SHANGHAI SCHOLARS PESSIMISTIC ABOUT NORTH KOREA

C O N F I D E N T I A L SECTION 01 OF 04 SHANGHAI 000043

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E.O. 12958: DECL: 1/23/2017
TAGS: PREL PGOV CH TW JA KN
SUBJECT: SHANGHAI SCHOLARS PESSIMISTIC ABOUT NORTH KOREA


CLASSIFIED BY: Simon Schuchat, Deputy Principal Officer, , U.S.
Consulate Shanghai.
REASON: 1.4 (b),(d)

1. (C) Summary: During a January 19 lunch with PDAS Stephens,
Shanghai scholars were pessimistic that there would be progress
on North Korea in the near term. One scholar said that while
North Korea would continue to participate in the Six-Party
Talks, it would never give up its nuclear program. Others said
that in the long-term there was still hope. All acknowledged
that China could do more on North Korea. It should have a more
normal relationship with North Korea, fully implement UNSC 1718
and not provide any assistance above what is needed to maintain
the minimum living standard of the North Korean people. The
scholars noted that Beijing was uneasy about the A/S Hill and
VFM Kim meeting in Berlin, which could be seen as a signal that
there were venues other than Beijing for discussions between the
United States and North Korea on the nuclear issue. PDAS
Stephens stressed USG commitment to implementing the Joint
Statement. North Korea would not get a better deal if it
waited. End summary.




2. (SBU) On January 19, DPO hosted a lunch for PDAS Stephens
and some of Shanghai's leading international relations scholars.
At the lunch were Shanghai Institute of American Studies
President Ding Xinghao, Fudan University Center for American
Studies (CAS) Director Shen Dingli, Shanghai Academy of Social
Sciences Institute of European and Eurasia Director Pan Guang,
Jiaotong University Shanghai Center for RimPac Strategic and
International Studies Executive Vice-Director Zhuang Jianzhong,
and Shanghai Institute for International Studies (SIIS) American
Studies Department Director Chen Dongxiao.



Berlin Meeting vs. Six-Party Talks

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3. (C) The scholars probed PDAS Stephens for information on A/S
Hill's meeting in Berlin with North Korean VFM Kim Gye-gwan.
SIIS Chen said Beijing was a little uneasy whether the Berlin
meeting represented a new form of engagement with North Korea
and noted that this was the first time that A/S Hill and VFM Kim
had met outside of Beijing. CAS Director Shen said that the
advantage of the Berlin meeting was that it created an
opportunity for the United States and North Korea to remove
hurdles. However, the disadvantage was that it undermined
Beijing's significance. He acknowledged the State Department
statement on the Berlin meeting, but said that no matter what
Washington says, the perception in Beijing was that the DPRK was
using the talks to signal that Beijing was no longer the only
venue for meetings between A/S Hill and VFM Kim.




4. (C) PDAS Stephens stressed that the United States felt
strongly that to achieve lasting gains on this issue, China
needed to be a part of it. She suggested the scholars not over
interpret one meeting. She added that the United States did not
want to enter into another round of Six-Party Talks unless it
was clear that the North Koreans were ready for real
discussions. The purpose of A/S Hill's meeting in Berlin was to
assess the North Koreans to see if they were ready to take
concrete steps to implement the September 2005 Joint Statement.



Financial Sanctions

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5. (C) Scholars also asked about the financial sanctions and
the likelihood that the United States would lift the sanctions.
PDAS Stephens said there appeared to be a great deal of
misunderstanding about the Banco Delta Asia issue. It was
Chinese authorities who had frozen the accounts. This was not a
simple political issue. The 24 million USD that was frozen

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paled in comparison to the benefits that North Korea could
receive if it implemented the Joint Statement. The North
Koreans must do their part and acknowledge that there was a
problem. Money laundering and counterfeiting were not new
issues. There would be a meeting of experts on January 22 on
these financial issues. If the financial issues were resolved,
she hoped that the North Koreans would not find another excuse
to not implement the Joint Statement. UNSCR 1718 would remain
in effect. She stressed that making progress in the Six-Party
Talks was a big priority for the USG. North Korea should not
think that it would get a better deal if it waited. There was
U.S. bipartisan support for the Administration in this area.



