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C O N F I D E N T I A L SECTION 01 OF 04 SHANGHAI 000043 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/CM 
NSC FOR WILDER 
 
E.O. 12958: DECL:  1/23/2017 
TAGS: PREL PGOV CH TW JA KN
SUBJECT: SHANGHAI SCHOLARS PESSIMISTIC ABOUT NORTH KOREA 
 
 
CLASSIFIED BY: Simon Schuchat, Deputy Principal Officer,  , U.S. 
Consulate Shanghai. 
REASON: 1.4 (b), (d) 
¶1. (C) Summary:  During a January 19 lunch with PDAS Stephens, 
Shanghai scholars were pessimistic that there would be progress 
on North Korea in the near term.  One scholar said that while 
North Korea would continue to participate in the Six-Party 
Talks, it would never give up its nuclear program.  Others said 
that in the long-term there was still hope.  All acknowledged 
that China could do more on North Korea.  It should have a more 
normal relationship with North Korea, fully implement UNSC 1718 
and not provide any assistance above what is needed to maintain 
the minimum living standard of the North Korean people.  The 
scholars noted that Beijing was uneasy about the A/S Hill and 
VFM Kim meeting in Berlin, which could be seen as a signal that 
there were venues other than Beijing for discussions between the 
United States and North Korea on the nuclear issue.  PDAS 
Stephens stressed USG commitment to implementing the Joint 
Statement.  North Korea would not get a better deal if it 
waited.  End summary. 
 
 
 
¶2.  (SBU) On January 19, DPO hosted a lunch for PDAS Stephens 
and some of Shanghai's leading international relations scholars. 
 At the lunch were Shanghai Institute of American Studies 
President Ding Xinghao, Fudan University Center for American 
Studies (CAS) Director Shen Dingli, Shanghai Academy of Social 
Sciences Institute of European and Eurasia Director Pan Guang, 
Jiaotong University Shanghai Center for RimPac Strategic and 
International Studies Executive Vice-Director Zhuang Jianzhong, 
and Shanghai Institute for International Studies (SIIS) American 
Studies Department Director Chen Dongxiao. 
 
 
 
Berlin Meeting vs. Six-Party Talks 
 
----------------------------------- 
 
 
 
¶3.  (C) The scholars probed PDAS Stephens for information on A/S 
Hill's meeting in Berlin with North Korean VFM Kim Gye-gwan. 
SIIS Chen said Beijing was a little uneasy whether the Berlin 
meeting represented a new form of engagement with North Korea 
and noted that this was the first time that A/S Hill and VFM Kim 
had met outside of Beijing.  CAS Director Shen said that the 
advantage of the Berlin meeting was that it created an 
opportunity for the United States and North Korea to remove 
hurdles.  However, the disadvantage was that it undermined 
Beijing's significance.  He acknowledged the State Department 
statement on the Berlin meeting, but said that no matter what 
Washington says, the perception in Beijing was that the DPRK was 
using the talks to signal that Beijing was no longer the only 
venue for meetings between A/S Hill and VFM Kim. 
 
 
 
¶4.  (C) PDAS Stephens stressed that the United States felt 
strongly that to achieve lasting gains on this issue, China 
needed to be a part of it.  She suggested the scholars not over 
interpret one meeting.  She added that the United States did not 
want to enter into another round of Six-Party Talks unless it 
was clear that the North Koreans were ready for real 
discussions.  The purpose of A/S Hill's meeting in Berlin was to 
assess the North Koreans to see if they were ready to take 
concrete steps to implement the September 2005 Joint Statement. 
 
 
 
Financial Sanctions 
 
------------------- 
 
 
 
¶5.  (C) Scholars also asked about the financial sanctions and 
the likelihood that the United States would lift the sanctions. 
PDAS Stephens said there appeared to be a great deal of 
misunderstanding about the Banco Delta Asia issue. It was 
Chinese authorities who had frozen the accounts.  This was not a 
simple political issue.  The 24 million USD that was frozen 
 
SHANGHAI 00000043  002 OF 004 
 
 
paled in comparison to the benefits that North Korea could 
receive if it implemented the Joint Statement.  The North 
Koreans must do their part and acknowledge that there was a 
problem.  Money laundering and counterfeiting were not new 
issues.  There would be a meeting of experts on January 22 on 
these financial issues.  If the financial issues were resolved, 
she hoped that the North Koreans would not find another excuse 
to not implement the Joint Statement.  UNSCR 1718 would remain 
in effect.  She stressed that making progress in the Six-Party 
Talks was a big priority for the USG.  North Korea should not 
think that it would get a better deal if it waited.  There was 
U.S. bipartisan support for the Administration in this area. 
 
