STRATFOR.COM's Global Intelligence Update - January 6, 2000 By The Internet's Most Intelligent Source of International News & Analysis http://www.stratfor.com/ __________________________________________ Stratfor Intelligence Services clears the fog of decision making for corporate strategists and executives. http://www.stratfor.com/services/ __________________________________________ CHECK STRATFOR'S SITE TODAY FOR OUR READERS' SURVEY As a valued reader of Stratfor.com, We'd like to hear your opinions and ideas. Please take a few minutes to complete our reader survey. GO TO http://www.stratfor.com/ __________________________________________ STRATFOR.COM Global Intelligence Update January 6, 2000 Italy Brings North Korea Out of Isolation Summary The Italian Foreign Ministry announced Jan. 5 that it had exchanged letters with a Rome-based North Korean diplomat, opening relations between the two countries. This move also opens up a world of possibilities for North Korea; it serves as a way to improve ties throughout Europe and as a way for it to break out of its relative international isolation. For Italy, it raises its value throughout Europe as a bridge builder between Europe and pariah states. It also sets the stage for Europe to gain more leverage in its transatlantic economic ties. Analysis The Italian Foreign Ministry announced Jan. 5 that Italian Foreign Minister Lamberto Dini met with North Korea's Rome-based permanent representative to the U.N.'s Food and Agriculture Organization to formally establish diplomatic ties between the two countries. Under the arrangement, Italy's ambassador in Beijing will double as its envoy to Pyongyang but continue to live in China. North Korea already has diplomatic relations with five European countries including Austria, Denmark, Finland, Portugal and Sweden. However, in opening diplomatic ties with Italy, North Korea now has ties with one of the Group of Seven (G-7), the world's seven leading industrialized countries. Formal diplomatic relations with Italy are a major step for North Korea in breaking out of its international isolation. It gives North Korea not only an outlet to the rest the G-7 and Europe, but it also gives it more leverage in its dealings with its neighbors - South Korea, Japan, Russia and China - as well as with the United States. In fact, North Korea made this point very clear just after the announcement in an unscheduled press conference. Just hours after Italy announced that it would open diplomatic ties with North Korea, the North Korean government announced that it would rescind plans to send a senior envoy to the United States for an official visit. "Our delegation cannot visit the U.S. under the present circumstances," said North Korean ambassador to Beijing Chu Chang-Jun. Chu also announced that future talks with South Korea and Japan would depend on a change in attitude from the two countries toward North Korea. "Whether a North-South summit will be open or not depends entirely on the behavior of [South Korean President] Kim Dae-jung," he said. He made almost identical remarks concerning Japanese-North Korean relations saying, "The future of Japan-North Korea talks depends entirely on the attitude of the Japanese government." Still, both Japan and South Korea attempted to play the move to their favor. Japanese Chief Cabinet Secretary Mikio Aoki reportedly said, "Any opening in the channels of communication with North Korea should be welcomed." South Korea also welcomed the move saying it was in line with Kim's Sunshine Policy of engagement with the North. The South Korean Foreign Affairs and Trade Ministry told South Korean media that, "We respect the Italian government's decision, which we consider will help North Korea's integration into the international community." Despite the cautious optimism from both Japan and South Korea, it is apparent that North Korean and Italian relations could endanger the Sunshine Policy, since it is designed to link the North's economy to the South's. These ties may serve to strengthen the North Korean economy by opening up the possibility of European investment. Also, in securing a bridgehead in the industrialized world, North Korea increases its maneuverability, making it more complicated for its neighbors to take measures against the state, in effect weakening the U.S., South Korean and Japanese leverage on the Stalinist state. For Italy, the opening of diplomatic relations with North Korea means something entirely different. Even though Italy is the sixth European Union (EU) member state to forge diplomatic links with Pyongyang, this move enhances Italy's reputation within Europe for forging relations with states on the fringes of the international community. In previous cases, such as with Iran and Libya, Italian openings have led to increased interaction between those countries and the EU as a whole. The EU usually pushes a joint diplomatic and security policy, but establishing ties with a certain nation is the sole decision of a member country. In July 1998, Italian Prime Minister Romano Prodi's visit to Tehran, where he met with both Iranian President Mohammad Khatami and supreme leader Ayatollah Ali Khamenei, paved the way for a gradual thaw in Iranian-Western ties and allowed Iran to call for a dialogue with the EU. This opened up the way for Khatami to make state visits to Italy in March 1999 and to Germany and France later that year. It was the first visit by an Iranian leader to Western Europe since 1979. Italy also moved to re-invigorate ties with Libya through a visit by Italian Prime Minister Massimo D'Alema on Dec. 2, 1999, to its former colony where he met with Libyan leader Moammar Gadhafi. It was the first visit by a Western government leader since sanctions were imposed seven years ago due to Libya's suspected involvement in the airplane bombing over Lockerbie, Scotland in 1988. Improved ties between Italy and these two countries make sense for Italy, since Iran is Italy's third largest oil supplier after Libya and Saudi Arabia. This latest move to extend diplomatic relations to North Korea, however, is different. North Korea has little, if any, trade activity with Italy. Instead, it is likely that this move is meant solely as a way for Italy to strengthen its position within the EU. As is the case with Iran and Libya, Italian ties with North Korea are likely to have a domino effect for the rest of Europe. Italy is one of the largest countries in Europe, yet its international influence lags behind that of its larger European partners. France has maintained and capitalized on its contacts throughout the Middle East and Africa. Germany is a key interlocutor among Europe, Russia and Eastern Europe. Britain maintains some influence over its former colonies and continuing members of the British Commonwealth. Even economically deprived Spain still exerts a considerable amount of influence in Latin America and Cuba. Even so, this serves as a major victory for Europe as a whole, as it clears a path for Europe to gain more leverage against U.S. economic pressure. Europe capitalized on improved ties with Iran and Libya in May 1999 to challenge the Iran-Libya Sanctions Act, a U.S. law that bars large companies from trading with the two countries. The United States capitulated and announced that European firms were exempted from U.S. laws prohibiting trade with Iran and Libya. This foreshadows similar problems with U.S. interference in potential European trade with North Korea, which also is subject to U.S. sanctions. In essence, diplomatic relations work in both North Korea and Italy's favor. The ties help North Korea break out of its isolation and serve to place Italy at the forefront of diplomatic rapprochement. However, this move does not bode well for North Korea's neighbors Japan and South Korea who have hoped to moderate North Korea on their own. The move also hinders U.S. efforts to contain North Korea. 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