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Geopolitics Watch: In Canceling North Korea Summit, Trump Gets Two Birds With One Stone

◎ We believe that the Singapore summit could still be held in June.

On May 24, United States President Donald Trump scrapped a planned summit with North Korean leader Kim Jong Un in Singapore.

SinoInsider analyzed earlier that the Sino-U.S. trade negotiations are tied with North Korean denuclearization and peace talks. We believe that Trump’s move to call off the June 12 Singapore summit is ultimately aimed at securing the denuclearization of the Korean Peninsula, as well as consolidating and even improving upon the trade “framework” agreed with Beijing.

The backdrop:
May 3-May 4: The first round of Sino-U.S. trade talks are held in Beijing.

May 6: North Korean state media accuses America of “deliberately provoking” the DPRK.

May 7-May 8: Kim Jong Un and Xi Jinping meet in Dalian. Kim again pledges to denuclearize.

After the meeting, Xi and Trump have a phone call where they “agreed on the importance of continued implementation of sanctions on North Korea until it permanently dismantles its nuclear and missile programs,” according to the White House readout of the call. In the Xinhua readout, Xi said that China is “willing to play an active role in realizing the denuclearization of the Korean Peninsula and the long-term stability of the region.”

May 9: North Korea releases three American prisoners.

May 14: Chinese language media report that a North Korean plane arrived in Beijing and was received by the North Korean ambassador.

May 15: State Council vice premier Liu He leads a Chinese delegation to Washington for the second round of trade talks. Meanwhile, North Korea invites eight South Korean journalists to cover the dismantling of its nuclear site.

May 16: North Korea suddenly cancels high-level talks with South Korea and threatens to withdraw from the Singapore summit over an annual U.S.-South Korea military drill that commenced on May 11 and White House National Security Advisor John Bolton’s May 13 televised comments about how North Korea should follow the Libyan model of denuclearization.

May 18: North Korea refuses to allow the eight South Korean journalists to cover the nuclear site dismantling.

May 21: Three days after a China-U.S. joint statement on trade is issued, Trump tweets that “China must continue to be strong & tight on the Border of North Korea until a deal is made.”

Vice President Mike Pence said on Fox News: “There was some talk about the Libyan model last week, and you know, as the President made clear, this will only end like the Libyan model ended if Kim Jong Un doesn’t make a deal.”

May 22: During a press conference with South Korean president Moon Jae-in, Trump said: “When I think about trade in China, I’m also thinking about what they’re doing to help us with peace with North Korea.”

May 23: North Korea grants a last-minute invitation to eight South Korean journalists to cover the destruction of its nuclear test site.

May 24: North Korea’s vice-foreign minister Choe Son Hui chastised Mike Pence for saying that North Korea could end up like Libya. “Whether the US will meet us at a meeting room or encounter us at nuclear-to-nuclear showdown is entirely dependent upon the decision and behavior of the United States,” she said, and added that North Korea should reconsider the Singapore summit. Trump released his letter to Kim Jong Un hours after her remarks were made.

Speaking about the scrapped summit at a press conference, Trump said that the U.S. military is “ready, if necessary,” and that South Korea and Japan are willing to shoulder much of America’s “financial burden … in operations if such an unfortunate situation is forced upon us.”

Secretary of State Mike Pompeo said after Trump released his letter canceling the Singapore summit that the U.S. had “over the past many days” received no response from the North Korean side to American inquiries on preparations for the summit. Pompeo and Kim Jong Un had agreed to put “preparation teams together to begin to work to prepare for the summit” during Pompeo’s trip to North Korea to secure the release of the American prisoners.

Meanwhile, a high-ranking North Korean official appears to have flown to Beijing after Trump called off the summit, according to Western and Japanese news reports. The official was received by a Chinese government vehicle, and could be holding talks with Chinese officials.

Our take:
1. Trump’s letter is a polite rebuke of North Korea for its recent belligerent statements. His mention of America’s “massive and powerful” nuclear capabilities in the letter, and his remarks about America’s powerful and “greatly enhanced” military being “ready, if necessary,” send a reminder to Kim that U.S. military option was never off the table.

Trump wants the peace and denuclearization talks with North Korea to succeed and for China to cooperate on the issue. Expect Trump to keep up the “maximum pressure” campaign on North Korea and for Beijing to work with Washington in sanctioning North Korea until Kim Jong Un caves.

This January, Kim signaled a nearly 180-degree change in attitude in sending a delegation to the Winter Olympics in South Korea and later seeking a summit with Trump. Before Kim’s about-face, Trump’s “maximum pressure” campaign starting in late 2017 had seen very tough sanctions imposed on North Korea, the holding of evacuation and military drills with Japan and South Korea, and South Korea’s creation of a “leadership decapitation” special forces unit. Trump canceling the Singapore summit and renewing the threat of using military and nuclear capabilities against North Korea should bring Kim back to the table.

