North Korea: Our Strategic Challenge

Thank you Linda, my parliamentary colleagues, Nick Cater and the team from Menzies Research Centre. Good morning distinguished guests, one and all.

I am absolutely delighted to have this opportunity to address this gathering on a week when the Lower House is not sitting but I'm so pleased to see a number of you here this morning.

Our discussion today is particularly timely given that last week the Coalition Government released our Foreign Policy White Paper – the first in 14 years and the most comprehensive report ever into the intersection between our national interest and our international engagement.

Of course we can't predict the future but we have detailed our interests, our priorities and our values within a framework of guiding principles. We looked at the threats and the risks and the trends and the opportunities that face Australia over the next decade and beyond.

The Foreign Policy White Paper, and I urge you to read it online, sets out five priorities for Australia. We are an open liberal democracy committed to the rule of law and freedoms and democratic institutions. We are an open, export-oriented market economy and we derive our economic growth and our standard of living from our ability to trade our goods and services around the world.

Not surprisingly one of the key priorities identified in the White Paper is our commitment to defending and upholding the international rules-based order, that web of alliances and treaties and institutions underpinned by international law and rules and norms and conventions that have evolved since the Second World War, when likeminded countries sought to create "a world out of chaos" and ensure that we didn't again see a world war and the devastating impact of the Second World War.

This international rules-based order has served us relatively well in terms of peace and prosperity. In fact, the greatest expansion of prosperity in human history has occurred under this international rules-based order, hundreds of millions of people have been lifted out of poverty.

As our White Paper notes, this international rules-based order is under strain. It's being challenged by some nations for short term gains, others are promising false hope of protectionism and isolationism.

As I stand here today, one of the most egregious challenges to the international rules-based order comes from North Korea and its pursuit of illegal ballistic missile and nuclear weapons programs, and I say "illegal" advisedly for North Korea is in direct violation of eight United Nations Security Council resolutions that prohibit the development of its weapons programs.

The United Nations Security Council of course is the pinnacle of the international rules-based order for it is the defender and upholder of international law and the promoter of global peace and security. The Security Council is made up of five Permanent Members – the United States, the United Kingdom, France, China and Russia. Over the years they have disagreed on many issues but they are unanimous in their condemnation of North Korea's current behaviour and in their belief that diplomatic and economic sanctions must be imposed on North Korea to compel it back to the negotiating table.

It is true that the first UN Security Council resolution to ban North Korea's weapons programs was in 2006, but we are aware that its ballistic missiles program began development in the 1970s and its nuclear weapons program probably in the early 1990s. Even when North Korea under Kim Jong-Sung or Kim Jong-Il entered into written agreements to freeze their illegal weapons activities and in return receive aid and other benefits, we now know that Pyongyang was cheating on those commitments from the outset.

North Korea's ballistic missile and nuclear weapons programs have increased dramatically since Kim Jong-Un became Supreme Leader in December 2011. In fact of the six nuclear weapons tests carried out by North Korea, four have been under Kim Jong-Un, and of the 90 or so ballistic missile tests, the vast majority of them have been carried out in the last three years.

North Korea has been pursuing its illegal weapons programs relentlessly under the administrations of Bill Clinton, George W Bush, Barack Obama and Donald Trump. My point is that North Korea has been on the trajectory to develop capacity in ballistic missiles and nuclear weapons irrespective of the approach taken by successive US administrations.

The September 2017 test was a 100 kiloton hydrogen bomb – that is seven times more powerful than the bomb that was dropped on Hiroshima in 1945.

North Korea presents a threat to our region and globally because it has an ambition to develop an intercontinental ballistic missile to which it will attach a miniaturised nuclear device that is capable of reaching Japan and mainland United States. As the pace and scale and acceleration of its programs increases it presents an even greater threat because its capacity is improved on each and every occasion.

The fact is there are some who now say that Australia should remain silent in the face of this threat. There are some who say Australia has no business even voicing an opinion on North Korea's behaviour. But consider the implications if North Korea is allowed to continue unchecked and fulfil its ambition.

The authority and prestige of the UN Security Council would be severely diminished. The standing of the Permanent Five great powers would be severely damaged. South Korea and Japan would feel increasingly threatened and vulnerable. The United States would have no alternative but to increase the military and defence presence in South Korea, Japan, Guam that would lead to corresponding tensions elsewhere in Northeast Asia.

