A Game-Theoretic Approach to Derivation of President Barack Obama's North Korea Policy

OverviewThe tension on the Korean Peninsula decreased immediately following the dramatic reconciliation, in June 2000, between Kim Il-Sung, former leader of North Korea, and Kim Dae-jung, president of South Korea. President Kim Dae-jung adopted a policy of engagement toward North Korea called the "Sunshine Policy." Subsequent to President Kim Dae-jung's five-year rule, President Ro Moo Hyun inherited the engagement policy from his predecessor. Under the Sunshine Policy, South Korea provided North Korea with generous economic aid on an annual basis from 1998 to 2007.At the beginning of 2008, South Korea switched from a one-way engagement policy to a policy of give-and-take. South Korea's new president, Lee Myung Bak, inaugurated in February 2008, initiated this policy shift. President Lee came to believe that South Korea's engagement policy had failed. In February 2009, Barack Obama was inaugurated as the 44th president of the U.S.Under the Clinton administration, the U.S. attempted to settle disputes through direct dialogue with North Korea. It is reasonable to assume therefore that under the Obama regime, more of a direct dialogue between North Korea and the U.S. may be pursued to resolve pending issues, including North Korea's development of weapons of mass destruction and support of rogue terrorist states.North Korea has been excessively provocative in recent years. On October 9, 2006, North Korea test-launched a nuclear missile. Neighboring countries immediately expressed serious concern, and the U.S. nuclear envoy, Christopher Hill, doubled his efforts to ensure that North Korea fulfill its agreements on denuclearization through the Six-Party Talks countries; namely, South Korea, North Korea, China, Russia, Japan, and the U.S. North Korea agreed to disable the Yongbyon nuclear reactor and to dismantle nuclear facilities in the interest of nonproliferation. The international community is watching closely to determine whether North Korea will fulfill its obligations under these agreements. Kim Jong-il has to decide whether he will take further steps to put North Korea in the nuclear power club-which would be likely to invite furious resistance from the Western world-or opt instead to abandon the nuclear program to improve international relations.The purpose of this paper is to envisage President Obama's North Korea policy by applying game theory. In game theory, players try to adopt the best strategy, given their objective function. There have been six major players so far in the Korean Peninsula's nuclear conflict. We point out that interstate differences in the objectives between the national leaders and the party/military leaders have undermined the Six-Party Talks.This paper focuses on the game play between North Korea and the U.S. Although Kim Jong-il can effectively control his military advisers at present, there are potential divergences in their respective viewpoints, which may become more evident in the future.The Game Play in Economic Cooperation between South Korea and North KoreaIn June 2000, Kim Dae-jung of South Korea and Kim Jong-il of North Korea met for the first time to ease the tensions on the Korean Peninsula. Since this meeting, the two Koreas have expanded the scope of reconciliation and economic cooperation. The two countries agreed on the reunion of separated families, the establishment of an industrial complex in Kaesong, and the joint exploration of Kumgang Mountain as a means of promoting tourism. This "honeymoon period" abruptly ended when North Korea fired two nuclear missiles on October 9, 2006. During the period 2000-06, President Kim Dae-jung and his successor President Roh Moo-hyun implemented the engagement policy of reconciliation toward North Korea. With generous economic aid from South Korea, North Korea was able to overcome severe food and energy shortages. In return, North Korea opened Kumgang Mountain to South Koreans, and allowed South Korean businesses to hire lower-wage workers in the Kaesong industrial complex. …