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Asia

Why War in the Pacific is All but Inevitable

 8 min read / 

On Friday, a shot was fired around the world, 21st-century style.  It was not something that happened on the trading floors of the world’s financial capitals, nor was it something President Donald Trump fired off in an early morning tweet storm.

Instead, it was the announcement that North Korea’s latest missile test proved the country now had the capability to hit almost all of the continental U.S.

Granted, news of missile tests and North Korea is nothing new.  Since January, the hermit kingdom has conducted a total of 12 tests – firing 18 missiles.  What is most unsettling about the latest test is not only the range of the missile but also the how quickly the country’s missile technology is advancing.

This has led many security analysts to rethink their assessment of North Korea’s offensive capabilities; so much so that a growing consensus is emerging that the country could possess nuclear first strike capabilities – albeit limited – by the end of the year.

While this should have been a wakeup call the response from the U.S. has been largely muted.  On Friday, Secretary of State Rex Tillerson released a statement condemning the test.  Meanwhile, South Korea conducted a successful joint test of its anti-missile defense system and CBS news reported on Saturday that the Americans are pushing for an emergency U.N. Security Council session.  On Monday, President Trump sought to place blame for the entire situation in the lap of the Chinese.

However, many intelligence officials have questioned how much influence the Chinese government has in Pyongyang.  Further, the pace of North Korea’s missile program has led to others wonder if the country is receiving technical assistance from another nuclear power.

This muddied response indicates the complexity of this situation which not only involves China and the U.S. but Russia as well.  In addition, open conflict has the potential to disrupt global supply chains and financial markets sparking a global recession, or worse.  In fact, some analysts have indicated the probability of a major economic correction in 2018 is as high as one in four, and armed conflict involving China and the U.S. could make that probable scenario a reality.

How Did We Get Here?

While the roots of enmity between North Korea, South Korea, and the U.S. date back to the period immediately following the end of the Second World War, the North’s nuclear ambitions – or its ability to act on those ambitions – date to the 1990s.

In the minds of those close to the Kim dynasty, a nuclear North Korea would act as a bulwark against encroachment from the South, and the policy has received tacit approval from leaders in Beijing and Moscow.  This has been to the benefit of many in China who resent American involvement in the ‘Third Taiwan Straits Crisis’.

In the face of ‘aggressive’ U.S. hegemony, Chinese leaders have been busy enacting a strategy to bolster China’s influence in the region through a combination of technological advance, rapid militarization, as well as trade and investment.

While the third leg of the stool – trade and investment – has been welcomed by much of the global community, the success of the remaining legs depends on the cover extended to China by North Korea’s constant aggression.  A military response by the U.S. and its allies has been taken off the table.

Meanwhile, the combination of diplomacy – à la six party talks – and economic penalties have proven ineffective; and this is even before Kim Jong-un came onto the scene.  The reason is simple, North Korea has never been an honest partner in negotiations and in terms of economic penalties the regime has essentially written the book on how to circumvent America’s control of the global market.

Added to the mix is Kim Jong-un, an unstable leader whose lust for power knows no bounds.  This means that China’s influence on Pyongyang has been waning – ironically at a time when the world needs Chinese President Xi Jinping to take a more forceful stand against its intransigent satellite, even if it is only behind the scenes.

How Will It Play Out?

The combination of narrow-mindedness by the Americans and the Chinese, as well as the need for South Korea and Japan to adopt more a vigilant stance point to the increasing probability of military conflict in the region.

In this way, history is repeating itself in the same way that the Russo-Japanese war was inevitable or in that the ongoing tensions between the U.S. and the Soviet Union led to the downing of Flight 007 in 1983. Factoring in the unpredictability of Kim Jong-un, as well Donald Trump, results in the ingredients of a perfect storm.  While this conclusion can still be avoided, the combination of stasis, posturing, and ‘face’ – in the U.S. and Asia – makes an armed conflict almost a foregone conclusion.

However, this brings us to the Russians, who might be the wild card in this deck of wild cards.  Even though Moscow is more focused on conflicts in Syria and Ukraine as well as reversing sanctions, there is a possibility that Vladimir Putin could broker a deal.  This won’t be easy, and the strategic missteps by the Trump administration have them starting from a position of weakness.

In terms, of gaining China’s support, the mostly likely bargaining chips include the South China Sea and Taiwan.  While giving China some leeway on its maritime claims would ensure the U.S. is not dragged into a proxy war over the question, there is no evidence to support that Washington is even considering this option.