Short-Term Resolution Unlikely

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6. (C) All of the scholars were pessimistic that there would be
progress on North Korea in the near future. Jiaotong University
Zhuang said North Korea was determined to have nuclear weapons.
Shen said that there were two different possible
interpretations. The first was that North Korea had genuine
security concerns and it would not give up its nuclear program
until its security was assured. The second was North Korea had
genuine security concerns and did not trust the United States.
Even if the United States no longer appeared to threaten the
DPRK, it would still retain its nuclear weapons. Under this
assumption, North Korea would use every "tool" to prevent
implementation of the Joint Statement. Even if the financial
sanctions were lifted, North Korea would find another tool.




7. (C) As a realist, he was more inclined towards the second
interpretation. He predicted that North Korea would not make
any significant concessions in the near future. He said it
could return to the Six-Party Talks, but would ensure that there
were no substantive advances in the talk. North Korea was
waiting for a new government in Washington in the hopes that the
new administration would accept a nuclear North Korea. He said
that North Korea was inspired by the Indian example. If North
Korea proved that it was a responsible nuclear country and met
three conditions in the next three to four years, then the
international community would re-embrace it. These conditions
were to not export nuclear weapons, not engage in
state-sponsored terrorism and not to engage in money laundering
or other cross-border crimes.




8. (C) According to Shen, China would not go all out to stop
North Korea as in the short-term North Korea's actions were in
China's interests. While an irresponsible nuclear North Korea
was a threat to China, a responsible North Korea -- one that met
the above three conditions -- was not a threat. He added,
however, that China could change its mind if Japan also decided
to acquire nuclear weapons, in reaction to a nuclear North
Korea. Later in the conversation he noted that a nuclear Japan
would not be completely disadvantageous. Every issue has
advantages and disadvantages, in the words of Mao Zedong. A
nuclear Japan could be helpful in promoting stability in the
region. (Comment: Presumably if it also supported China's
efforts to take back Taiwan by force. End comment.) Even a
non-democratic country could transform itself into a positive
force. For example, China in the 1950's had nuclear weapons.
At that time, its people were starving and it was supporting
insurgents in Indonesia. China has been able to successfully
transform itself into a productive, stable country. If China
could, why can't North Korea? The risk was whether North Korea
could successfully follow China's example. He did not think
that there were many choices and said that North Korea would not
abandon its nuclear program. The United States did not have
many alternatives, it could either accept North Korea or bomb
it. He suggested that, as a way forward, the United States
Congress pass a law that allowed the President to impose
sanctions but lift the sanctions after a few months to encourage

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the North Koreans to return to the negotiations.




9. (C) Chen said that while he accepted Shen's interpretation,
domestic problems, such as the economy and succession issues,
could affect North Korea's decision to maintain its nuclear
program. He added that there were conflicting messages on how
Kim Jong-il perceived the problem. He agreed that Japan's
actions could impact China's calculations. The United States
was loosening restrictions on Japan's military and had
encouraged Japan to play a more normal assertive military role.
He was pessimistic about the immediate future and said that the
United States had already lost its window of opportunity. North
Korea was waiting for the next administration. China had told
North Korea that the idea that the next administration would
change its policy was an illusion. However, the North Koreans
believed this, and would not likely return to the negotiations.




10. (C) Ding rejected Shen's comparisons of North Korea to
India and China. One could not compare India and China to North
Korea. Both China and India were big countries with big
populations. These countries have more responsibilities then
small countries like North Korea. He added that the North Korea
issue was not isolated from other issues such as Taiwan and
Japan. Beijing was trying to balance all of these issues. He
too was very pessimistic about North Korea. North Korea was
very shrewd and knew how to maneuver between the United States
and China. Zhuang was the most optimistic of the scholars. He
said that there was still hope for a resolution. The
international community was united and the United States was
doing the right thing. It was important to use the carrot and
stick approach. "We must continue to engage North Korea as well
as maintain the UN resolutions against North Korea," he said.




