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Based on existent EU relations with Vietnam and Cambodia

Francesc Pont Casellas

Màster Oficial en Integració Europea

Universitat Autònoma de Barcelona

1

Contents

CONTENTS ............................................................................................................................................. 1

INTRODUCTION ..................................................................................................................................... 2

WHY VIETNAM AND CAMBODIA? .......................................................................................................... 4

BACKGROUND INFORMATION: VIETNAM ............................................................................................................ 4 BACKGROUND INFORMATION: CAMBODIA ......................................................................................................... 5 BACKGROUND INFORMATION: NORTH KOREA ..................................................................................................... 6 SIMILARITIES AND DIFFERENCES ........................................................................................................................ 7 THE THREE COUNTRIES AT A GLANCE ................................................................................................................. 8

CURRENT AND RECENT EU – NORTH KOREA RELATIONS ........................................................................ 9

THE RELATIONSHIP WITH VIETNAM AND CAMBODIA .......................................................................... 10

BASIC FRAMEWORK ..................................................................................................................................... 10 TRADE RELATIONS ....................................................................................................................................... 12 DEVELOPMENT COOPERATION ....................................................................................................................... 14 HUMANITARIAN AID .................................................................................................................................... 18 POLITICAL DIALOGUE.................................................................................................................................... 19

Bilateral dialogue ............................................................................................................................... 19 Multilateral dialogue ......................................................................................................................... 21

DEMOCRACY AND HUMAN RIGHTS PROMOTION ................................................................................................ 22

A PROPOSAL FOR NORTH KOREA ......................................................................................................... 24

FIRST PHASE ............................................................................................................................................... 24 SECOND PHASE ........................................................................................................................................... 26

CONCLUSIONS...................................................................................................................................... 32

REFERENCES ......................................................................................................................................... 33

NORTH KOREA ........................................................................................................................................... 33 VIETNAM ................................................................................................................................................... 33 CAMBODIA ................................................................................................................................................ 34 EU FOREIGN ACTION FINANCIAL INSTRUMENTS ................................................................................................ 35 THEMATIC PROGRAMMES OF THE DCI ............................................................................................................. 35 TRADE POLICY ............................................................................................................................................ 36 REGIONAL COOPERATION ............................................................................................................................. 36 OTHER REFERENCE SITES ............................................................................................................................... 36

2

Introduction

This paper focuses on a hypothetical case study that requires a notable change of the

current state of affairs to take place. Nowadays, international cooperation with North

Korea is, at best, a very tense affair: broken rounds of talks for nuclear disarmament,

condemnation of violent attacks, negligible trade relations (excluding arms trafficking

and military know-how transfers to some countries), etc. North Korea’s menace-based

diplomacy and isolated, autarchic economy makes it impossible for international actors

such as the European Union to improve their ties with the Hermit Kingdom.

However, amidst the overall confusion surrounding the Kim regime, there is a ‘new,

bright light it the sky’, as the official propaganda puts it: the future ascent to power of

Kim Jong-il’s youngest son, Kim Jong-un, probably by 2012. To make the transition

smoother, the young, Western-educated Jong-un will probably be surrounded by Kim

Jong-il's sister Kim Kyong-hui and her husband Jang Song-taek.

How this triumvirate will lead the country starting on the year marking the 100th

birthday of eternal leader Kim Il-sung, whereupon the North Korean government has

pledged to convert the country into a prosperous and modern one, remains a mystery.

However, leadership changes in reclusive Communist countries are usually catalysts for

change: China in 1978, the USSR in 1985 or, more recently, Cuba are fine examples of

aggressive reform agendas being applied by new leaders leading up to a progressive – or

radical – opening of the economies and the political system.

What should the European Union do, therefore, if the new North Korean regime shows

signs of openness and a real willingness to negotiate with international actors in order to

modernize and open up its economy and progressively adopt measures to change the

political scene of the country? We could easily imagine a smooth transition to a

‘socialist-based market economy’ with a strong, one party leadership, along the lines of

China or Vietnam.

In what would be the best possible short term scenario – avoiding a sudden collapse of

the regime and the humanitarian crisis it would unleash –, the EU should be ready to

step in and make its voice heard in the region, along with those of China, South Korea,

the US, Japan or Russia.

3

The European Union has many decades of experience in building bridges with third

countries, and it also possesses several political and economic instruments to make such

relationships effective. The question is which instruments and methods should be

applied in this hypothetical case.

This comparative analysis aims to be a possible answer to that question: by studying the

current framework of the EU’s relations with two countries that share several

characteristics with North Korea, we can put forward a set of proposals for future

relations with a more cooperative Kim regime.

Vietnam and Cambodia, two former Communist countries – Vietnam still is one, at least

in name –, both situated in South East Asia and consumed by long, deadly wars during

the last third of the 20th century, were the countries chosen for the analysis. Being under

the direct sphere of influence of the Chinese giant, they have opted for multipolar

diplomacy and integration in the world economy as a way to reinforce their independent

status and the best path to progressively raise income and welfare levels for their

citizens.

As we will see, the EU has comprehensive relations with both these countries: from

trade-related cooperation to development cooperation, from political dialogue to good

governance and democracy promotion. A deep and comprehensive analysis of the

relations between the EU and these two countries will let us single out exportable

structures and instruments – while also realizing their weaknesses –, but also detect and

take into consideration key differences that will give a unique personality to any future

cooperation framework between the EU and North Korea.

Those successful examples of deepening relations will help devise a basic strategy for

North Korea, based both on the similarities between the three countries and the

particularities of the North Korean case.

4

Why Vietnam and Cambodia?

As we argued in the introduction, the selection of these two Southeast Asian countries

for this comparative study is not a random one. Although stark differences between

themselves and between them and North Korea are obvious enough, no other two

countries could have as much in common with North Korea.

Background information: Vietnam

Although Vietnam declared independence after World War II, France continued to rule

until 1954, when it was defeated by local Communist forces under Ho Chi Minh.

Vietnam was divided into the Communist North and anti-Communist South. After a 20-

year war between both countries, in which US forces were heavily involved, North

Vietnamese forces overran the South, reuniting the country under Communist rule.

Despite the return of peace, the country experienced little economic growth because of

conservative policies, the persecution and mass exodus of dissidents and growing

international isolation. Although Communist leaders maintain control on political

expression, running a one party regime with a questionable human rights record, the

enactment of Vietnam's “doi moi” (renovation) policy in 1986 meant increased

economic liberalization and structural reforms to modernize the economy.

Vietnam is a densely-populated developing country that has had to recover from a long

war, the loss of the Soviet Bloc and the rigidities of a centrally-planned socialist

economy. Vietnamese authorities have reaffirmed their commitment to economic

liberalization and, with valuable support by the European Union, Vietnam joined the

WTO in January 2007, securing its entry into the global market and reinforcing the

domestic economic reform process. Agricultural share of economic output is shrinking,

with exports making up more than 60% of GDP. Deep poverty has declined

significantly and a labor force that is growing by more than one million people every

year fuels the 7% annual average GDP growth rate achieved during the last decade.

5

Background information: Cambodia

After suffering Japanese occupation in World War II, Cambodia gained independence

from France in 1953. In April 1975, after a five-year civil war, Communist Khmer

Rouge forces captured the capital, Phnom Penh, and evacuated all cities and towns. At

least 1.5 million people died from execution, forced hardships or starvation during the

Pol Pot regime. In 1978, a Vietnamese invasion began a 10-year occupation period. The

1991 Paris Peace Accords mandated democratic elections – finally held in 1993 – and a

ceasefire, not fully respected by the Khmer Rouge. The coalition government that arose

from the 1993 elections ended in 1997, but political stability was restored just a year

later, after national elections led to the formation of another coalition government. The

remaining Khmer Rouge surrendered in 1999; some of the surviving leaders have been

tried or are awaiting trial for crimes against humanity by a hybrid UN-Cambodian

tribunal. Elections were held again in 2003, already with EU observers, but it took one

year of negotiations before a coalition government was formed. In 2004, King Norodom

Sihanouk abdicated and his son, Prince Norodom Sihamoni, was crowned as his

successor. The latest national elections, held in July 2008, resulted in Mr. Hun Sen

keeping his long-standing post as Prime Minister.