2. Beijing should work with Trump on North Korea because it needs the U.S. not to impose trade tariffs and grant a reprieve to ZTE. The ZTE issue is both a face issue and a political stability issue for the Chinese Communist Party (CCP). Before the U.S. Commerce Department banned American companies from selling services and products to ZTE, the Chinese telecommunications maker was prominently featured in a propaganda film about China’s tech achievements. The U.S. business ban, however, has effectively crippled ZTE’s operations and has its 75,000 workers idling about. If ZTE is forced to carry out mass layoffs, the Chinese regime could see large-scale social unrest and a paralyzed economy. Also, ZTE provides communications and other tech equipment to the People’s Liberation Army, and its collapse would affect Chinese military operations. The CCP would do anything to save face and preserve its rule, and should accede to U.S. conditions to keep ZTE afloat.

We wrote earlier that should ZTE be granted a reprieve, the U.S. would place it on strict “probation” and keep the company on a tight leash. Since then, Trump has talked about slapping ZTE with a $1.3 billion fine, changing its management, and getting it to adhere to “very, very strict security rules.” Separately, Commerce Secretary Wilbur Ross has suggested that U.S. compliance officers could be installed in ZTE after management changes and that the company is not “in strong negotiating position” to reject such an arrangement. With a future Trump-Kim summit in question, expect Beijing to agree to U.S. handling of ZTE, but sell the concessions as being part of its own plans for opening up the Chinese economy.

China has the most to lose in the current geopolitical contest with the U.S. and North Korea given its current economic situation and the threat of trade war with America. It is unlikely that Beijing would be goading Pyongyang to strike a belligerent tone and undermine the denuclearization and peace talks, which the Trump administration has tied closely with Sino-U.S. trade negotiations. Trump administration officials have repeatedly said that suspended tariffs could always be put back on if Trump is unhappy with the progress of the trade talks. Regime survival is first and foremost for the CCP, and it would not risk a full-blown trade war with the U.S. by resorting to North Korean gambit that gives it no leverage over an America bent on putting “maximum pressure” on the DPRK.

3. North Korea appears to be playing both the U.S. and China with its recent recalcitrance. Given that Kim Jong Un fully understands what Trump wants and knows that he cannot challenge the U.S., there is a good chance that his “about face” is geared toward extracting more economic aid from China after the denuclearization of North Korea.

The relationship between the PRC and the DPRK is complex at best, and Xi and Kim are known to dislike each other. Due to the existing dynamic between the two communist countries and their current leaders, we wrote that the Xi-Kim meeting in Dalian is likely an effort by Xi to rein in Kim after North Korea started making hostile noises. Most observers, however, would be more inclined to believe that Xi and Kim may be acting together against the U.S. because conventional wisdom holds that the PRC has huge sway over the DPRK. Kim Jong Un is likely aware of the conventional view, and could be exploiting the bias of “conventional wisdom” to create a ruckus when Sino-U.S. trade discussions are not yet finalized to embarrass Xi Jinping into making concessions.

A less plausible explanation for North Korea’s recent sharp remarks is the need to drive internal propaganda. Kim cannot appear to be weak when giving up his nuclear weapons or he risks losing face and legitimacy. Yet the Kim regime would likely be aware of the risks of being “overzealous” in propaganda, and should have kept a moderate tone instead of ramping up tensions.

We believe, however, that Kim does want the summit and is willing to denuclearize in exchange for security guarantees and economic benefits. The release of American prisoners and dismantling of the nuclear test site suggest that he is taking the opportunity to set North Korea on a path of peace and prosperity quite seriously. But it appears that Kim has allowed himself to be outplayed by his own greed.

What’s next:
1. Xi Jinping and Kim Jong Un would likely seek communications with Trump to re-establish the denuclearization talks. And Trump has left the door open for Kim to restart talks in his letter. We believe that the Singapore summit could still be held in June.

2. With ZTE still crippled and China facing the possibility of U.S. sanctions in early June, Xi would be the most anxious of the three leaders to force progress in the Trump-Kim summit. The arrival of a high-ranking North Korean official in Beijing shortly after Trump canceled the Singapore summit echoes the summoning of Kim to Dalian after the first signs of North Korean defiance on May 6.

If Kim is still recalcitrant, Xi could toughen sanctions on North Korea and become more accepting of additional U.S. trade demands. If Xi gets Kim to go back to the table, ZTE might get a more favorable, but no less strict security-wise, reprieve.

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