These twin challenges should be addressed by a package of risk reduction measures that would include conventional arms reductions, CBMs to reduce the risk of an accidental conflict, cooperative threat reduction programs to dismantle North Korean conventional weapons systems, and programs for North Korean defense conversion and military demobilization.

Conventional Force Reductions and CBMs

As numerous arms control experts over the years have argued, the European experience with arms control and CBMs has relevance to threat reduction on the Korean Peninsula, as does the US experience with the Soviet Union in negotiating naval confidence building measures. Modeling conventional force reductions after the heart of the Conventional Armed Forces in Europe (CFE) Treaty—reductions to equal levels in five major categories of combat equipment that are optimal for offensive operations—may be more than the political traffic will bear at the outset of this process; limiting concentrations of forces in various regions, as the CFE treaty does, may be more feasible. If, in later phases of the negotiating process, the two sides begin serious discussions of conventional force reductions, the US could explore potential trade-offs between US and South Korean conventional capabilities and the North’s chemical weapons and short-range missile capabilities. How much trading-space there might be will depend on progress in establishing other elements of a peace and security regime on the peninsula as well as improvements in US and ROK conventional forces.

But the most promising “low hanging fruits” in the short term are probably cooperative CBMs to reduce the risk of a conflict between North and South Korea in the West Sea, where the two sides have skirmished over longstanding disputes on boundaries and fishing rights. In his May 2016 speech to the 7th Workers’ Party Congress, Kim Jong Un proposed military-to-military talks with South Korea to reduce tensions, specifically in the West Sea. The conservative South Korean government at that time rejected this overture, but the Moon government is likely to be receptive, and a joint US-ROK initiative to establish regular talks on CBMs might get traction in Pyongyang. Measures to reduce tensions in the West Sea were also mentioned in the Panmunjom Declaration the two leaders signed in April.

As far as Seoul is concerned, measures to reduce the risk of conflict in the West Sea are a North-South issue. The North’s views on whether it would welcome US or other outside involvement are unknown. Both countries could draw, however, on the experience of two successful naval CBMs. The first is the 1972 US-Soviet Agreement on Preventing Incidents at Sea (INCSEA), which was designed to prevent or reduce incidents between the superpowers and provide a process to adjudicate incidents that did occur. The second is the Code for Unplanned Encounters at Sea (CUES) —a voluntary agreement among more than 20 countries with interests in the western Pacific—that provides for safety, communication, and navigational measures to prevent confrontations among naval ships and aircraft during unplanned encounters. If the North and South are amenable, the US could also brief them on best practices for the safe and professional conduct of opposing naval forces operating in close proximity to one another to reduce the risk of an unintended conflict.

Neither North or South Korea want to see their disputes in the West Sea escalate into armed hostilities. If North-South talks on the West Sea prove fruitful, the US, South Korea, and North Korea could gradually try to tackle the more challenging problem of CBMs and conventional force reductions on the peninsula. A key question, however, is whether the West Sea issue could be used first to move past the narrow focus on questions of maritime and fishing rights and the disputes over the demarcation of the Northern Limit Line (NLL) in order to establish a foothold for progress on larger tension reduction and armistice replacement issues.

This may prove feasible. There is a major KPA corps on North Korea’s west coast (IV Corps) as well as naval headquarters, and these are important elements of the North Korean threat. Pyongyang has indicated in the past that it is prepared to deal with the larger issue of military tension in the West Sea. It is unclear how far the North is prepared to go, but a significant reduction of tension in the area could help settle disputes over fishing rights, allowing both countries to profit more from this resource.

The key point is that both countries have strong incentives to reduce their conventional forces. Kim wants to reduce the overall size of his military to free up resources for the development of the civilian economy. President Moon will face not only growing popular support for cuts in ROK defense spending if peace breaks out on the peninsula, but also economic pressures. The South Korean population is on track to dramatically shrink—and the ROK army is already scrambling to figure out how to make do with fewer active-duty troops in the not-to-distant future. How deeply the US should be involved—or whether it needs to be involved at all—in North-South negotiations depends on whether the US military presence in the South is implicated by decisions either side makes on its force levels.

