Sustainable Peace in Northeast Asia

Sustainable Peace in Northeast Asia

Sustainable Peace in Northeast Asia

Yong-Shik Lee, Ph.D.

Anthem Press

An imprint of Wimbledon Publishing Company

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This edition first published in UK and USA 2023

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© 2023 Yong-Shik Lee

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ISBN-13: 978-1-83998-376-4 (Hbk)

ISBN-10: 1-83998-376-0 (Hbk)

Cover Credit: Oleh Donets

This title is also available as an e-book.

In memory of all those who lived and died for peace and who perished in Ukraine

ADVANCED REVIEWS

The security environment in Northeast Asia is notoriously complex, but Y.S. Lee weaves a compelling introduction to it. A distinctive feature of the approach is to work through the perspectives of each of the relevant players, with a particular bonus in considering Mongolia’s contributions. Professor Lee sees a long-term solution as requiring an institutional component; some kind of regional integration effort that would pull North Korea into the Asia-Pacific success story. He argues that building a rules-based order will hinge on where China’s domestic politics is headed, but the US must also take diplomatic risks and lead on the economic issues. A useful introduction for both insiders to the region and those seeking an entry point.

Dr. Stephan Haggard, Lawrence and Sallye Krause Distinguished Professor, School of Global Policy and Strategy, University of California at San Diego

Lee’s volume is a balanced, penetrating, and up-to-date analysis of political, historical, military, and economic dynamics in Northeast Asia. It is comprehensive in scope, innovative in analytical orientation, rigorous in empirical investigation, and rich in policy implications. Departing from the traditional great power determinism, he adopts an ‘inside-out’ approach focusing on six individual countries (North Korea, China, South Korea, Japan, Russia, and Mongolia). Lee skillfully unravels hidden codes of regional dynamics and generates powerful policy implications for sustainable peace in Northeast Asia. Strongly recommended for scholars, policy-makers, and laymen who are interested in conflicts and peace in contemporary Northeast Asia.

Dr. Chung-in Moon, Professor Emeritus, Yonsei University

Professor Lee’s book includes a chapter on Japan which comprehensively, accurately, and concisely describes Japan’s political and economic history, its tense relationship with neighboring countries, and ways to resolve them. It is a must-read for researchers and students studying the subject. This book is an excellent introduction and a practical prescription for achieving peace in East Asia.

Dr. Hiroyuki Hoshiro, Professor, Institute of Social Science, University of Tokyo

Dr. Yong-Shik Lee’s new book ‘Sustainable Peace in Northeast Asia’ suggests innovative, in-depth and comprehensive analysis on the continuing geopolitical tension in Northeast Asia. His careful and thorough data-backed examination of the repercussions of the Korean unification to Northeast Asia gave me valuable academic insight for actual policy making in the Foreign Affair & Unification Committee. I am also truly inspired by Dr. Lee’s anatomy of the influence of the external powers over the crisis, their political and economic objectives, their strategies and the dynamics that their engagement has created within Northeast Asia. This volume should be widely read not only among academics but policymakers as well.

Hon. Yongho Tae, Vice Chair of the Foreign Affair & Unification Committee of the National Assembly of the Republic of Korea, Former Deputy Ambassador of the Democratic People’s Republic of Korea to the United Kingdom

Dr. Lee’s new book ‘Sustainable Peace in Northeast Asia’ is an interesting, innovative and multidisciplinary project. Cultural, historical, political economy, and geopolitical factors are closely integrated into the development of the book. The book is worth reading by scholars and students in international relationships, government officials focusing on Northeast Asia, and readers interested in politics and peace in this important and dynamic region.

Dr. Guanghua Yu, Professor of Law, University of Hong Kong

Dr. Yong-Shik Lee’s book ‘Sustainable Peace in Northeast Asia’ presents a new approach to the security issues in Northeast Asia. Many of us address these issues from a traditional perspective, focusing on current geo-political and military affairs. In contrast, Dr. Lee’s book moves beyond the narrow confines of this traditional approach and performs a broader analysis of historical, political, economic, cultural and other factors that affect sustainable peace in the region. This innovative approach makes Dr. Lee’s book a unique scholarly contribution and a must read for policymakers, academics, students, and all others sharing interests in the important question of sustaining peace in Northeast Asia.

