North Korea’s Weapons of Mass Destruction Game: A Theoretical Perspective

December 14, 2016

 

I.  The Puzzle

       

          When analyzing North Korea’s foreign relations, most part of its foreign policy strategies are focused on its relations with the United States. During the Bush administration, relations with North Korea completely came to an impasse, but following the Bush administration, Kim Jong Il may have thought that negotiations with the U.S. could be restarted.

       When President Obama was campaigning for the presidency, he mentioned that he was willing to hold conversations with the leaders of all nations, including North Korea. However, when he became the President of the U.S., North Korea responded to his willingness to talk with a new nuclear test. After that, the Obama administration made several attempts to negotiate with the DPRK, an example of which is the February 29, 2012 Leap Year Statement, but the agreement failed because North Korea was not willing to give up its nuclear capabilities until it perceived no sign of threat posed by the United States.[i] Since nothing seemed to work, the Obama administration opted for what is called strategic patience.

         Strategic patience works as follows: first, the United States should insist to Pyongyang that it should commit to steps towards denuclearization and improve relations with Seoul to return to the Six-Party Talks. Second, the United States should convince China to take a tougher line with North Korea until North Korea makes a sincere effort to denuclearize. Third, the United States will apply pressure on North Korea through arms interdictions and sanctions. Under the right conditions, the U.S. would pursue a comprehensive package deal for North Korea’s complete denuclearization in return for normalization of relations and economic aid, but it will not move first.[ii] Basically, the United States is just following the politics on North Korea of the Bush administration’s second term: waiting for North Korea to collapse.

Photo illustration by The Daily Beast

 

But why is the Obama administration relying on such a strategy when during his presidential campaign the still president of the U.S. said he would do whatever he could to resume talks with North Korea? Several reasons can be pointed to.

       Two of the reasons behind the implementation of strategic patience are mentioned by Melanie Hohlfeld in her article “Risk Manipulation and Economic Extortion: A Game Theoretic Approach to Diplomatic Relations between the United States and North Korea” (2010). North Korea has been building and staking its reputation, and at the same time eliminating attractive alternatives.

       Nonetheless, there is another major reason why the U.S. is playing this card why North Korea: a failure to appreciate the DPRK’s standpoint in terms of game theory and prospect theory.

 

II. Game Theory

 

        Game theory is a mathematical attempt to determine the best strategy under given conditions in order to optimize the outcome when one or more players interact with each other.[iii]  It is assumed that all players are rational and that they seek to maximize their own profits. Thus, the more players there are, the more complicated the situation becomes and the more difficult to predict the outcome.[iv]  As Debin Zhan mentions on “Beyond the Hostility: An Analysis on the U.S.-North Korean Relations by Game Theory”,

 

[…] If each player has selected a strategy and no player can benefit by changing his or her strategy while the others keep them unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium.

 

There are different categories according to different perspectives[v], but in this paper only the two-player category and, according to the payoff, the zero-sum and non-zero-sum categories will be mentioned, since these two are the ones to which North Korea-U.S.’ relations belong.  This essay will be specially focused on the game theory strategy called chicken game, since many assume U.S.-North Korea negotiations are based on this zero-sum strategy.

           The “chicken game” begins with two cars facing each other and then accelerating rapidly. Each driver has only seconds to decide whether he or she should swerve to avoid a collision, or instead risk hanging tough, in the hope that the other driver will swerve. If both decide to hang tough, the result will be disastrous, but on the other hand, the first one to swerve will be called a coward.[vi] Players take the decision of swerve or not to swerve based on the information they have or what they think the other player is going to do; the problem is that the given information can be distorted and thus, it becomes unreliable. For this reason taking the risk of not swerving can lead to catastrophic consequences.

          Considering the danger posed by taking the risk of ignoring North Korea’s threats, it has been the U.S. who in the DPRK-U.S. relations has swerved most of the time.