If North Korea is allowed to get away with this, what if countries like Iran who may wish to follow a similar path, thinking there is little to lose by doing so? If Iran were to become nuclear capable, how would Saudi Arabia and others respond? This would see a nuclear arms race regionally and globally.

While Australia is not the primary target, I believe that morally, strategically, diplomatically we must add our voice to the collective effort of nations around the world who are seeking to compel North Korea back to the negotiating table so that we can achieve a peaceful outcome.

I support the UN Security Council resolutions. I am pleased to see that China is fully implementing the sanctions that have been imposed, as well as the other Permanent Members of the Security Council. Australia is calling for tougher sanctions on North Korea and we're urging all countries to exert maximum diplomatic and economic pressure on North Korea.

You see, North Korea might be isolated diplomatically but it is still dependent on trade and investment from others to advance its weapons program. In fact, in absolute terms and as a percentage of GDP, trade and investment in North Korea has increased under Kim Jong-Un's reign. About 75 percent of its trade is with China, about 95 percent of its foreign direct investment comes from China.

What is a tragedy and perhaps not often appreciated is that while the people of North Korea are suffering under the brutal regime of Kim Jong-Un the elites are thriving. The so-called "court economy" is doing exceedingly well – that is the importation of foreign luxury goods for the political elite that surround Kim Jong-Un. It was estimated that under the regime of Kim Jong-Il the importation of foreign luxury brands was valued at about $400 million a year. Under Kim Jong-Un it's about $850 million a year. These are luxury goods available to few and denied to many.

This is changing. The world is coming together to exert pressure on North Korea and there have been two recent UN Security Council resolutions that for the first time have not just targeted individuals and entities but have been applied sector-wide. UN Security Council Resolution 2371 on 5 August focussed on sector-wide sanctions including a ban on the importation of coal, iron, iron ore, and seafood. The ban on textiles from North Korea is worth about $950 million. There's also been a ban on the importation into North Korea of LNG and about a third of its oil needs have been reduced.

A second Security Council Resolution on the 11 September, 2375, expanded the sanctions. All joint ventures with Korean entities and individuals are prohibited. North Korean workers, who have mainly been working in China, at the end of their contracts will not be able to continue to work overseas and send the remittances back home, which the regime had been using to fund their illegal weapons programs. The stop and search powers of ships taking illegal cargo to North Korea have been dramatically expanded.

Countries around the world are also imposing autonomous sanctions. Australia has sanctions against 37 entities and 31 individuals who we believe are supporting North Korea's illegal nuclear weapons and ballistic missile programs.

We are seeing the world respond in diplomatic ways with North Korean Ambassadors being expelled from missions around the world.

Australia believes that we need to maintain the diplomatic and economic pressure on North Korea – it's not yet economically isolated to a point where Pyongyang will recalculate the risks of continuing down its current path.

We support the measures that the United States, Japan and South Korea have taken in terms of military response because North Korea must be deterred from continuing down this path of developing illegal weapons and threatening its neighbours and the region.

So Australia is part of a collective strategy to impose pressure to compel North Korea back to the negotiating table and in the meantime deter it from taking any risks or unpredictable acts that could threaten our neighbourhood.

One of the great tragedies of the story of North Korea is the humanitarian toll that the regime's actions have taken on the people of North Korea. It's probably not all that well known that prior to the commencement of the Korean War on the 2 June 1950, North Korea was by far the richer part of the Korean Peninsula. The industry was concentrated in the North. The North was wealthier and had a higher standard of living than the South. Of course, the Korean War devastated the entire Peninsula and in the aftermath of the Korean War both North and South were decimated and their economies struggling, if even growing at all.

What a divergent path the North and the South have taken.

South Korea opened its doors to the world, an open market economy, a robust democracy. South Korea is today 18 times richer than North Korea. The South Koreans enjoy a far longer lifespan, at least 10 years longer than those in North Korea.

So the tragedy of North Korea's pursuit of illegal weapons, given that it still expends about 25 per cent of its total GDP on illegal weapons, is that it is the people of North Korea who suffer.

Australia will continue to be calm yet resolute in calling for collective action to bring North Korea back to the negotiating table and we will do all we can to pave a better path for the people of North Korea.

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