Some Proposals for Peace Settlement

on the Korean Peninsula and

Realization of the East Asian Community

Professor Yang-Taek Lim

Hanyang University, Korea


History is a record of past facts, and also it is a mirror of future. When the future gets more uncertain, reflection of past events provides many suggestions and lessons.


Historical tragedies of Korean nation in the modern and contemporary era


Historical tragedies of Korean nation in the modern and contemporary era are as follows: i) loss of Joseon’s dominion over Gando by Sino-Japanese Manchurian Agreement and Gando Agreement (September 4, 1909), ii) robbery of Daehan Empire’s national sovereignty (August 29, 1910) by the Forced Eulsa Treaty (November 17, 1905) and Korea-Japan Annexation Treaty (August 29, 1910) and iii) national division by ideological conflict (September 8, 1945) and the Korean War (June 25, 1950~July 30, 1953).


The Korean peninsula, which was overwhelmed by the Japanese imperialist invasion in the early twentieth century and the ideological conflict in the mid-twentieth century, encounters a more severe crisis than ever. The past Joseon was an integrated society with ‘one nation and one system’, although it was an uncivilized feudal system. On the contrary, the Korean peninsula divided into South Korea and North Korea has maintained ‘one nation with two systems’, accompanying experienced ideological conflict. Moreover, the Korean peninsula may be on the brink of war because of WMDs (weapons of mass destruction) and North Korean nuclear weapons.


President of Korea, Lee Myung Bak proposed the ‘New Peace Initiative’ (August 15, 2009) and the ‘Grand Bargain’ (September 21, 2009) by deleting the ‘openness’ from his presidential campaign pledge ‘Vision 3000: Denuclearization and Openness’ for North Korean per capita income of US 3,000. Similarly, US Secretary of State Hilary Clinton supported the ‘Comprehensive Package’ (July 19, 2009) proposed by the US president Barack Hussein Obama and expressed her desire to discuss and settle concurrently ‘the problem of North Korean nuclear weapon’ and ‘an agreement of peace on the Korean peninsula’ (normalization of US-North Korean relationship). Steven Bosworth, the top representative on North Korea, is going to visit Pyongyang with the card (December 8, 2009). US card for negotiation with North Korea is that USA and North Korea sign an ‘agreement of peace on the Korean peninsula’ focusing on the ‘normalization of US-North Korean relationship’ within the framework of the six-party talk.


Among the ‘tragedies of Korean nation in the modern and contemporary times’, the ‘loss of Joseon’s claims to Gando’ and the ‘Gyung-Sool National Humiliation’ were resulted from the Forced Eulsa Treaty (November 17, 1905) concluded by the Japanese imperialism that won the Sino-Japanese War (August 1894 ~ March 1895) and the Russian-Japanese War (February 1904 ~ September 1905). In fact, this was supported by British-Japanese alliance for invasion of the Korean peninsula as evidenced by the first and second British-Japanese alliances (January 1902 and August 1905), US-Japanese secret agreement as evidenced by the US-Japanese Katsura-Taft Secret Agreement (September 27, 1905), French acceptance of British actions on the problem of Korea (September 9, 1905), agreement of the German emperor Wilhelm II to take joint steps to the Far Eastern policy of the US president Theodore Roosevelt (September 27, 1905), and Russian connivance at Japanese rule of the Daehan Empire (Treaty of Portsmouth, September 5, 1905).


Japan’s advocacy of ‘return to Asia’ and ‘East Asian Community’


At this point, it is necessary to remind the ‘Oriental Peace Theory’ (March 15, 1910) proposed by the national hero An Jung-Keun who killed Hirobumi Ito (Oct 26, 1909) to pay off the grudge of national decay and promote the Oriental peace, because the hero’s ‘Oriental Peace Theory’ is being advocated as the ‘EAC (East Asian Community)’ at nowadays almost 100 years after the appearance of the theory. Ironically, the EAC was advocated by Yukio Hatoyama (August 27, 2009), new prime minister of Japan trampled on the Oriental peace, and Barack Hussein Obama (November 14, 2009), new president of USA tolerated and admitted the Japanese invasion of the Korean peninsula through the US-Japanese Katsura-Taft Secret Agreement (September 27, 1905) as mentioned above.


