Political Risk Analysis - N-S Talks Positive, But Goodwill Could Evaporate Rapidly - MAR 2018

BMI View: The positive outcome of the inter-Korean talks on January 9 belies the considerable difficulties both Koreas will face in mending tense bilateral relations, given that North Korea is extremely volatile in its diplomatic posture. The North ' s bid for improved ties could also be aimed at driving a wedge between South Korea and the US, and this could see Washington proceed more cautiously with ongoing KORUS renegotiations, as it seeks to avoid alienating Seoul.

While the outcome of inter-Korean talks on January 9 is a positive development in North-South relations, we highlight that the improvement in bilateral ties and reduction of tensions on the Korean Peninsula remain fraught with difficulties. Although the joint statement indicated that both sides were willing to increase bilateral interactions, Pyongyang's extremely volatile diplomatic posture and its refusal to discuss its nuclear programme suggest that relations could deteriorate very quickly. The talks also come at a time when the US-South Korea relationship is coming under a degree of strain due to the ongoing renegotiations of the Korea-US free trade agreement (KORUS). We thus believe that Washington, DC, could proceed more cautiously with its demands as it seeks to avoid alienating Seoul, boding well for the future of the trade talks.

Talks Marked Slight Thawing Of Ties...

Inter-Korean Ties A Key Flashpoint
Asia - Regional Flashpoints
Source: BMI

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