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The Importance of North Korea’s Nuclear Arsenal to the Country’s Economy; How it Effects Pyongyang’s Calculus Regarding Sanctions and Denuclearisation

June 12th - 2018

Since suffering economic disaster and severe famine in the 1990s, North Korea has struggled to rebuild and modernise its economy while also bearing the significant burden of a massive conventional military budget. With the end of the Cold War and collapse of the Soviet bloc Pyongyang appeared particularly vulnerable to attack, and there appeared few limits to the power of the U.S. led Western bloc. The U.S. military would engage in 188 military interventions abroad over the next 25 years, an increase in frequency of over 250% compared to the Cold War era, the largest of which were against formerly Soviet aligned states such as Iraq. Newfound security threats made compromises to national defence effectively impossible for the North Korean leadership, despite the adverse effects such large military expenditures were having on the already struggling economy. 

North Korea has long been lambasted by its adversaries for, in the words of then U.S. President George W. Bush when branding Pyongyang a member of the ”˜Axis of Evil’: “arming with missiles and weapons of mass destruction, while starving its citizens.” While famine had long ago ended when these accusations were made, the President’s words nevertheless had a strong impact on world opinion. A number of Pyongyang’s greatest critics in the West, from Human Rights Watch to the White House, have accused the country of pursuing nuclear weapons at the expense of its citizens’ wellbeing – putting forward without evidence the claim that the Korean nuclear program has had an adverse effect on the wellbeing of the country’s population. An analysis of the North Korean nuclear program however strongly indicates its potential not only to act as a feasible deterrent and grant Pyongyang some form of nuclear parity with Washington, but also to facilitate improvements to the country’s economic situation by reducing the burden of a large conventional military force. Using weapons of mass destruction to reduce conventional military expenditure is a strategy which has been employed by other powers in the past, including both the United States and Soviet Union during the Cold War.

In the aftermath of the Korean War the U.S. had deployed well over 300,000 military personnel to South Korea, while also financially supporting a vast South Korean army of 720,000 men, over twice the size of that in the North which at that time deployed 350,000. In 1956 President Eisenhower declared his intention to reduce the United States’ substantial budget deficit by reducing expenditures on large ground forces. Military leaders considered that the only means of scaling down conventional forces and reducing military assistance to the south without leaving it vulnerable to attack would be to deploy tactical nuclear weapons to the peninsula. These were low yield nuclear bombs intended to be deployed on the battlefield – rather than strategic warheads which were intended for deterrence against far off adversaries. The United States thus unilaterally withdrew from article 13 (d) of the Korean War armistice agreement prohibiting the deployment of nuclear arms to the peninsula and stationed a large arsenal of nuclear weapons in South Korea from January 1958. This facilitated a significant scaling down of U.S. military forces deployed to the country, and proved an effective solution both strategically and economically. In the European theatre, the Soviet Union too was able to significantly reduce its military expenditure in the 1950s by relying more heavily on nuclear weapons, including nuclear artillery, tactical nuclear bombs and ICBM mounted strategic weapons. These proved far more cost effective in their destructive capabilities and value as a deterrent than conventional arms.

Nuclear weapons provide quite literally more ”˜bang for the buck’ than conventional arms, the value of which is not lost on states struggling with the burden of maintaining a vast conventional force. In 2016 North Korea’s ruling Workers’ Party announced the “Byungjin” policy of prioritizing both economic development and the development of nuclear weapons in parallel. It marked a significant change for the preceding policy of “Songun,” the policy of ”˜military first,’ and indicated the true value nuclear arms held for Pyongyang. That year the country took a significant step to reduce its conventional military spending, a trend set to continue in future as the country develops a more capable nuclear force and improves its second stage strike capabilities by developing a submarine based nuclear force – known to be Pyongyang’s objective to complement its land based missile forces. It was not for no reason that Byungjin paired economic development with the development of a viable deterrent force, as the latter serves as an effective facilitator of the former. For a state to reduce its overall military expenditure while perceiving growing threats of attack and war, particularly with a nuclear armed superpower, is extremely unusual. The most viable explanation is that a functional nuclear deterrent has not only eliminated the need for increased military spending, the norm for all states when facing growing military threats, but it has in fact facilitated cuts to the defence budget.

In regards to the cost of developing a nuclear program, the program represents what is very likely the most cost effective part of the North Korean military – and therefore the least likely to see cuts made to it as a result of external economic pressure. Former North Korean diplomat Kim Min Gyu, who in 2009 defected, stated regarding the costs of the nuclear program: “actually, what they spend isn’t that much. Their workforce works for free and, except for a few key imported parts, they make everything else.” With North Korea having managed to sustain significant economic growth despite unprecedented levels of extremely severe economic sanctions, a feat not lost on Russia, Iran, Iraq and others whose economies spiralled into decline when facing far less severe forms of economic warfare, cuts to the country’s conventional military budget could well be responsible for this economic stability. Reports indicate that despite their severity, sanctions long failed to have a noticeable effect on living standards and prices of consumer goods in the country, a stark contrast to Iran and Iraq in particular.

Pyongyang appears to be acquiring more modern asymmetric capabilities every year at a rate few states of similar size can match, as demonstrated by the new hardware so regularly displayed on parade and field tested. By investing in a smaller more elite fighting force backed by a nuclear deterrent the country is set to continue to relieve pressure on its formerly overburdened economy, a significant asset which could well be key to allowing the country to withstand economic sanctions without seeing a notable decline in living standards. While sanctions do much to curb the country’s potential for economic growth, and demonstrate the United Nations Security Council’s resolute will not to accept North Korea as the world’s ninth nuclear armed state, they are as a result of the nuclear program’s importance to North Korea’s economy highly unlikely to bring about full denuclearisation. Indeed if anything, it is possible that the cost of maintaining a large conventional force to match those of Pyongyang’s adversaries deployed to its borders indefinitely could well exceed the benefits of having sanctions relaxed. This is particularly true considering that sanctions from the United States and its allies are set to largely remain in place regardless of whether or not Pyongyang retains its nuclear arms – based on alternative pretexts such as human rights abuses as used today to sanction non nuclear states such as Venezuela, Cuba and Iran.


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