Living With a Nuclear North Korea


North Korea Explainer: With the world on the brink, Andrew Parker explains how we got here and what might happen next.

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ASIA: WHAT HAS HAPPENED?  North Korea continues its provocative actions, testing the patience of Washington, Beijing and the international community more broadly. The United Nations Security Council has adopted nine major sanctions resolutions on North Korea in response to the country’s nuclear and missile activities since 2006. The latest, and toughest yet, came in September after North Korea carried out its sixth and most powerful nuclear test, prompting the US to lead a push at the UN for tougher sanctions.

Recent exchanges have prompted concerns that North Korean Leader Kim Jong-un and US President Donald  Trump are engaged in a dangerous game of brinkmanship that could lead to a catastrophic conflict, perhaps even nuclear war.

The world may well have to come to terms with a nuclear-armed North Korea. There are no good options, just ones that are less bad.

Andrew Parker

What does North Korea want?

Kim Jong-un wants to be recognised as the legitimate leader of a nuclear-armed North Korea. He wants US troops withdrawn from South Korea, a stop to US military exercises in the region and probably a withdrawal, or significant reduction, in US military assets in the region.

Much of the North Korean regime’s domestic legitimacy rests on portraying the country as being under constant threat from the US and its regional allies, South Korea and Japan.

Pyongyang feels insecure from the legacy of the Korean War - which has never been formally ended - and the preference of the US-led global community for democracies over dictatorships. North Korea lives in existential fear of a US-led invasion, with thousands of US troops situated on its southern border.

Pyongyang also fears ongoing military exercises in the region involving the US and its allies are really preparations for an invasion. The presence of US military facilities in South Korea, Japan and Guam all serve to exacerbate North Korea’s feeling of encirclement and imminent threat.

Developing a missile capable of reaching the US armed with a nuclear warhead is believed to be Pyongyang’s ultimate objective. Kim Jong-un’s calculation is that the US will not be willing to risk a nuclear missile attack on Los Angeles, San Francisco or Chicago in retaliation for an attack on North Korea – or an attack on him. Kim Jong-un assumed power in 2011 and less than six years into his reign he has tested more missiles than his father and grandfather combined.

Whether Pyongyang has already been successful, or may be close to developing a miniaturised nuclear warhead remains a big question for intelligence analysts. Recent tests, however, suggest that North Korea’s missile program may have progressed much more rapidly than previously believed. Their arsenal of conventional and chemical weapons can today be directed at targets close to home, including Seoul or Tokyo, or thousands of kilometers away. There are 23 nuclear reactors in South Korea and 54 in Japan, and although just three are in operation after Fukushima, they still pose serious risks.

How does China view the issue?

From Beijing’s perspective, maintaining relative calm on the Korean peninsula is a number-one priority. A divided Korea also provides China with a buffer against a US-Japanese-South Korean security bloc.

Stability on the Korean peninsula has always been a priority over denuclearisation. The problem for China is that they do not see a viable path to this without creating unacceptable risks of instability.

While China does not want North Korea to have nuclear weapons, there are a number of potential consequences for China if it applies too much pressure. North Korea could, for example, turn on China and threaten to fire missiles over Chinese territory.

China also has legitimate concerns that Chinese pressure in conjunction with the international community may precipitate a regime collapse in North Korea — and with it a flood of refugees crossing from North Korea into one of the poorest regions of China, as well as risks posed by loose nuclear materials and the economic costs of instability.

What about North Korea’s relationship with China?

It has been drifting in recent years. China does have enormous economic leverage over North Korea and the relationship has shifted more in China’s favour as Chinese firms become stronger. China has also become closer to South Korea.

Kim Jong-un has so far refused to meet with Chinese President Xi Jinping. 
He has eliminated most of the people close to China, including his uncle who was executed in 2013, leaving Beijing with few diplomatic channels. The costs for China are mounting — including enhanced US military capabilities in the region; declining relations with surrounding countries; countries like Japan and South Korea developing their own missile, possibly nuclear; increased sanctions putting pressure on Chinese firms and banks; and of course the fear that a full-scale conflict could erupt in North Korea.

As a consequence, China has been prepared to put more pressure on Pyongyang. The recent tightening of sanctions by the UN Security Council, which China supported, will start to bite North Korea hard in the coming months as Beijing enforces implementation by Chinese banks and trading firms. Chinese enforcement of existing sanctions, though, is key. Among challenges for the international community in its dealings with North Korea is its apparent imperviousness to sanctions - or, at least, its ability to withstand what are now nine rounds of UN sanctions resolutions since 2006.

While China would prefer that North Korea stop testing missiles and start negotiating with the US, its primary concern, increasingly, is preventing war.

What happens from here?

There are multiple complex calculations being made more so by the personalities of both Kim Jong-un and Donald Trump. The risk of a miscalculation or accident that escalates out of control may actually be the greatest threat. Perhaps even more than his father and grandfather, Kim Jong-un appears willing to push the limits of what the rest of the world, including China, might tolerate.

In addition to apocalyptic threats of military action directed at North Korea, President Trump has also linked a number of economic issues he has with China to North Korea, further complicating the situation.

In August he wrote on Twitter:
 “I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk. 
We will no longer allow this to continue. China could easily solve this problem!”

In the event of a full-scale military conflict, analysts generally agree that the US would overwhelm the Korean People’s Army (KPA) in a matter of days. But a pre-emptive strike on North Korea reflecting President Trump’s policy of “America First” would inflict a heavy cost on US allies in the region. Pyongyang would likely unleash its conventional and chemical weapons on South Korea and Japan, causing hundreds of thousands, if not millions, of casualties.

Assuming Pyongyang has a nuclear weapon, it is believed that they would likely use it. The risk, no matter how small, that one or more of these weapons may survive the first wave strikes has prompted most analysts to conclude that there is no viable military solution for the US. There are around 230,000 US citizens currently living in South Korea (the capital Seoul is just 35 km from the border) and around 100,000 in Japan. It seems inconceivable that the US would launch an attack on North Korea before its citizens in South Korea and Japan had been evacuated. Should a war erupt in North Korea, China would probably have no choice but to intervene.

The consequences would be highly unpredictable but almost certainly disastrous. The world may well have to come to terms with a nuclear-armed North Korea. There are no good options, just ones that are less bad.

What can organisations do?

Now is a good time to revisit your risk management plans and challenge the assumptions they are based on. Our region is becoming more complex and less predictable. In a connected digital world, conflict could be a cyber event. The big cables undersea and satellites that move data and information around the world might become the target. So think about what happens to your offshore centers, suppliers and customers if your communications fail. And also consider the financial and operational implications of a trade war.

The Press is a publication by PwC Australia, aimed at sharing expertise, capturing insights and working together to solve important problems.

This article first appeared in Edition 3 of The Press
By Andrew Parker, Partner, Asia Practice Leader

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