hankyoreh

By Park Hyun, Park Min-hee and Jeong Nam-ku, Washington, Beijing and Tokyo correspondents

The climate on the Korean peninsula 　

With leadership changes complete in South Korea, China, and Japan, the year 2013 could mark the beginning of a new environment for the Korean Peninsula and East Asia generally.

The first test for cooperation among these new regimes will be the proposal of United Nations Security Council sanctions against North Korea for its long-range rocket launch on Dec. 12. Despite expectations that some solution would be found before the end of the year, no headway has yet been made, as Washington and Beijing remain locked in a tense standoff.

In the US, newly reelected president Barack Obama declared in November that his country would reach out to North Korea if it ended its nuclear weapons program. But the administration is also insisting that dialogue is out of the question unless Pyongyang shows signs of genuine change. Now attention is turning to its nominee for secretary of state, Senator John Kerry, who would be expected to go softer and seek dialogue with North Korea.

Meanwhile, newly appointed Chinese Communist Party general secretary Xi Jinping has indicated that Beijing will be continuing its close ties with Pyongyang, declaring in a personal letter to Kim Jong-un in November that developing the two countries’ friendship was the “firm intention of the new leadership of the Communist Party of China.” China is maintaining that North Korea issues should be handled within the framework of six-party talks with South Korea, the US, Japan, and Russia.

As discussions between Washington and Beijing are set to get under way early this year, president-elect Park Geun-hye will have to take part in the debate over sanctions against North Korea before her administration is officially inaugurated on Feb

Park indicated her readiness to resume dialogue during her presidential campaign, saying she would place “no preconditions on dialogue.” She also stressed the importance of rebuilding trust between Seoul and Pyongyang, indicating that South Korea may undertake large-scale economic cooperation projects, with international participation, if sufficient trust is established and progress is made in North Korean denuclearization. The success of this trust-building process may hinge on the efforts her administration makes in the early going.

With the other parties all maintaining fairly rigid positions, North Korea’s approach is almost certain to have a decisive impact. Now that Kim Jong-un has honored the instructions of his father and predecessor Kim Jong-il with a successful rocket launch, the key question is whether he will risk an international outcry with additional nuclear testing or rocket launches, or assume the defense issue to be more or less resolved and turn his attention to his country’s economy. Previously, Kim declared at an April 2012 military review that he would “make sure the North Korean people do not have to tighten their belts again.” His commitment to making the necessary improvements in relations with Seoul, Washington, and Tokyo will be a major factor in the regional and peninsular political climate for 2013.

Beware of the Senkaku Islands　

This is a warning that all East Asia leaders will have to take to heart. As competition for influence in East Asia between the US and China heats up, festering territorial disputes and nationalist sentiments dating back to the Japanese colonial era and the Cold War are beginning to find expression in dangerous ways.

After a push initiated by prominent right wing politician Shintaro Ishihara, Japan nationalized its control of the Senkaku Islands (known as the Diaoyu Islands in China) in September of last year. With this, Beijing and Tokyo went into seemingly irreversible conflict. China has frequently sent ocean surveillance ships into waters Japan claims as its own and aircraft into the skies above them - part of an effort to erode Japanese control over the area.

For this reason, the “return” of right wing hard-liner Shinzo Abe as prime minister is drawing even greater attention than it might otherwise. After winning the election in December, Abe declared his plans to amend the country’s Peace Constitution, under which Japan renounces the right to wage war.

Now the country appears poised for rearmament. Although he has indicated he may hold off for now on honoring his pledge to station a government official on the islands, he also said in a press conference after his victory that the “greater national interests must not be sacrificed for the sake of good relations in the short term” - a statement many observers took as a sign of his willingness to accept even more unfriendly relations with Beijing if necessary. He also added fuel to the fire by appointing as cabinet members a number of parliamentarians who have made statements denying Japan’s colonial era misdeeds and taking a hard line on territorial issues.

Newly appointed Communist Party of China general secretary Xi Jinping shows no signs of backing down either. During a Sept. 2012 meeting with US secretary of defense Leon Panetta, Xi called Japan’s nationalization of the islands’ control “laughable” and demanded that Washington keep out of the dispute.

For all the rhetoric, the leaders on both sides are trying to avoid a worst-case scenario. The problem is that unexpected developments - such as a group from Hong Kong group attempting to land on the islands last year - will increasingly make control measures inevitable.

