Solving the Korean crisis with game theory

People have asked me whether game theory can offer any insights for finding a solution of the North Korean nuclear crisis. Let me suggest that the answer may be Yes, as I will try to explain here in a nontechnical note without mathematical analysis. Based on a few general points that one can learn from game-theoretic analysis, I will explain why an effective strategy for encouraging moderation and political change in North Korea may be possible only with a long-term American commitment to recognize and respect China’s vital security interest in North Korea.

The first lesson that students learn from game theory is that we should try to think about any conflict situation from the perspectives of all the parties involved. Game theory also teaches us that a strategy for inducing others to behave better should include, not only a threat to punish their bad behavior, but also a promise to reward their good behavior. If we have a problem in making such threats and promises credible, then it may be necessary to stake our reputation on them, so that we would lose our ability to influence others in the future if we did not act as promised in this situation. But game-theoretic analysis often finds that a party can increase its current power to influence others by accepting such commitments that could reduce its own freedom of action in the future.

Several years ago, I argued that American military threats against Iran only tended to increase Iran’s motivation to acquire its own nuclear deterrent; and so an effective strategy for deterring Iran from acquiring nuclear weapons had to include an offer of better relations between America and Iran if Iran complied with international standards of nuclear nonproliferation. But I would be less optimistic that North Korea’s nuclear ambitions could be deterred by such an offer of detente. The rulers of North Korea must fear that their grip on power may require perpetual military tension with South Korea and its American ally, because peaceful relations could enable the people of North Korea to discover the vastly greater prosperity and freedom that Koreans enjoy in the South.

As a result, North Korea has become a perennial source of international tensions, and it has invested heavily in destructive military capabilities, so that any military operation against North Korea would be extremely dangerous for its neighbors. Economic sanctions have remained as the primary instrument for deterring North Korean provocations, but such sanctions cannot be effective without China’s full cooperation. In the past, a lack of such cooperation has undermined America’s efforts to use sanctions for inducing better behavior by North Korea.

Thus, an effective American strategy for managing the Korean crisis depends on finding a way to induce better Chinese cooperation with international sanctions against North Korea. Threats to extend trade sanctions against China are unlikely to induce full cooperation, and such a trade war would be at least as harmful to America as to China. But it is a mistake to think only about threats when searching for strategies to induce others to cooperate. Americans need to think also about promises that America could offer to make China prefer full cooperation with sanctions against North Korean violations of nuclear nonproliferation agreements.

It might seem surprising that China has not been a stronger supporter of sanctions against North Korea’s nuclear program. After all, no country would want an unreliable neighbor to acquire nuclear weapons. So what has limited China’s willingness to cooperate with America against North Korea? We must look at the situation from China’s perspective to understand what kind of promises could elicit the Chinese cooperation that is essential for solving the Korean crisis.

When we ask how the Korean situation looks from China’s perspective, we should recognize, first and foremost, that Korea was the starting point of the Japanese invasion of China in the early 20th century. Once Japan had achieved military dominance of Korea in 1905, Korea served as Japan’s base for invading China until the end of World War II in 1945. Of course the leaders of China know that their country is one of the most powerful nations in the world today, but people in China cannot forget the devastating Japanese invasion that entered China through Korea. We must understand that the people of China remember this history and demand that their leaders, who are responsible for their country’s security, must never permit the conditions for such an invasion to happen ever again.

But any threat that can effectively deter the rulers of North Korea must entail some risk of causing them to lose their grip on power. And any process of political change in North Korea, once it begins, could naturally open the way to a reunification of the peninsula under the government of South Korea, which already hosts American military forces. In that case, what would prevent American forces from moving north to the Chinese border? Such a possibility was intolerable to China in 1950, and we should understand that it is still intolerable for China today. This fear has made China resist any threat that could destabilize the North Korean regime.

Thus, to get China’s effective cooperation against North Korean militarism, America needs to provide some assurance that political change in North Korea would not expose China to any risk of foreign military forces on the Chinese border there. Indeed, one could argue that an American failure to recognize Chinese security concerns has been a factor in the Korean crisis since 1950, when America first tried to settle the crisis by moving its forces north to the border with China. Since then, China has seen only one clear way to ensure that powerful foreign forces should never return to its Korean border, and that is by maintaining the xenophobic regime of Kim Il Sung and his heirs as a buffer against all other powers. So any possibility of political change in North Korea will be strongly resisted by China unless it gets some credible assurance that its vital long-term security interests there would be respected even in the event of a regime change.

The fact that America and its NATO allies actually did move their forces eastward toward Russia after the end of Communism in Eastern Europe constitutes an unhelpful precedent which must be addressed. But there is nothing in North Korean history to resemble America’s long historical connection with Poland and other parts of Eastern Europe. Strong statements by American diplomats and leaders of both parties could give China some confidence that America would not use regime change to expand its power into northern Korea.

In the old language of 19th-century realpolitik, the key is for America to recognize the northern half of the Korean peninsula as being in China’s sphere of influence. Today, of course, agreements among great powers to recognize each others’ spheres of influence would be generally viewed as inconsistent with the principle of political self-determination for the people of every country. But in this case, a promise by America and its allies to respect a long-term Chinese sphere of influence in northern Korea could be actually the essential key to creating some possibility for the people of North Korea to change the political course of their country.

Thus, a credible commitment to keep American forces out of northern Korea could be the basis for a strategy to achieve long-term American policy objectives in Korea with Chinese cooperation. Some observers might consider such a commitment as a concession by America, but a game theorist would recognize it as a concession which could actually strengthen America’s ability to influence the situation.

See also the sequel “On the problem of commitment in Korea.”