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 North Korea is a problem for China – if only the US would realise

North Korea is a problem – for China

  • 13Sep 17
  • Donald Amstad Business Development Director, Specialist Distribution

North Korea now has nuclear warheads that it can attach to missiles, that can travel great distances – to Guam, almost certainly, the nearest offshore U.S. territory, and, with a bit of practice perhaps heavily populated parts of the U.S. mainland. It sounds scary, but then Russia, China and others have had this capability for decades and we’re all still here.

North Korea’s President Kim has been acting as one might expect. He wants to stay in power and not end up like Saddam Hussein or Colonel Gaddafi. If anyone does threaten him or his regime, they may succeed. But at least he will go out in a blaze of glory, as he now has the ability to inflict catastrophic damage on any aggressor. Put yourself in Kim’s shoes. Having gotten to this position, is there anything that the West could offer that would make you give up those nuclear weapons and missiles?

So the question then becomes: “What does Kim do with these weapons?” Well, he has them but can’t use them, because if he does he gets destroyed. He can only threaten to use them. His fate is that of the honeybee: you sting, you die. China has also made it very clear to North Korea that if it starts a war, China will not come to its aid. However, if North Korea were attacked by the U.S., then China would likely intervene. It’s possible that North Korea is trying to goad the U.S. into an attack, so that China can be brought back to its side.

If Kim can’t use his new toys, they could still be useful if he could sell them for hard cash. He would have to find a way to deliver them to his “customers,” which is not easy if you are completely isolated. China and Russia are important in this regard, as the only way out of North Korea by land is through their territory. Proliferation is a very real threat, and that is the threat that the West should be working to contain now.

What is not widely reported is Kim’s anger and frustration with China. North Korea has been used to having carte blanche from China to do pretty much whatever it likes. Recently China has been putting the squeeze on North Korea, both with its votes in the UN and its actions. Why is China so upset?

China is upset with Kim because North Korea’s recent testing of warheads and missiles have upset a balance of power in north Asia that had been swinging steadily in China’s favor. The U.S. has for some time been perceived as reducing its commitment to the region. Few people bought Obama’s “pivot to Asia,” for example.

U.S. retrenchment was likely to accelerate under his successor, who famously said on the campaign trail that if “Japan and South Korea want nuclear weapons they can buy them themselves.” One of Trump’s first actions in office was to pull out of the Trans-Pacific Partnership (TPP), a regional trade deal that excluded China.

From a Chinese point of view, these developments were perfect. They were an open invitation to China to expand both militarily and economically.

China has brazenly ignored international opinion, building runways on atolls (ring-shaped coral reefs) whose ownership is disputed across the South China Sea. At the same time, it has dangled development cash to its Asian neighbors via its Asian Infrastructure Development Bank. Earlier this year, Beijing invited 50 nations to hear about its extravagant but vague project, “One Belt, One Road.”

Give Beijing an inch and it takes a mile.

The Chinese have spent a lot of time trying to kick the U.S. out of Asia, and now Pyongyang has invited them back.

But now because of North Korea’s re-militarization under Kim, the U.S., much to China’s ire, has reversed course. Because of the threat from North Korea to allies South Korea and Japan, the U.S. has sent the Terminal High Altitude Area Defense (THAAD) missile defense system to both countries. This upsets China because THAAD could also be used against the Chinese. The Chinese have spent a lot of time trying to kick the U.S. out of Asia, and now Pyongyang has invited them back.

China may take it out on Kim one day, but for now it’s not in their interest to do so. While China detests Kim, it does not want regime change or for the country to implode. North Korea has a vital role to play in China’s security because it acts as a buffer against South Korea, which is host to 30,000 U.S. troops. The last thing that China wants is to have those troops on its border. Nor does it want millions of starving refugees flooding across its border, as there are 25 million people in North Korea. Kim knows all this only too well.

So while the Western press presents North Korea as a problem for the U.S. and its allies, from an Asian perspective North Korea feels much more like a problem for China.

If the West were to think of North Korea as a Chinese problem and wanted to influence Chinese behavior, then several courses of action come to mind. Rather than pounding the table at the UN and demanding more sanctions, the U.S. could ramp up its military presence in the region and explain to the world that this is the result of North Korea’s behavior. It could also re-start the TPP negotiations, as Japan has been arguing for.

That might force China to think more creatively about a solution for North Korea. One person Beijing might turn to is Kim Han-Sol. The 22-year-old nephew of President Kim may not be ready to take the reins of power. Yet he would seem to have ample motive. His father is thought to have been assassinated on Kim’s orders. Alas, China’s influence probably does not run this far.

Still, the diplomatic option of leaving China to sort matters out while quietly building up its military and economic clout would be a pragmatic one for the U.S. No one in their right mind sees an attack on North Korea as an option, short of mass slaughter (on both sides – Seoul, a city of 10 million, is only 37 miles from the border).

Part of the difficulty is that President Trump is under considerable pressure domestically, and isn’t experienced in international relations. Couple that with the need to appear a “winner,” a short attention span and a fondness for Twitter, and you can see many reasons for uncertainty regarding Asia.

How are financial markets making sense of all this? This would be less of an afterthought if markets had reacted at all in the past week. Apart from the dollar, which was wobbly anyway, they have been muted. That probably says a couple of things: when it comes to geopolitics, markets aren’t much of a guide. Besides, this is just the latest iteration of the last Cold War, something that has been playing out for the best part of 65 years.

All the same, North Korea depressingly has the making of a true black swan event – one by definition that is almost unthinkable, impactful but easily rationalized in hindsight.

ID: US-110917-45306-1

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