The main content of Hatoyama’s concept of the EAC is that East Asian countries shall build a ‘collective security system’ and realize ‘common currency’ under the initiative of Korea, China and Japan. In other words, Japan shall have no future unless a system of coexistent ‘regional sovereign countries’ is made instead of the East Asian international order led currently by USA but in the future by China. However, Hatoyama has not presented any road map for the EAC.


In fact, it is very difficult to realize the EAC due to the Chinese-Japanese competition over leadership, historical and territorial conflicts among Korea, China and Japan, US ‘doubts’ about the recent movements of Asian powers, etc. With regard to the possibility of Japanese contribution to the EAC, Japan has an inherent limitation that is not resulted from its external environment but from the historical contradiction and the Japanese society. In other words, Japan has tried to switch from its past ‘get-out-of Asia’ to ‘return to Asia’. In the course, Hatoyama has recently proposed the idea of ‘leaving the US and return to Asia’. However, Yukichi Fukuzawa (1835 ~ 1901), who was a famous enlightenment thinker 100 years ago in Japan, argued the ‘theory of leaving Asia’ (March 16, 1885) under which Japan had to go towards the West, despising and hating its neighbor countries, Korea and China. Fukuzawa is still admired by Japanese people, and his portrait is imprinted on the 10 thousand yen note. Moreover, Japan has regarded China as its main enemy for about 10 years according to the US-Japanese Guideline (September 1997). Also, Japan has desired eagerly to amend the section 9.2 of the ‘Peace Constitution’ to have a ‘military troop capable to fight’. An example extremely showing this is that a famous Japanese writer Yukio Mishima (1925 ~ 1970) committed suicide by disembowelment by shouting ‘seven lives for my country’.


What Korea and China want from Japan is as follows: Japan should apologize wholeheartedly for its past invasion and barbarism (with regard to Korea, the Eulmi Incident (October 8, 1985), Japanese assassination of Joseon’s empress Queen Min) and show a ‘serious’ stance to follow the ‘Murayama Statement’ (August 15, 1995). The self-awareness and reflection of people in the Japanese leadership class will be a response to the good Japanese common people who ‘rebelled’ in as many years as 55 under repugnance of the ‘1955 system’, showing of ‘authenticity’ to the construction of ‘fraternity society’ with the East Asian countries, and a start and shortcut to ‘A New Path for Japan’ and ‘New Japan’ asserted by Hatoyama.


Proposals for the peace on the Korean peninsula


As an attempt to find a practical solution for ‘settlement of peace on the Korean peninsula’ and realization of the EAC, the related problems raised by this study and the proposals for them are as described below.


‘Peace on the Korean peninsula’ is resulted from solving the North Korean nuclear weapon, food and energy problems. It is essential to build the ‘NEATO’ (North East Asian Treaty Organization) to solve the North Korean nuclear problem. What are the solutions for the North Korean food and energy problems? One of the solutions is the ‘Northeast Asian Peace Treaty’ (see the Appendix), which has been proposed by the author (2007 and 2009). The ‘Northeast Asian Peace Treaty’ covers the NEATO.


Then, North Korean-US negotiation for peace on the Korean peninsula will inevitably be the key to the solution of the North Korean nuclear problem. If the ‘Libyan model’ (December 19, 2003) is adopted to solve the North Korean nuclear problem instead of the ‘Indian model’ (March 2, 2006), especially, the role of China will be very important.


