Since I last wrote a few weeks ago, North Korea has lost one showdown with the U.S. and has geared up for a second. The first showdown was a threat to ring tiny Guam with a military barrage. The second showdown is the threat of intercontinental ballistic missiles ICBM armed with hydrogen (fusion) bombs.

Why the first threat? Because Guam is a U.S. protectorate with a major U.S. military base, and sufficiently off the beaten path to make good long-distance target practice. When the U.S. rattled sabers in return, a worried China publicly punched a hole in the security umbrella it provides North Korea. The Global Times, long viewed as its semiofficial mouthpiece, said that China would not defend North Korea from U.S. retaliation if North Korea struck first — more precisely, if it launched missiles that threatened U.S. territory. North Korea backed off on Guam.

 

Instead, North Korea launched a missile that traveled 5,000 km on such a high loft that it landed near Japan. On a low loft the missile could have flown at least 7,000 km and approached the west coast of the U.S.  This was the second test of North Korea’s new intercontinental ballistic missile (ICBM) capability, and the first verification of intercontinental range.

 

North Korea’s dearth of ICBMs has long been the Achilles’ heel of its nuclear blackmail program. North Korea’s own missile factories didn’t seem up to the challenge. According to Western military analysts, the new advances hinged on rocket engines or critical parts smuggled from Ukraine or Russia. Most reports emphasize the Russian connection, reflecting Russia’s greater incentives for mischief, proximity to North Korea, and better smuggling capability. (Ironically, the main outlet emphasizing the Ukraine connection was the New York Times, which for the previous nine months lambasted Trump as a tool of Russian intelligence.).

 

North Korea also claims to have developed a hydrogen bomb. This past weekend appears to mark the first successful test, as the earthquake tremors associated with North Korea’s previous explosions were ten times more powerful than ever recorded before. In addition to greater killing power, hydrogen bombs can knock out vast electromagnetic grids.

 

The combined ICBM/fusion developments ratchet up North Korea’s offensive capabilities and threat to the U.S. and its allies. From a purely military perspective, they don’t facilitate either conquest of others or defense from conquest, since·

 

The only country they could possibly attack without being attacked back thrice as hard is South Korea, and there the odds are best if North Korea keeps the war non-nuclear. North Korea’s best deterrent to invasion is its long-standing and largely uncontested ability to wreak havoc on nearby Seoul with conventional weapons.

 

No other power wants the burdens of nursing 20+ million battered and brainwashed North Koreans back to civilization.

 

Development of nuclear-armed ICBMs is the single biggest lure and goad to preemptive U.S. attack.

 

Hence, the program boils down to North Korea’s quest for “respect,” which is diplomat-ese for permanent blackmail payments. There is a wide range of payments — say, from $1 billion a year to $100 billion a year — that might strike North Korea as reasonably respectful and global pooh-bahs as reasonably cheap in context. However, there is no way to seal agreement since.

 

If North Korea keeps its nukes, it has incentive to keep developing them and upping the ante for more; If North Korea gives up nukes, the West has incentive to stop paying the ransom; Agreement spurs a host of warlord wannabees to strive for the same.

 
Side payment between wannabees and North Korea will most likely spread the technology and the threat.

 

At the other extreme, preemptive Western conquest doesn’t seem politically viable either. To contain damage to Western interests, it will need to be all-out. If it’s all-out and contains the damage, it will be widely criticized as excessive, with victors treated more as war criminals than as saviors. The negative feedback will likely weaken Western military capability and resolve to defend core interests.

 

That forces the Trump administration to choose between two basic paths, with each path disguised as something else. The first path backs down. It discards the last 50 years of presidential pledges never to tolerate North Korean nukes and resumes blackmail payments. However, it claims publicly that recognition of North Korean power doesn’t mean acceptance and that the payments are just grease for confidence-building and negotiation. The second path holds firm. It refuses to loosen sanctions or to offer blackmail. It meets threats with counter-threats and a North Korean attack with overwhelming counterattack. However, it attempts no preemptive invasion, allows public fears to build, and goads criticism for both recklessness and false bravado.

 

All U.S. presidential administrations in the past quarter century, regardless of style or predilection, have opted for the first path whenever North Korean push came to threatened shove. Given this history, I am reluctant to predict that Trump will not.  So far, however, Trump sounds like he’s opting for the second path. To some extent, the intense criticism he faces encourages him to stay the course, because changing course will earn as much ridicule as praise, and because facing down U.S. enemies can help him broaden support.

 

Behind the dovish or hawkish facades, the main difference between the two paths is their time horizon: how much more important is it to defer hostilities than to resolve them. The next most important difference is their approach to China. The smoother first path implicitly encourages China to stay on the sidelines, while the U.S. and South Korea try to coordinate aid to an independent North Korean warlord. The bumpier second path implicitly demands that China crack down harder on its would-be North Korean ward. In the long run, the second path has better chances of reuniting Korea but higher risks of expanding China’s sphere of influence.

 

By Kent Osband

This entry was posted in No category, The Region and tagged by Kent Osband.

About Kent Osband

Dr. Osband is an American economist, strategist, financial risk analyst and longtime student of Bulgaria. He is the author of two well-known books on quantitative risk analysis (Iceberg Risk: An Adventure in Portfolio Theory and Pandora Risk: Uncertainty at the Core of Finance) and has served both in the public (IMF, WB) and private sectors (Goldman Sachs, CSFB, Fortress Investments).
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