebulous in return for the U.S. and South Korea giving up necessary moves to keep their military capabilities sharp”. Crisis Group interview, Washington, January 2018.Hide Footnote Others argue that a freeze-for-freeze would not address North Korea’s nuclearisation and would be used by the regime to advance other elements of its weapons program; they also point out that previous attempts at resolving the issue through diplomacy have failed: We don’t want to go back to defunct policies, compromises and mistakes of the past – whether under Presidents Clinton or Bush. Both tried some form of compromise that would kick the can down the road. Both failed. If we freeze the missile tests, and take the pressure off, the regime still develops its nuclear weapons and can quickly break out. We’ve fallen for that before. This time we need to resolve the issue once and for all.[fn]Crisis Group interview, senior U.S. official, December 2017.Hide Footnote Others question whether the regime would act in good faith. They recall the collapse of a similar deal in the 1990s under the Agreed Framework – though that deal held for eight years, which some would count as at least somewhat successful. Notwithstanding sporadic offers of diplomacy – including by President Trump himself – officials assert that opening a door to negotiations with the North Koreans now, before inflicting greater economic pain, would be a mistake.[fn]Crisis Group interview, U.S. official, Washington, December 2017.Hide Footnote The two issues – willingness to hold unconditional talks and freeze-for-freeze – are intertwined. Neither side seems open to accepting conditions placed by the other for a resumption of negotiations. But both could agree that such talks would be hard, if not impossible to sustain if either engaged in provocative behaviour. In other words, a mutual freeze of some sort – not as a precondition per se, but as a trust-building gesture – is the best way to maximise chances of a constructive dialogue. Neither the U.S. nor North Korea should view such a deal as a concession. A freeze-for-freeze has strong arguments in its favour. First, aspects of such a deal in practice already exist, at least for the next few weeks, and could be prolonged and formalised once official talks begin. Given Kim’s outreach to Seoul and North Korean participation in the Olympics, further tests before then appear unlikely. Joint U.S.-South Korean exercises are already deferred until at least the third week of March. Building on these mutual and reciprocal steps, talks could begin soon after the Winter Games. Those conversations could then aim to formalise a more precise understanding on the types of tests that would be frozen, and the types of military exercises that would be stopped – likely along the lines outlined above. Most importantly, while a freeze-for-freeze would fall well short of giving either side everything they demand, it would still offer everybody something. Despite U.S. officials’ assertions otherwise, the joint exercises with South Korea and the U.S. deployment of strategic assets to the peninsula matter to Pyongyang.[fn]See footnote 63.Hide Footnote While the DPRK may not interpret those exercises as directly threatening, it does view some as humiliating; Kim referred to the deployment of assets in his New Year Address; North Korean officials frequently express the regime’s anger at the “decapitation drills” aimed at Kim.[fn]Crisis Group interview, North Korean official, November 2017.Hide Footnote The U.S. would risk little in putting some exercises and assets on hold, provided it enjoys its allies’ confidence while doing so. It could still maintain its military readiness by conducting less provocative exercises. It could put the ball in Kim’s court by offering a concession that he himself floated in his January address. Notwithstanding Kim’s apparent rejection of talks in the past, his January speech and outreach to South Korea, added to the necessity of delivering on economic pledges, might make him now more open to such a deal, and to subsequent diplomacy, than he was some months ago.[fn]For example, senior defector Thae Yong-ho believes that, based on his reading of Kim Jong-un’s 1 January televised address, North Korea has accepted the freeze-for-freeze proposal and will ask China to set up talks with the U.S. “North Korea will ask China to broker talks with US: defector”, Nikkei Asian Review, 4 January 2018.Hide Footnote While a freeze-for-freeze would fall well short of giving either side everything they demand, it would still offer everybody something. For South Korea – and for that matter Japan and even Russia – the deal brings the obvious benefit of lowering the risks that either U.S. military action or Pyongyang’s missile tests will provoke a dangerous escalation. While U.S. officials argue that a freeze-for-freeze could undercut South Korean security, in reality Washington’s reiteration of its commitment to extended deterrence matters much more to Seoul.