Dr. Bayasgalan Sanallkhundev, Associate Professor of International Relations and Public Administration, National University of Mongolia

Dr. Yong-Shik Lee is uniquely situated to engage in a thorough treatment of Northeast Asia as a legal academic, law and development expert, international law authority, law and economics specialist, diplomat, and multi-continent academic. The breadth and depth of his experience and knowledge provide insights that make ‘Sustainable Peace in Northeast Asia’ a must read for students, scholars, decision-makers, and policymakers. International relations literature tends to be dominated with large global theories, and area specialists often focus on one country as it relates to neighbors or on very specific issues. Dr. Lee is able to add a new perspective by examining China, North Korea, South Korea, Mongolia, and Japan from a regional and nation-specific perspective. Including the impacts of major global powers in regional alliances, diplomacy, trade, and investment provides a deeper understanding of the importance of Northeast Asia in the larger global landscape. By delivering a strong historical approach to situate modern positions, Dr. Lee allows a context-rich understanding of Northeast Asia that is not available elsewhere. The solid foundation makes his approach to potential solutions and strategies particularly helpful. Dr. Lee covers complex dynamics in an engaging and thought-provoking manner making ‘Sustainable Peace in Northeast Asia’ appealing read. ‘Sustainable Peace in Northeast Asia’ is a must-read and essential tool for anyone interested in Northeast Asia and larger global issues.

Dr. John Parsi, College of Law, University of Nebraska

ABOUT THE AUTHOR

Yong-Shik Lee is a lawyer, economist, and international relations expert. He is currently the Director and Professorial Fellow of the Law and Development Institute. Lee has taught at leading universities throughout the United States, Europe, and Asia, including Cornell University, New York University, Emory University, Tulane University, University of Manchester, and University of Sydney. Prior to his academic career, Lee served as counsel for the Ministry of Foreign Affairs and Trade of the Republic of Korea. He graduated with a degree in economics with distinction from the University of California at Berkeley and received degrees in law with honors from the University of Cambridge (BA, MA, PhD). Author of Law and Development: Theory and Practice (2019, 2022), Reclaiming Development in the World Trading System (2006, 2009, 2016), and Microtrade: A New System of Trade Toward Poverty Elimination (2013), Lee has published over 120 scholarly articles, book volumes, chapters, and shorter notes with leading publishers in North America, Europe, and Asia.