In Japan, right wing politicians calling for a stronger military presence enjoyed a rapid ascendance by fanning anxieties about China - a particularly effective strategy at a time when the country is stuck with a stagnant economy. Strong nationalist sentiments have also been erupting in China, where huge economic growth has been accompanied by widespread resentment over the divide between rich and poor. With disputes flaring up in the South China Sea, Washington and Beijing’s contest to reorganize the East Asian order is pulling the other countries of the region into the fray.

Could Tokyo start a currency war?　

Some are predicting exactly that, pointing to the bold quantitative easing measures currently being spearheaded by newly appointed Japanese Prime Minister Shinzo Abe.

Before Japan’s parliamentary election on Dec. 16, Abe, former president of the Liberal Democratic Party, declared that he would implement such a program if elected, indicating he would “print all the money we need even if it leaves the presses spinning.” Flooding the market with Yen would cause its value to fall and provide an edge to Japanese exporters by making their products less expensive. Competing nations could devalue their own currencies in response.

The goal of this approach - dubbed “Abenomics” - is to break the Japanese economy out of its deflationary spiral by artificially boosting consumer prices. When prices drop, companies cut production and employment. Household income then drops, and falling consumption causes further downward pressure on prices. The previous Democratic Party of Japan administration pressed the Bank of Japan to take bold action by increasing the amount of yen on the market to escape the spiral.

But the pressure from Abe is expected to be far heavier than that faced by the previous administration.

Following his huge election victory, Abe met with Bank of Japan governor Masaaki Shirakawa to demand quantitative easing. Specifically, he asked for monetary policy that would allow Japan to meet a goal of 2% inflation. Shirakawa’s term ends in late March, and Abe turned the screws by saying he would appoint a new governor who was willing to go along with his policies.

The effect was immediate. The Bank of Japan announced at a Dec. 20 monetary policy committee meeting that it was increasing its fund to buy bonds on the market by 10 trillion yen (US$115.3 billion). It is also considering introducing a 2% inflation target, with plans to discuss the matter at a January meeting. The Abe administration is poised to speed up the process by greatly increasing its spending.

The policies have already resulted in the yen weakening on the international financial market. As soon as Abe began demanding quantitative easing measures, its value dropped to around 80 yen to the dollar. By Dec. 26, when the Abe cabinet was launched, it was above 85 yen to the dollar. It stands to drop even more if the Bank of Japan begins taking stronger easy money measures.

The yen has remained strong throughout the economic crisis that started with the US-based subprime mortgage crisis and the European financial crisis, partly because of low prices in Japan. The strong yen was a boon to exporters in competing countries, not least of all South Korea. International financial markets are now watching Tokyo closely, waiting to see if Abenomics means this era is now coming to an end.

South Korea- Park Geun-hye　

At the tender age of 22, South Korea’s president-elect Park Geun-hye gained her first diplomatic experience by serving as the country’s first lady after the death of her mother in 1974. Park is therefore familiar with diplomatic etiquette and has diplomatic connections from her time serving as representative of her political party. She is skilled in reducing the tension in a room by using polite expressions in English, Chinese and other languages.

Park advocates “trust” in foreign relations (just as she does domestically). In October 2012, Park announced the beginning of the “Korean peninsula trust process,” pledging to maintain humanitarian aid to the North and resolve the North Korean nuclear issue through restarting the six-party talks. However, she has maintained a firm stance on other issues, including the sinking of the Cheonan warship, the shelling of Yeonpyeong Island, and the Northern Limit Line in the West (Yellow) Sea.

It looks like Park will work to mend the relationship with China, which has been damaged by the Lee Myung-bak government.

On multiple occasions, Park has advocated “strengthening strategic dialogue between South Korea, the U.S., and China,” emphasizing an upgrade in the South’s relationship with these two countries. With regard to the U.S., we think that Park will maintain or strengthen the current framework of the two countries’ comprehensive strategic alliance.

As for Japan, Park’s official statements have been on the lines of “getting past the historical conflict.” According to a diplomat who is close to Park, however, she hinted at her thoughts by promising to “let sleeping dogs lie, unlike the current administration.”