For reference, the ‘Libyan model’ refers to the case that Tony Blair, prime minister of the United Kingdom having a big interest in the Libyan oil, worked with Nelson Mandela trusted by the Libyan president Qaddafi to make a successful negotiation for guaranteed security of Qaddafi government and Libyan abandonment of nuclear weapon (December 19, 2003). Applying the ‘Libyan model’ to the North Korean nuclear problem, China may arrange the negotiation for guaranteed security of the current North Korean regime and North Korean abandonment of nuclear weapon since the North Korean leader Kim Jung-il trusts Hu Jintao, president of China which is a blood alliance (based on the July 1961 Sino-North Korean Treaty of Friendship, Cooperation and Mutual Assistance). The fundamental problem is whether China has ‘authenticity’ related with its strategy toward the Korean peninsula. Therefore, Sino-US coordination as well as US-Korean coordination are important for a smooth negotiation with North Korea.


On the other hand, the ‘Indian model’ is a case showing that India possessing nuclear weapon and USA monitoring nuclear weapon have a matching interest. USA and India agreed that USA shall sell commercial nuclear fuel and provide nuclear technology to India by signing the Nuclear Cooperation Agreement (March 2, 2006). As results, India got US official recognition of being one of the world six nuclear possessors and constructed nuclear power plants on the condition that India shall permit the nuclear inspection by the IAEA (International Atomic Energy Ageency) of 14 civilian reactors, solving energy (electric power) shortage caused by rapid economic development, while USA could strengthen cooperation with India and contain the influence of China. However, the above treaty set a precedent of giving a special favor to India which developed nuclear weapons without joining the NPT (Nuclear Nonproliferation Treaty). North Korea will prefer this model very much, but USA is not very likely to adopt the ‘Indian model’ (i.e., the 2006 ‘US-Indian Nuclear Cooperation Agreement’) since it has a deep distrust in North Korean government. For instance, the US-North Korea Geneva Agreement signed in October 1994 made North Korea agree to give up nuclear development and to hold its withdrawal from the NPT. In return, USA agreed to provide light water reactors for North Korea. However, the US believes that North Korea did not keep its promise to give up nuclear development and had continuously and secretly driven nuclear development.


On the other hand, in terms of food and energy, China should not worry about the ‘march of hardship’ by making North Korea live on its supply of food and energy. China should drive the following forward-looking projects of ‘saving North Korea’. For instance, China and North Korea may solve fundamentally the North Korean food problem by extending the China-North Korea ‘National Border Treaty’ (1962) and driving the joint projects of China, North Korea and South Korea in Gando which is rich in agricultural and aquatic products.


For reference, Gando will be able to become an economic and traffic center of East Asia in the future. Gando reaches to Songhua River to the north, coastlines of the Korean peninsula to the south and to Vladivostok to the east, with adjacency of land to sea. The southern part of Duman River has tough mountains and poor soil, while Gando is characterized by smooth landscape, rich soil, heavy woods, active hunting and crisscrossed streams and rivers, which make the land appropriate to fishery or agriculture.


In fact, China has had a plan to develop Chiangchun, Jirin and Tum into districts leading opening to make them a Northeast Asian logistics base. But the plan has not been put into practice because any path to the East Sea is obstructed by North Korea and Russia. To make the districts a traffic center, China has therefore constructed the 1,380 km-long railway connecting to the borderline of Russian Primorski Krai along the eastern frontier, and connected the railway with the 11 railways constructed in the northeast of China. Recently, China got an exclusive right to use the Najin port quay 1 (October 7, 2009), with ability to transport the natural resources from the northeast of China to the south by using cheap shipping on the East Sea.


Also, China and Russia can work together to solve fundamentally North Korean energy problem by constructing ‘Asian pipeline’ on the Korean peninsula. Along with this, the TCR (Trans-China Railway) can be connected with the TKR (Trans-Korea Railway) and the TSR (Trans-Siberia Railway) to construct a ‘logistics center’ of the Korean peninsula linking Asia and Europe. Furthermore, North Korean economic system to be switched to market economy to create a foundation for progressive opening of North Korean society. North Korean government attempted to change the centrally-controlled economic system to a decentralized economic system by implementing the 7.1 Economic Management Improvement Measure in July 2002. However, such an economic reform measures couldn’t solve the fundamental issue of ‘a shortage-economy’ which has resulted in an underground economy and a chronic inflation and led to the recent currency revaluation on November 30, 2009.