CONTENTS

Figures

Tables

List of Abbreviations

Foreword

Preface

Acknowledgments

1.   Introduction

1.1 Northeast Asia: Economic and Strategic Importance

1.2 Historical Context

1.3 Military and Political Tensions in the Region

2.   The Heritage from the Cold War—North Korea and the Nuclear Crisis

2.1 Causes of the Nuclear Crisis: Political and Economic Issues

2.2 The Cold War and North Korea

2.3 North Korea’s Irreconcilable Reality

3.   The New Asian Paradigm or Return to the Old Asia—Rise of China and Its Role in the Region

3.1 The Rise of China: From a Historical Perspective

3.2 Economic Opportunities and Political Tensions

3.3 Toward a New Asian Paradigm? Creating a Sustainable Power Balance in the Region

4.   A New Balancer in the Region? South Korea at the Crossroads

4.1 South Korea: Center or Periphery?

4.2 The Long and Winding Road: From Poverty to Prosperity

4.3 South Korea at the Crossroads: Challenges and Prospects

5.   A Power with Rising Concerns: Escalation of Tensions between Japan and Its Neighbors

5.1 A Restored Power

5.2 Escalation of Political Tensions with Neighbors

5.3 Toward Sustainable Peace: Call for Closure and a New Approach

6.   Insiders from the Outside: The United States and Russia

6.1 Historical Context: Insiders from the Outside

6.2 Continued Engagement: Sustained Economic, Political, and Military Presence

6.3 Roles for the Future

7.   A Hidden Player: Mongolia and Its Role in the Power Dynamics of Northeast Asia

7.1 An Independent Mongolia: Historical Context—From World Domination to the Fight for Independence

7.2 Strategic Vulnerability and Economic Potential

7.3 The Role of Mongolia in Northeast Asia

8.   Pathway to Peace and Stability in Northeast Asia

8.1 Deciphering the Historical, Cultural, Political, and Economic Codes of Northeast Asia

8.2 Necessity for a New Power Balance in the Region

8.3 Toward Sustainable Peace in Northeast Asia

Notes

Bibliography

Index

FIGURES

TABLES

LIST OF ABBREVIATIONS

FOREWORD

The strategic landscape in the Indo-Pacific region has devolved into a fraught set of conflict points, now stretching from the India-China border, through the South China Sea, the Taiwan Strait to the East China Sea. Yet no part of that arc is as complex as the Northeast Asian theatre, where the interests of six parties collide: the two Koreas, Japan, China, Russia and the United States. As U.S.-China relations have deteriorated, the Cold War divides that have been in place since the end of the Pacific War have hardened, with declining prospects of a negotiated settlement. China’s struggle to define its global status and the war in Ukraine are now central drivers in this drama. But in the end, the Korean peninsula remains at its heart, precisely because it increasingly surfaces as a focal point for a broader array of competing interests. Those now include China’s decision to cast its fate with Russia and the corresponding logic of tighter political, military and economic cooperation among the democracies: the United States, Japan and South Korea.

Y.S. Lee weaves an introduction to the current state of play. A distinctive feature of the approach is to work through the perspectives of each of the relevant players, with a particular bonus in considering Mongolia’s contributions as well. Prof. Lee sees a long-term solution as requiring an institutional component—some kind of regional integration effort that would pull North Korea into the Asia-Pacific success story. He recognizes that building a rules-based order will hinge on where China’s domestic politics is headed, but the U.S. must also take diplomatic risks and lead on the economic issues.

Prof. Lee’s approach is anchored in realist fundamentals. China is clearly central to sustainable peace in Northeast Asia, and nothing will move unless Beijing comes to see it in its interest to make them move. Given China’s massive political, economic, and military influence in the region, a more balanced, reconciliatory, and constructive engagement with the other Northeast Asian countries around the Korean peninsula is imperative to achieve a meaningful settlement. However, Lee’s account acknowledges that the nature of China’s foreign engagement is inseparable from its internal governance style. He outlines a classic liberal argument (and one with which I strongly agree): China’s authoritarian turn is intimately connected with its more confrontational, aggressive, and coercive foreign policy, with Xi Jinping sitting as the architect of that approach. Unless there is some fundamental rethink of China’s rise in Beijing, sustainable peace in Northeast Asia will remain elusive.

North Korea’s nuclear ambitions represent a more immediate security risk for the region, and they too have an internal as well as external dynamic. Critics of the U.S., Japan and South Korea note that as a weak country facing much more capable rivals, it should come as no surprise that North Korea would seek the cheapest deterrent at its proposal: a missile-based nuclear capability. But the excesses to which the leadership has pushed this program suggests that its strategy is not just a bargaining chip to extract political and economic concessions; if so, the Six Party Talks would have achieved much more and negotiations would at some point have resumed. It is now probably too much to expect a hereditary regime to remake itself. But as China’s earlier peaceful rise strategy suggests, it is certainly not impossible to combine a form of autocratic rule with an engaged and constructive foreign policy.

Each of the other players in the region—South Korea, Japan, the United States, Russia, and Mongolia—has unique historical, political, and economic contexts that Lee traces to national codes: these rest on a complex combination of national characteristics, from the nature of postwar nationalism, to the level of economic development, and the extent of the embrace of liberal norms; as with China and North Korea, domestic political forces are given appropriate play.

