Missile and minister's purge raise North Korea risk

Subject North Korea's politics and foreign relations. Significance North Korea on May 9 announced its first ever test of a submarine-launched ballistic missile (SLBM). Separately, Pyongyang has yet to comment on allegations by South Korea's National Intelligence Service (NIS) on May 13 that the North's defence minister, Hyon Yong-chol, was publicly executed using anti-aircraft guns around April 30, apparently for disrespect and disobedience to Kim. Impacts Delivering on pledges of economic improvement would buy Kim loyalty, but there are reasons for pessimism. The new missile threat will raise North Korea's place on the list of US priorities. Decisions on missile defence in South Korea will become more urgent.

Significance This followed Pyongyang’s breach of its 17-month moratorium on missile testing with two volleys on May 4 and May 9, each personally supervised by Kim and both including short-range ballistic missile launches. Impacts Kim has given Washington until the end of the year to rethink its stance; that is possible but unlikely. Pyongyang’s new missile may be able to penetrate South Korean missile defences. South Korea will persevere with cooperation efforts for now, despite Pyongyang’s rebuffs.


Subject North Korea's foreign relations. Significance China’s President Xi Jinping visited Pyongyang on June 20-21, ahead of the G20 summit in Osaka where he will meet his US counterpart Donald Trump. Trump is then due in Seoul on June 29-30 to meet President Moon Jae-in. Reports that Trump may visit Panmunjom in the inter-Korean Demilitarised Zone (DMZ) have sparked speculation of steps to revive nuclear diplomacy, possibly even including an unannounced third summit with Kim. Impacts North Korea will be Trump’s main agenda item in Seoul, so some initiative seems likely. South Korea risks being sidelined if nuclear diplomacy resumes, with China perhaps taking the intermediary role. If Trump and Kim meet at Panmunjom, that would boost Moon’s position; the more so if he joins them.


Significance North Korean leader Kim Jong-un visited China during January 7-10. He spent his 35th birthday in Beijing and met Chinese President Xi Jinping for the fourth time in ten months. Meanwhile, Pompeo implied on January 11 that sanctions on North Korea could be eased, with a focus on removing its intercontinental ballistic missile (ICBM) threat to the United States rather than full denuclearisation. Impacts Xi might make an overdue return visit to Pyongyang in April, perhaps before Kim’s promised first visit to Seoul. Other Asian leaders may visit Pyongyang too, conferring legitimacy on Kim. South Korea may once again challenge China for influence in North Korea.


Subject North Korea-US relations. Significance The ruling Workers’ Party of Korea (WPK) held a Plenum on December 28-31. Supreme leader Kim Jong-un’s uncompromising keynote speech included an explicit abrogation of his two-year moratorium on nuclear and intercontinental ballistic missile (ICBM) tests, plus a pledge to reveal an unspecified “new strategic weapon” soon. Personnel changes, both announced and apparent, also suggest a turn away from diplomacy. Impacts Chinese economic support will be vital for North Korea, despite Kim’s rhetoric of self-reliance. Nuclear testing would anger Beijing, whose cooperation Kim needs, so an ICBM launch is likelier. South Korea, unmentioned in Kim’s speech, will be sidelined; President Moon Jae-in’s peace process is in tatters.


Significance It also benefits from policies that heavily favour the domestic arms industry. This has resulted in a well-equipped modern military and a high degree of self-reliance in equipping it. However, this model may be unsustainable. Impacts Seoul will likely attempt to expand armaments collaboration with other countries to gain additional resources, technologies and markets. China’s military modernisation is an increasing concern, including in the context of potential war with China’s ally, North Korea. Threats from North Korea make air and missile defence the top procurement priorities.