[fn]Crisis Group interviews, U.S. officials, Washington, November 2017-January 2018.Hide Footnote For the U.S. itself, the freeze on tests would not halt Pyongyang’s weapons program, given that its research and development could continue. But it would significantly slow its progress in developing technology able to deliver nuclear weapons to the U.S. mainland and buy time for negotiations on a broader deal. Much as U.S. rhetoric – and some top officials – focus on the imperative of denuclearisation, others have made statements suggesting that, for now at least, what matters most to the administration are those aspects of Pyongyang’s ballistic missile program that could allow it to deter the U.S. and to pursue other goals in North East Asia.[fn]Crisis Group interviews, Washington, November 2017-January 2018. Also see Crisis Group Report, The Korean Peninsula Crisis (I), op. cit.Hide Footnote The scenarios and forms of North Korean deterrence that the administration seems set on preventing all involve its capability to strike U.S. cities with nuclear weapons. The Trump administration also could claim that its maximum pressure strategy has paid dividends, winning genuine concessions from Pyongyang, slowing its nuclear weapons program and opening a door for diplomacy – arguably more than what the Obama administration achieved. China’s role in both helping to broker a freeze-for-freeze deal and sustaining it while the U.S. and North Korea begin direct negotiations would be critical. Despite protestations that it lacks leverage over Pyongyang short of cutting off the oil supply – and thus risking severe humanitarian harm and possibly regime collapse – Beijing could consider more incremental measures that would both pressure Pyongyang and alleviate distrust in Washington. For example, it could commit to the U.S. that it would more thoroughly and transparently implement existing Security Council resolutions should North Korea balk at or violate the freeze-for-freeze deal; conversely, it could communicate to Pyongyang that, if the freeze holds, it will block any U.S. attempt to list Kim and other regime elites by name in future sanctions or to suspend the DPRK’s UN membership. Implicit for the U.S. would be the understanding that if Washington violated the deal, Beijing’s enforcement of sanctions would further slacken. In addition, to bolster U.S. confidence, China could agree to further discussions with the U.S. and South Korea on contingency planning, starting with less politically fraught topics such as coordinated regional responses to nuclear accidents on the peninsula. Russia might join these conversations, given its probable knowledge of the vulnerability of Pyongyang’s nuclear program. Finally, China has multiple economic benefits it could proffer North Korea in return for cooperation; the challenge will be to identify those that are both attractive to Pyongyang and compliant with sanctions. Given North Korea’s aversion to economic dependence on China, some incentives could be diplomatic, such as offering to restore and expand cultural and educational exchanges, and facilitating further talks like those with South Korea held in Kunming in December.[fn]“Several meetings led to Olympics breakthrough: Sources”, Korea JoongAng Daily, 3 January 2018.Hide Footnote China’s role in both helping to broker a freeze-for-freeze deal and sustaining it while the U.S. and North Korea begin direct negotiations would be critical. Reciprocal steps from Washington would at a minimum include pledging to Beijing that, public statements notwithstanding, it will not insist on immediate denuclearisation or pursue a de facto regime change policy; agreeing to work with China on interim measures that combine de-escalation (as per freeze-for-freeze); crafting sharper sanctions together in the event they are necessary; and committing to unconditional bilateral talks. If the contours and potential benefits of a freeze-for-freeze deal are clear, the question becomes how to get there quickly and in a form that best guarantees success. The Six-Party format is defunct. Nevertheless, the five states that joined North Korea in that group remain the ones either most affected by the crisis or most influential in Pyongyang. And notwithstanding the complicated, in some cases hostile, relations among the five, and their oft-competing interests, they share an interest in averting war. A deal backed by all five would signal unity to Pyongyang. As a result, those countries – though chiefly the U.S., China and South Korea – should use the window opened by the Winter Olympics to consult and reach broad consensus on parameters of the freeze-for-freeze deal to be presented to Pyongyang. In the wake of the Olympics, bilateral U.S.