The currency reform aims at curbing a soaring inflation on the surface, but it seems that the shock was designed to strike a blow against an entrepreneurial class people who are engaged in market economic activities that are beyond the state control, thereby attempting to uphold the statics quo of the North Korean regime before Kim Jong-Il’s anticipated handing over the reins of power to his third son, Kim Jong-un. In detail, North Korean government has sharply raised the value of its national currency by knocking off two zeroes from its monetary notes and more or less arrogating hidden individual wealth by limiting the amount each household can exchange for the new money to just two to three months’ worth of living expenses. The sweeping move will inevitably exact a heavy toll on shopkeepers and small merchants struggling to make a living across the nation. Reports told of growing confusion and resentment over the sudden revaluation move. A majority of North Koreans have been making their living from unauthorized markets for the last decade after food distribution stopped. Many residents had turned to black market activities and began to accumulate wealth over the years, posing a potential threat to the government’s control over its people.


But it is unlikely that North Korean government will gain what it seeks from confiscating personal wealth. The country has been mired in economic pitfalls for the last two decades ever since the breakdown of the Socialist bloc. Productivity remained low as the result of poor central planning, while foreign capital and resources became scarce following the collapse in ties with Socialist economies. North Korea’s only way out of this economic mess has been to break its shell and reach out to the outside world by opening its market, at least to some degree. However, North Korean government has become more introverted, alienating themselves and weakening ties with the international community through heightened military belligerency led by nuclear weapons development. The authority has instead enforced a futile “work harder and faster” campaign on the country’s impoverished working community. The ramifications of those policies have been perennial scarcity in food and daily goods, black market prosperity, skyrocketing inflation and resentment against the ruling class. If North Koreans believe that currency reform will wipe out these problems, they are more foolish than we thought. The hike in currency value is the composite byproduct of a failed system, not its solution.


Therefore, North Korea must realize that its only choice is to reform its dysfunctional central planning system and keep abreast with the rest of the world. It must give up its nuclear program and cease making menacing threats to prevent further isolation and deprivation.


Proposals for realization of the EAC


In this section, the author would like to make some proposals for realization of the EAC, which shall be described mostly in the two aspects: real sector and financial sector.


The FTA among Korea, China and Japan will increase their trade and growth rate by 10% and 5.14% for Korea, 12% and 1.54% for China, and 5.2% and 1.2% for Japan, respectively. Furthermore, if the EAC including the 10 member countries of ASEAN, Korea, China, Japan, India, Australia and New Zealand is formed, the world-largest single market will rise with total population of 2 billion people and total GDP USD 7 ~ 8 trillion. As a result, the existing international economic, political and diplomatic order led by USA and EU is very likely to be shaken.


Realizing the NEAEC (Northeast Asian Economic Community) or the EAC will depend on whether Japan apologizes authentically for its past imperialist invasion of Asia, heals and sublimates the historical scars of Korea, China and Japan via national policy switching, and moves forward with the FTA among the three countries as agreed on October 10, 2009, Beijing.


What are reciprocal common tasks for the NEAEC in the real sector? This study believes that the tasks are i) cooperation for low-carbon and green growth, and ii) promotion of the ‘NAITC’ (Northeast Asian Information Technology Community). The two tasks should be executed initiatively by Korea, China and Japan, which are cores of the EAC. The former is a periodical mission of the world to keep global environment and achieve sustainable economic growth, as shown in the Kyoto Protocol (adopted in December 1997 and effective on February 16, 2005). The latter is a historical lesson that the three Northeast Asian countries should strengthen their IT cooperation to prevent Asia, which was a ‘territorial colony’ of Western world in the past because of industrial backwardness, from becoming an ‘information colony’ of Western world again.


