- North Korea overnight carried out its most advanced missile test so far with the launch of what was probably an intercontinental ballistic missile (ICBM). It was the 11th round of missile tests this year, but the first test of the long-ranging ICMB that is needed to reach the US.
- The test underlines that North Korea is not backing down from its nuclear ambitions but instead continues to make progress in its goal to reach the US with a nuclear warhead. It is one of the most difficult military challenges the US has faced since the Cold War. Below, we give a quick summary of the crisis and why it is important.
- For further background analysis and market implications please see Research: The rising risk from North Korea – and what it means for markets, 27 April 2017.
What happened overnight?
On US Independence Day, 4 July, North Korea carried out its most advanced missile test so far with the apparently successful launch of an ICBM. According to North Korean state media the rocket reached an altitude of 2.802km, reached the target 933km away and flew for 39 minutes. If true, it is the first time North Korea has tested an ICBM. It has previously tested rockets with similar technology but not an ICBM that can carry a warhead.
According to the state media it was fired at its highest angle. This makes the distance it travels shorter. But at a lower angle it is estimated by some Western experts that it may be able to reach a range of roughly 6700km, see for example this blog (www.allthingsnuclear.org). US, Japanese and South Korean military officials have not yet been able to confirm it indeed was an ICBM. The missile landed in Japan’s Exclusive Economic Zone, according to US, Japanese and South Korean officials.
Why is it important?
The launch is another testimony that North Korea continues to move on with its nuclear ambitions – and that it has made a lot of progress over the past year in its stated aim of becoming able to strike the US with a nuclear warhead. For this, it needs two things: an ICBM that can reach the US and a nuclear weapon that can be miniaturized enough to fit in the cone of a missile. North Korea has escalated missile tests over the past two years and in a New Year speech, North Korean President Kim Jong-Un said North Korea had ‘reached the final stage in preparations to test-launch an intercontinental ballistic rocket’. This may have turned out to be true with today’s test. On the nuclear side of things, North Korea has carried out five tests in total, with the two most recent last year (the single most recent in September).
It is uncertain how close North Korea is to its stated goal. Experts believe that North Korea may only be a couple of years away from this. At the same time the US has been very clear that it will not allow North Korea to develop the capability of hitting the US with nuclear weapons. It seems clear that a solution will have to be found under the reign of US President Donald Trump and his advisors.
While the Trump administration has highlighted that all options are on the table – including the military option – it is also clear that a military intervention against North. Korea comes with a huge risk as North Korea would probably be able to cause severe casualties in South Korea and possibly Japan before being stopped.
The key thing to watch is still whether North Korea pursues completion of another nuclear test. The US has made clear that this would have consequences – and would need to respond in some way in order not to lose face. North Korea has been ready to do a test for some time according to military intelligence but has refrained from this.
How can North Korea be stopped? What are the scenarios?
This is the million dollar question to which there is no obvious answer. For Kim Jong-Un development of the nuclear deterrence is necessary for the survival of his regime – and possibly himself. Other nations that stopped nuclear weapons programmes were overthrown. Following a nuclear test in January 2016 a commentary in North Korea’s state media said ‘The Saddam Hussein regime in Iraq and the Gaddafi regime in Libya could not escape the fate of destruction after being deprived of their foundations for nuclear development and giving up nuclear programmes of their own accord.’ There are thus no signs that any sanctions or threats are likely to stop the North Korean regime.
In theory a military alliance with China guaranteeing North Korea’s safety – as the US is guaranteeing to defend South Korea – could work. But it requires a degree of trust between China and North Korea that does not exist. Another option is that the US eventually allows the development of North Korea’s ability to reach the US with a nuclear weapon, simply because the cost of stopping North Korea with military force is deemed too high. This would be a major loss of US credibility, however, and would weaken any US show of force in future conflicts. Finally, using the military option and accepting the potential casualties could be the result if all other options are ruled out. The lack of any obvious solutions is what makes the situation so difficult – and the biggest US military challenge since the end of the cold war.
What does the escalation mean for US-China relations?
The continued escalation is gradually increasing tensions between the US and China again. The relationship got off to a much better start than feared with the successful visit by Chinese President Xi Jinping to Mar-a-Lago in April. Trump acknowledged that China was doing what it could to put pressure on North Korea but that it may not have so much power over North Korea. During the visit Trump said ‘After listening 10 minutes, I realised it’s not so easy…I felt pretty strongly that they had a tremendous power [over] North Korea… But it’s not what you think‘. He also called the relationship with China ‘outstanding’.
As late as 20 June Trump tweeted ‘While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried!’
However, today after the missile launch Trump tweeted ‘…Hard to believe that South Korea and Japan will put up with this much longer… Perhaps China will put a heavy move on North Korea and end this nonsense once and for all‘. It indicates that Trump believes China has not done all it could. This will most likely anger China, although it may continue to keep a calm face publicly.
It comes on top of a range of other issues upsetting China over the past few weeks: apparent US plans for steel tariffs (see Flash Comment: Trump likely to announce tariffs on steel soon, 23 June 2017), the US finalising a USD1.4bn arms sale to Taiwan (www.cnbc.com), labelling China one of the worst human traffickers (www.foxnews.com) and imposing sanctions on a Chinese bank for doing business with North Korea.
Keep an eye on the G20 meeting
Japan said on Monday that the US, South Korea and Japan will have a trilateral summit on North Korea at the G20 meeting in Hamburg this weekend (7-8 July). On Tuesday Japan’s prime minister Shinzo Abe also said he would ask China and Russia to play a more constructive role in efforts to stop North Korea.
As the threat from North Korea rises, Japan may increasingly push to scale up its military power, which would most likely anger China and increase tensions in the Asian region.
Another hot issue at the G20 meeting that could make the environment for the talks difficult is the area of trade and protectionism. Trump may send a signal of coming protection of US steel workers or of other areas which would anger both the EU and China.
