North Korea’s Negotiating Position Is Out of Reach for Iran, Even if It Acquires a Bomb

1024px-Kim_and_Trump_shaking_hands_at_the_red_carpet_during_the_DPRK–USA_Singapore_Summit

by Esfandyar Batmanghelidj

The Singapore Summit was bittersweet for those working to save the Iran nuclear deal. Just a few weeks after Trump violated a robust, multilateral arms control agreement, he choreographed his own bid to strike a similar agreement with North Korea. The hypocrisy was grating. But there was something almost nostalgic about watching another “historic summit” that promised to bring a member of the “Axis of Evil” in from the cold. The value of dialogue is central to the defense of the Iran deal, and so it is hard to fault Trump for making an effort to engage North Korea, even if his method is characteristically superficial.

Nonetheless, it was galling to see Trump legitimize a regime far more totalitarian than Iran simply to deescalate a crisis of his own making. The whole summit seemed to validate calls in Iran, growing louder as the Joint Comprehensive Plan of Action (JCPOA) approaches its demise, to make a dash to a nuclear weapon. As Mahsa Rouhi explains, Trump’s deference to Kim has given rise to increasingly loud voices in Iran that “also favor escalation and seek to use brinkmanship to secure a more favorable deal for themselves.” Iranian hardliners “insist that if Iran accelerates its program to build significant nuclear capabilities, or even a bomb, it will gain leverage and be in a much stronger bargaining position for comprehensive concessions.” Seen this way, Trump’s invitation for Iran to come to the table and negotiate a “real deal” with him is an invitation for proliferation.

But observers in Iran should not be fooled. The nuclear deterrent is not the only source of Kim’s strong negotiating postion. This becomes clear when you compare the Joint Plan of Action (JPOA), the framework agreement which led to a nuclear deal with Iran, and the document signed by Trump and Kim on June 11.

During the summit press conference, Trump said that he had implored Kim to “think of [the opportunity] from the real estate perspective,” including the potential for North Korea to “have the best hotels in the world.” Trump also referenced the bizarre “movie trailer” the White House produced for Kim, which included renderings of a massive construction boom in Pyongyang. Secretary of State Mike Pompeo was a bit more specific, suggesting the United States could offer “technology, knowledge, entrepreneurship, efforts to build systems” if the right deal comes together.

Already, headlines in Bloomberg, CNN, and NPR have begun to highlight the investment potential of North Korea’s opening. Mark Mobius, the doyen of emerging markets investors, has described North Korea has having “tremendous potential.” Mobius had similarly heralded opportunities in Iran following the lifting of sanctions, publishing an investor note that described the opening of the market as an “exciting development.” The headlines on North Korea echo the hype that ballooned with the prospect of sanctions relief on Iran a few years ago.

But given how central economic opportunity was to Trump’s pitch to Kim, there was a glaring omission in the text of the basic agreement the two leaders signed. Other than a passing mention to “prosperity” on the Korean Peninsula, the document makes no mention of any efforts to improve North Korea’s economy and reduce the extreme hardship faced by much of the population.

The initial diplomatic agreement that paved the way for the Iran nuclear deal, the JPOA, included a page of “voluntary measures” offering Iran sanctions relief in areas such as the oil industry and automotive sector. These measures were meant to provide the Hassan Rouhani administration an early political win, building trust and validating the nascent political consensus in Iran that political engagement and compromise were the best ways to lift the country out of its economic malaise. When the JPOA was eventually superseded by the Joint Comprehensive Plan of Action (JCPOA), a whole annex to the agreement was dedicated to sanctions relief. Fast forward to today and the JCPOA’s (unrealized) economic promise is central to how Iran has judged the agreement.

The absence of language pertaining to economic cooperation or sanctions relief in the Trump-Kim agreement, meanwhile, might be explained by the fact that China and South Korea will almost certainly be the primary investors following any post-deal opening. More likely, it reflects the fact that North Korea is ambivalent about the appeal of economic incentives. This is critical difference between the cases of Iran and North Korea when it comes to their negotiations on non-proliferation.

Last month, following the debacle of John Bolton’s “Libya model” comments, North Korean Deputy Foreign Minister Kim Kye-gwan issued a statement that declared that “The US is trumpeting as if it would offer economic compensation and benefit in case we abandon nukes. But we have never had any expectation of US support in carrying out our economic construction and will not at all make such a deal in future, too.”