When it comes to Taiwan, the question is more nuanced.  But giving Beijing a choice between stability, and possibly unification, on the Korean peninsula and reunification with Taiwan there is a possibility they may choose the latter.

The challenge is that neither Xi, Putin, or Trump are proponents of finding ‘win-win’ solutions.  Instead, all three are motivated by ‘zero sum’ relationships – especially where they win and the other side loses.

Are There Other Scenarios?

From the U.S. perspective, there are basically three doors – continue the path of sanctions and diplomacy, seek global consensus, or take a preemptive first strike.   Given talks and sanctions have failed up to this point and the fact that the current administration has essentially hollowed out the State Department, the first scenario is not likely to convince North Korea to halt its nuclear program.

The second scenario – global consensus – does have a slim chance for success but this comes with two caveats.  The personalities of the leaders of China, Russia, and the U.S.  and the fact that the global playing field is drastically different from the First Gulf War.

In 1990, the Soviet Union was in full meltdown and China was recovering from the fallout of the Tiananmen Massacre.  As such, the U.S. faced little international opposition when it sought Security Council approval to authorize the use of force against Saddam Hussein’s annexation of Kuwait.  The situation today is quite different and with China and Russia on the ascendancy, any ‘global’ consensus would require significant horse trading.

The last scenario is a pre-emptive first strike.  While such an attack might help President Trump’s sinking approval rating, it would need to be swift and overwhelming, destroying North Korea’s nuclear capabilities and wounding its military while keeping China and Russia on the sidelines.

In reality, this scenario would require months of preparation and would tip the U.S.’ hand in terms of its first strike capabilities.  Remember, this would not be the same as firing 59 cruise missiles against the Assad regime.  North Korea is a highly-militarized nation, and Seoul is roughly 50 kilometres from the DMZ.

For the most part, this is the American option set.  From the perspective of South Korea and Japan, the most likely scenario is a massive buildup of offensive and defensive capabilities and this might even look to bring Taiwan and even India into the mix – as both serve as a check on China.  However, such moves are not likely to be welcomed by Beijing.

Finally, there is China.  While North Korea has served its purpose as a guard dog, there is a point where even the Chinese need to worry that Kim Jong-un might be mad enough to eventually bite the hand that feeds him. So, while it might be in the best interests of Beijing to engineer a change in Pyongyang, this won’t happen unless Xi can sell this to the more hawkish elements in his government.

What Does This Mean?

In absence of cooperation between China, Russia, and the U.S., a war in the Pacific is inevitable.  Given the capabilities of the players, this Second Korean War will not only be fought on the peninsula but possibly in China, Japan, the U.S., as well as vital shipping lanes.

The impact on the global economy would be catastrophic.  Not only would it disrupt integrated supply chains in multiple industries but the fallout would extend to financial markets while causing a refugee crisis which would put Syria to shame.

As such, the actions of world leaders over the coming weeks and months could well determine whether the current world order is maintained or torn asunder.

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America

Trump’s Presidency and Russian Relationship: The Future

 4 min read / 

Trump Russia

Much has been said about Donald J. Trump’s love affair with Russia. Questions deserve a thorough and honest investigation. As distasteful and risky it may be, the best outcome of the enquiry is accusations continue to swirl, Trump limps through three more years, and in 2020, he is crushed at the ballot box. The world moves on. If removed from office, odds are Trump whips his base into a frenzy. Only the height and duration of civil unrest is in question. A worse case is that Trump emerges emboldened, eager to settle Putin’s longstanding challenge.

Putin Mocks Trump

The competition is real. Putin’s economic and political dominance gnaws Trump. Putin knows this. So, he taunts the President and dares Trump to employ the same ruthless tactics he exploited to consolidate power and possibly become the world’s richest man. Since Trump only sees green, he took the bait. The race is on to be the world’s first trillionaire.

Russia’s population is 142 million. Its $3.86trn translates into a measly $26,900 per capita GDP. In contrast, the 326 million people of the United States generate $18.62trn in GDP, nearly five times Russia’s total. The US per capita GDP of $57,600 more than doubles Russia’s. Despite Russia’s meek economy and reports  that Putin has embezzled up to $200bn in assets, Putin remains incredibly popular in Russia.

