U.S. should engage with North Korea economy: report

U.S. should engage with North Korea economy: report

Thu Oct 22, 2009 4:55pm EDT

By Paul Eckert, Asia Correspondent

WASHINGTON (Reuters) - Ambitious U.S. economic engagement with North Korea would help end Pyongyang's isolation and moderate its behavior, aiding efforts to rid that country of nuclear arms, a task force report said on Thursday.

The study by leading U.S. experts on North Korea, released as Washington weighs whether to engage in bilateral talks with Pyongyang, argues that sanctions alone will not denuclearize the North and will tend to strengthen hostile forces there.

"Sanctions alone cannot provide protection from the threat posed now or in the future by North Korea," said the report by the Asia Society and the University of California Institute on Global Conflict and Cooperation.

"Instead, economic engagement starts a process that may lead to significant benefits without enhancing the DPRK's military capabilities or making the U.S. or its allies more vulnerable," it said.

A U.S. outreach -- through academic exchanges, development projects, and helping North Korea work with the International Monetary Fund and Asian Development Bank -- could spur better behavior by Pyongyang while helping its impoverished citizens, the task force argues.

With approaches similar to those the Obama administration is attempting with Iran and Myanmar, Pyongyang could be shown incentives that "generate vested interests in continued reform and opening, and in less hostile foreign relations," it said.

The task force acknowledges that North Korea has not shown much interest in economic reform or opening, and that a delicate leadership transition to succeed leader Kim Jong-il means Pyongyang's hardliners appear to be ascendant.

North Korea held its second nuclear test in May and conducted a series of missile tests, drawing fresh U.N. Security Council sanctions designed to restrict its arms sales and proliferation activities.

But the North also signaled it wanted better relations with Washington, freeing two jailed U.S. journalists in August and signaling that it could return to multilateral region talks but wanted to talk to the United States first.

Washington should be patient and determined and take steps to bolster forces in North Korea that want to engage, while promoting interactions that increase the importance of markets in the North's economy, said the report.

"Military and civilian hardliners in Pyongyang flourish in an international atmosphere of hostility, distrust, and isolation; pragmatists will be unable to advance their agenda without contact with the world outside," it said.

The State Department last week said it had decided to grant a visa to Ri Gun, North Korea's No. 2 official at six-party talks, to attend unofficial meetings in New York and San Diego at which U.S. officials are also expected to appear.

The task force recommended Washington expand official contacts "as widely as possible with North Korea," while also utilizing so-called "track two" unofficial dialogues like the ones Ri will attend later this month.

In addition, academic exchanges with North Korea should be expanded, U.S. aid and development groups should be encouraged to work there, and the United States should end policies aimed at keeping Pyongyang out of the IMF and other international financial institutions, it said.

(Editing by Eric Walsh)

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