Prospect theory

In the words of Dongsoo Kim and Yongseok Choy:

 

[…] The core principle of prospect theory is that decision makers evaluate each choice anew, and that they do so in terms of a neutral reference point. […] […] decision makers do not maximize objective outcomes due to the framing effect and loss aversion. […] […] individuals are risk-averse in the domain of gains and risk-acceptant in the domain of losses. […]

In prospect theory, players only take the risk when they perceive that the gains obtained by taking that risk are bigger than the losses they could face. Once the losses surpass the benefits, even if in the long term the latter is attractive, the player will avoid risk and just take the benefits it can obtain for granted. This theory could be explained using the real-case of North Korean as an example, specifically vis-à-vis their nuclear weapons.

Before the U.S. negotiates with the DPRK, they demand the regime to give up its nuclear weapons development program essentially in exchange for nothing until this is verified (zero-sum game).  Thus if North Korea gave up such a program it would remain unprotected against a possible attack by the U.S. and South Korea. Because of this, no matter how attractive the future benefits of giving up the nuclear program are, the risks are perceive as much bigger since the stability and continuity of the regime would be threatened, so keeping the nuclear weapons offers the benefit of security.

U.S.-North Korea Relations

Ever since negotiations between the DPRK and the U.S. started, they have revolved around the nuclear issue, but why did North Korea start its nuclear development program in the first place?  What pushed North Korea’s nuclear program development was the fear of an outside threat to the regime, the economic decay of the Democratic People’s Republic of Korea (DPRK) since the late 1980s, and the insecurity complex shared by the regime’s leaders.[vii]

         Although there are several factors playing a role in the DPRK’s foreign policy strategies, mostly the two elements above have led North Korea to use a cooperative policy when it perceives that its national security is improving, and to engage in brinkmanship[viii] when it perceives that its security is threatened.[ix] All this is what leads the DPRK use to the aforementioned game theory and prospect theory.

 

III. How North Korea uses the Chicken Game strategy when it negotiates with the U.S.

 

           The reasons why the chicken game strategy has led to strategic patience are, in the first place, that the DPRK-U.S. relationship is a two-player game as mentioned at the beginning of this paper, based on a zero-sum game strategy; what the U.S. has been offering provides benefits just for itself and none for North Korea. The U.S. keeps demanding North Korea to give up its only bargaining asset, nuclear weapons, before any agreement can be reached, actually before any kind of negotiation can be restarted. This prevents the chicken game strategy from reaching a real solution to the conflict.

 

The second reason for the failure of this strategy is the lack of reliable information. Because the given information is distorted, Washington is always the one to swerve first to avoid major conflicts and thus it is condemned to lose every time it plays the chicken game, which gives the perception of the U.S. being weak when negotiating with the DPRK. Since nobody likes to be called a coward, the U.S. decided not the play the chicken game anymore.  Two examples of chicken game between the U.S. and North Korea are of note.

The first time that North Korea used game theory to manipulate the U.S. was when on March 12, 1993, it threatened that it would pull out of the Treaty on the Non-proliferation of Nuclear Weapons (NPT). To solve the conflict, and after a series of tensions the Agreed Framework was signed in 1994, in which it was promised to North Korea the construction of two light-water nuclear reactors, and compensation for the electricity loss.[x] In this case the U.S. did not actually know if the DPRK would be willing to carry out such a provocation and go against the international community, but just to avoid the possibility of that happening, Washington gave in.

But maybe the most important example happened during the Bush administration, when despite the U.S.’ warnings that the reprocessing of the spent fuel rods frozen under the Agreed Framework would bear serious consequences, the North (even though it retracted for a brief moment) followed through on its threat and the U.S. did nothing; the threats against the North proved to be just verbal.[xi] Since the U.S. did not know the real extent of the DPRK’s nuclear power, they did nothing to counter the provocations and in the end, the North did as it pleased. It is important because it is very likely that this was one of the moments when the DPRK realized that it would not matter how far it took the threats, the U.S. would do nothing in the end since the cost of a new war in the Korean Peninsula was (and still is) too high, so this combined with the fact that Washington does not really now the actual nuclear capabilities of North Korea, made way for the North to believe that it could manipulate the U.S. as it pleased.

 

IV. How North Korea Prospect Theory works from North Korea’s standpoint

 

            As mentioned before, every time the U.S. plays the chicken game with North Korea there is no room for Washington to be victorious, and thus, the U.S. decided not to play that game anymore, but before adopting strategic patience there was still the option of prospect theory. However the implementation of such strategic patience shows us that prospect theory did not work either, but why?