The apathy regarding this unparalleled heist makes Trump and Putin salivate over what they could jointly pilfer from the world economy. To advance their contest, the pair will identify a common threat. US-Russia relations will warm. Under the guise of “Peace through strength,” Russian sanctions will be lifted, and the Magnitsky Act repealed.

The administrative state in retreat, animal spirits will run wild. Trump’s name will be emblazoned across the globe. Countries desperate for jobs will be compelled to forge deals sponsored by Putin and Trump. Ethics be damned, the race to the bottom of the $120trn global economy will prompt a wave of corruption never seen before. Every facet of human decency will be compromised: environmental regulations, free and fair-trade by-laws, intellectual property, and human rights protections. The collusion is real.

In time, complicity will turn to double-crossing. It’s the Trump-Putin way. Makeshift “me-first” trade deals will collapse. Boycotts, divestitures and sanctions will be commonplace. Cooperation will evaporate. New political boundaries will be drawn with little world condemnation.

It doesn’t have to happen this way. Patience is a virtue. The checks and balances of the three branches of government are powerful mechanisms to thwart overt corruption.

Yet, for the impatient who seek Trump’s impeachment or removal via the 25th Amendment, be careful what you wish for. Only Trump can tame his army. To assume Trump will plead mercy at the feet of the administrative state contradicts Trump’s lifelong persona. He will relentlessly counterpunch and encourage his followers to do likewise. The short and long-term political and social risks are astronomical.

If Trump stems the tide, consolidates power and aggressively partakes in Putin’s race for two terms, the risks outstrip his forced removal. The consequences will be multi-generational.

Rope-a-Dope Is the Key to Containing Trump

The only path that possibly prevents extensive collateral damage is to check Trump into policy oblivion. Legislators must play rope-a-dope for as long as it takes, even three years if necessary. If Democrats take back both houses in 2018, the tactic will not set up Trump and his base for a final knock-out punch in 2020. For that to occur, numerous members of the GOP must join the effort. They too must throw periodic jabs at Trump then absorb a barrage Trump’s counterpunches.

With foes in every corner, even Trump – the self-proclaimed greatest counterpuncher in history—and his base will wear themselves out well before 2020. Then the decisive knockout punch can be delivered at the ballot box—without collateral damage.

Trump is severely wounded. If he gracefully and peacefully surrenders the Presidency, great. But don’t expect it. Rope-a-dope deployed by both parties is the countries best hope for a peaceful end to the Trump Presidency. Any other scenario risks the once unthinkable; an ‘American Spring’.

Keep reading |  4 min read

Asia

2018 Winter Olympics: North and South Korea will March under a Unified Flag

 1 min read / 

2018 winter olympics

North and South Korean athletes are set to march together in the opening ceremony for the 2018 Winter Olympics, to be held in Pyeongchang.

On Wednesday, South Korea’s Unification Ministry announced that following talks which began earlier this month, both teams have agreed to participate together under the Unified Korea flag – the first time since 1992.

The two nations, who are still officially at war with one another, have also agreed to field a joint women’s ice hockey team and organise a joint cultural performance. Skiiers from both Koreas will train together at a resort in the North and Pyongyang has reportedly said it will allow a small delegation of supporters to attend.

This represents the first major breakthrough in years. Although some cynics are worried North Korea will use it to buy time for the development of its weapons programme, there are promising signs that the Winter Olympics could help to cool rising tensions in the area.

As a sign of good faith, combined drills held by the South Korean and US army have been suspended for the duration of the Olympics.

Keep reading |  1 min read

Asia

Hacks on Cryptocurrency Exchanges Linked to North Korea

 1 min read / 

hacks

A report has linked a hacker group, responsible for targeting crypto-investors and exchanges, to the North Korean state.

The attacks took place against South-Korean crypto-exchanges and included attempts to harvest users’ passwords. The report does not say if the attacks were successful.

The report, by internet technology company, Recorded Future, has identified the attackers as the group Lazarus, known to be associated with the hermit kingdom. The malware was similar to that used against Sony Pictures in 2015, the WannaCry ransomware attack in 2017 as well as the Bangladeshi bank heist in 2016.

Attacks began when cryptocurrencies started to rapidly increase in value. It is believed North Korea favours attacks on cryptocurrency because they are not linked to any bank or government, making attempted heists less politically incendiary.

North Korea has shown a great interest in crypto-currency, potentially as a means for funding itself. In 2017, the elite Pyongyang university started to run courses on the virtual tender.

Keep reading |  1 min read

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