Kim Seeks to Exploit U.S.-China Tensions With Missile Claims
Comment of the Day

July 04 2017

Commentary by Eoin Treacy

Kim Seeks to Exploit U.S.-China Tensions With Missile Claims

This article by Andy Sharp, David Tweed and Ting Shi for Bloomberg may be of interest to subscribers. Here is a section: 

Trump turned to Twitter after news of the launch, before North Korea’s claim the missile was an ICBM. He wrote: "Perhaps China will put a heavy move on North Korea and end this nonsense once and for all!” In response, China Foreign Ministry spokesman Geng Shuang said Beijing had been "indispensable" in pressuring Kim.

Reclusive North Korea has for decades relied on its weapons programs as a deterrent to outsiders. Kim is also no different from his father and grandfather -- both leaders before him -- in using his military clout as a bedrock for his internal power.

Encouraging a personality cult around the Kim dynasty helps him keep a grip on generals at home and foster public obedience.

North Korea has called its weapons program a "precious sword of justice” against invaders. It has drawn comparisons with former dictatorships in Iraq and Libya, arguing that Saddam Hussein and Muammar Gaddafi fell because they gave up on developing nuclear arms.

The regime has also used provocations to secure concessions from neighbors in the form of aid. China, the main economic lifeline of North Korea, has been reluctant to press too hard in case it leads to the collapse of the regime and chaos on its border.

Eoin Treacy's view

How do you make waves on the international geopolitical stage when you have a non- interventionist foreign policy? The easy answer is to have a quasi-vassal state do it for you. North Korea would not exist if it was not for China or to put it another way, North Korea only exists because of China’s desire to have a ring to buffer states around its border. 

The trend of technical knowhow is clear. It is looking increasingly likely North Korea is going to develop a missile capable of hitting the continental USA and it already has nuclear weapons. That really is a problem because what has, until now, been mischief making suddenly got serious.

The best possible scenario is if China were to bring the regime to heel and install another puppet government. However that is looking less and less likely with political machinations at fever pitch in China ahead of the Party Congress where so many vacant positions on both the Standing Committee and Politburo need to be filled. Xi’s desire to exude a strongman persona was on show last week in Hong Kong for example as well as in continued border skirmishes on the frontier with India.
 Little wonder then that Modi is in Israel right now seeking access to more advanced weaponry. 

North Korea gets cold winters so if a short campaign to depose the regime is to take place then the height of summer is an opportune time. With the G-20 meeting this week and increasingly vocal disagreement between the US and China the potential for an escalation of tensions is nontrivial. 
Northrup Grumman has one of the most consistent uptrends of any share and a sustained move below the trend mean would be required to question medium-term upside potential 


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