With tensions remaining high on the Korean peninsula, South Korea asked the United Nations Security Council on Friday to take action against North Korea for the sinking of the Cheonan, a South Korean warship. Any response from the Security Council would require the support of China, North Korea’s neighbor and benefactor.

In a video Q&A, Douglas Paal analyzes the risk of confrontation between the Koreas and what the United States and China should do to prevent war and help change North Korea’s behavior and limit the regime’s menace. Paal says that China is having a hard time sitting on the fence and a quiet debate is emerging within China about its response. “Hopefully, international persuasion—and maybe even pressure—will lead China to take the steps that restrain North Korea and eventually to work together with the United States and help manage the transition in North Korea to a less dangerous regime.”

What’s the status of relations on the Korean peninsula?

The Korean peninsula is now at its most dangerous moment since 1953 when the armistice descended. That’s measuring by the fact that the North explicitly violated the armistice by sinking the South Korean corvette, the Cheonan, off the Western coast on March 26.

Having said that, despite the highly provocative style of the Northern leadership and the addition of nuclear weapons into the mix, the steadiness and cool approach of the South Korean government is going to keep us from facing a serious conflict. And violent conflict on the Korean peninsula is unlikely to stem from an action made by South Korea, but would be the result of a miscalculation made by North Korea. These are precarious times, but we will probably get through it without a serious eruption in violence.

There are more temptations for the North. In reaction to the sinking of the corvette by a North Korean submarine’s torpedo, there will be an effort in the United Nations to sanction North Korea, and there will also be some military exercises between the United States and South Korea. In response to both of these, it is likely that North Korea will likely try to offer its own show of force—fire a missile or explode another nuclear weapon—and tensions could zoom up again. The United States should be ready for that and not be overly excited by it.


How has the United States responded?

The United States responded vigorously and with an extraordinary degree of coordination, in part because President Lee Myung-bak in South Korea is an especially effective president and cool statesman. There has been more room for the United States to work closely with him and respond step by step to the issues that have developed over the last few months. It has been a model for how allies should work together.

This type of relationship has not been possible during the previous ten years. The South Korean government had two strong personalities in charge whose deliberate agenda was to improve relations with North Korea, almost at any cost. After those ten years proved to be a failure, President Lee Myung-bak was elected to bring back a more sober leadership and not to pursue peace at any cost with North Korea. That makes it easier for the United States to work with South Korea, but it also means that there will be more tense moments as North Korea reacts to the change in Southern behavior.


How has China reacted and will this impact Beijing’s relations with Pyongyang?

China is in a terrible position. The Chinese have been trying to sit on the fence on these issues for some time. Last year, the second nuclear weapon test led to a resolution that China supported in the United Nations Security Council—that was as far as China has gone to lean toward the U.S. side of the fence.

Now, there is a succession problem in North Korea as President Kim Jong-il is in poor health and doesn’t have too long. He’s trying to promote his 27-year-son who has a pattern of instability himself. China is not comfortable with that kind of succession, and it’s not comfortable with the confrontational approach that North Korea, takes not just with South Korea and the United States, but also occasionally with China.

At the same time, the Chinese are torn because—similar to the Dutch boy with his finger in the dike—if they pull their finger out of the dike will it bring down the Northern regime. This could lead to a unified Korea and suddenly all the way up to China’s borders there will be a state allied with the United States that wasn’t there when North Korea existed as a buffer.

China is having a hard time sitting on the fence right now. The evidence is rolling in that North Korea was responsible for the latest provocation. China is squirming in the spotlight, not wanting to recognize the evidence and trying to dismiss it. This has spurred a big internal debate in China—not loud, but quietly. Hopefully, international persuasion—and maybe even pressure—will lead China to take the steps that restrain North Korea and eventually to work together with the United States and help manage the transition in North Korea to a less dangerous regime.


How much influence does China have over North Korea?