11. (C) PDAS Stephens observed that the scenario described by
Professor Shen was not in China's interests. She also agreed
with Ding that there was no comparison between North Korea and
India. She added that it was high risk gamble for Beijing to
believe that North Korea would abide by the three conditions
laid out by Professor Shen. This was especially true since it
was hard to know the internal dynamics of North Korean politics.
The North Korean system survived because of the lifeline
provided by China and the cultivation of an external threat.



China's Role

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12. (C) Scholars all acknowledged that China could do more on
the North Korea issue. Chen said that China should have a "more
normal" relationship with North Korea. He said that in the
past, when North Korean scholars came to China, Chinese scholars
usually were sympathetic to North Korean scholars concerns about
external threats. Recently, Chinese scholars have stressed to
them that North Korea must also resolve its internal domestic
problems such as improving government performance and the
economy. He said that their North Korean interlocutors
definitely understand that China believes that North Korea must
find solutions to their internal problems. Zhuang said China
needed to see that a nuclear North Korea was not in its national
interests. It should fully implement UNSC 1718, not just parts
of it. China must also be more active in soft diplomacy and
show North Korea more examples of how China developed. At the
same time, it must implement hard diplomacy and not provide any
assistance beyond what is necessary to maintain the minimum
living standards of the North Korean people.




13. (C) Shen agreed that China should do more, but said that it
would be difficult for China to go all out on North Korea.

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According to Shen, maintaining good relations with North Korea
was in China's national interests because in Beijing's eyes,
North Korea was linked to Taiwan. If a conflict was to breakout
in the Taiwan Straits, it would be difficult for the United
States to intervene as China could open up a second front in
North Korea. He noted that everything China was doing from
announcing the construction of an aircraft carrier to building
more weapons was to bring psychological pressure to Taiwan.
2007 and 2008 were the most vulnerable two years for China
because of the upcoming Taiwan presidential elections and the
Olympics. China would be making key strategic decisions in these
years. After a few years, China would surpass Taiwan in its
development and be in a more secure position. He added that it
would be difficult for China to make relations with North Korea
"more normal." If China cut off relations with North Korea,
then North Korea could change its allegiance from Beijing to the
West.



Taiwan and North East Asia Security

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14. (C) PDAS Stephens noted that some Americans believed that
China overreacts to Chen Shui-bian. The trend line for Taiwan
was getting better and better and the United States understood
its role. The USG position was clear and consistent. Shen said
that China was making progress in this area. It often did not
respond to President Chen's provocations and when it did
respond, it behaved more moderately. In addition, China was
trying to be more proactive in telling Taiwan about China's
bottom line. China was being responsible but Taiwan must also
be responsible and not risk its own life. China's uneasiness
with Taiwan and the North Korean nuclear issue were all
connected to first tier security structure questions. While the
United States was a strategic collaborator, it was also a rival
of China. He indicated that some in China still had doubts
whether China could trust the United States.




15. (C) PDAS Stephens noted that the fact that there was
special legislation on Taiwan was an indication that the Taiwan
situation was unique. One of the successes of the U.S.-China
relationship was that the two countries have been able to manage
this situation. Ding agreed and added that the Anti-Succession
law and the Taiwan Relations Act made up the status quo. One of
the contributions of the Bush administration was to create more
room for cooperation on Taiwan. Beijing was now more confident.
Taiwan was no longer on the top of Beijing's agenda, and it was
now more focused on domestic issues.




16. (C) PDAS Stephens said that the United States, having
fought three land wars in Asia in the 20th century, had a strong
interest in peace and stability in the region. It was natural
for the United States to have relations with fellow democracies.
At the same time, the United States valued its relationship
with China and wanted China to improve its relations with other
countries including Japan. The USG wanted the Six-Party talks
to make progress and to not only lead to a de-nuclearized North
Korea, but also serve as an example of how the countries of the
region could work together. The best way to get such a
mechanism going was to get concrete results.




17. (U) This report was cleared by PDAS Stephens.
JARRETT