From 2004 to 2007, the economy grew about 10% per year, driven by an expansion in

the clothing, construction, agriculture and tourism sectors. GDP contracted in 2009 as a

result of the global economic slowdown, but climbed again in 2010. The textile industry

currently employs more than 280,000 people – about 5% of the work force – and

generates more than 70% of Cambodia's exports. In 2005, oil was found beneath

Cambodia's territorial waters; mining also is attracting significant investor interest,

particularly in the north of the country. The tourism industry has continued to grow

rapidly, with more than 2 million visitors annually.

However, the long-term development of the economy is still a big challenge. The

Cambodian government cooperates with bilateral and multilateral donors to address the

country's many needs, including education and infrastructures. Cambodia needs to

create an economic environment in which the private sector can create enough jobs

absorb the growing work force: more than 50% of Cambodians are 25 years old, and

many lack education and productive skills, particularly in the countryside.

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Background information: North Korea

Korea was occupied by Japan until the end of World War II, when it was split, the

northern half coming under Communist control. After the 1950-53 war against the US-

backed South, North Korea, under its founder President Kim Il-sung, adopted a policy

of diplomatic and economic autarky, structuring political, economic and military

policies around the eventual unification of Korea under Pyongyang's control. The

current ruler Kim Jong-il was officially designated as his father's successor in 1980,

assuming a growing role until the elder Kim’s death in 1994. North Korea's history of

military provocations, nuclear programs, proliferation and massive conventional armed

forces impede any hint of normal relationships with the international community.

North Korea's economy declined sharply in the 1990s with the disintegration of the

Soviet Union and the dissolution of the former socialist bloc. North Korea experienced

a severe famine in the summer of 1995 and continues to suffer from chronic food

shortages and malnutrition. Since then, it relies heavily on international aid to feed its

population.

GNP per capita fell by about one-third between 1990 and 2002. Although the economy

has since stabilized and grown modestly, output and living standards remain far below

1990 levels. North Korean industry operates at well less than full capacity due to the

lack of fuel, spare parts and raw materials. Agricultural output has not recovered to

early 1990 levels, either; the infrastructure is generally poor and outdated, and the

energy sector has collapsed.

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Similarities and differences

What unites and differentiates North Korea and these two Southeast Asian countries?

As previously stated, there is no country that can be compared to North Korea.

However, both Vietnam and Cambodia share several historical, political, geographical

and economic characteristics with the DPRK:

- Both Vietnam’s and Cambodia’s economies are formerly Communist systems

transitioning to market economies and, therefore, a mirror into which

- The three of them are low-income countries, although Vietnam’s economy is

growing faster and its population enjoys a higher GDP.

- Vietnam is also a one-party state, with the Communist party firmly in hold.

Cambodia is, however, a democracy.

- They are geographically located in East Asia, although North Korea is not part

of the same sub-region in which Vietnam and Cambodia are located.

- Although different in number and structure, Cambodian and North Korean

populations enjoy a very similar life expectancy, while Vietnamese citizens live

longer.

- The three countries share a number of environmental challenges, such as

increasing floods and droughts and severe deforestation.

However, differences also abound:

- Both Cambodia and Vietnam are already functioning members of the world

economy, as attested by their WTO membership. Moreover, both show dynamic

and sustained growth rates, while North Korea’s economy has sharply receded

in the last two decades.

- Cambodia and Vietnam were ravaged by long wars in the last third of the 20th

century, while the Korean War finished almost 60 years ago. Therefore, both

Southeast Asian countries are in a rebuilding process, with no infrastructure left

after the wars, while North Korea has infrastructures in place, although outdated,

underused and in disrepair.

- Vietnam’s and Cambodia’s populations are much younger than Korea’s, also in

part due to the long wars. Moreover, North Korea’s population is mainly urban,

while Vietnam’s and Cambodia’s remains predominantly rural.

- While 37% of North Koreans still work in the agricultural sector, the percentage

reaches 52% in Vietnam and 68% in Cambodia.

8

The three countries at a glance

Vietnam Cambodia North Korea Political system Single party,

Communist

implementing a

market economy

Monarchy with

democratic

elections

Single party,

Communist

Population 90 million 15 million 23 million

Urban population

as % of total

28% 22% 63%

Median age 27.4 years 22.6 years 33.9 years

Agricultural share

of the labor force

52% 68% 37%

Life expectancy 72 years 62 years 64 years

Per capita GDP at

purchasing power

parity

$2,900 $2,000 $1,800

Cumulative GDP

growth 2002-2009

74% 63% 10%

WTO member Yes (2007) Yes (2004) No

Recent war

periods

1955-1975 1970-1975

1978-1988

1950 - 1953

Past dependency

relationship with

EU countries

Former French

colony (until 1954)

Former French

colony (until 1954)

None

Source: The CIA World Factbook

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Current and recent EU – North Korea relations

Humanitarian aid, assistance programs and cooperation activities, coupled with

sanctions and condemnations, have defined the relations between the European Union

and North Korea in the last two decades.

The EU has been active in North Korea since its planned economy started to crumble

following the dissolution of the Soviet bloc and the disastrous floods and resulting

famine of 1994-95. Since then, more than €366 million have been provided as food and

medical aid, support for agricultural programs and water sanitation projects. While food

and medical aid and water sanitation projects were funded by the DG ECHO,

agriculture-related activities have been funded under the Food Security Thematic

Programme of the Development Cooperation Instrument.

After establishing diplomatic relations in 2001, the CE/EU has also conducted regular

political dialogues with the DPRK, focused on the topics of non-proliferation and

human rights, while also fostering modest knowledge-sharing activities on issues such

as the modernization of the Korean economy. Multilateral political dialogue involving

the DPRK is done through the United Nations, where the EU has sponsored and

supported several resolutions on North Korea.

The European Union had already envisaged a more integral cooperation with the

Korean regime, adopting a Country Strategy Paper for the period encompassing 2001-

2004. In it, the Commission detailed its priorities, focused in three main areas

complementing existing food security activities: institutional support and capacity

building, sustainable management and use of natural and energy resources and reliable

and sustainable transport.

However, the strategy was never implemented and there are currently no plans to

prepare a new one. In fact, while there are still some minor aid and cooperation

programs in place, the Council of the European Union recently adopted a decision to

renew and expand the lists of persons and entities from the DPRK subject to restrictive

measures (namely visa bans and asset freezes).

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The relationship with Vietnam and Cambodia

Basic framework

The relationship with both Vietnam and Cambodia is structured around the goals

defined in the respective Country Strategy Papers for the period 2007-2013, which work

within the frame set up by the respective Cooperation Agreements. In the multilateral

sphere, relations are shaped around the 1980 EC-ASEAN Cooperation Agreement,

which allows all parties to be involved in regional cooperation activities

Vietnam’s diplomatic relations with the EU were established in 1990. After the

signature of a limited commercial agreement covering textiles in 1992, the EU-Vietnam

Framework Cooperation Agreement (FCA) was signed in 1995, entering into force in

June 1996. A good example of a third generation Cooperation Agreement, it already

provides for the inclusion of development cooperation, although its main focus and

level of detail remains in the economic sphere, aiming to promote trade and investment,

support Vietnam's economic development and its transition to a market economy.