The United States- Barack Obama　

The tasks that U.S. president Barack Obama aims to tackle are accelerating the “return to Asia” policy in Northeast Asia, providing a counterbalance to China, and finding a solution to North Korea’s nuclear program.

In his foreign policy, Obama values both bilateral alliances and international cooperation. His diplomatic style is not so much about stepping forward to take the lead on international issues as it is “leading from behind” and seeking consensus and compromise.

However, his foreign policy also reflects his cool-headed personality. Some good examples of this are his personal selections of people to add to the terrorist “hit list” and the unprecedented economic and financial sanctions he has leveled against Iran.

These characteristics can also be seen in his containment of China and his approach to the North Korean nuclear issue. While early on he focused on cooperation with China, when things didn‘t go according to plan, he slowly but surely cranked up the pressure on the country.

His attitude to North Korea is similar. Regarding the North’s nuclear weapons, he has stuck with the principle of not rewarding bad behavior. As long as North Korea’s attitude doesn’t change and the South Korean government doesn’t create a mood for dialogue by improving relations with the North, it will not be easy for the Obama administration to take action to strengthen ties with North Korea.

The most pressing business for Xi Jinping, general secretary of the Communist Party of China, is domestic: narrowing the gap between rich and poor, rooting out corruption among government officials, and transitioning to a new model of growth. But if it is to achieve these goals, China desperately needs to foster more favorable international relations.

Xi’s task here is to disrupt the American strategy of surrounding China and to find an appropriate solution for its territorial disputes with Japan and Southeast Asian countries over the Diaoyu Islands (Senkaku in Japanese) and the South China Sea. On several occasions, he has stressed “the great revival of the Chinese people” and has stubbornly insisted on not yielding an inch on territorial rights or sovereignty.

North Korea, whose fate is tied to China, is another important item on Xi’s agenda. To coax the maverick state to reform and open up, resume the six-party talks, and guarantee stability on the Korean peninsula are among his goals.

Xi has extensive connections in the military, partly as a result of the time he spent serving as secretary to Geng Biao, former minister of national defense, and also thanks to the legacy of his father and revolutionary leader Xi Zhongxun. It is expected that Xi will bend the army to his will and take hard-line positions when necessary.

Japanese Prime Minister Shinzo Abe has stated that his number one diplomatic objective is to strengthen Japan’s alliance with the U.S., but it is also imperative that he minimize damage to Japan in the clash with China over the Senkaku (Diaoyu) islands. The conflict has already led to economic losses, and if it becomes protracted and further losses are incurred, Abe runs the risk of losing popular support.

Abe is ideologically conservative, but has at times shown a more pragmatic attitude in his diplomacy. When he first took office as prime minister in 2006, he visited China and South Korea and took steps to rebuild relationships with the two countries that had taken a hit under former Prime Minister Junichiro Koizumi.

Even after he was reelected in the December 2012 general elections, Abe has refrained from unnecessary provocations, even deferring government sponsorship of the Takeshima (Dokdo) Day event.

However, the situation could change if the coalition between the Liberal Democratic Party and the New Komeito Party is victorious in the House of Councilors election in July 2013 and gains a stronger grip on the government. The process of pushing through various political objectives including constitutional amendments could cause major friction with Japan’s regional rivals.

North Korean leader Kim Jong-un’s challenge is to guarantee the security of his regime through improving North Korea’s relationship with the U.S. This means replacing the current armistice agreement, which has been in place since the Korean War ended, with a peace treaty.

The two nuclear tests conducted during the rule of Kim Jong-il as well as the success of the second long-range missile launch in December 2012 have provided Kim Jong-un with leverage in negotiations with the U.S. By launching a long-range missile estimated to be capable of delivering a 600kb payload at a range of 10,000km, the North has shown that it is getting closer to developing intercontinental ballistic missile (ICBM) technology that would put the continental U.S. within range. Pyongyang has defied all kinds of sanctions and appears to have largely succeeded at demonstrating that the regime can’t be toppled by military force.

Kim has shown himself to be surprisingly open-minded. He invited the foreign media to North Korea for the first missile launch in April 2012, and when the launch failed, he didn’t hesitate to admit it. He also has allowed his wife to accompany him to public events. Such behavior suggests that Kim might make more daring moves than his predecessor in domestic and international relationships.

Please direct questions or comments to [english@hani.co.kr]