         Since in prospect theory players only engage in the game when the benefits surpass the losses, for North Korea the only viable option is for the U.S. to offer something in exchange, something the regime does not have to wait several years to get benefits from; especially what the DPRK longs for is the regime’s survival, and thus what the government is hoping for is something which assures the regime’s security.   However, the U.S. has been manipulated so many times by North Korea that it does not trust the regime enough to provide those benefits, and at the same time it knows that going back to chicken game is not an option since winning the game is not possible. This is how strategic patience became the U.S.’ strategy on North Korea.

After strategic patience, what is the international community’s response to North Korea?

It was expected that U.S. strategic patience would help to somehow force the North back to the negotiations table, but in fact this strategy has brought more negative consequences than benefits.           

       In his article “The Obama administration’s policy toward North Korea: the causes and consequences of strategic patience”, Dongsoo Kim names a series of consequences of Obama’s strategic patience:

  1. There seems no room for resolution of the North Korean nuclear issue since the U.S. seems to be more interested in non-proliferation of WMDs than in denuclearization of North Korea, while the latter has made it clear in several occasions that the country has no intention to abandon its nuclear programme. Thus, relations are in a deadlock.

  2. North Korea has strengthened its WMD capability to a considerable extent.

  3. The two aforementioned consequences led to the deterioration of inter-Korean relations.

Another component of strategic patience is sanctions. The international community, meaning the UN and the U.S., try to counter North Korea with numerous sanctions, but given the DPRK’s development during the last few years it is obvious that those sanctions are not working. In a recent interview for Radio Free Asia, Andrei Lankov also commented on the failure of this strategy.[xii]

       I believe that four indicators show that the sanctions so far have not produced any significant impact. These involve declining grain prices in North Korea; a steadiness in exchange rates; only a minor decrease in the electrical supply in Pyongyang; and zero change in major North Korean construction projects.

             Part of it has a lot to do with the increasing trade between China and North Korea despite sanctions, since the latter have failed to cool Chinese willingness to invest in the DPRK and trade with the regime; also scholar William Brown, an adjunct professor at Georgetown University and non-resident fellow at the Korea Economic Institute in Washington, confirms the improved relations with China.[xiii] Further proof of this are reports that North Korea’s GDP has been steadily growing for five years, from 2010 until 2015.[xiv]

Conclusion

 

V. Moving Forward

 

            As North Korea feels threatened by the U.S. presence on the Korean Peninsula, the DPRK has stated that denuclearization is not going to happen. Thus, taking as a first step to negotiations asking North Korea to give up its nuclear program does not look like the right option and sanctions have proved to have little or no effect at all, at least not in a positive way.

Since the biggest fear of North Korea is the stability of the regime being threatened, it is necessary for the U.S. to be the one to reopen negotiations, leaving hostilities aside and proving to the DPRK that such negotiations will be carried out under peaceful intentions; that is to say, leaving threats aside, offering more carrots than sticks.

           There are a few main issues the North Korean government wishes to discuss with the U.S., and some of these are: realizing a peace treaty between the parties to the Korean War; creating a permanent peace regime on the Korean Peninsula; and U.S. commitment to not use or threaten to use nuclear (and conventional) weapons against the DPRK, among others.[xv]

            The U.S. should show the DPRK its commitment to some of those issues in order to create a prosperous and trustful relationship with the communist regime. On the other hand, as mentioned on Lyle J. Godstein’s article “Time to Think Outside the Box: A Proposal to Achieve Denuclearization by Prioritizing the China – DPRK Relationship”, besides the stated commitments the number of American troops in the southern part of the Peninsula should be considerably reduced as should the joint military exercises with South Korea.

           Also, again with following the logic of Goldstein, China may have the most important role, as it should give minimum protection to the regime so it feels its survival is granted and its safety is equal to the South’s. Then, once this step is achieved, China should persuade North Korea to eventually give up its nuclear weapons proliferation program. For this, China and the U.S. need to reach a level of mutual understanding much deeper than the current one.