Based upon Articles 113 and 130y of the Maastricht EC Treaty – after Lisbon, Articles

207 and 208 of the Treaty on the Functioning of the European Union–, together with the

first sentence of Article 228(2) and the first subparagraph of Article 228(3) of that

Treaty, this agreement was valid for an initial period of 5 years and automatically

renewable on a yearly basis.

In line with other contemporary agreements – including Cambodia's FCA –, it also

includes political conditionality clauses, both negative – with the possible suspension of

the Agreement in case of breaching the principles of democracy and human rights,

considered an essential1

However, with the EU-Vietnam agenda diversifying towards increased political and

economic cooperation, negotiations of a new Partnership and Cooperation Agreement –

equivalent to an Association Agreement, which will probably be of Mixed nature

part of thereof – and positive – it contains a clause on

cooperation in the fields of human rights and democracy, now financed via the

European Instrument for Democracy and Human Rights. Moreover, it also provides for

comprehensive political dialogue between the actors.

1 The precise use of terminology is very important here, as the word 'essential' has, under the 1969 Vienna Convention, legal implications in International Law, while other synonym expressions, such as ‘vital’ or ‘key’, don’t.

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because of the variety of subject matters (up to 60) affected – were launched in 2007.

Eight rounds have already been completed with notable progress achieved, but the final

signature of the Agreement is being delayed due to severe discrepancies in the fields of

human rights and the rule of law between the two parties2

Its relationship with Cambodia framed around development assistance, support to

democracy and a commitment to open markets and free trade, the EU signed a

Framework Cooperation Agreement with the Kingdom of Cambodia on April 1997.

This Agreement, which came into force on 1 November 1999, focuses basically on trade

and financial relations, economic cooperation and development cooperation activities,

while also covering other areas such as environmental and regional cooperation, science

and technology, intellectual property, human resources, communication or culture.

.

As is the case with Vietnam, respect for and recognition of democratic principles and

human rights also constitute an essential and binding element of the Agreement. Also to

be found in the Vietnam Agreement, the future developments clause in Article 15

allows for the expansion of the scope of the Agreement by mutual consent.

Both Agreements, being almost contemporary in time and sharing the overall scope and

target region, have much in common, also including a most favored nation clause.

However, subtle differences can be found, both in the order3

Environmental and political cooperation are also included in both Agreements, although

the clauses are not linked to the Generalised System of Preferences, of which both

Cambodia and Vietnam are beneficiaries. Such positive conditionality, in the form of

the so-called Special Incentive arrangement for sustainable development and good

governance, can usually be found in more modern FCAs. Therefore, any future proposal

for North Korea should include this element.

and content of the articles

and the emphasis on certain aspects, like the encouragement of and support towards

resettlement of refugees returning to Vietnam – the readmission of citizens is only

mentioned in Annex II of the Cambodia FCA –, the explicit wording used in the clause

regarding intellectual property rights in the Cambodia FCA or the differences in the

provisions drug abuse control, more developed in the case of Vietnam.

2 In fact, after a few years of progressive but controlled opening of the political sphere, Vietnam has cracked down on protests and opposition after the global crisis hit the country in 2008, a situation that worries the EU, as stated in its 2010 Mid Term Review of the Vietnam Country Strategy. 3 For instance, it cannot be overlooked that development cooperation (Article 3) appears even before trade cooperation (Article 4) in the Cambodia Agreement, while it stays well behind (Article 9) in the Vietnam FCA.

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Trade relations

Trade relations are the key element of the relationship between the EU and these two

Southeast Asian countries. Although growth rates have averaged 6-7% in recent years,

Cambodia and Vietnam still face daunting challenges before becoming middle income

countries, including improving the education level of a growing working force and

reducing the number of people living below the poverty line4

Both Cambodia and Vietnam are export-oriented developing economies, with an

exports-to-GDP ratio of 45% and 60% respectively (source: IMF). Their trade with the

EU concentrates on the export of garments and footwear

.

5

The structure of their trade relations with the EU is, however, not identical. Cambodia is

clearly the less developed country of the two: with a PPP-adjusted per capita GDP of

just $2,000 (compared to $2,900 in Vietnam), problems related to poverty, lack of

infrastructure and deficient access to education are more acute. This explains why the

EU has granted regional accumulation to Cambodia, a tweak of the GSP rules of origin

that allows unfinished textiles imported from other ASEAN countries to be considered

of Cambodian origin and, therefore, easily exportable to the EU. Rules of origin under

the GSP regime have also been amended recently by Regulation (EU) 1063/2010), the

changes having entered into force on January 1, 2011.

(and also seafood in the case

of Vietnam), while importing modest amounts of hi-tech goods, automobiles, airplanes

and machinery. Therefore, trade imbalances in favor of both developing countries,

equaling more than 50% of the total annual worth, are commonplace.

Moreover, the EU has included Cambodia in its Everything But Arms (EBA) program,

aimed at least developed countries (LDCs). In 2001, the Council adopted Regulation

(EC) 416/2001 – later incorporated in the GSP regulation (EC) No 2501/2001 –,

offering duty-free access to imports of all products from LDCs, except arms and

ammunitions (as well as bananas, sugar and rice for a limited period), without any

quantitative restrictions. Of course, in case North Korea decided to abandon its

aggressive, uncooperative stance, it would be granted LDC status by the UN and,

4 For instance, according to the latest Blue Book for Cambodia (2010 edition), 5 million Cambodians live with less than 1 dollar a day, and an additional 6 million have between 1 and 2 dollars per day. 5 This explains why one of the first agreements between the CE and Vietnam was a Textile Trade Agreement, already signed in 1992; Cambodia's followed in 1999.

13

therefore, be eligible for the Everything But Arms program – an ironical proposition for

a country whose exports currently focus on arms and weapons.

Cambodia is also a beneficiary of trade-related technical assistance, structured under an

integrated sector-wide approach detailed in the EU’s Cooperation Strategy with

Cambodia for 2007-2013. Such cooperation focuses on trade and economic reforms,

capacity building to meet WTO obligations and regulatory aspects.

For its part, Vietnam, as a developing country, is a beneficiary of the Generalised

System of Preferences, which offers preferential access to the European market in the

form of reduced tariffs for goods. Still not granted Market Economy Status6 by the EU,

its admission to the World Trade Organization in 2007 has to be partially credited to the

EU, which negotiated a Market Access Agreement lifting restrictions on Vietnamese

textiles from January 1, 20057

It must be noted that current agreements, both under the GSP and the Everything But

Arms programs, only cover trade in goods, but does neither include trade in services nor

trade-related aspects of intellectual property rights. Those aspects of trade have to be

regulated under Mixed Agreements, signed by all EU member states, as for the

restrictive interpretation of the EU trade policy arising from the well-known ECJ's

Opinion 1/94 on the WTO.

, and also offered help via its MUTRAP assistance

programme, both during the accession process and the implementation period.

This is precisely one of the reasons behind current ongoing negotiations with Vietnam,

both to create a Free Trade Area (FTA) and to sign a new Partnership and Cooperation

Agreement (PCA) that would make bilateral relations more comprehensive, both in the

political and the trade fields. The FTA negotiations with Vietnam and other individual

ASEAN countries were started after talks to reach a wider EU – ASEAN FTA stalled

due to the differences in development levels among ASEAN countries. With a growing

service sector and a thriving industrial complex specialized in low-cost products, the

Vietnamese market is, therefore, increasingly attractive for the EU. However, obstacles

lay ahead in the European Parliament, both for its protectionist sentiments and human-

rights concerns.