The most intriguing and controversial component of Lee’s book is his claim that the formation of an economic and political union in Northeast Asia, such as the European Union, will be a necessary institutional arrangement to ensure sustainable peace in the region. Without cross-cutting institutional and economic ties, the region will remain in its current rut. Prof. Lee is well aware that the lack of shared political values, economic disparities, and political and military tensions make the formation of such a union in the near future highly unlikely. But here is where the book makes it most important contribution: that without diplomacy, the chances of transcending the status quo are even more remote. Whether in the form of dialogues such as Ulaanbaatar Dialogue on Northeast Asia Security or cross-cutting initiatives such the China–Japan–South Korea initiative, which includes an FTA, steps must be found to cross the river to what Prof. Lee calls sustainable peace. The U.S. plays a crucial role in this regard, and must hold open the door for an alternative to the current impasse.

Stephan Haggard

Lawrence and Sallye Krause Distinguished Professor

School of Global Policy and Strategy

University of California at San Diego

PREFACE

Northeast Asia, a major region in Asia covering China, Korea (South and North Korea), Japan, Mongolia, and the Southeast corner of Russia, is economically one of the most vibrant areas in the world, with a rich array of economic opportunities. Yet, it is simultaneously one of the world’s most politically and militarily unstable regions, creating a global security risk. This risk was made apparent by North Korea’s nuclear crisis, which was followed by a series of its nuclear tests and ballistic missile launches from 2016 to 2017. Although the worst-case scenario may have been avoided by a summit meeting between the heads of South and North Korea on April 27, 2018, and another summit between the United States and North Korea on June 12, 2018, substantial uncertainty and the risk of a major military conflict remains.

Although less dramatic and visible to the outside world, other political and military tensions among constituent countries in Northeast Asia, with their deep historical origins dating back centuries, are also significant. These tensions have been demonstrated by persistent territorial disputes, lack of reconciliation on the question of war crimes during World War II, increasing disparities in political influence and military power among Northeast Asian countries as a result of China’s ascension, and deepening uncertainty in the region due to the potential instability of North Korea (caused by its confrontations with South Korea and its allies, internal political issues, and economic problems). These problems carry with them the potential to destabilize Northeast Asia, the effects of which would have a substantial global impact.

This book examines the causes of these complex tensions in Northeast Asia and their underlying political, historic, military, and economic developments. It further discusses their political-economic implications for the world and explores possible solutions to build lasting peace in the region. This book offers a unique approach to these important issues by examining the perspectives of each constituent country in Northeast Asia: China, South and North Korea, Japan, and Mongolia, and their respective roles in the region. Major global powers, such as the United States and Russia, have also closely engaged in the political and economic affairs of the region through a network of alliances, diplomacy, trade, and investment. The book will discuss the influence of these external powers, their political and economic objectives in the region, their strategies, and the dynamics that their engagement has brought to the region. Russia’s recent invasion of Ukraine also affects its engagement in Northeast Asia, as Russia had to withdraw its military resources from the region for deployment in its war effort in Ukraine, and several constituent states in the region, such as South Korea, Japan, and the United States, support Ukraine. Russia’s political credibility has also been damaged in this region and beyond due to its globally condemned invasion.

Both South and North Korea have sought to unify the Korean peninsula for nearly eight decades. The Korean War (1950–1953) brought destruction and distrust between the two Koreas instead of the unification intended by the North at the beginning of the war. During several decades that followed, South and North Korea failed to build peace and trust between them. Although the prospect of Korean unification remains uncertain, the outcome of this process will have a substantial impact on the region. This book will also examine the justifications, feasibility, and regional effects of Korean unification. Lastly, this book discusses the role of Mongolia in the context of the power dynamics in Northeast Asia. This relatively small country, in terms of its population and economic size, has rarely been examined in such a context, and this book offers a discussion on its role.