Especially, after the global financial crisis in September 2008, China’s industrial and technological role in the process of switch into China-led Asian economic system is to form the NEAEC and furthermore the ‘EAFTA’ (East Asian Free Trade Area). Its starting point is to sign the FTA between Korea and China, and it means a successful development of the Korea-China International Industrial Complex in Muan Jeolanamdo.


In the aspect of financial sector, China can take a role to establish the ‘Asia Pacific Currency Basket System’ as the APMS (Asia Pacific Monetary System), which includes USA, by  leveraging its world top foreign exchange reserve (USD 2,273 billion as of the end of September 2009) and world top possession of US Treasury Bond (USD 801.5 billion as of the end of July 2009) and the recent development of the CMI (Chiang Mai Initiative) from ‘creation of joint fund’ of USD 80 billion (May 2005) to a ‘mutual financial support system’ (May 4, 2008). In this case, Asia Pacific currency basket will comprise US dollar, Chinese yuan, Japanese yen and Korean won, and therefore exchange rate in onshore and offshore markets will be stabilized. Based on this, exchange rate fluctuation will be offset internally, resulting in stability of foreign exchange rate. And, financial institutions and companies will be able to harmonize soundness and profitability in foreign exchange control. The Asian exchange crisis in 1997 and the global financial crisis in 2008 must not be repeated in this ‘era of Asia’ taking a flying jump. It will be a shame and sacrifice of Asians.


Concluding Remarks


The current study has suggested some ‘pragmatistic’ directions for the peace settlement in the Korean Peninsula (with a special reference to the resolution of North Korean nuclear issue) as well as for the development of East Asia Community (EAC). This study has emphasized the role of China in cooperation with USA for the settlement of the proposed 'Northeast Asian Peace Treaty' and its contribution to North Korea's transformation into a market-oriented economic system. This paper has also recommended China’s contribution to the establishment of East Asian Free Trade Area (EAFTA) in the real side as well as Asia-Pacific Monetary Fund (APMF) and Asia-Pacific Monetary System (APMS) in the financial side. Considering the feasibility of the aforementioned proposals (EAFTA, APMF and APMS), the author has pointed out the dramatic change of USA's approach to Asia from 'negative' to 'positive' position on East Asian economic block led by China in particular, as 'New Asia Policy' has been recently declared by President Obama in Tokyo on November 14, 2009.


There may be a direct and indirect restriction to the actual adoption of the aforementioned proposals of this study for peace settlement on the Koren Peninsula and for realization of the EAC. The most important constraint imposed on South Korea is the conflict between Korea-USA political and military alliance (Korea-USA Mutual Defense Treaty, October 1, 1953; Joint Vision for the Alliance Between Korea and USA, June 16, 2009) and Korea-China ‘strategic collaborative partnership’ (May 27, 2008). How to achieve harmony and compatibility between the structural conflict above is an important question. The answer shall be an important national task from the view-point of South Korea, which can determine the ‘fate’ of the Korean peninsula in the G2 (USA and China) era. Surely, the above problem is expected to be continuously addressed by the Strategic and Economic Dialogue (SAED) between China and the US (Washington, July 27 ~ 28, 2009).


Although USA and China have a ‘friendly partnership’, their conflict and confrontation in the East Asia are inevitable. On the one hand, the US Taiwan Relations Act (April 1979), which is the Achilles’ heel of China, and North Korea-China Friendship Treaty (July 1961), and on the other hand, the US-Korea Mutual Defense Treaty (October 1, 1953), and the US-Japan Defense Treaty (November 1978) and the New Defense Treaty (September 1997) have an exquisite power balance. Keeping the balance is a key that can determine whether to realize the ‘peace on the Korean peninsula’ and the ‘East Asian Community’.