 
 
Short-Term Resolution Unlikely 
 
------------------------------ 
 
 
 
¶6. (C)  All of the scholars were pessimistic that there would be 
progress on North Korea in the near future.  Jiaotong University 
Zhuang said North Korea was determined to have nuclear weapons. 
Shen said that there were two different possible 
interpretations.  The first was that North Korea had genuine 
security concerns and it would not give up its nuclear program 
until its security was assured.  The second was North Korea had 
genuine security concerns and did not trust the United States. 
Even if the United States no longer appeared to threaten the 
DPRK, it would still retain its nuclear weapons.  Under this 
assumption, North Korea would use every "tool" to prevent 
implementation of the Joint Statement.  Even if the financial 
sanctions were lifted, North Korea would find another tool. 
 
 
 
¶7.  (C) As a realist, he was more inclined towards the second 
interpretation.  He predicted that North Korea would not make 
any significant concessions in the near future.  He said it 
could return to the Six-Party Talks, but would ensure that there 
were no substantive advances in the talk. North Korea was 
waiting for a new government in Washington in the hopes that the 
new administration would accept a nuclear North Korea.  He said 
that North Korea was inspired by the Indian example.  If North 
Korea proved that it was a responsible nuclear country and met 
three conditions in the next three to four years, then the 
international community would re-embrace it.  These conditions 
were to not export nuclear weapons, not engage in 
state-sponsored terrorism and not to engage in money laundering 
or other cross-border crimes. 
 
 
 
¶8.  (C)  According to Shen, China would not go all out to stop 
North Korea as in the short-term North Korea's actions were in 
China's interests.  While an irresponsible nuclear North Korea 
was a threat to China, a responsible North Korea -- one that met 
the above three conditions -- was not a threat.  He added, 
however, that China could change its mind if Japan also decided 
to acquire nuclear weapons, in reaction to a nuclear North 
Korea.  Later in the conversation he noted that a nuclear Japan 
would not be completely disadvantageous.  Every issue has 
advantages and disadvantages, in the words of Mao Zedong.  A 
nuclear Japan could be helpful in promoting stability in the 
region.  (Comment: Presumably if it also supported China's 
efforts to take back Taiwan by force.  End comment.)  Even a 
non-democratic country could transform itself into a positive 
force.  For example, China in the 1950's had nuclear weapons. 
At that time, its people were starving and it was supporting 
insurgents in Indonesia.  China has been able to successfully 
transform itself into a productive, stable country.  If China 
could, why can't North Korea?  The risk was whether North Korea 
could successfully follow China's example.  He did not think 
that there were many choices and said that North Korea would not 
abandon its nuclear program.  The United States did not have 
many alternatives, it could either accept North Korea or bomb 
it.  He suggested that, as a way forward, the United States 
Congress pass a law that allowed the President to impose 
sanctions but lift the sanctions after a few months to encourage 
 
SHANGHAI 00000043  003 OF 004 
 
 
the North Koreans to return to the negotiations. 
 
 
 
¶9.  (C)  Chen said that while he accepted Shen's interpretation, 
domestic problems, such as the economy and succession issues, 
could affect North Korea's decision to maintain its nuclear 
program.  He added that there were conflicting messages on how 
Kim Jong-il perceived the problem.  He agreed that Japan's 
actions could impact China's calculations.  The United States 
was loosening restrictions on Japan's military and had 
encouraged Japan to play a more normal assertive military role. 
He was pessimistic about the immediate future and said that the 
United States had already lost its window of opportunity.  North 
Korea was waiting for the next administration.  China had told 
North Korea that the idea that the next administration would 
change its policy was an illusion.  However, the North Koreans 
believed this, and would not likely return to the negotiations. 
 
 
 
¶10.  (C) Ding rejected Shen's comparisons of North Korea to 
India and China.  One could not compare India and China to North 
Korea.  Both China and India were big countries with big 
populations.  These countries have more responsibilities then 
small countries like North Korea.  He added that the North Korea 
issue was not isolated from other issues such as Taiwan and 
Japan.  Beijing was trying to balance all of these issues.  He 
too was very pessimistic about North Korea.  North Korea was 
very shrewd and knew how to maneuver between the United States 
and China.  Zhuang was the most optimistic of the scholars.  He 
said that there was still hope for a resolution.  The 
international community was united and the United States was 
doing the right thing.  It was important to use the carrot and 
stick approach.  "We must continue to engage North Korea as well 
as maintain the UN resolutions against North Korea," he said. 
 
