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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