North Korea seems to be a perennial topic, especially as the markets took a deep breath early Tuesday morning before exhaling this afternoon.
As the Trump administration begins to consider tougher sanctions against North Korea, keep your eye on which sanctions will be leveled against the Chinese government as well. China's influence on North Korea is immense, and if they so chose, the Chinese could instantaneously compel the North Korean government to stop meanacing the region. To date, China has shown a great deal of reluctance in restraining North Korea. In fact, an argument can be made in the light President Trump's concerns about Chinese currency manipulation that North Korean intransigence is more causation than correlation.
Perhaps the Chinese are placing a bet that President Trump does not have the support back home for any serious decisions, either to cage North Korea or send a message that China's peaceful rise will not be underwritten by the American taxpayer. Both assumptions are foolhardy at best and myopic at worse. This is a president that will act if required; the United States military will not be bullied or pressured into making a decision on North Korea's timetable. So long as nuclear non-proliferation remains an imperative of American foreign policy doctrine, North Korea's ability to project force will be limited, short-lived, and fatal to the Hermit Kingdom if pursued.
China is not immune to security concerns either. In Hong Kong, the government is facing pro-democracy activists. In India, a recently defused border dispute could flare up at any time. In the Xinjiang province, civil unrest is a reality. In the South China Sea, several nations have security concerns as Chinese naval assets continue to assert themselves. China's list of allies and options wears particularly thin... North Korea would only serve to be an additional -- and nuclear -- addition to this list of concerns.
One misplaced bet on the part of the Chinese is the perceived hesitancy of the United States to jeopardize our economic recovery during midterm elections. In this regard, the Chinese have far more to lose than the United States, as their own housing and infrastructure bubble cannot maintain itself forever. Once capital flight becomes a serious consideration, it will be the European Union and United States that retain a position of strength. Conflict along the Pacific Rim would make capital flight a very real security concern for the Chinese government... hence the low-stakes game of "chicken" over North Korea when it comes to the Trump administration's readiness to crackdown on currency manipulators.
This is all the more reason that American diplomacy must exercise a careful balance of firmness and patience, and why our South Korean and Japanese allies must have the full assurance of American military support. As we have seen over the last few days, North Korea's efforts focus entirely on getting the pendulum of fear rocking.
Only firm American leadership can prevent this gambit from being successful. Reinforce skittish markets and defuse tensions along the Korean peninsula should remain our primary focus, and a firm and patient resolve should forge our strategic decision making moving forward.
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