EDITOR: | April 5th, 2013

North Korea plays a dangerous Game of Chicken but can’t afford it

| April 05, 2013 | No Comments

Kim jong un-4Is North Korea bluffing, playing chicken or trying to come out of isolation? North Korea’s declaration of war against the United States must sound as ridiculous in the circles of power in Pyongyang as it does in Washington. There is a twisted, but not entirely dismissible logic betraying a complex geopolitical framework behind the threat. North Korea is using fiery rhetoric and increasing tensions to the highest possible level in order to reach some kind of negotiations to loosen the noose sanctions and somehow improve the local economy in order to ensure its survival.

Kim Jong-un has gone where Kim Jong-il had not dared to venture: threatening to launch a missile against the United States, its bases or its allies. Military analysts have pointed out that North Korea doesn’t quite have the capability of acting on their threat, but the rhetoric is some of the fiercest ever from the reclusive regime. While military analysts debate over North Korea’s actual strength, the economic ones have a somewhat clearer idea of the situation. North Korea is extremely indebted – largely to Russia – but also to the major industrialized economies. The South Korean government suggests Pyongyang owes USD 20 billion while its GDP is USD 28 billion. The CIA has ranked North Korea (population of 24 million) as the 194th economy, accounting for less than 3% of South Korea’s GDP. Yet, North Korea has a mineral wealth estimated at six trillion dollars even if 37% of children are malnourished. One of the reasons is that the country devotes 20% of GDP to armaments.

North Korea has limited energy supplies and agriculture is collapsing; the country needs food. The North Korean regime’s threats to the United States are related to the fact that under an agreement signed in January 2012, places the responsibility for retaliating to a North Korean missile strike against South Korea to the United States, which would in turn assume command of South Korean military forces. The latest reports say that North Korea has moved two Musudan missiles to the Pacific coast, nearer to the US and Japan; indeed, nearer to all kinds of places including the ocean itself where all North Korean rockets like to land.  So far the biggest victim of North Korea’s threats has been the stock market in Seoul as its Kospi index dropped to the lowest levels since last October. South Korea’s currency, the Won, has also suffered losses. Mining is the one economic area that could be developed.

Control of mining resources is essential in a country with limited resources and opportunities; the restoration of government control over the mining wealth, even suggested the possibility of an economic opening facilitated by minerals. North Korea has something the West wants; it has dozens of varieties of minerals, including iron, molybdenum and graphite. There have also been persistent rumors of a vast rare earths (REE) capacity. Leonid Petrov, a professor at the University of Sydney and North Korea specialist, reported that South Korean mining officials have already held talks with North Korean counterparts to develop joint REE mining projects based on evidence of large deposits of high-grade REE in western and eastern North Korea estimated at some 20 million tons.

No reliable data exists to corroborate such claims; however, the idea of North Korea collaborating with the outside world on resources is very credible, given that the Korea Resources Corp. (KORES) has already jointly developed a graphite mine in North Korea.  In a more perfect world, North Korea would take advantage of its minerals to launch international cooperation, relinquish its military nuclear program, while earning the foreign currency needed to manage the socialist status-quo to prevent a massive upheaval in the leadership structure along a path first explored by Mao Zedong’s China starting in 1972.

Pyongyang has managed to obtain some debt cancellations from Russia in a possible exchange involving natural resources. The country has also asked Hungary, the Czech Republic and Iran to erase much of its debt or, alternatively, to accept a payments in goods, offering ginseng to the Czech Republic and small submarines to Iran. However, even if technically at war, North Korea and South Korea share the Kaesong Industrial Complex,  an industrial area occupied by 121 factories (but with much more room) where North and south Koreans work side by side. Hyundai Asan has paid $ 12 million for fifty-year lease. While the latest crisis has been heating up for about a month, it was only last Tuesday that Kaesong was shut down.

For the time being, the best that North Korea’s military strategists might hope is for their rockets to hit U.S. bases in Japan – possibly Alaska or Hawaii with the Taepodong-2 missile claimed to have a maximum range of 6,000 km.  It is estimated that Kim has about 600 missiles Hwasong-5 and 6, respectively with a range of about 300 and 700 kilometers with which it can strike multiple targets in Japan or South Korea. There is one little, but important caveat called known as North Korean technology. It is simply not that good. Pyongyang’s rockets have been rather a source of embarrassment for the Dear Leader and ‘Sun of the Communist Future’. Indeed, the Taepodong rocket was tested once and it crashed 45 seconds after launch. Therefore, Americans have more to fear from Kim Jong Un’s style sense than his ballistic missiles.

Beyond the missile movements, there are already signs of a softening rhetoric, especially from the US side and it is typical for North Korea to get ‘flustered’ when the United States and South Korea engage in annual military exercises. One of the main reasons is that the US does not wish to fuel South Korea’s own nuclear military capability, which some Korean politicians have proposed with more vigor in view of the recent crisis. Therefore, the one conclusion is that the situation at large cannot last; at some point, North Korea will likely collapse economically (and politically). A Russian think tank suggests this may happen by 2021.  It will then be absorbed by South Korea (though it could even choose to join China or Russia; geographically there is logic to support such options).

China, would be unsettled by a united and pro-USA Korea (as suggested by ‘The Atlantic’) and that is why it has kept up supplies of goods and services (China supplies North Korea with 90% of its energy, 80% of consumer products and 45% of food products). Moreover, nobody wants a direct collapse of the North Korean regime, not even Washington or Seoul. Should Pyongyang truly have nuclear weapons, there are concerns as to who would end up taking possession of them in the eventuality of sudden regime change. Better to have the ‘known knowns’ than the ‘unknown unknowns’ as former Defense Secretary Rumsfeld would put it. Should warheads end up into the wrong hands, it would endanger the world as we know it. Perhaps, then, the recent North Korean crisis will help jolt the world into helping it develop its resources and, ironically, the goal for all parties from China to the United States would be to help sustain rather than bring down the regime, leaving that task to a wise person within the regime in the style of Gorbachev with the Soviet Union: controlled collapse from within.


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