However, from the standpoint of Korea, the rise of the NEATO under the US-Sino political and military leadership and agreement and the conclusion of the ‘agreement of peace on the Korean Peninsula’ which is a trade-off for ‘North Korean abandonment of nuclear weapon’ and focuses on the ‘normalized North Korea-USA relationship’ will allow the NEATO substituting for existing security mechanisms to play a role of the headquarters of UN army stationed in Korea like the ‘NATO Headquarters’. On the other hand, Korea will become a base for R&D and supply of machinery, parts and materials in Asia’ by linking the US-Korean FTA (signed on June 30, 2007) and the Sino-Korean FTA (under consideration and negotiation). These are what this study thinks. Korea will become a bridge over USA and China. Based on this, USA will establish its identity as an Asia-Pacific country and China will have the world-biggest North American market.






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[Appendix] Proposal of ‘Northeast Asian Peace Treaty’

1) The belligerence between the concerned countries (South Korea and North Korea) shall be officially terminated. Any exercise or threat of military force shall be prohibited. The two Koreas shall renounce the deployment, manufacturing, possession and control of ABC(atomic, biological and chemical weapons) on the Korean peninsula


2) The two Koreas shall reduce conventional weapons and use the resulting fiscal benefits for the vitalized economic cooperation and socio-economic integration between both parties.


3) The two Koreas shall form and run the tentatively named CSCNA (Conference on Security and Cooperation in Northeast Asia) as a peace and security mechanism.1)


4) The two Koreas and four powers (USA, China, Japan and Russia) shall construct a ‘special economic zone of South Korea and North Korea’ in Jangdan-Myeon (around the DMZ)2) and develop it into a tentatively named ‘Northeast Asian Peace City3). The tentatively named ‘CSCNA’ (Conference on Security and Cooperation in Northeast Asia) shall be located there as a multilateral regional security cooperation body among the six parties (South Korea, North Korea, China, USA, Japan and Russia). Especially, as it is stationed in Germany, the US army in South Korea shall continue to take a role of maintaining peace and security in the Korean peninsula as well as Northeast Asia, thereby realizing the ideal of UN.


5) Joint projects for the peace and prosperity of Northeast Asia shall be driven on the basis of the above ‘Northeast Asian Peace City’. To provide financial support for the projects, the tentatively named ‘APMF (Asian-Pacific Monetary Fund)’ shall be established4).


6) Examples of the projects APMF (Asian-Pacific Monetary Fund) can invest in are as follows: linkage of traffic network with TKR (Trans Korea Railway), TSR (Trans Siberian Railway) and TCR (Trans China Railway), construction of logistics network of Russian Hasan~North Korean Najin~South Korean Busan5), joint development of offshore oil fields in west Kamchatka, development of oil and gas wells in Irkutsk and Sakhalin, construction of 'Asian' oil and gas pipelines for the wells, solving of energy problem of North Korea by supplying Russian electricity to North Korea and South Korea, joint development of agricultural products in Khabarovsk Krai for North Korean food, etc.


7) Considering deep distrust between Washington and Pyongyang, USA shall declare and sign in the UN Congress or Security Council (as well as in the six-party talks) that :

USA shall respect mutual sovereignty and peaceful coexistence (not just non-aggression) and declare officially that it will guarantee the continuation of North Korean regime ;

USA shall provide financial support (beyond simple lifting of financial sanctions) for economic development of North Korea ;

USA shall acknowledge the production in Gaeseong Industrial Complex of being intra-trade in the ‘South Korea-North Korea Economic Community’6), and shall allow products from the Complex to be exported to USA in the form of ‘normal trade relationship’ so that the products made in North Korea including the Gaeseong Industrial Complex can avoid the high tariff specified in the ‘column 2’ and be free from the US Trading with the Enemy Act of 1953, the US Trade Law of 1974, US Export Administration Regulation (EAR) of 1979, WTO regulation on Origin (section 9), Wassennar Agreement on Non-Proliferation Regime, etc7).


