President Donald Trump is desperate to achieve what no U.S. leader has since the onset of the Korean War: a lasting peace on the Korean Peninsula. Businesses, meanwhile, are salivating over prospective access to new markets—access that promises to reinforce political gains made between the two governments.
But while the president may achieve some version of success toward his objectives, businesses should be circumspect. As we have seen with America’s pullout from the Iran nuclear deal, potential can turn perilous with just one decision.
Détente on the Korean Peninsula is already reaping dividends for the North: South Korea is repairing the Kaesong industrial park, a collaborative business complex between the two nations; China and other countries that went along with Washington’s maximum pressure policy have begun to relax their efforts at enforcing international sanctions; and South Korean companies are reportedly ready to rush northward to take advantage of the warmer political climate.
North Korea reportedly sits on anywhere between $6–10 trillion worth of untapped mineral wealth, including but not limited to molybdenium, uranium, gold, and silver. Companies undoubtedly want to lay their claim if and when the country begins to open itself to foreign investors (that are not Chinese). In so doing, industry could become a critical partner in solidifying peace on the peninsula by giving North Korean leader Kim Jong Un tangible gains toward his goal of modernizing the North’s economy.
Before that can happen, however, steps need to be taken to ensure that countries that do business with North Korea won’t suddenly find themselves being forced to pull out, as we have seen following Trump’s reimposition of sanctions on Iran. First, political rhetoric must be ratcheted down. With the Singapore summit concluded and the threat of war greatly reduced, the business climate on the peninsula has improved. But hot-headed leadership on either side could quickly unravel that progress.
Second, the U.S. and North Korea should move towards mutual recognition, whether that means opening liaison offices in Washington and Pyongyang, or full-fledged embassies. That would give industry the comfort of knowing that regardless of future disagreements, they would have a peaceful recourse for hashing out disputes.
Third, Kim is eager to move to the second track of his byungjin policy, which emphasizes the parallel development of both nuclear weapons and the economy. The North Korean leader reportedly was quite taken by Singapore and its economy, and has considered a Chinese or Vietnamese-style economic model for his country.
These steps could yield new economic opportunity and a reinforced dynamic for peace—but the pitfalls remain numerous. North Korea has the most horrific human rights record in the world. People are routinely sent to labor camps for violations of thought or deeds that do not conform to the totalitarian country’s standards. These labor camps are rife with abuses, from forcing prisoners into mining without proper safety procedures to more horrific actions, including rape, testing biological weapons on prisoners, and murder. What’s to stop a North Korean supplier from using prisoners to create a product, and then routing it through a “legitimate” business, claiming that they made it without forced labor?
Second, while North Korea does have untapped mineral wealth, its infrastructure is extremely dated. It would cost billions of dollars for a company to bring the nation’s infrastructure up to modern standards. Would a company want to invest so much in a country that might get aggravated with the U.S. and become belligerent again at any time?
Third, and perhaps most importantly, the U.S. has repeatedly said sanctions will not be lifted until the North denuclearizes. If the two sides cannot agree on the precise definition of this term, it is unlikely that sanctions will be removed any time soon.
The North Korea situation remains far from solved. Sanctions prevent companies from investing in the country and the nuclear issue remains an issue so long as the U.S. and North Korea remain far apart on the definition of denuclearization. However, with proper management of the momentum from the Singapore summit and careful laying of a solid diplomatic foundation, North Korea could eventually become a prosperous country—with the support of private industry.
Brian Finlay is president and CEO of the nonpartisan Stimson Center.