            Summing up, for North Korea to eventually denuclearize and stop posing a threat to Northeast Asia these could be the steps to follow:

1. - The U.S. must be the first to approach the DPRK and reestablish diplomatic relations between the two countries by leaving threats and sanctions aside.

2. - China should grant North Korea’s regime’s safety with a symbolic military presence in the DPRK’s territory.

3.  - China should make sure that the North eventually gives up its nuclear development for military purposes.

***The views expressed herein do not necessarily represent the opinions of NKR or Yonsei Institute for North Korean Studies.

 

By Raquel Galvez, NKR Intern

 

 

***The views herein do not necessarily represent those of NKR, YINKS, or Yonsei University.

 

[i] Peter Hayes, “Overcoming U.S.-DPRK Hostility: The Missing Link Between a Northeast Asian Comprehensive Security Settlement and Ending he Korean War,” North Korean Review 11 (2) (2015), pp. 79-102

 

[ii] Kim et al. 2013, pp. 61-82 in Dongsoo Kim, “The Obama administration’s policy toward North Korea: the causes and consequences of strategic patience,”  Journal of Asian Public Policy 9 (1) (2016), pp. 32-44

 

[iii]Debin Zhan, Beyond the Hostility: An Analysis on the U.S.-North Korean Relations by Game Theory, The Journal of Peace Studies, 9 (4) (2008)

 

[iv] Ibid

 

[v] Ibid

 

[vi] Inchul Kim, “A Game-Theoretic Approach to President Obama’s North Korea Policy,” North Korean Review 6 (2) (2010)

 

[vii] Melanie Hohlfeld (September 2010), “Risk Manipulation and Economic Extortion: A Game Theoretic Approach to Diplomatic Relations between the United States and North Korea”, North Korean Review, 6 (2)

 

[viii] According to Melanie Hohfeld, “Brinkmanship is a special case of international diplomacy. It is the manipulation of risk to achieve new ends. In brinkmanship, solutions are negotiated using threats that raise the risk of war to both parties, the risk that the bargaining process will break down. Threats in brinkmanship do not propose the certainty of disaster but the possibility of it, and so players engaged in brinkmanship must assess which moves will be effective in arriving at an advantageous contract given the parameters of the game.”

 

[ix] Dongsoo Kim & Yongseok Choy (Autum 2011), Risk-Taking or Risk-Aversive: Understanding North Korea’s Foreign Policy of Brinkmanship, Korea Observer, 42 (3), p. 461-489

 

[x] C. Kenneth Quinones & Joseph Tragert, The Complete Idiot’s Guide to Understanding North Korea, (Nueva York (Estados Unidos): Special Markets, Alpha Books, 375 Hudson Street, 2004), Chapter 18

 

[xi] Melanie Hohlfeld (2010)

 

[xii] “Interview: Sanctions Against North Korea Aren’t Working,” Radio Free Asia, July 14, 2016, http://www.rfa.org/english/news/korea/sanctions-07142016162348.html, accessed August 24, 2016

 

[xiii] Jae-Soon Chang, “Latest U.N. sanctions having little impact on N. Korea yet: U.S. expert”, Yonhap News Agency, August 5, 2016, http://english.yonhapnews.co.kr/northkorea/2016/08/05/0401000000AEN20160805000200315.html, accessed August 24, 2016; “U.N. Sanctions Fail to Cool Chinese Ardor to Invest In North Korean Businesses,” Radio Free Asia, August 18, 2016, http://www.rfa.org/english/news/korea/un-sanctions-fail-to-cool-chinese-ardor-08182016110957.html, accessed August 24, 2016; “N. Korea-China trade showing signs of revival: sources,” Yonhap News Agency, August 14, 2016, http://english.yonhapnews.co.kr/news/2016/08/14/0200000000AEN20160814003000315.html?input=rss, accessed August 24, 2016.

 

[xiv]“(LEAD) N. Korea’s economy shrank 1.1 pct in 2015: BOK,” Yonhap News Agency, July 22, 2016, http://english.yonhapnews.co.kr/northkorea/2016/07/22/0401000000AEN20160722004251320.html,  accessed August 26, 2016

 

[xv] Peter Hayes (2015), pp. 79-102

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