8) At the same time, North Korea and USA shall take the following measures :

North Korea shall boldly and simultaneously disable and give up its WMD (Weapons to Mass Destruction) including nuclear weapons according to ‘the 9·19 Beijing Joint Declaration’ of 2005, ‘the 2·13 Joint Agreement’ of 2007 and ‘the 10·4 Joint Declaration’ of 20078) ;

In return, USA shall declare that North Korea has been already deleted as of October 11, 2008 from its list of ‘terror supporting countries’ (from the ‘axis of evil’) in which North Korea was reappointed on April 30, 2007, and shall allow North Korea to have a seat in international financial organizations (such as IMF, IBRD, IDA, IFC, ADB, World Bank, etc.)9) ;

Accordingly, the above international financial organizations shall immediately support economic development of North Korea.


9) In connection with the aforementioned political/military and economic agreement between USA and North Korea, the two Koreas shall take the following measures :

According to the aforementioned ‘idea of unification’, South Korea and North Korea shall recognize each other’s mutual sovereignty, shall make concurrent declarations of non-aggression against each other for permanent peace on the Korean peninsula, shall abandon any exercise or threat of military force, and shall try and collaborate, respectively and jointly, to realize a peaceful unification of the two Koreas under conditions which can be accepted by the peoples of South Korea and North Korea10).

Also, Seoul and Pyongyang shall sign and announce the ‘Denuclearization Agreement’11) and the four powers (USA, China, Japan and Russia) surrounding the Korean peninsula shall agree immediately to these declarations.


10) Then, the two Koreas and USA shall re-confirm and announce the ‘Three-Party Agreement on Military CBMs (confidence building measures, which includes control of the movement of large military units and military training, peaceful use of the DMZ, exchange of military information and personnel, progressive arms reduction including the dismantlement of WMDs and attack capacities, and verification of the reduction) and Deployment of Military Force’, which was already agreed by Seoul, Pyongyang and Washington (October 4, 2007)12). The major contents of this Agreement are as follows13) :

They shall establish a ‘Military Committee’ specified in the ‘Agreement on the Reconciliation, Non-Aggression, and Exchanges and Cooperation between South Korea and North Korea’ which was signed on December 13, 1991 and effective on February 19, 1992 and shall let it stay in permanent effect. The would-be Committee shall encourage and monitor the faithful fulfillment of denuclearization, the above military CBMs, relocation of military force and arms reduction14) ;

They shall relocate the military force of both parties (such as tanks, cannons, armored cars for battle, aircraft for battle, attack-only helicopters, short range missiles and anti-aircraft defense equipment) to the rear, with bold arms reduction.

The two Koreas and USA shall check and implement the military CBMs related with the ‘South Korea-North Korea Summit Talks’ Joint Declaration’ on June 15, 2000 in Pyongyang, the 4th Six Party Talks' Beijing Joint Communiqué on September 19, 2005, the 5th Six Party Talks' Beijing Joint Agreement on February 13, 2007 and the 'South Korea-North Korea Summit Talks' Joint Declaration on Mutual Development, Peace and Prosperity on October 04, 2007 in Pyongyang.


1) CSCNA (Conference on Security and Cooperation in Northeast Asia) can be symmetrically compared with CSCE (Conference on Security and Cooperation in Europe), a European multilateral security structure, or SCO (Shanghai Cooperation Organization). As specified in the clause 8 of the 10-point program for reunification (November 28, 1989) proposed by the West German Prime Minister Helmut Kohl, the basis for the reunification of East Germany and West Germany was the CSCE.

2) Korea Development Bank (KDB) shall provide support and investment for establishing a symmetrical special economic zone of South Korea and North Korea in Jangdan-Myeon (around the DMZ) in Gaeseong Industrial Complex in North Korea. In fact, like KfW (Kreditanstalt für Wideraufbau), KDB has provided financial support for the Korean companies entered into the Gaeseong industrial complex in order to promote the economic collaboration between the two Koreas. However, its support targeted the Gaeseong Industrial Complex, not the economic special zone of South Korea and North Korea in South Korea. For reference, KfW supported the industrial development in West Germany by the 1980s. In the 1990s, KfW succeeded to and paid off the liabilities of old East Germany and led the projects of economic development in old East Germany on behalf of the German federal government.