Significance South Korea’s unification minister (MOU) warned on April 10 that any US strike on North Korea would put “the safety of the public” at risk. A day later, Seoul’s defence (MND) and foreign (MFA) ministries dismissed rumours on local social media of an imminent war crisis as “overblown” and “groundless”, respectively. Moon Jae-in, the liberal opposition candidate whom most polls predict will win the May 9 snap presidential election, said he does not expect a US pre-emptive strike on the North. However, Moon also warned Washington that South Korea is “the concerned party” which “owns” peninsula-related matters, including the nuclear issue. Impacts Experienced military professionals in Trump’s cabinet and National Security Council are a restraining influence. South Korea and Japan, being in the front line, will counsel their US protector against any action that might imperil their security. If Moon Jae-in is elected, his desire to re-engage the North will clash with Trump’s hard-line attitude and narrow nuclear focus. After his smooth -- if insubstantial -- summit with Xi, Trump’s threatened unilateralism on North Korea is likely to stop at sanctions.


Significance The standoff with North Korea has led the Senate Foreign Relations Committee to hold a hearing on the president’s authority to order a nuclear first strike. This is the first such formal examination of the executive branch’s nuclear prerogatives and procedures by Congress since 1976. Meanwhile, President Donald Trump’s administration is planning on upgrades to the US arsenal to boost Washington’s ability to wage a nuclear war and has raised the spectre of nuclear conflict with North Korea in its public remarks. Impacts The probable US deployment of new tactical nuclear weapons will not carry over to delegating attack authority to commanders in a crisis. Chinese and Russian anti-access/area-denial systems may trigger more US reliance on nuclear deterrence in the Baltics and North-east Asia. Improved weapons technology convincing policymakers that first strikes are prudent pose greater risks than unbalanced political leadership.


Subject Politics in South Korea. Significance President Moon Jae-in has hailed the second summit between North Korean leader Kim Jong-un and US President Donald Trump due to be held in Hanoi on February 27-28 as a “remarkable breakthrough” for peace on the Korean peninsula. Moon hopes the meeting will lead to an easing of sanctions on Pyongyang, enabling inter-Korean cooperation such as the relinking of roads and railways to progress, and that this will boost his waning popularity. Impacts US pressure on Seoul to pay more for US troops in South Korea may stoke anti-US sentiment. Rising tensions with Japan will ultimately cause problems for both countries, and their currently indifferent US ally. Pinning hopes on the unpredictable Kim and Trump is risky; failure with North Korea would galvanise the conservatives.


Subject The outlook for China-North Korea foreign relations. Significance A ceremony in Pyongyang on December 17 marked the third anniversary of the death of Kim Jong-il. Unlike on previous occasions, no Chinese delegation was invited. Official exchanges between North Korea and its sole ally have slowed to a trickle. Beijing has frozen investment in North Korean infrastructure. Chinese and North Korean state media exchange critical remarks. Frustrated with Pyongyang's snubs and its perseverance with its nuclear weapons programme, Beijing is putting more pressure on North Korea than ever before -- while Pyongyang attempts to reduce China's ability to do this and retaliates in kind. Impacts North Korea's dire track record vis-a-vis foreign investors will hamstring its attempts to drum up investor interest more widely. Despite China's presumed influence, Chinese investors are far from immune to political risk. Political risk has increased for Chinese investors in North Korea, but has not fallen for non-Chinese investors. Russia will be offered investment opportunities in North Korea, but will accept only projects viable on purely commercial grounds. Though disappointment has repeatedly followed promising signs, South Korea offers the highest-potential alternative to Chinese investment.


Subject Japan-South Korea relations. Significance Japan-South Korea relations have global significance. The two are East Asia’s largest and second-largest advanced economies and play a vital role in the economy of the Asia-Pacific region, including in the creation of large free trade areas. Their relationship also affects security issues related to North Korea. Impacts The shared threat from North Korea and the alliances both governments have with Washington will force a degree of cooperation. Intractable political and psychological issues related to history will impede cooperation indefinitely. Bilateral economic ties will remain large-scale and important for both sides, but gradually become less so.


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