In sum, CBMs could play an important role in demilitarizing North Korea. They will help normalize US and South Korean relations with North Korea and, in a virtuous cycle, normalized relations will create more space for CBMs. A more normal relationship with Seoul and Washington is one of Pyongyang’s overriding priorities; achieving this goal can go a long way toward reducing the threat North Korea poses to peace and security on the Korean Peninsula.

Defense Conversion and Demobilization

Recently, three experts from Stanford University discussed opportunities for the cooperative conversion of North Korea’s nuclear and ballistic missile infrastructure to civilian uses. Such an approach might also be applicable to downsizing and converting North Korea’s massive conventional military establishment to civilian purposes.

Kim Jong Un has opined about the need to devote more of North Korea’s limited resources to the development of the civilian economy. Indeed, for the better part of a decade, and especially since Kim assumed power in 2011, senior DPRK officials have questioned the contribution that defense spending makes to the growth of the civilian economy, and have hinted that a transformational change in US-DPRK relations could pave the way for negotiations on conventional force reductions. According to one expert,

From the perspective of civilians in Pyongyang, such negotiations could further lessen the defense burden shouldered by the North Korean economy and allow Pyongyang to devote greater resources to the civilian sector.

Defense expenditures seem to be a serious drag on the North Korean economy; however, North Korea does not report its budget in absolute numbers (only percentages) and estimates of North Korean defense spending are notoriously unreliable and vary widely. The US Department of State estimated in its World Military Expenditures and Arms Transfers 2016 report that the North’s military expenditures averaged about $3.7 billion a year based on the period between 2005 and 2015, or roughly 23 percent of its GDP (by comparison, the US spends roughly 3.4 percent of its GDP on defense). Most analysts estimate that North Korean defense spending makes up about a quarter of all government spending.

What is better known is that North Korea operates some 180 arms factories, including 40 gun factories of varying calibers, 10 armored vehicle factories, 10 naval shipyards, and 50 munitions factories. In addition, more than 115 non-military factories have a dedicated mission of producing wartime material. Converting many of these facilities to civilian purposes would not only reduce defense spending but also increase production of civilian goods.

While North Korea does not seem to have made any explicit statements on repurposing defense production facilities, the government has converted other military facilities for civilian use in the past. Two notable examples are the conversion of two military airfields into civilian airports (the Kalma Airport in Wonsan and the Samjiyon Airport) in special economic zones focused on tourism, and the conversion of the Saenal Hotel—originally built for military use—into a luxury hotel in the eastern port town of Wonsan.

Such initiatives appear to fall under Kim’s byungjin policy (dual development of a nuclear deterrent and the economy), allowing the regime to earn foreign currency while minimizing the negative impact on its local population and defense program. Moreover, defense conversion and demobilization lend themselves to a multilateral framework. The Russians could play a useful role in helping the North to dismantle and deactivate weapons and equipment, drawing on their cooperative threat reduction experience (e.g., The Nunn-Lugar Program) with the United States. The South Koreans and perhaps the Chinese could also provide assistance to the North to convert some of its defense production facilities to civilian use and to help the North develop a viable plan to deactivate many of its troops and reintegrate them into the civilian economy.

Defense conversion and demobilization of military manpower will be hard and expensive depending on its scale and scope. In addition to the challenge of securing adequate outside funding for these programs, there will be four critical challenges to success: first, defense conversion and demobilization will need to be integrated into the plans, programs and priorities of future inter-Korean economic cooperation. Second, it should be implemented in a way that advances the broader goals of promoting greater market reforms and better business practices in North Korea. Third, plans for conversion of physical plants and equipment currently devoted to defense production should be aligned with North Korean sectoral priorities, in particular, expanding agricultural production and improving transportation infrastructure. Finally, the scope and pace of defense conversion and demobilization will need to be synchronized with how quickly the North Korean economy can absorb ex-soldiers.