It has been said that the nineteenth century was the European century, the twentieth century was led by the United States, and the twenty-first century will be the Asian century. The economic and political influence of Asia, particularly Northeast Asia, has grown substantially in recent decades, and this growing influence gives credence to this observation. Reflecting on the importance of the region, both the United States and Russia have been closely involved in the region. The escalating political tensions, associated with the rise of China, create a confrontational divide between China and the U.S. alliance, the effect of which goes well beyond the region. The nuclear issues in North Korea seem to have subsided after a series of summits but have not been permanently resolved, and they could erupt and develop into a major crisis again. These outstanding risks, which coexist with the massive economic opportunities in the region, call for new approaches and paradigms to achieve sustainable peace in Northeast Asia.

Y.S. Lee

Atlanta, Georgia

December 2022

ACKNOWLEDGMENTS

This book would not have been possible without dedicated support from my research assistants, colleagues, and many other individuals, all of whom cannot be listed in this limited space. I am grateful to my wife Hye Seong for her endearing support for my work and her kind understanding when I had to be away from family engagements to work on this book. I am indebted to leading scholars, Professors Stephan Haggard (University of California at San Diego), Moon Chung-In (Yonsei University), Yongho Tae (National Assembly, Republic of Korea), Guanghua Yu (University of Hong Kong), John Parsi (University of Nebraska), Salim Farrar (University of Sydney), Bayasgalan Sanallkhundev (National University of Mongolia), Hiroyuki Hoshiro (University of Tokyo), and Artyom Lukin (Far Eastern Federal University, Russia), for their insightful comments and constructive criticisms. I am thankful to my student assistants, including Thomas Oliver Flint, Andrew Smith, Skyler Martin, Kedric Ross, Max Robert Beal, Kate Billard, Matthew Bowling, Adam Xie, Inseok Jeong, Turner Jensen, Monica Vu, Sayeed Mohammad, Rachel Pearce, Matthew Dutton, Jamie Borscha, Jordan Cohen, Isabel Cheesman, John Clayes, Olivia Thiel, Philip Jeffry Abraham, and Aryka Klemme, for their research and editorial assistance. I also appreciate young Mongolian citizens Lkhagva Yesu, Saruul Khaliun, and Bill Guudei for participating in interviews for the book. I am also grateful to Georgia State University, the University of Nebraska, and Cornell University for providing research support for this book. Lastly, I am very appreciative of Anthem Press for its decision to publish this book. It would not have been possible to bring this book to the light of the day without the excellent work of its editorial staff and production team.

Chapter 1

INTRODUCTION

1.1 Northeast Asia: Economic and Strategic Importance

1.1.1 Economic rise of Northeast Asia

Northeast Asia, the region that encompasses China, Korea, Japan, Mongolia, and the southeast corner of Russia, is one of the world’s most economically dynamic and strategically important regions.

Figure 1.1 Map of Northeast Asia.

(Source: Northeast Asia Countries Map, modified from https://www.alamy.com/northeast-asia-countries-map-editable-continental-map-of-country-image370477370.html)

Within 1,200 kilometers of Seoul, South Korea, a distance that can be covered by less than two hours of flight time, lie three national capitals that command over 20 percent of the world’s population and nearly a quarter of the world’s economy.¹ The region’s economic importance is unquestionable: two of the world’s three largest economies (China and Japan) and three of the world’s 10 largest exporters (China, Japan, and South Korea) are located in this region.² By the end of World War II, Northeast Asia was among the poorest regions in the world; much of it laid in ruin as a result of the war’s destruction. However, starting with the economic recovery of Japan in the 1950s, rapid economic development and successful industrialization of the constituent countries have turned this region into the world’s premier economic powerhouse. North Korea, under its socialist economic system, showed rapid economic growth until the 1970s,³ although it met economic struggles and has been on a decline since the 1990s. South Korea, with its successful economic development drive beginning in the 1960s, became an advanced, industrialized economy and a major trader by the 1990s. China, under Deng Xiaoping’s leadership advocating the socialist market economy, has also achieved phenomenal economic growth since the 1980s, becoming the second largest economy, next only to the United States, by 2010. Figures 1.2 and 1.3 illustrate the economic growth of Northeast Asian countries (China, Japan, and South Korea) vis-à-vis the United States.