However, Kim Yong Chol, a senior aide to Kim, has reportedly sought Trump’s support for investment in North Korea’s tourism industry, a fact that may explain Trump’s reference to building hotels in the country. A report of the summit published by the Korean Central News Agency, North Korea’s official newswire, suggested that Trump intends to “offer security guarantees to the DPRK and lift sanctions against it.”

But the relative absence of any real discussion of foreign investment from the North Koreans and the lack of any concrete economic provisions in the preliminary agreement stand in stark contrast to the role that economic engagement played in bringing about the Iran nuclear deal. Rouhani was elected with a mandate to improve the Iranian economy and create jobs through trade and foreign investment. It’s hard to imagine that the tour of Singapore, one of the world’s gleaming metropolises, had no impact on Kim’s ambitions for his own country. But acting on those ambitions remains his prerogative alone—Kim faces no real political pressure to deliver economic benefits to his people as part of the deal.

When Trump was elected, Iranian commentators suggested that the Rouhani government could appeal to his instincts as a businessman to convince him to drop his opposition to the nuclear deal. The joke commonly made was that offering Trump the chance to develop the first international five-star hotel in Iran would change his mind about Iran. Trump’s comments during the Singapore Summit might be taken to confirm this theory.

But the more important lesson of the summit is what it tells us about the limits of Iranian leverage. Even if Iran obtains a nuclear deterrent, it would always find itself in a more vulnerable negotiating position than North Korea. Given Iran’s level of economic development and the realities of its electoral politics, securing foreign trade and investment will remain a true imperative for the country’s political establishment. Although Trump might be convinced to offer economic incentives in any improbable return by Iran to the negotiating table, the experience of the JCPOA shows that the combination of political and economic promises introduces a fundamental vulnerability to any negotiated agreement, one that not even a nuclear deterrent can outweigh.

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Esfandyar Batmanghelidj

Esfandyar has spent the last 5 years working on projects related to "business diplomacy" between the West and Iran. He is the founder of the Europe-Iran Forum, the leading annual gathering for business, government and civil society leaders committed to Iran's economic development, and the executive editor Bourse & Bazaar, a digital business publication with a focus on Iran. He is a graduate of Columbia University.

SHOW 10 COMMENTS

10 Comments

  1. There is no point in comparing the two Esfandyar. Once the Ayatollahs have nukes and then get seriously threatening, will they be treated seriously like NK. In the meantime we have to pray that the Ayatollah sanctions do not strangle Iran.

    The most important factor is to remember that the Ayatollahs are not legitimate rulers of Iran. They only care for their Mahdi. You talk of them as if they are sovereign rulers of Iran. Quite wrong. They want to create a new world for their Mahdi. They murder Iranians for that cause. No deals should be made with them.

    The US administration may be doing things wrong but that does not mean you support the Ayatollahs. And there is no Iran as such. There is only Ayatollah regime.

  2. “They want to create a new world for their Mahdi.” – Mostofi

    What a load of crap. Are they implementing a form of Sharia law, yes, they call iran an ‘Islamic Republic’ but are they going full Gotterdammerung to bring about the Apocalypse? No.

    They are waiting for the Mahdi to return just like Christians are waiting for Jesus. There is nothing in their eschatology that requires them to be destructive in the meantime. They charge that we in the west acting on behalf of Israel are stirring up trouble while they try to bring stability to the Arab world.

    Are you Sunni, MEK, other? It’s the Sunnis who are bringing chaos in the M.E. The Saudis who are starving Yemen through their vicious bombing campaign and blockade and blame Iran by providing a few small rocket components vs. their billions of $. The Saudis have done much more than that in other places.

    If you hate what the Ayatollah’s are doing internally to Iran, fine, but you sound like the agitator Netanyahu who portrays Iran as the source of all evil and is believed through endless repetition, ‘they have taken over 4 Arab capitals’.

  3. Christian

    You are being far too nice about the Ayatollahs. Just because I do not like them does not make me an MEK or an “Israeli Agent”. Ask any normal Iranian and they will tell you what monsters we are dealing with.

  4. Yes, Christian, I also imagine that “Ali Mostofi” is an Israeli or CIA dupe or sock puppet. He has only one theme which he harps on continuously and without much variation.

  5. Perhaps the biggest improvement Trump wants in the Iran deal is to put his own name on it. Make it the Trump Deal, and it would become Great. Possible. Don’t put it past Trump.

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