China has the greatest influence in North Korea—Chinese investment, Chinese aid, and Chinese energy all keep the regime in Pyongyang alive. If China were not a factor, North Korea would not be able to exist. It doesn’t mean that China helps them with everything, but it’s a key enabler for North Korea’s survival.


What is the likelihood that South Korea will successfully obtain a Security Council resolution condemning North Korea?

It’s going to be difficult—probably impossible—to get a resolution in the UN Security Council. My judgment is China will be unable to support a resolution condemning North Korea. There could be a presidential statement as, when the five major powers in the council don’t agree to support action, a statement by the presidents can condemn something—in this case the sinking of the ship.

That requires unanimity, and China may not even be willing to support that. South Korea needs a response for domestic political purposes, so the pressure will be high. And the United States will push very hard for China to accept a presidential statement. That is where the crux of the struggle will be over the next couple of months. And when that happens, everyone will need to deal with the North Korean reaction.


What does the situation signify about North Korea’s ruling regime?

The government in North Korea is durable because of its use of an internal regime of terror. But, it’s obviously not a regime for the modern era. It depends on grace and favor from China and it’s living on a meager diet. A few people, including the 600,000 people in the nomenklatura (the elite and privileged class) and the military, do very well, but everyone else is close to starvation.

Barring major reforms, this is not a durable regime for the long term. But the reforms that they have tried lately were retrograde. In November, they introduced a currency redenomination that probably risked finally pulling down the regime had they not reversed it earlier this year when they recognized how much trouble it was causing.

Grasping for reforms—that are not real reforms—demonstrates that the government doesn’t understand that the future requires the introduction of markets, market incentives, and a liberalization of the people’s capacity to make decisions for themselves. The government is far from being able to permit that, so they are on a road to ruin.

It seems to be clear in the minds of the North Korean leadership that the regime’s survival depends on the military’s loyalty. A leader needs to show its military that they are a capable leader and give the military success. On the other hand, the government needs to take care of the military and make sure they get preferential access to food and equipment. That has been harder to do because there are sanctions on military equipment to North Korea.

For the son to be able to survive the father’s departure—as a young kid with no relevant experience—it will depend on the military. There is an effort now to portray the son as a young marshal and genius general who can do daring things. It wouldn’t be surprising to see an eventual attempt to internally portray Kim Jong-un as the genius behind the sinking of the ship. But right now North Korea is denying that it sank the ship, so the world isn’t going to see that for a while.


Is the crisis likely to escalate and lead to direct confrontation in the Koreas?

There is a fear of direct confrontation because of the disposition of forces. The leadership in the South has been judicious. They have cut off the last bits of trade between the countries, including sand, fish, crab, and shrimp, but they have not cut off the Kaesong special district manufacturing which employs around 40,000 people in North Korea and keeps them on better wages than they would get anywhere else in the country. And the North Koreans have been careful not to cut off that trade for fear of creating 40,000 unemployed and unhappy people in the south of North Korea.

So, there are signs of moderation on both sides, even as leaders need to show their respective domestic audiences—the military in the North and the people in the South—how tough they are and how they have given back tit for tat for what happened to them.


What should the United States do moving forward?

The nuclear program in North Korea was being contained through the so-called six-party talks, and there is no point in thinking about these talks anytime soon—that should be way down the road. In the near future, there will be increased diplomatic and military coordination between the United States and South Korea.

Military cooperation will include strengthening South Korea’s antisubmarine warfare capabilities. Some of this will involve technology transfer and equipment and some of this will involve exercises. There will be responses to those exercises and the United States will need to respond to those responses.

The U.S. government should take a close and brutal look at North Korea’s external finances. There are plenty of places where the United States can suggest to banks that they no longer do business with North Korea if they still want to enjoy favorable reputation in American financial circles—with all that that means for their business.

Hopefully, this will be done in a gradual way and the United States will not just cut everything off. This would let North Korea know that for every further step they take to increase tensions, there will be a bigger price that limits the income that they use to pay for the fine wines, champagne, and lobster that the leadership in North Korea seems to depend on.