Figure 1.2 Gross domestic product of major Northeast Asian economies (1960–2020).

(Source: World Bank, GDP (current US$) – China, Japan, Korea, Rep., United States)

Figure 1.3 Gross domestic product per capita of major Northeast Asian economies (1960–2020).

(Source: World Bank, GDP per capita (current US$) – China, Korea, Rep., Japan, United States)

The region is now known as the factory of the world and a bastion of new technologies and innovations. In the traditional manufacturing areas, such as steel, automobile, shipbuilding, electronics (including semiconductors), and chemical, Northeast Asian countries, particularly China, South Korea, and Japan, make up substantial shares of global production. By 2021, China, Japan, and South Korea produced over 61 percent of the world’s steel supply,⁴ over 44 percent of the world’s automobiles,⁵ and over 94 percent of all ships (in tonnage).⁶ For electronics, Northeast Asia is home to the world’s top five consumer electronics companies, as measured by revenue.⁷ Northeast Asia is also an important region for semiconductor production: South Korea alone accounts for over 70 percent of the world’s Dynamic Random-Access Memory (DRAM) production.⁸ Northeast Asian countries are also major drivers of new technologies and industries, including artificial intelligence (AI), biotechnology, and information and communication technology (ICT). In 2021, China’s ICT exports reached US$ 857 million.⁹

Northeast Asia has achieved rapid economic development over the past several decades and remains the fastest growing economic center, despite the worldwide pandemic (COVID-19) that slowed economic growth across the world.¹⁰ In the pre-industrial era, Northeast Asian economies, including China, accounted for up to a third of the world economy.¹¹ The region lagged behind the West economically during the period of the Industrial Revolution, but successful industrialization and economic growth in the latter part of the twentieth century resulted in Northeast Asia becoming one of the world’s three major economic areas, alongside North America and Europe. Northeast Asia, with three of the world’s top 10 importers in the region (China, Japan, and South Korea), is also becoming the world’s largest import market.¹² Thus, the continuing economic growth of the region will work as an engine for global economic growth.

1.1.2 Strategic importance of the region

Historically, Northeast Asia formed the frontline between the continental powers, which include Russia and China, and the Asian-Pacific maritime powers, which include the United States and Japan. Those who control Northeast Asia have enjoyed critical strategic advantages, as the region is the gateway to the Eurasian continent from the South and to the Pacific and Southeast Asia from the North. For this reason, imperial Japan first annexed Korea and occupied Northeast China (Manchuria) before it attempted to expand its empire across the entire Asian-Pacific region in the 1930s and 1940s. During the Cold War, communist Russia (formerly the Soviet Republic or the Soviet Union)¹³ and China clashed with the United States in Northeast Asia, particularly in the Korean peninsula. Korea was divided into the South and North at the beginning of the Cold War conflict between the United States and Russia in the region. Communist attempts to expand in Northeast Asia culminated in the outbreak of the Korean War (1950–1953), in which 24 countries participated following the resolution of the United Nations Security Council.¹⁴

These strategic dynamics and the intense presence of global powers in the region indicate that maintaining peace in Northeast Asia will be essential to sustain global peace. As further discussed in Section 1.3, Northeast Asia, particularly the Korean peninsula, has undergone a massive military buildup over the past several decades, and the world’s largest military forces, including the United States, China, and Russia, are maintaining strategic military forces in the region (although Russia recently withdrew substantial military resources from the region for its war effort in Ukraine). The Cold War may have ended, but political confrontations between Russia, China, and North Korea on one side and the United States, South Korea, and Japan on the other continue, with Mongolia trying to maintain its neutrality between the two groups. Increasing economic integration among these countries via international trade and investment¹⁵ may work as a deterrent against all-out wars, but political tensions and the potential for military confrontations remain, due to unresolved critical issues. These issues include North Korea’s nuclear ambitions; China’s conduct in Xinjiang, Tibet, Hong Kong, and Taiwan, as well as its expansionary policies in the South and East China Seas; and Japan’s decades-long rightward shift that has created political frictions with Korea and China, as further discussed in subsequent chapters.