6 According to the Vietnam - EC Strategy Paper for 2007-2013: “In spite of impressive achievements, Vietnam’s process of transition to a market economy is still on-going. State-owned enterprises still represent a substantial part (about 40%) of the economy.” 7 In exchange for a further opening of the Vietnamese market to EU firms.

14

Also related to that, another goal of the Framework Cooperation agreements is

facilitating the business climate for European companies willing to invest in Cambodia

and Vietnam. Under the header Economic Cooperation (and also with a dedicated

article on Investment in the Vietnam FCA), the EU defines, almost unilaterally, the

fields of action of such cooperation, which the ultimate goals of creating a better

economic environment and business climate, generating synergies between companies

in the private sector and facilitating investment. In the context of globalization, this

should be in the best interest of both parties, as Europe is looking for business and

delocalization opportunities for its companies which, in turn, would create jobs and

generate revenue in the beneficiary third countries.

Development cooperation

Development cooperation is a key element of the EU relationship with both Cambodia

and Vietnam. The successful implementation of applicable EU cooperation instruments,

which were rationalized in 2006-2007, shows the true level of commitment the

European Union has with the development agenda of the third countries.

Development cooperation goals and focal sectors are detailed in the respective Country

Strategy Papers (currently for the period 2007-2013), its progresses analyzed in Mid

Term Reviews (published in 2010) and its per-country implementation in regards to

DCI (the Development Cooperation Instrument) detailed in Multi-Annual Indicative

Programmes (latest edition: 2007-2010).

Although the legal basis for such development cooperation actions, as specified in the

relevant FCAs, is the Council Regulation (EEC) 443/92 of 25 February 1992 on

financial and technical assistance to, and economic cooperation with, the developing

countries in Asia and Latin America, the European Union looks for an ever closer

cooperation with the beneficiary nations, in line with the 2005 Paris Declaration and the

2006 EU Roadmap for Increased Aid Effectiveness, which highlight the importance of

ownership, harmonization, alignment, results and mutual accountability. Therefore, the

EU strives to align its development cooperation strategy with third country national

plans, in this case Vietnam’s Socio-economic Development Plan 2006-20108

8 The 2011-2015 Socio-economic Development Plan should be published shortly. For now, all information the Government has made available through official media is that the main goals of the plan are maintaining the GDP

and

15

Cambodia's National Strategic Development Plan 2006-20109

Nowadays, EC Country Strategies look to reduce the number of focal sectors, selecting

areas in which the European Union has a competitive advantage and/or additional

know-how compared to other donors, and Vietnam’s and Cambodia’s are no exception

to that trend. In both cases, we find just two focal sectors and two sets of additional

actions, the only difference being the second focal sector chosen for each case. So,

while the focal sectors for Vietnam are supporting the Socio-economic Development

Plan (with the aim to reduce poverty in a sustainable manner via the World Bank’s

Poverty Reduction Support Credit) and supporting the health sector, Cambodia’s

include supporting its Strategic Development plan as well as basic education.

Additional actions focus, in both cases, on trade-related assistance and support to

political dialogue and cooperation, with governance and human rights, the environment

and gender issues identified as key cross-cutting issues that should be positively

affected by EU policies and actions.

, both also guided by the

UN’s Millennium Development Goals and based on the IMF scheme of Poverty

Reduction Strategy Papers.

The main instrument the EU has to implement development cooperation programs is the

DCI, which covers three components: geographic programmes (focusing on 47

developing countries and 5 regions worldwide), thematic programmes (benefiting all

developing countries) and a programme of accompanying measures for the Sugar

Protocol countries (that does not apply to Asian partners).

Of the total budget for the period 2007-2013, €16.9 billion, roughly €10.1 billion are

allocated to geographic programmes (both country and regional programmes), while

€5.6 billion will go to thematic programmes. Under the multi-annual indicative

programme, which allocates funds corresponding to country programmes, Vietnam was

set to receive 160 million from 2007 to 2010, and 144 million from 2011 to 2013, for a

grand total of €304 (roughly 3% of the total available budget). Cambodia, for its part,

was allocated 77 million for 2007-2010 and 75 million for 2011-2013, totaling €152

million (or about 1.5% of the total available budget).

While the per capita allotment to Cambodia is much higher that Vietnam’s10

growth rate of 7-8% per year and attaining an annual reduction of 2-3% in the number of poor families while completing the transition to a fully functioning and stable market economy.

, we should

also take into account that the €304 million that the EU is set to disburse in 7 years (or

9 Revised in 2008 and now valid until 2013.

16

about €43 million a year) surpass the €299 million it offered from 1989 to 2006.

Moreover, it must be noted that, under Regulation (EC) No 1905/2006, EU measures

funded with the DCI can be used to co-finance programs and are eligible for co-

financing from Member States or other donors, including international and private

organizations, as well as non-state actors and partner countries. Therefore, their

potential for relevance is dramatically increased by creating synergies with other actors

in the field, even if the overall number is small11

Also under the financing umbrella of the Development Cooperation Instrument and

complementing national assistance programmes are a series of regional cooperation

programmes for Asia, of which both Cambodia and Vietnam (and also North Korea) are

beneficiaries. Such regional programmes are structured around three intervention

priorities: support to regional integration through regional organizations and fora (such

as ASEAN or ASEM), thematic policy and know-how based cooperation (including

topics such as higher education or the environment) and support to displaced people.

.

Vietnam and Cambodia benefit from Asia-wide thematic programmes for regional

cooperation in the fields of higher education (Erasmus Mundus), the environment (both

the ‘green growth’ SWITCH and the sustainable forest management FLEGT

programmes) or food security (in the case of Cambodia12

), while also profiting from

ASEAN regional integration cooperation programmes. While we don’t have any exact

data from Cambodia, Vietnam received about €40 million per annum between 2002 and

2005 under such regional programmes. Given that the budget allocated for Asia

(excluding Central Asia) for 2007-2013 reaches €775 million, we can expect a similar

or even higher contribution to these two countries.

In what the EU terms thematic programmes, we can also identify a series of

instruments, also available to both countries, that focus on the promotion of democracy

and human rights, as well as the development of a strong civil society. Those are funded

under the EIDHR instrument and the NSA/LA thematic program of the DCI, and will be

analyzed independently.

10 Cambodia will receive half the amount Vietnam has been assigned, but its population is just 1/6 of Vietnam's, so it will indeed be granted about €10 per person for the whole period, compared to less than €3.5 per person in the case of Vietnam. 11 Donor countries and institutions pledged $8 billion, or roughly €6 billion, to Vietnam in 2008. 12 In what is fresh news and an excellent demonstration of this versatile and useful instrument in action, the EU announced on January 20 that it was providing €2.6 million to two food security projects run by the FAO and the Danish NGO ADDA.

17

Another important but often overlooked instrument of trade-related development

cooperation, the WTO's Aid for Trade program, has been used by the EU to help

Vietnamese businesses become more competitive and develop trading links with the

EU. Financed through the regular EU budget and the European Development Fund

(EDF), the Commission has pledged to contribute €1 billion annually (with an extra €1

billion coming from Member States) on a global scale. There is no doubt that this

program, both in its Trade Related Assistance and wider agenda categories, could be

hypothetically applied in North Korea if it decided to take progressive steps towards

creating market-oriented economy.

As a complement to all these instruments, Vietnam also receives loans from the

European Investment Bank. Under EU mandate ALA IV, covering the period 2007-

2013, the EIB can lend up to €1 billion to support and complement EU cooperation

strategies, programmes and instruments. In this sense, the EIB reached an agreement

with the Government of Vietnam for a loan of €100 million to fund climate change

adaptation investments, as well as another agreement to loan €73 million for the

construction of a subway line in Hanoi. We are, therefore, talking about very relevant

figures, substantially higher than the yearly combined allocation the EU pledges to the

country in development cooperation.

