Following weeks of ups and downs surrounding the prospects for the first meeting ever between a sitting US president and the North Korean leader, the two countries officials laid the groundwork for it by engaging in "microwave diplomacy" as US journalist Barbara Demick called it. South Korean President Moon Jae-in, however, stood above the diplomatic roller coaster as the sole actor who keeps working on infusing coherence and stability into this ride.
Having invested much political and reputational capital on reviving inter-Korean relations and brokering a deal between the US and North Korea, Trump's abrupt May 24 cancellation of the Singapore summit caught President Moon off guard only days after returning home from his visit to the White House, where apparently he was given the green light for the talks to go ahead. Against this backdrop, Moon could not help but respond positively to Kim Jong-un's outreach and within 24 hours the two Koreas arranged their fourth ever meeting. Even though the two could easily talk directly via the hotline that was set up in April, the fact that Moon promptly made his way to the North Korean side of the border to meet again with Kim is a strong indication of his willingness to keep the flame of reconciliation alive regardless of the outcome of US-North Korea negotiations on denuclearization.
So far, the public supports the Blue House's current North Korean policy. The president's popularity soars in the polls (85.7% in early May) and the reason might be partly found in his ability to avoid multiple past pitfalls when carefully navigating the engagement waters. Moon has been committed to sending clear signals to the North Koreans not only by sticking to a strong deterrence posture but even more importantly by not providing any economic inducements to Pyongyang to bring its leadership back to the table, except for humanitarian aid to North Korea's malnourished children and pregnant women. The unwillingness to opt for "economic carrots", in particular, is seen as instrumental to Moon's first stage of diplomatic outreach towards the North: the priority is to restore trust across the 38th Parallel through cooperation and integration instead of economic concessions.
It is worth noting that in the April 27 Panmunjom Declaration the section regarding the creation of new channels to increase confidence between the two Koreas stands out from the list of ambitious goals for its action-oriented and practical tone. It groups in one single document a summary of the joint initiatives that came out from the June 15 and October 4 declarations. Therefore, its comprehensive character can be considered one of the most innovative outcomes of the third inter-Korean summit if compared to the ones in 2000 and 2007. In terms of confidence-building measures, the USB stick containing the "New Economic Map of the Korean Peninsula" that Moon handed to Kim during that first meeting could be seen as such. By sharing his blueprint for inter-Korean economic cooperation (it calls for the creation of three "belts": one along the eastern coast and Russian border for energy and resources, another along the western coast for transportation and logistics, and a third across the land border for tourism) the South Korean president aimed at reaffirming Seoul's commitment to supporting Pyongyang's striving for economic growth, now that the regime has apparently shifted its emphasis from the byungjin first leg - after announcing the "completion" of it nuclear weapons - towards the economic track. It follows that joint infrastructure projects are set to be on the table after any diplomatic breakthrough as they were during previous South Korean engagement efforts, which were driven by the modernization of connections to facilitate trade and contacts across the border.
Meanwhile, several actors are ready to factor in some possible "peace dividends" internationally and domestically. South Korea's infrastructure proposal draws interest primarily from neighbouring countries since improving the area's logistics to boost trade and secure energy supplies would also bring obvious benefits to the development and integration of Russia's Far East and China's north-eastern provinces. As for the South Korean business community, many banks and private companies have already shown their willingness to cash in on opportunities by launching task forces to identify possible investment targets in the North, such as the re-opening of the joint industrial complex in Kaesong, in operation from 2004 to 2016. Even South Korea's local elections, scheduled for June 13, got drawn into this matter when the ruling Democratic Party released a list of joint infrastructure projects it hopes the South can conduct in North Korea as part of its "Five Major Promises".
Against a potentially promising picture stands a long list of unknowns in which the international sanctions regime might not be the biggest hurdle to overcome. To what extent does Pyongyang intend to pursue economic cooperation and tolerate reforms without putting regime stability at risk? This is the question around which everything revolves, which then raises the issues of political risks for foreign investors, who would hardly get full control over their businesses, and moral hazard for their governments. As much as Moon considers regular economic and personal exchanges the best guarantee for stable inter-Korean relations potentially able to change the North's strategic calculus, the time is not yet ripe for hoping that Pyongyang would embark on a process leading to a Vietnam-style opening-up. North Korea's political and ideological foundations would not hold up under the flow of information from the outside, and the regime knows it.