-North Korean talks would commence with the goal of agreeing to and formalising the understanding. Messaging to the Kim regime about the deal should be clear: while it hinges on Pyongyang’s and Washington’s restraint and direct actions, it is the common property of all six states; it does not constitute or foreshadow a change in the legal status of North Korea’s nuclear program; and – ideally – it is a precursor to talks about a more lasting resolution of the crisis and broader talks about East Asia’s future security architecture. As for the talks themselves, a recurring issue has been whether they would aim at North Korea’s denuclearisation – a goal on which Washington insists and to which Pyongyang objects. While this disagreement will need to be resolved at some point, it need not and should not stand in the way of resumed talks. The U.S. – and North Korea’s neighbours – could retain their stated goal of denuclearisation, even while pursuing more immediate measures to de-escalate the crisis. North Korea could claim, particularly at home, that it has already achieved nuclear status and is being treated by foreign powers accordingly, while similarly consenting to de-escalatory steps. As a senior Chinese official put it: What is needed are negotiations. We know the U.S. cannot accept the premise of a nuclear-armed North Korea, just as we know North Korea will not agree to denuclearisation as a goal. So let’s fudge the issue. Washington can say it is the goal, Pyongyang that it is not, but at least proceed with talks and a freeze in hostile action by both sides.[fn]Crisis Group interview, Chinese official, December 2017. See also Crisis Group Asia Report N°254, Fire on the City Gate: Why China Keeps North Korea Close, 9 December 2013; Zhu Feng, “China’s North Korean liability”, Foreign Affairs, 11 July 2017; Crisis Group interviews, Chinese officials, analysts and scholars, Beijing, Hong Kong, Jilin, Liaoning, Shanghai and Washington, February 2017-January 2018.; Fu Ying, “The Korean Nuclear Issue: Past, Present and Future – A Chinese Perspective”, Brookings Institution John L. Thornton China Center Strategy Paper 3, May 2017; PRC Foreign Ministry Spokesperson Hua Chunying’s Regular Press Conference, 30 August 2017.Hide Footnote VI. Conclusion Ahead of the Winter Olympics and Paralympics, President Trump’s administration can continue with its maximum pressure strategy, dialling up economic pressure and, after the Games, its implied threats of military strikes. Or, alternatively, it can use the window ahead of the Games to seek a way to dial down the crisis. At its core, the choice is between further high-stakes brinkmanship on the Korean peninsula and an effort to achieve some form of de-escalation that presages a broader diplomatic process with Kim Jong-un’s regime. Talks with the Kim regime, which believes many of its core interests directly contradict those of the U.S. and its neighbours, would hardly be a cakewalk. Nor is the final outcome evident, given it would have to balance U.S. and wider international concerns about what Pyongyang would do with advanced nuclear capacity against the regime’s fear of what might happen to it without that, all the while keeping both the Non-Proliferation Treaty and a delicate regional strategic balance intact. But diplomacy remains the better option. While maximum pressure has paid some dividends – injecting new urgency into other states’ North Korea policies and contributing to a tougher Chinese stand against North Korea that Beijing’s already strained relations with Pyongyang had precipitated – it has come at a cost. As outlined in Crisis Group’s companion report, evolving strategic calculations in North East Asia, among allies and rivals alike, owe as much to fears that U.S. belligerence could spark an escalation as they do to Pyongyang’s sprint to acquire nuclear weapons. More gravely, while sanctions will take time to kick in, the expiration date of U.S. bellicosity is likely near. Kim’s next round of weapons testing could leave Washington with an awful choice: show restraint and chance that its threats are perceived as bluster; or strike and risk catastrophic war. De-escalating now, while both tests and military exercises appear to be on hold and inter-Korean lines of communication are open, remains the most viable way to avoid that decision. A freeze-for-freeze along the lines China has proposed is far from ideal, but it does provide the U.S. with an off-ramp that preserves its credibility – particularly if Beijing commits to help broker and enforce such a deal – while buying time to negotiate a more durable solution for the North Korean nuclear crisis. Washington’s insistence on denuclearisation is understandable, given the nature of the Kim regime; indeed, it is an objective shared in principle by most other states. But however worthy the goal, for now it is delusional: Pyongyang will not pledge to a step it perceives as akin to signing its own death warrant. Holding out in the hope it does so hinders the ability of the U.S., and that of its allies, to cope with the grave risks that Pyongyang’s nuclear capability already poses. Seoul/Beijing/Washington/New York/Brussels, 23 January 2018 Appendix A: Map of the Korean Peninsula Map of the Korean Peninsula CRISIS GROUP Appendix B: Map of North East Asia Map of North East Asia CRISIS GROUP Related Tags More for you Video / Asia Extending the Korean Winter Olympics Detente Commentary / Asia Decoding the Korean Peninsula Missile Rhetoric