In conclusion, while plain numbers might not seem staggering, the EU, when put

together with its Member States, which co-fund many of its projects, is the biggest

partner in development assistance for Cambodia (pledging approx. €200 million per

year) and the third biggest for Vietnam (pledging around €900 million per year), and

must strive to play a similarly important role in the future, both in these Southeast Asian

Countries and, when the time comes, also in North Korea.

Finally, it must be noted that effectiveness in the implementation of development

cooperation programs is greatly enhanced by decentralized management, i.e. when

implementation is managed from the local European Union Delegation. This aspect,

which is already a given in all EU-operations in Vietnam and Cambodia will, however,

be a key point in any future strategy for North Korea, which currently lacks an EU

Delegation.

18

Humanitarian aid

Humanitarian aid also plays an important role in EU relations with its Southeast Asian

Partners – and, obviously enough, also with North Korea. The European Commission’s

Humanitarian Aid and Civil Protection department, ECHO, offers substantial aid to both

Cambodia and Vietnam.

Cambodia, a country still struggling with the legacy of wars, environmental degradation

caused by deforestation and the changes of weather patterns due to the global climate

change – a set of problems which North Korea also shares – has received €73 million

since 1994. Vietnam, for its part, mostly struggles with floods and typhoons, netting up

to €27 million in aid since 1994.

Moreover, ECHO’s Disaster Preparedness programme, DIPECHO, has also been active

in the area, mainly focusing on projects to reduce the impact of typhoons and floods in

Vietnam (having invested €9.5 million since 1998) and the impact of floods and drought

caused by deforestation in Cambodia (investing between €8 and €9 million over the

same period).

Although remarkable, EU aid is maybe not such a big factor for change in Vietnam and

Cambodia as development cooperation is, chiefly in a fast-developing nation such as

Vietnam, where both the government and the people’s capacity to respond to natural

disasters is already high. In fact, although the EU (including its Member States) is the

world's largest provider of funds for humanitarian aid operations, the particular cases of

these two Southeast Asian countries is not fully representative of its potential. However,

any future intervention in North Korea should no doubt build upon existing

humanitarian aid programmes, so the role of ECHO/DIPECHO programs in any plans

for that country should be very much taken into account.

19

Political dialogue

As provided by the relevant bilateral agreements, both Cambodia and Vietnam enjoy

several channels of political, technical and sectorial dialogue with the EU, both

bilaterally and multilaterally.

Bilateral dialogue

Both Cambodia’s and Vietnam’s FCAs provide for regular political consultation and

bilateral dialogue via a Joint Commission (Vietnam) or Joint Committee (Cambodia), a

forum for high-level discussions on political and economic issues of common interest,

which is held every two years, alternating Brussels and the capital city of the relevant

third country as the venue. However, such meetings can also be exceptionally held on a

more regular basis, as has been the case with the EC-Cambodia Joint Committee, which

met in 2010, 2009 and 2007.

Cambodia, a parliamentary democracy, also receives the regular – although not

systematic – visits by the European Parliament Delegation for Relations with Southeast

Asia and ASEAN, thus enjoying another useful channel of political dialogue that shows

the active involvement of the European Parliament with democracy promotion around

the world. EU electoral observers were also sent on Observation Missions to elections

in Cambodia in 2008, 2003 and 2001.

In the case of Vietnam, meetings at the highest level have already been held and will

probably increase in number. A standout event was the visit of Prime Minister Nguyen

Tan Dung to the European Commission in October 2010, a trip he used to emphasize

the interest of his country in signing a Partnership and Cooperation Agreement that

would substitute the current FCA and thus expand the common agenda for bilateral

cooperation, both in local and global challenges.

As stated in the respective agreements, the Joint Commission/Committee can have

several working groups and subgroups, one of them of vital importance for EU relations

with the respective countries, as it allows articulation of an important part of the EU

cooperation strategy. It is the subgroup on Cooperation in the areas of institution

building and administrative reform, governance and human rights, whose work is used

20

to identify the areas of interest for

technical cooperation actions and side

events funded by the EU under its

cooperation strategy.

As shown by the graphic on the right,

the funding allocated to this particular

“additional action”, influenced by the

decisions taken by this subgroup,

under the 2007-2013 Vietnam

Strategy Paper is remarkable enough.

However, in the following table, showing the estimated allocations for the period 2011-

2013, we can see that just 2% of the cooperation budget for this second half of the

current Strategy will be allocated to governance support – which focuses on legal and

judicial reform – and strategic dialogue. This could easily be seen as a direct result of

the slowdown on political aperture and the growing power of conservative leaders in

Vietnam’s power spheres as an after effect of the world financial crisis. It looks like the

EU, instead of fighting to defend its core values of democracy, rule of law and human

rights13

Focal Sector 1

, is lifting its foot off the pedal to appease an important trade and strategic

partner, willing to hedge against excessive Chinese influence in South East Asia and

also in the final stages of the negotiation of a comprehensive Partnership and

Cooperation Agreement with the EU.

Support to Vietnam’s Poverty Reduction Strategies €70 Million 48,50%

Focal Sector 2 Support to the Health Sector €56 Million 39,00%

Additional Action 1 Trade-Related Assistance

€15 Million 10,50%

Additional Action 2

Support to Governance and to the EU-Vietnam “Strategic Dialogue” €3 Million 2,00%

Total €144 Million 100%

13 Also in spite of the continued existence of a human rights dialogue mechanism between the EU Heads of Missions in Hanoi and the Government of Vietnam, created in 2001 and holding meetings twice a year.

21

Cambodia’s statistics, however, show an opposite trend. A less important trading

partner for the EU and also a minor geopolitical actor in the region, Cambodia is already

a democracy, although a young and relatively unstable one. After the celebration of

general parliamentary elections in July 2008, observers from the EU said that, although

improvements over the 2003 elections were undeniable, they still fell short of

international standards.

If we look at the budget allocation data for the Multiannual Indicative Programme 2011-

2013, we see the clear possibility of a remarkable increase in the funding of the Support

to Cooperation and Dialogue in Governance and Human Rights item, which could

receive up to 20% of all available funds, or up to €15 million. Therefore, we can only

conclude that, although the EU takes democracy and human rights dialogue seriously in

Southeast Asia, the intensity and outcomes of such elements of the political dialogue

depends on many other – namely economic and geostrategic – calculations.

Multilateral dialogue

The Association of Southeast Asian Nations (ASEAN), an increasingly successful

regional organization encompassing 10 countries – which include Vietnam and

Cambodia - is the ideal forum for multilateral political and economic dialogue between

the EU and these two countries. The first EU-ASEAN summit of Heads of Government

took place in 2007, while the ASEAN-EU Meeting of Foreign Affairs Ministers takes

place regularly, the latest being held in Phnom Penh, Cambodia, in 2009. Moreover, the

EU is an ASEAN dialogue partner, which allows participation in a limited number of

ASEAN meetings.

The Asia-Europe Meeting is another important forum for multilateral political dialogue.

Summits gathering Heads of States and of Governments of forty-six Asian14

14 Not including the People’s Democratic Republic of Korea.

and

European countries – plus the President of the European Council and the President of

the European Commission – are held every 2 years, with over 50 ministerial and

officials’ meetings in between. Dialogue topics are wide in range and scope, covering

from finance and trade to disaster preparedness and climate change, and from food

security and development to global governance.

22

Democracy and human rights promotion

As of 2006, the EU has a specific instrument for the promotion of democracy and

human rights: the EIDHR (European Instrument for Democracy and Human Rights).

