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Sandro Rosell
FC Barcelona President
Monday, September 25, 2017

North Korea’s dictator Kim Jong-un has raised the stakes. After conducting a succession of ballistic missile tests, including two ICBM tests in July and its most recent ballistic missile test over Japan, the rogue regime carried out its sixth nuclear test this past weekend. It reportedly was at least four times more powerful than the previous nuclear test North Korea conducted last year. North Korea acted despite strident warnings from President Trump, enhanced demonstrations of U.S. and its allies’ joint military prowess in the region, and increased sanctions imposed collectively by the United Nations Security Council and unilaterally by the United States. 

When this powerful nuclear bomb test is coupled with North Korea’s successful test launching of intercontinental ballistic missiles and with intelligence reports indicating that North Korea has mastered the capability to miniaturize a nuclear warhead that can fit onto its missiles, the regime appears to be closer than ever to presenting a credible nuclear threat to the United States mainland. It still has one problem to solve in order to successfully launch direct nuclear strikes on U.S. cities - missile re-entry into the atmosphere. 

However, without even bothering about re-entry, North Korea may already have the capability today to detonate a nuclear bomb in the upper atmosphere, generating an electromagnetic pulse (EMP) that could virtually destroy the US.'s electrical grid and communications systems. An EMP attack would affect transportation as well as critical food, water and medical supplies. Millions of people could die as a result. North Korea has in fact threatened just such an attack.

In short, the U.S. and its allies are facing a very serious threat of catastrophic proportions from an erratic megalomaniac, with limited options to prevent it from becoming a grim reality at a time of Kim Jong-un’s choosing.

President Trump responded to North Korea’s latest nuclear test provocation via his usual channel of choice, Twitter. The president first tweeted: “North Korea has conducted a major Nuclear Test. Their words and actions continue to be very hostile and dangerous to the United States.....” He also announced that he was meeting with his White House Chief of Staff John Kelly, Defense Secretary Jim Mattis and military leaders at the White House to discuss North Korea. 

After then criticizing China for not doing enough to stop North Korea and criticizing South Korea for its “talk of appeasement with North Korea,” President Trump ramped up the pressure on any countries still doing business with North Korea. He tweeted: “The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea.”  China, North Korea’s biggest trading partner and principal supplier of oil, would seem to be the main target of this threat.

China condemned North Korea’s latest nuclear test and urged North Korea to “stop taking erroneous actions that deteriorate the situation.”  It has previously backed the United States in voting for the toughest economic sanctions resolution yet at the UN Security Council, and has in fact curtailed some trade with North Korea. Yet Kim Jong-un remains unfazed.

Would President Trump risk a devastating blowback to the United States economy by stopping all trade with China if China does not promptly agree to cut off all of its trade with North Korea, including the supply of oil? China would obviously be hurt badly by such an action. However, given the intertwining of the U.S. and Chinese economies and China’s vast holdings of U.S. Treasury securities, the U.S. economy would also suffer major damage. Thus, it is unlikely that President Trump would follow through with his threat anytime soon. China’s leaders as well as North Korea’s know this.

According to the Office of the United States Trade Representative, “U.S. goods and services trade with China totaled an estimated $648.2 billion in 2016.”

China is currently the U.S.’s largest goods trading partner with $578.6 billion in total goods traded in both directions during 2016. While the U.S. has a trade surplus with China in the services sector ($37.4 billion in 2016), the U.S. trade deficit with China in goods is considerably higher ($347.0 billion in 2016). President Trump has frequently criticized the extent of this trade deficit. However, many jobs in the U.S. would be lost were he to close down or sharply curtail U.S. imports from China, as such an action would inevitably lead to a proportionate retaliatory response against U.S. exports to China. According to the Department of Commerce, U.S. exports of goods and services to China supported an estimated 911,000 jobs in 2015 (latest data available). 

Moreover, if China’s U.S. market is cut off and its currency drops drastically in value as a result, it may be forced to liquidate its U.S. treasury holdings in a fire sale to raise currency reserves. This would have the effect of seriously depressing the price of U.S. treasuries, which would mean much higher treasury yields and possibly undermine the strength of the U.S. dollar’s unique status as the world’s reserve currency. This all could have a ripple effect throughout the U.S. and global economies, which in turn could precipitate a major recession, if not an outright economic depression.

Even if China, for whatever reason, agreed to cut off all trade with North Korea, there is no way the United States or its allies could be certain that China would fully enforce such a ban against all Chinese individuals and entities, public and private.  

Applying more trade leverage with China’s full cooperation is unlikely to stop Kim Jong-un in any event. He is determined to build up enough of a nuclear deterrence to prevent the United States and its allies from daring to attempt an attack or regime change. Moreover, North Korea will find a way to procure oil from its ally Iran and to receive hard currency for its transfer of nuclear and missile related technology and parts to Iran.

President Trump could agree now to an entirely diplomatic solution, along the lines of the mutual freeze of North Korea’s nuclear weapons and ballistic missile programs in exchange for suspension of all major military exercises in the region by the United States and its allies. China and Russia have advocated this path, accompanied by the resumption of talks with the objective of denuclearizing the Korean peninsula. At this point, North Korea may well demand more, such as massive financial aid and the removal of U.S. military assets from the region. And North Korea would consider denuclearization to be a non-starter. It has certainly not come this far in developing its nuclear weapons capabilities to roll them all the way back, much less accept unfettered onsite international inspections. For his part, President Trump has correctly branded direct talks at this point with North Korea and the granting of more concessions to induce them to behave as appeasement of nuclear extortion.

Even if North Korea and the Trump administration were to accept just a mutual freeze, it would amount to no more than kicking the can down the road, just as we have seen for the last two decades. Freezing North Korea’s nuclear and missile programs in place is tacit acceptance of North Korea’s status as a full-fledged nuclear power. This would track with former President Obama’s National Security Adviser Susan Rice’s advice to “tolerate nuclear weapons in North Korea” and contain the regime instead. However, unless backed by a demonstrated willingness to use military force to stop further expansion of North Korea’s nuclear and ballistic missile programs, the United States will be right back where it started, except at an even higher threat level.  

By: Joseph Klein 
(Front Page Mag)