The worse North Korea acts, the more cash aid it gets

Key Points
  • Missile tests could be a means for North Korea to gain aid money from the same countries leading international sanctions on it, according to Tufts University's Sung-Yoon Lee
  • Whenever Pyongyang acts out, negotiations and concessions from the international community usually follow, Lee said
North Korea tensions: More provocation ahead?
North Korea tensions: More provocation ahead?

North Korea's episodes of nuclear aggression are typically interpreted as demonstrations of force, but they may actually be generating funds for its cash-strapped economy.

"For Pyongyang, it pays to provoke," Sung-Yoon Lee, Korean Studies professor, The Fletcher School at Tufts University, told CNBC on Monday. "Whereas good behavior buys only indifference from its richer neighbors, being a bad apple buys leverage and billions in aid."

The same countries admonishing North Korea leader Kim Jong Un for nuclear belligerence still shell out large sums of diplomatic aid under the motive of "damage-control diplomacy, i.e. getting the North to back off and stay out of the headlines for a while," Lee said. "Exporting insecurity is [Pyongyang's] time-tested means to reaping concessions."

Over the past quarter-century, the pariah state has amassed $20 billion worth of cash, food, fuel, and medicine from the U.S., Japan, China and South Korea. That's come from "repeated lies of denuclearization," according to Lee, who has testified as an expert witness at U.S. government hearings on North Korea policy.

Pyongyang has often promised to get rid of its nuclear weapons — in 2007, the communist state agreed to disable all nuclear facilities in return for fuel oil or economic aid. Evidently, disarmament never materialized.

More recently, Kim's regime said it was willing to freeze nuclear and missile testing if Washington halts joint military exercises with Seoul.

North Korea has been engaged in a "crafty" cycle in which it commits hostile acts that are typically followed by negotiations and concessions from the international community, explained Lee, who added that he expects "that tired old tale to continue for the foreseeable future."

A mass rally held at Kim Il-sung Square in Pyongyang, North Korea, on August 9, 2017.
KCNA | Reuters

Going forward, Kim could further exploit that pattern under the administration of South Korean President Moon Jae-in, who advocates stronger inter-Korean relations and humanitarian aid.

"North Korea wants to use its nukes to be better positioned to extort and bully the South. Pyongyang will blackmail the Moon government, which remains very much pro-appeasement ... hence the cycle of provocations-negotiations-concession will continue," said Lee.

Billions worth of aid

Washington sent $1.3 billion in unconditional aid to the rogue nation between 1995 and 2008. About 60 percent of that was for food aid, with the remainder going to energy assistance, according to U.S. government data.

More recently, President Barack Obama's administration sent $1 million for flood relief via the United Nations in January this year before President Donald Trump took office. It was the first U.S. humanitarian assistance to the isolated nation since 2011, when Washington gave Pyongyang $900,000 through independent relief organizations.

Humanitarian aid is exempt from the diplomatic sanctions.

South Korea has officially given its northern neighbor $7 billion between 1998 and 2007 in cash, food, fertilizer, medical supplies and the like.

North Korean leader Kim Jong Un reacts during the long-range strategic ballistic rocket Hwasong-12 (Mars-12) test launch in this undated photo released by North Korea's Korean Central News Agency (KCNA) on May 15, 2017.

"Defusing tension and getting Pyongyang to back off has been the standard by which Seoul measures success in inter-Korean relations," he added.

In 2013, Seoul approved $6 million in government aid for North Korean children. Last month, Moon's administration also said it was willing to pay $6 million to help the the pariah state conduct a population census, local media reported.

China, the world's second-largest economy, has provided Pyongyang with $1 billion to $1.5 billion since 2003, Lee estimated.

Even when Sino-North Korean relations are visibly acrimonious, Beijing still doles out aid and political support to protect strategic interests in the region, according to Lee, citing the historical track record. A collapse of North Korea's regime isn't expected to bode well for the mainland as it could result in increased U.S. presence on the continent and millions of refugees fleeing across the border.

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Chinese oil sales to North Korea should be cut off: Center for Security Policy's Fred Fleitz
Chinese oil sales to North Korea should be cut off: Center for Security Policy's Fred Fleitz