This instrument, successor to the European Initiative of 2000-2006, is used to grant aid

where no established development cooperation channels exist, and can also do it

without the agreement of third country governments, a key element in hostile setups

such as one-party autocracies. Aimed at enhancing respect for human rights and

strengthening the role of civil society, it can support groups or individuals, but also

intergovernmental organizations. With a total budget of €1.1 billion for the period 2007-

2013 (or roughly 1/10 of the global DCI budget for the same timeframe), disbursement

of its funds in a given country is considered a good indicator of the EU’s compromise

with democracy and human rights in the given country or the wider region.

In Cambodia, the program is specially active with local and international NGOs, having

pledged €13.5 million since 2003 in grants to support democracy and human rights,

normally calling for new proposals once or twice a year. In the resolution of the latest

call for proposals, eight new projects (out of 23 candidates) were awarded €1.6 million,

to be disbursed starting in 201115

As for Vietnam, no up-to-date information on this particular program is currently

available from the EU Delegation website. However, the presence in the country of the

current instrument and even of its predecessor, the European Initiative for Democracy

and Human Rights, seems clear. Documentation related to calls for proposals for

initiatives in Vietnam is readily available through online sources and a clear reference to

the successful implementation of both the EIDHR and the NSA programmes in the

Vietnam Strategy Paper 2007-2013, which are labeled “the main channel for funding

NGOs in Vietnam.”

.

Moreover, a quick glance at the list of projects currently being funded or co-funded by

the EU and coordinated by the EU Delegation in Hanoi shows a remarkable number of

projects dealing with governance, democracy, human rights and institutional reforms,

with objectives such as building social accountability, empowering workers and trade

unions and encouraging democratic participation and social dialogue within companies.

15 http://ec.europa.eu/delegations/cambodia/press_corner/all_news/news/2011/20110118_01_en.htm

23

All these undeniable efforts have to be complemented with the budget allocations to

support political dialogue on governance and human rights. As already mentioned in the

previous sections, the relevant Country Strategy Papers set out two additional actions

that should complement the two focal sectors of the EU's development cooperation

activities in Cambodia and Vietnam, one of them dealing with political dialogue and

cooperation. In the case of Cambodia, the Strategy Paper clearly details such dialogue

and cooperation will take place in the field of governance and human rights, while using

the more general term "strategic dialogue" for the single party regime of Vietnam.

However, emphasis is also put in the subgroup on Cooperation in institution building,

administrative reform, governance and human rights of the EC-Vietnam Joint

Commission.

In conclusion, the EU is rather active in the promotion of democracy and human rights

in the region, using the relevant tools to fund active NGOs that, in turn, help create a

stronger civil society in the receiving countries. Although the EU is not ready to

sacrifice other interests on behalf of democracy and human rights – as shown by the

deepening ties with Vietnam, which remains a one-party state, despite its recent

crackdowns on dissidents and human rights abuses –, positive actions are taking place

in both countries, mainly at grassroots level but also at the highest administrative

spheres, including the judiciary.

24

A proposal for North Korea

Building upon the stated goals for EU relations with another one-party, Communist

state such as Vietnam, we can easily devise a basic framework for EU – North Korea

relations. They should, therefore, aim at supporting the sustainable economic

development of North Korea, encouraging its integration in the world economy,

assisting in North Korea's transition to an open society and raising the profile of the EU

in Northeast Asia.

However, progress should be attained gradually, as the starting point would be a ruined,

isolated economy coupled with an alienated society which should start gradually

integrating in a globalized world.

Therefore, our relationship building plan would be divided in two separate phases: an

institution and confidence building initial phase and a cooperation establishment phase.

First phase

The first stage of development in EU – North Korea relations should be based on

mutual confidence building. While the EU should be ready to step in and gradually

increase its involvement in North Korea, the Communist regime should be pressed to

make positive steps towards a progressive opening that, in turn, should generate mutual

trust and greater freedom to operate.

Institution and capacity building from the Korean side should be a must. Progressive

legislation reforms in the model of Vietnam’s “doi moi” policy should be undertaken,

together with the definition of a comprehensive national strategy aimed at improving

overall living standards and promoting sustainable growth, in the line of Cambodia's

National Strategic Development Plan and Vietnam's Socio-economic Development Plan

and based on the IMF’s Poverty Reduction Strategy Papers.

As the EU gradually increases its positive involvement in North Korea, the Korean

regime should be able to demonstrate greater transparency and accountability through

progressive project ownership.

However, the EU should also take several measures to succeed in this first phase, the

first building block being the aperture of an European Union Delegation in Pyongyang.

25

Given their long-time diplomatic and aid-related relationship with North Korea, Sweden

would be the ideal Member State to head the delegation and implement and coordinate

all measures and programs in the field.

This first phase could probably imply the use of the Instrument for Stability, whose

stated goal is providing financial aid that would guarantee stable conditions for human

and economic development. With a total budget of over €2 billion for the period 2007-

2013, any hypothetical decision to gradually open up North Korea from 2012 would

still coincide with the current validity period of said instrument.

Hoping that the power transition goes smoothly, the Instrument for Stability could still

be implemented in the form of aid in a stable context on the grounds of further

implementation of EU cooperation policies, in case there is a sudden – and not

unthinkable by any means, given the sorry situation of the country – crisis threatening

the law and order or the security of individuals, or affecting critical infrastructure or the

public health. In other words, it could serve as a curative springboard for further

cooperation projects in the second phase, once the situation in the now isolated country

is further stabilized.

Humanitarian aid in the form of medical aid and water sanitation projects, already in

place in the last decade, should be resumed, once again with funds from the DG ECHO.

Meanwhile, the Development Cooperation Instrument should also be used in this initial

phase to address food insecurity and scarcity and build competences in agriculture-

related activities, using funding from the Food Security Thematic Programme, while

also offering help in the area of sustainable development and environmental protection

under the Thematic programme for the environment and the sustainable management of

natural resources.

Finally, DIPECHO programs should also be readily implemented in order to help

farmers cope with environmental degradation caused by acute deforestation and the

effects of changes in weather patterns, including droughts and floods. In this sense,

Cambodia, a country sharing these same threats, is a very valid reference.

As stated before in this paper, the European Union had already adopted a Strategy Paper

for North Korea in 2002. Taking a look at the identified priorities, they do not seem too

far away from the lines drawn by the Commission almost ten years ago: food security

26

activities, institutional support and capacity building and sustainable management and

use of natural and energy resources are all there, while the third priority area earmarked

a decade ago – reliable and sustainable transport – does not seem a maximum priority,

specially in this first phase of rapprochement.

Second phase

Building upon a successful first phase, which could span three or more years, always

according to developments on the North Korean side and also to the international

environment and reaction to such apertures, the European Union should proceed in an

intensification of political and economic ties with North Korea. Key to that would be

the signature of a new generation Cooperation Agreement.

Of course, North Korea should also be asked to abandon its nuclear program and sign

the NPT before any agreements are signed. We should expect strong pressure from the

European Parliament in that sense. However, it might well be that the new regime is not

ready to surrender its nuclear deterrent but desires a progressive opening anyway, also

wishing to make concessions in the other values and core interests of the European

Union, as defined in Article 3.5 of the Treaty. Therefore, we should not rule out that a

nuclear North Korea could sign a Framework Cooperation Agreement with the

European Union, in the line of that signed with Pakistan in 2004.

