Stephan Haggard and Marcus Noland have an article in the latest Newsweek International (h/t OneFreeKorea) concerning the apparent change in North Korea’s attitude towards negotiations to denuclearize. While I don’t agree with all they suggest, this is what to take away from this article:

We think we know why North Korea is softening, or at least appears to be. We’ve been working on an in-depth profile of the North Korean economy, and it is in serious trouble… Our research suggests the main reason for the downturn was that U.S.-led sanctions hit harder than most people realize. Now more than ever, North Korea needs the financial benefits of a nuclear deal to survive. (emphasis added)

In effect, this says that those who have argued that North Korea is (likely) immune to such pressures are wrong. Many (n)k-bloggers have been suggesting that for some time that this may be the case (see this, this, and this). As it turns out, and despite being called a failure, the U.S. approach seeking to cripple North Korea’s illicit activities – a laundry list of mafia-like businesses – has in fact been key:

The sanctions struck a feeble economy from many sides. The United States led actions to shut down North Korea’s missile trade, and put the squeeze on its illicit smuggling and counterfeiting revenue. The black-market rate on North Korea’s currency plummeted after a small bank in Macau, central to the North’s money-laundering activities, was shut down. Japan effectively cut off a heavy flow of remittances to Pyongyang from North Koreans in Japan. We estimate that together with legal arms sales, revenue from contraband—including the production and trafficking of drugs, counterfeit cigarettes, smuggling of liquor and endangered-species parts, to name a few—may have accounted for as much as half of North Korea’s exports in the late 1990s but has fallen to roughly 15 percent in recent years due to sanctions. In the meantime, aid now finances 40 percent of imports. There are benefits to playing nice in the nuclear talks—or pretending to.

To clarify, I don’t think North Korea is actually planning to negotiate away all of its nuclear capability, but it may give up some of it in order to stay alive. And under no circumstances, while Kim Jong-il is in power, will North Korea genuinely engage and open up.

I believe it is now safe to say that Pyongyang’s days are numbered – the situation has fundamentally changed since similar predictions after Kim Il-sung’s death in 1994. The famine of the mid-1990s opened up fissures in state control that have only expanded with time, despite the best efforts of the North Korean government to reign in control. Kim Jong-il has even lost much of his base in Japan, formerly a vital source of hard currency. I now think the regime will eventually collapse rather than make it by on the military first policy. It’s only a matter of time, less than a decade, I think.

This is where I disagree with Haggard and Noland:

Is the Great Director now conjuring up a blockbuster tale, ending in a genuine breakthrough in the international confrontation over North Korea’s nuclear-weapons program? It is starting to look that way.

But this engagement is like that we saw in late 2001 and 2002; it is not driven by the desire to change, it is driven only by the desire to survive. There does not appear to be any evidence to the contrary. Everything North Korea will agree to will be reversible and they will be in receive mode only. If North Korea had been sincere in 2002 (and 1994, and 1992, and 1991), those reforms would still be in place, but they are not.

This is in large part why I am now dissatisfied with the Bush administration; rather than energetically pursuing more policies to strangle the Kim regime, they are engaging in pseudo diplomacy with North Korea. Perhaps they are just giving Kim enough rope to hang himself once last time, but that is no longer certain. Strangulation needs to be in full force to work.