 
 
¶11.  (C) PDAS Stephens observed that the scenario described by 
Professor Shen was not in China's interests. She also agreed 
with Ding that there was no comparison between North Korea and 
India.  She added that it was high risk gamble for Beijing to 
believe that North Korea would abide by the three conditions 
laid out by Professor Shen.  This was especially true since it 
was hard to know the internal dynamics of North Korean politics. 
 The North Korean system survived because of the lifeline 
provided by China and the cultivation of an external threat. 
 
 
 
China's Role 
 
------------ 
 
 
 
¶12.  (C) Scholars all acknowledged that China could do more on 
the North Korea issue.  Chen said that China should have a "more 
normal" relationship with North Korea.  He said that in the 
past, when North Korean scholars came to China, Chinese scholars 
usually were sympathetic to North Korean scholars concerns about 
external threats.  Recently, Chinese scholars have stressed to 
them that North Korea must also resolve its internal domestic 
problems such as improving government performance and the 
economy.  He said that their North Korean interlocutors 
definitely understand that China believes that North Korea must 
find solutions to their internal problems.  Zhuang said China 
needed to see that a nuclear North Korea was not in its national 
interests.  It should fully implement UNSC 1718, not just parts 
of it.  China must also be more active in soft diplomacy and 
show North Korea more examples of how China developed.  At the 
same time, it must implement hard diplomacy and not provide any 
assistance beyond what is necessary to maintain the minimum 
living standards of the North Korean people. 
 
 
 
¶13.  (C) Shen agreed that China should do more, but said that it 
would be difficult for China to go all out on North Korea. 
 
SHANGHAI 00000043  004 OF 004 
 
 
According to Shen, maintaining good relations with North Korea 
was in China's national interests because in Beijing's eyes, 
North Korea was linked to Taiwan.  If a conflict was to breakout 
in the Taiwan Straits, it would be difficult for the United 
States to intervene as China could open up a second front in 
North Korea.  He noted that everything China was doing from 
announcing the construction of an aircraft carrier to building 
more weapons was to bring psychological pressure to Taiwan. 
2007 and 2008 were the most vulnerable two years for China 
because of the upcoming Taiwan presidential elections and the 
Olympics. China would be making key strategic decisions in these 
years.  After a few years, China would surpass Taiwan in its 
development and be in a more secure position.  He added that it 
would be difficult for China to make relations with North Korea 
"more normal."  If China cut off relations with North Korea, 
then North Korea could change its allegiance from Beijing to the 
West. 
 
 
 
Taiwan and North East Asia Security 
 
----------------------------------- 
 
 
 
¶14.  (C) PDAS Stephens noted that some Americans believed that 
China overreacts to Chen Shui-bian. The trend line for Taiwan 
was getting better and better and the United States understood 
its role.  The USG position was clear and consistent.  Shen said 
that China was making progress in this area.  It often did not 
respond to President Chen's provocations and when it did 
respond, it behaved more moderately.  In addition, China was 
trying to be more proactive in telling Taiwan about China's 
bottom line.  China was being responsible but Taiwan must also 
be responsible and not risk its own life.  China's uneasiness 
with Taiwan and the North Korean nuclear issue were all 
connected to first tier security structure questions.  While the 
United States was a strategic collaborator, it was also a rival 
of China.  He indicated that some in China still had doubts 
whether China could trust the United States. 
 
 
 
¶15.  (C)  PDAS Stephens noted that the fact that there was 
special legislation on Taiwan was an indication that the Taiwan 
situation was unique.  One of the successes of the U.S.-China 
relationship was that the two countries have been able to manage 
this situation.  Ding agreed and added that the Anti-Succession 
law and the Taiwan Relations Act made up the status quo.  One of 
the contributions of the Bush administration was to create more 
room for cooperation on Taiwan.  Beijing was now more confident. 
 Taiwan was no longer on the top of Beijing's agenda, and it was 
now more focused on domestic issues. 
 
 
 
¶16.  (C) PDAS Stephens said that the United States, having 
fought three land wars in Asia in the 20th century, had a strong 
interest in peace and stability in the region.  It was natural 
for the United States to have relations with fellow democracies. 
 At the same time, the United States valued its relationship 
with China and wanted China to improve its relations with other 
countries including Japan.  The USG wanted the Six-Party talks 
to make progress and to not only lead to a de-nuclearized North 
Korea, but also serve as an example of how the countries of the 
region could work together.  The best way to get such a 
mechanism going was to get concrete results. 
 
 
 
¶17.  (U) This report was cleared by PDAS Stephens. 
JARRETT