3) This is a concept similar to the Danzig Free City established on the basis of the 1919 Versailles Peace Treaty.

4) The author proposes that the CMI (Chiang Mai Initiative), a joint fund system agreed at the 11th ASEAN + 3 finance ministers talk (May 4, 2008), shall be developed further so that it can create the ‘APMF’ (Asian Pacific Monetary Fund) which will undertake the investment necessary for economic development in the region. The finance ministers talk of South Korea, China and Japan in May 2008 agreed to complete the creation of the USD 80 billion joint fund of the CMI by the first half of 2009. This is an idea of making an ‘Asian version of IMF’ (International Monetary Fund). Also, the above finance ministers talk (May 4, 2008) replaced the present ‘BSA (Bilateral Swap Arrangement) with a joint fund and set up the fund amount to USD 80 billion similar to the present BSA contract amount, generating the base for the creation of the AMF (Asian Monetary Fund). With regard to the ‘APMF’ (Asian Pacific Monetary Fund), total foreign currency reserves of South Korea, China and Japan are USD 3,141.2 billion as of the end of September 2008, accounting for over 43% of world foreign currency reserve (USD 7,307.1 billion): China USD 1,905.6 (1st place in the world), Japan USD 995.9 billion (2nd place) and Korea USD 239.7 billion (6th place). If USA deposits a matching fund USD 80 billion to the above CMI joint fund (USD 80 billion) or if USA signs a currency swap agreement with South Korea, China and Japan, which amounts to the above joint fund, and increases the joint fund to USD 160 billion. In this way, USA will be able to found the APMF, along with South Korea, China and Japan.

5) Linkage of network traffic between TKR and TSR is a long-cherished project of Russia and agreed by the three countries (Russia, South Korea and North Korea) and the traffic ministers talk at UN ESCAP in November 2006.

6) Trade between East Germany and West Germany was acknowledged to be intra-trade according to the GATT (General Agreement on Tariffs and Trade).

7) For more information on the trade relationship between North Korea and USA, see Marcus Noland (2006), The Legal Framework of US-DPRK Trade Relations, Washington D.C.,: Institute for International Economics.

8) The article 3 of the German ‘Treaty on the Final Settlement’, i.e. the so-called ‘2+4 Treaty’(September 12, 1990), put it: “the Governments of the Federal Republic of Germany and the German Democratic Republic reaffirm their renunciation of the manufacture and possession of and control over nuclear, biological and chemical weapons. ... In particular, rights and obligations arising from the Treaty on the Non-Proliferation of Nuclear Weapons of 1 July 1968 will continue to apply to the united Germany.”

9) Concretely, USA shall remove North Korea from its 'list of terror supporting countries’ which enables Washington to stand against international financial organizations’ loans to Pyongyang, shall delete North Korea from the list of countries prohibited from receiving US aid according to USA’s applicable laws, shall unfreeze North Korean assets, and shall mitigate or lift trade sanctions (including the prohibitions specified in the ‘US Trading with the Enemy Act’ of 1953, the ‘US Trade Law’ of 1974, etc.) against North Korea.

10) ‘Ban on the use of force’ is specified in the article 3 of The Basic Treaty (Grundlagenvertrag) 1972.

11) The two Koreas had already declared jointly the ‘denuclearization of the Korean peninsula’ (prohibiting the facilities reprocessing plutonium and concentrating uranium) on December 31, 1991.

12) Aloysius M. O’Neill (2006), “Inter-Korean CBMs and Their Role in a Peace Regime”, Working Paper, Atlantic Council Working Group on North Korea.

13) William M. Drennan (2006), “Military Implications of a Peace Regime for the Korean Peninsula”, Working Paper, Atlantic Council Working Group on North Korea.

14) The MAC (Military Armistice Commission) and NNSC (Neutral Nations Supervisory Commission) played the roles of monitor and supervisor under the Armistice Agreement of 1953.

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