If such hurdles are bypassed, the EU should be ready to offer a basic but attractive

Cooperation Agreement, whose legal basis should be found in Articles 207, 208 and

352 of the Treaty on the Functioning of the European Union, to North Korea. The

preferred model, in line with recent agreements, would be a mixed agreement, meaning

that all EU countries should approve and sign it. Although this could clearly difficult

and slow down the ratification process, measures could be taken to partially implement

the agreement in its commercial policy aspects, which are an exclusive competence of

the European Commission.

The main reason for choosing a mixed agreement would be the desirable inclusion of

services and property-rights related trade issues. Obviously enough, China would

swiftly take advantage of a hypothetical aperture of the North Korean economy, both by

delocalizing low-cost and highly polluting factories and by flooding the market with

27

cheap Chinese goods. Most European firms would be in no position to compete in a

very immature market, with an extremely reduced elite enjoying enough purchasing

power to opt for EU products. However, entering the service sector – absolutely

underdeveloped and with no local know-how or expertise whatsoever – would be a very

attractive opportunity for many European firms, including those in the banking and

insurance sectors. European service sector firms enjoy, moreover, a remarkable

competitive advantage in terms of expertise, know-how and service quality and variety

when compared to their Asian counterparts, so any possibility to enter and develop a

fresh market should not be passed up.

However, the EU should also be ready to understand that North Korea might not be

ready to open its service market16, even partially. Even if the regime is open for change,

aperture would be gradual and not without a relative degree of wariness, thus making it

hard for the North Korean elite to accept the aperture of a sector in which no local firms

would be in a position to compete, even if other additional and conditional incentives

are enticing. Should that be the case, the EU should be ready to accept a basic

Framework Cooperation Agreement, signed on a bilateral basis and following the lines

of Vietnam's and Cambodia's17

More precisely, said Cooperation Agreement could use the EC-Vietnam's FCA as a

basis to introduce a democracy and human rights conditionality clause: Vietnam, also a

single party Communist regime with a suspect human rights track record, but that has

not deprived it from signing a Cooperation Agreement with the EU. Namely

Democratic (a “People’s Democracy”), the North Korean regime should make some

concessions in the name of a progressive democratization and respect for the rule of law

and human rights, including freedom of speech and information, based on international

standards. Moreover, a positive conditionality clause on cooperation in the fields of

human rights and democracy should also be included in the Agreement. This should

appease the European Parliament and, coupled with the promise of a generous aid and

cooperation package for the underdeveloped nation (including democracy and human

.

16 Also in line with neighboring Asian countries – including Japan –, all of them extremely protectionist with the national service sectors. 17 Although more recent Cooperation Agreements exist, such as the one for Pakistan (signed in 2004), the evolution of such agreements has not been much remarkable over the years, in stark comparison with the new generation Association / Partnership and Cooperation Agreements, which have become much more detailed and comprehensive than their older counterparts.

28

rights promotion programmes), be enough to fend off attempts to exercise veto power

over the signature of the Agreement.

Also in line with Vietnam’s, this Framework Cooperation Agreement should include a

clear reference to North Korea’s economy transitory status towards a market one, with

the EU ready to step in and offer technical cooperation towards that goal. North Korea

should also be granted beneficiary status of the Generalised System of Preferences,

although with no regional accumulation measures in order to avoid covert dumping

procedures from Chinese manufacturers.

Conditional on its designation as a Less Developed Nation by the United Nations, and

also pending on the regime's acceptance of non-proliferation measures for both small

arms and WMDs, North Korea could also be offered participation in the Everything But

Arms program, a measure that would surely be welcome by the regime as it tries to

modernize and integrate its economy in the world markets.

It must be noted, however, that such an offering would also have the intrinsic risk of

benefiting Chinese outsourcers, who would then be able to produce cheaper goods in

Korea and export them to the European market paying no tariffs. Therefore, rules of

origin should be strictly enforced and special provisions might be in order in order for

such trade arrangements to be beneficial for both North Korea and the European Union.

The FCA should also focus on the following aspects:

- Environmental cooperation, including a conditionality clause linked to the

beneficiary status of the Generalised System of Preferences. Such positive

conditionality, called the Special Incentive arrangement for sustainable

development and good governance, can usually be found in modern FCAs.

- Cooperation in the science and technology fields, which would be very welcome

by the North Korean government. Although very aware of the consequences the

current isolation, the government is already taking controlled steps to have

access to modern knowledge via limited and supervised Internet access. One of

the chief goals of a progressive aperture of the regime would clearly be the

acquisition and exchange of scientific and technological know-how and

expertise, so participation in EU-funded programs would be an offer North

Korean negotiators would be very ready to embrace.

29

- Human resource development would also be a key offering for North Korea,

which would badly need to retrain and adapt its workforce for a successful

accession into the globalized world economy. At the same time, cooperation in

this field would also prove beneficial for EU companies starting business

activities in North Korea in the future.

- Drug trafficking, human trafficking and money laundering provisions should

also be included in the Agreement. North Korea is currently a focus for such

criminal activities in Northeast Asia and the European Union should, in line with

its European Security Strategy, take steps towards mitigating such treats on a

global basis.

- Institutional aspects and political dialogue mechanisms should also be detailed,

in line with Vietnam’s and Cambodia’s agreements and including the setting up

of a Joint Commission and relevant specialized subgroups. Moreover, assuming

North Korea is included in ASEM, multilateral dialogue through this channel

should also be emphasized.

In line with the Agreement, a competent strategy for development cooperation should

be devised. This would mean shifting focus from humanitarian aid (namely ECHO and

DIPECHO projects) towards development cooperation, chiefly in the shape of DCI

country allocations, but also making sure North Korea benefits from regional programs,

both in the framework provided by EU-ASEM regional integration plans and for Asia-

wide thematic programmes.

The allocation of funds from the DCI should, of course, be based on a Country Strategy

Paper, which should in any case be prepared in 2014 or later (and, therefore, be valid

until 2020 if the current 7-year planning system is maintained). In line with the need to

mainstream and integrate development cooperation operations, and also taking as a

basis the current Vietnam and Cambodia strategies, focus should be narrowed into two

main focal points, which should be complemented by two sets of additional actions.

Making sure close coordination and synergies are created with other hypothetical

donors, including the UNDP, China, South Korea, the U.S. and Japan, as well as NGOs

and other European aid agencies18

18 Which will probably be led by SIDA, the Swedish Government’s Development Cooperation Agency, with a long history of cooperation and aid activities in North Korea based upon successful diplomatic relations between the two countries.

, the European Union should focus on:

30

Focal point 1: Support for North Korea’s Poverty Reduction Strategy Paper – which

could prove quite similar to Cambodia's National Strategic Development Plan

Focal point 2: Support for the Health Sector19

Additional actions: Trade-related Assistance and Support to the EU-North Korea

Cooperation and Dialogue in the field of Governance and Human Rights

Funds allocated to development cooperation programmes cannot be detailed in advance,

but we could foresee per capita yearly allocations in the line of Cambodia’s (i.e. 3 times

those of Vietnam's).

Moreover, all 5 lines of the DCI thematic programmes would be of special interest for

the Democratic People’s Republic of Korea:

- The Non-state Actors and Local Authorities programme should be used to assist

in the progressive building of a functioning civil society.

- Also in line with current activities in Cambodia, North Korea should benefit of

the two main lines of the Environment and sustainable management thematic

programme, namely the ‘green growth’ SWITCH and the sustainable forest

management FLEGT programmes.

- Food security will also keep being a problem in North Korea for the years to

come, so cooperation under this thematic program should also be a must.

- The Investing in people thematic programme, with its focus in the Erasmus

Mundus student exchange programme, would also be very beneficial for both

the educational and the cultural development of the future North Korean

economic and political elite and for the European Union, whose perceptions and

awareness levels in the area would surely improve.

