US President Donald Trump and North Korean leader Kim Jong-un on 12 June signed a joint statement pledging to work towards denuclearisation and improved relations, following their historic summit in Singapore.

  • The joint statement was brief and vague, and lacked any detail or new commitments. However, tangible North Korean commitments to real, rapid denuclearisation were never a realistic expectation. 
  • As anticipated, this was a very broad, initial agreement that leaves the real questions to be addressed in subsequent talks, probably over several months and implemented over years.
  • A precarious process lies ahead with a persistent risk of breakdown and re-escalation. Trump and Kim’s personal commitment to the process has increased but will be tested by domestic pressures. 
  • If talks progress, interest will grow in a potential North Korean economic opening, but most forms of economic engagement will remain extremely problematic in terms of political, operational and reputational risks.


The history boys

The Singapore meeting was the first ever US-North Korea summit, between two countries which remain technically at war, and two leaders who a year ago were exchanging personal insults and threats. Relative to this context, the atmospherics appeared very friendly and positive. The immediate outcome was underwhelming: a four-point joint statement stating intentions to “establish new relations”, build a “peace regime” and “work toward complete denuclearisation of the Korean peninsula. 

A spokesperson at one point referred to three documents having been signed, but no clarification has yet been provided on the other two documents, and it is not clear whether the summit produced other outcomes yet to be made public. The main surprise was Trump’s later suggestion that he would halt US-South Korean military exercises, which he referred to as “provocative war games” – language which Washington and Seoul have long avoided. This appears to have been a spur-of-the moment comment from the President but would be the most substantive (and apparently unreciprocated) concession of the summit if carried out.

Based on the joint statement alone, many will certainly criticise the summit for failing to have Kim promise complete, verifiable, irreversible denuclearisation (CVID), but that was never a realistic expectation. The meeting went as smoothly as it realistically could have done, and has likely strengthened the tentative understanding that emerged in recent weeks as a basis for further talks. The apparent “war games” pledge has fuelled the view that the summit was a “win for Kim”, but the point-scoring means little for the core issues determining diplomatic prospects. The summit outcome is essentially as expected: a basic, broad agreement setting out principles and a vague commitment to denuclearisation and improved relations. This is strongly positive for regional stability as long as the process continues, but the biggest challenges to sustained diplomacy lie ahead.

Talk isn’t cheap 

Lower-level talks are likely to resume, and must tackle the extremely delicate, difficult details of a deal. These would likely involve phased, reciprocal steps that somehow balance Trump’s need to credibly claim progress towards denuclearisation, with the near certainty that Kim will only consider real CVID as the distant outcome of a process that normalises relations and addresses his overwhelming sense of regime insecurity. This task has defied previous attempts at a negotiated resolution and the summit does not really tell us anything new about the prospects this time. However, the fact that it took place is a positive sign: some details were broached during several days of working-level talks in June without derailing the summit plans, suggesting both sides see some hope of a formula emerging.

The summit also further deepens Trump and Kim’s personal investment in this remarkable diplomatic gambit – one which carries considerable risks for both men. The personalisation and top-level involvement in this engagement – which is in contrast to previous negotiations – injects uncertainty, but is also one of the factors that give this process a chance (slower-moving, lower-level engagement in the past has failed without top-level commitment). Notwithstanding his short-lived cancellation of the summit, Trump in recent weeks seemed to grow more comfortable with the idea of a gradual, phased denuclearisation process, was very positive in his initial assessment of the summit, and is clearly still attracted to the idea of a historic deal. Kim is more committed than ever to his diplomatic turn: North Korean domestic coverage of engagement with the US had been cautious and low-profile but the Singapore summit was given far more prominent attention.

The hard part

The question is whether the two leaders’ commitment survives the hardest parts of the process, beyond Singapore. Fundamental differences on the scope, timing and verification of denuclearisation, and what the US gives in return, will remain the most daunting stumbling block. Kim will have to be prepared to give up limited aspects of his weapons of mass destruction (WMD) programmes, and will expect Trump to at least partially ease sanctions along the way, but such thorny issues are no clearer. The initial joint statement was also silent on other likely key issues, such as the question of a formal peace treaty or non-aggression pact, and exchanging some level of diplomatic representation in each other’s capitals. 

The joint statement did make reference to the 27 April Panmunjom Declaration – signed after Kim’s first summit with South Korean President Moon Jae-in, and outlining many other confidence-building steps, and measures for improved communications and limited economic engagement. There may also be more substantial outcomes from the Trump-Kim summit than were apparent from the immediate briefing and joint statement. However, it is clear that this tentative reconciliation, remarkable and encouraging though it is, will continue to face risks of being derailed by a change of heart or domestic political calculations by either leader, an inability to bridge remaining differences on the denuclearisation process, or subsequent allegations of duplicity. 

Frontier fantasies

Despite challenges, recent developments have spurred interest in the possibility of economic opening. The idea of North Korea as the next big frontier market is compelling, given its hypothetical development potential and complementarities with the South Korean economy. For companies and investors with a long-term view and a very healthy risk appetite, these scenarios are worth considering. Some niche opportunities could also emerge quite quickly in a best-case scenario for US-North Korea talks. However, they should be viewed with very great caution (though the risk may be lower for potential future projects with multilateral institutional backing, such as under humanitarian auspices, or linked to government-supported industrial zones or infrastructure development).

Existing sanctions on North Korea are already being enforced less strictly and proactively and this trend will probably continue along with diplomacy. However, formal and full lifting of UN and US sanctions will take much longer – at least some significant sanctions will remain in place until the North has made very significant concessions. Kim is very interested in economic development but almost certainly paranoid that opening up will undermine his regime. He is therefore likely to proceed only very cautiously, regardless of sanctions, allowing investment only in specific, controlled zones and projects. Moreover, North Korea has one of the least secure and most difficult business environments in the world in terms of fundamentals such as investment protection and rule of law, and engagement with the country involves dealing with state or military-linked entities with highly problematic records. Political, operational and reputational risks are likely to remain extremely daunting for multinationals dealing with North Korea, even with rapid progress in diplomatic engagement.

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