Northeast Asia is also a theater for global powershift and rivalry between the United States and China. With its growing economic, industrial, and military capacities, China has challenged the global hegemony that the United States maintained for several decades.¹⁶ In this rivalry, both the United States and China have vied for alliances and support from other constituent countries in Northeast Asia. The power struggle has put two major U.S. allies, South Korea and Japan, in sensitive positions, as their economies rely in substantial part on China’s market,¹⁷ and neither wants to undermine their own economic positions by provoking economic retaliation from China (e.g., trade sanctions).¹⁸ Nevertheless, the United States maintains a substantial military presence in both countries, and the possibility of a military conflict between the United States and China cannot be precluded given the history of confrontation between the two countries. The United States does not accept China’s claims over the South and East China Seas and has also committed to protecting Taiwan from an invasion from China.¹⁹ In the event of a conflict, the United States and China will likely attempt to geographically limit it to Taiwan and its surrounding seas, but U.S. allies outside the region could also be pulled into the conflict, sparking another war.

An example of this danger is well illustrated by the Korean War, which lasted for three years—from 1950 to 1953. This destructive war, waged by communist North Korea to unite the entire Korean peninsula under communist rule, claimed over 2.5 million lives.²⁰ Twenty-four countries—including South and North Korea, the United States, China, the United Kingdom, France, Canada, Australia, New Zealand, Greece, Turkey, Belgium, the Netherlands, Luxembourg, Thailand, the Philippines, South Africa, Ethiopia, and Columbia (combatants), as well as India, Sweden, Norway, Denmark, and Italy (noncombatant participants offering medical support)—participated in this war. The Korean War, which ceased in a stalemate, was contained to the Korean peninsula, but it could have exploded into a third world war, as the commander of the allied forces, General Douglas MacArthur, considered using nuclear bombs to halt the advance of Chinese forces during the war (although his plan could not be implemented due to his dismissal by President Truman).²¹

The economic importance of the region reinforces its strategic value. As discussed above, Northeast Asia has become a hub of industrial production, new technologies, trade, and investment. The rise of China, with increasing economic as well as political influence over the region and beyond, has alarmed the United States and its allies, which prompted the Obama administration to adopt policies with an eye toward a pivot to Asia, as illustrated by its conclusion of the Trans-Pacific Partnership (TPP) negotiations in 2016 with 12 countries in the Asia Pacific region.²² The subsequent Trump administration withdrew from the TPP, but the TPP survived without the participation of the United States.²³ China has also made efforts to reinforce its economic and trade ties with other Northeast Asian countries and has participated in two free trade agreements (FTAs), including the China–Japan–Korea tripartite FTA and the Regional Comprehensive Economic Partnership (RCEP) with 15 members, which represents a third of the world’s population and accounts for 30 percent of the world’s gross domestic product (GDP).²⁴

Notably, two countries in the region, Mongolia and North Korea, have not participated in any of these FTAs. Mongolia is a member of the World Trade Organization (WTO) and has signed an Economic Partnership Agreement with Japan, but it has not participated in RCEP or the TPP. Due to its small economy (US$ 15.1 billion GDP as of 2021)²⁵ and low level of industrialization, the country is economically vulnerable to the influence of neighboring China, which is the largest importer of Mongolian exports and the largest investor in Mongolia. North Korea is another isolated country in the region. Its economic size (estimated US$ 28.1 billion GDP as of 2021) is larger than that of Mongolia, but its per capita income (estimated US$ 1,085 as of 2021) is among the lowest in the world. Due to the economic sanctions in place against North Korea, as further discussed in Chapter 2, the country is not in a position to pursue economic or trade agreements with another country. From an economic standpoint, these two countries remain in peripheral positions and do not have a significant economic presence in the region, despite