- Migration and asylum could also prove a problem for a more open North Korean

regime, as many people would seek refuge in China and/or South Korea. Self-

evidently, the main aim of an orderly transition, desired by both China and

South Korea, would serve to mitigate this risk, but the EU should be ready to

help in case important migratory movements take place.

19 As in the case of Vietnam, assistance in the basic education sector is not a very pressing need for North Korea, which enjoys a 99% literacy rate and whose higher education system is still functional. Moreover, educational assistance should and would surely be provided by South Korea, an advanced nation itself with a top-notch educational system which, moreover, shares the vehicular language with its northern neighbor’s.

31

This second phase would also see the introduction of the EIDHR instrument in North

Korea. Although not advisable at the outset of reform - due to the intrinsic instability of

such aperture processes in a Communist, autarkic society –, improved and expanded

relations with the country should also be accompanied by a strong commitment with

grassroots democracy, human rights promotion and civil society fostering. In that sense,

much should be done in North Korea, an extremely reclusive country for the last 60

years; adding to that will be the overwhelming influence of its Chinese neighbors,

whose government is well known for its reluctance towards such developments.

Therefore, allocation of EIDHR grants – as well as grants from the NSA/LA DCI

thematic programme – for projects in this country should be given priority.

Finally, ECHO and DIPECHO actions in North Korea should not be discontinued in the

short- to mid-term, as the country will surely maintain its underdeveloped status and,

therefore, its fragility to sustain natural disasters such as floods and severe droughts.

32

Conclusions

No country with a functioning government is more unpredictable than North Korea. A

bizarre combination of isolationism and aggressive diplomacy, the world community

awaits an elusive aperture of the regime. However, the pending power transfer raises the

stakes once again. Will the transition be smooth? Will the new leader(s) take the chance

to modernize the economy and improve the living conditions of their long-suffering

population?

If that is the case, the EU must be ready to step in. Having a clear strategy for a

progressive deepening of ties with the DPRK can help hedge China’s influence in the

region, while also making its name heard amongst other players in the area, such as

South Korea, the United States, Japan or Russia.

The European Union has the right set of tools – namely comprehensive cooperation

agreements and financial instruments – to make a difference for the North Korean

population, while also benefiting the European economy, promoting the EU core

principles and helping attain the goals detailed both in the Treaties and the European

Security Strategy.

The examples of Vietnam and Cambodia, with their respective Development Plans

guiding the highly focalized EU strategies, can be very useful for the hypothetical North

Korean model, also at the political dialogue and trade levels.

By leveraging its experience in those Southeast Asian countries and applying it to the

particular characteristics of North Korea, while also providing for the use of different

tools in the short- and mid-term – such as humanitarian aid and, if necessary, the

Instrument for Stability –, the European Union will cement its position and raise its

profile in Asia in an effective and efficient manner.

33

References

North Korea

Strategy Paper 2001-2004

http://eeas.europa.eu/korea_north/docs/01_04_en.pdf

Evaluation of ECHO’s actions in the DPRK 2004-2007

http://ec.europa.eu/echo/files/policies/evaluation/2008/dprk.pdf

EEAS page on North Korea

http://eeas.europa.eu/korea_north/index_en.htm

U.S. Department of State page on North Korea

http://www.state.gov/r/pa/ei/bgn/2792.htm

BBC North Korea Country Profile

http://news.bbc.co.uk/2/hi/country_profiles/1131421.stm

Vietnam

Delegation of the EU

http://www.delvnm.ec.europa.eu/index.html

Framework Cooperation Agreement

http://ec.europa.eu/world/agreements/downloadFile.do?fullText=yes&treatyTransId=814

Strategy Paper 2007-2013

http://www.delvnm.ec.europa.eu/eu_vn_relations/development_coo/pdf_file/VIETNAM_DS_2007_2013_EN.pdf

Multi-Annual Indicative Programme 2007-2010

http://www.delvnm.ec.europa.eu/eu_vn_relations/development_coo/pdf_file/Multiannual_Indicative_Programme_0710.pdf

34

Mid Term Review

http://eeas.europa.eu/vietnam/csp/07_13_mtr_annex_en.pdf

Vietnam Blue Book 2010

http://www.delvnm.ec.europa.eu/eu_vn_relations/bluebook2010/EU_Bluebook22.9.2010.pdf

Humanitarian Aid in Vietnam

http://ec.europa.eu/echo/aid/asia/vietnam_en.htm

Vietnam’s main economic indicators

http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113463.pdf

Cambodia

Delegation of the EU

http://ec.europa.eu/delegations/cambodia/index_en.htm

Framework Cooperation Agreement

http://ec.europa.eu/world/agreements/downloadFile.do?fullText=yes&treatyTransId=782

Strategy Paper 2007-2013

http://www.eeas.europa.eu/cambodia/csp/07_13_en.pdf

Multi-Annual Indicative Programme 2011-2013

http://ec.europa.eu/delegations/cambodia/documents/eu_cambodia/mip_2011_2013_en.pdf

Cambodia Blue Book 2010

http://ec.europa.eu/delegations/cambodia/documents/eu_cambodia/eu_bluebook_2010_en.pdf

Humanitarian Aid in Cambodia

http://ec.europa.eu/echo/aid/asia/cambodia_en.htm

Cambodia’s main economic indicators

http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113362.pdf

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EU Foreign Action Financial Instruments

Instrument for Development Cooperation (DCI)

http://europa.eu/legislation_summaries/development/general_development_framework/l14173_en.htm

Instrument for Democracy and Human Rights (EIDHR)

http://europa.eu/legislation_summaries/development/sectoral_development_policies/l14172_en.htm

Instrument for Stability

http://europa.eu/legislation_summaries/development/general_development_framework/l14171_en.htm

Thematic programmes of the DCI

Non-state Actors and Local Authorities

http://europa.eu/legislation_summaries/development/general_development_framework/r12554_en.htm

Environment and sustainable management of natural resources

http://europa.eu/legislation_summaries/development/sectoral_development_policies/l28173_en.htm

Food security

http://europa.eu/legislation_summaries/development/general_development_framework/r12546_en.htm

Investing in people

http://europa.eu/legislation_summaries/development/general_development_framework/r12547_en.htm

Migration and asylum

http://europa.eu/legislation_summaries/development/general_development_framework/l14510_en.htm

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Trade Policy

Generalised System of Preferences

http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/

http://trade.ec.europa.eu/doclib/docs/2008/july/tradoc_139988.pdf

Everything But Arms

http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/everything-but-arms/

Aid for Trade in developing countries

http://europa.eu/legislation_summaries/development/sectoral_development_policies/dv0006_en.htm

http://ec.europa.eu/trade/wider-agenda/development/aid-for-trade/

Regional Cooperation

http://ec.europa.eu/europeaid/where/asia/regional-cooperation/index_en.htm

http://www.eeas.europa.eu/asia/rsp/mip_0710_en.pdf

http://ec.europa.eu/europeaid/where/asia/regional-cooperation/documents/rsp_0713_en.pdf

Other reference sites

EuropeAid Development and Cooperation

http://ec.europa.eu/europeaid/where/asia/country-cooperation/index_en.htm

The European Union @ United Nations

http://www.eu-un.europa.eu/home/index_es.htm

37

EU Treaties Office Database

http://ec.europa.eu/world/agreements/default.home.do

Eurostat

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

EEAS page on the ASEM

http://eeas.europa.eu/asem/index_en.htm

Asia EurPoverty Reduction Strategy Papers

http://www.imf.org/external/np/prsp/prsp.aspx

The CIA World Factbook

https://www.cia.gov/library/publications/the-world-factbook/

Index Mundi

http://www.indexmundi.com/