Posted by Christian Earl on 5 Apr 2013 in Business Risk, China, East Asia, Japan, Military Activity, North Korea, Political Risk, South Korea, United States
DOES THE RECENT INCREASE IN TENSIONS SIGNIFY MERELY INCREASED RHETORIC FROM NORTH KOREA AND BRINKMANSHIP TO EXTRACT INCENTIVES, OR ARE THEY PRECURSORS TO FORTHCOMING MILITARY ACTION?
North Korea has steadily escalated its rhetoric since February 2013, when it completed another nuclear test. Pyongyang has threatened both South Korea and the US with a nuclear attack, severed its hotline with Seoul, closed the main Panmunjom border crossing, reactivated the Yongbyon nuclear reactor site, halted entry into the Kaesong joint development area, warned that “inter-Korean relations had entered into a state of war”, and has now reportedly moved road-mobile missile systems. It also threatened to retaliate against any provocative acts by South Korea or the US, which are currently carrying out joint military exercises on the Korean peninsula. For North Korea, the current rise in tensions are likely not a clear cut drive to war but rather they are used to shape the perceptions of those involved in peninsular affairs, to create political tensions in and between Seoul, Washington, Beijing, Tokyo, Moscow and others. By pressuring South Korea and the US to resume talks to dismantle its nuclear programmes, resume food aid in the face of increased UN backed international sanctions, North Korea is attempting to achieve its end goal of signing a defacto peace treaty to end the Korean War which remains technically on hold and is in its 60th year. Pyongyang feels that if it can force another set of negotiations, that will exchange a brief relaxation of tensions, it can gain vital economic and political concessions. This does not diminish the threat of miscalculation or an accident as the level of tension grows. As our series of projected outcomes and recommendations contained in our blog illustrate.
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Posted by Christian Earl on 14 Mar 2013 in Business Risk, China, East Asia, Energy, Exploration, Japan, Military Activity, North Korea, Political Risk, South Korea, United States
Is latest increase in rhetoric just bluff or the start of a wider military engagement which would make any chances of a Trans-Korean pipeline now a pipedream?
A sexist jab became the latest in a barrage of verbal insults direct by North Korea towards its southerly neighbour South Korea on 14 March 2013, after Pyongyang attributed the recent tensions between the Korean nations as being linked to a ‘venomous swish of skirt’ from Seoul’s newly appointed female President Park Geun-hye. Such a swipe takes the continuing torrent of rhetoric from Pyongyang (which has threatened nuclear war this week), to a new level, but no matter how personnel or ridiculous the claims seem President Park continues to stick by her campaign vow to reach out to Kim Jong Un rather than to alienate the fragile regime any further. How long will this last?
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Posted by Christian Earl on 12 Feb 2013 in Business Risk, China, East Asia, Japan, Military Activity, North Korea, Political Risk, South Korea, United States
A magnitude 5.1 tremor was detected at the Punggye-ri underground nuclear test site in North Korea’s north-eastern Kilju County on 12 February 2013, caused by a third nuclear test which resulted in almost universal international condemnation. It also saw South Korea place its military on alert only days after it had already relaxed the “rules of engagement” at border posts which may now see the risk of small scale conflict rise as South Korean guards now have authority to shoot back immediately if they come under attack. The likelihood of open hostilities between the two countries remains unlikely. However, clashes as seen in 2010 around the Yeonpyeong Islands cannot be discounted.
Although it is not yet clear yet what sort of device was tested, experts believe it involved a miniaturised nuclear device with more explosive force than previous tests (which had a seven-kiloton yield) and that it was probably a uranium device. It would follow-on to its two earlier plutonium tests in 2006 and 2009 and most importantly would now signify it has mastered the ability to produce highly enriched uranium. Despite this understandable concern, North Korea is still thought to be some way off having the ability to produce a nuclear warhead small enough to mount on a reliable long-range missile, but estimates suggest that it does currently have enough fissile material for about a dozen plutonium warheads.
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Posted by Christian Earl on 2 Aug 2012 in Business Risk, China, East Asia, Energy, Exploration, Japan, Philippines, Political Risk, Vietnam
Diplomatic tensions between the Philippines and China could again escalate over the vital waterways, islets in the contested South China Sea, due to its vast resource potential. Philippine President Benigno Aquino has asked Beijing to “respect Manila’s rights in the South China Sea” and announced plans for a Philippine Exclusive Economic Zone, as well as issued plans to upgrade naval capabilities to counter any threats to this zone.
To illustrate the untapped resource potential of oil reserves in the South China Sea, energy analysts from the US Energy Information Administration, said in a March 2008 report, that there could be up to 213 billion barrels of oil in the Sea, a figure equal to perhaps sixty-five years of Chinese domestic energy demand. Oil is not alone either, as analysts also estimate that the area also has at least 3.79 trillion cubic metres of undiscovered conventional natural gas, equivalent to more than thirty years of Chinese consumption.
The fact that the region in general is experiencing a relative economic slowdown is not helping matters either. China’s GDP growth slowed to 7.6% on an annualised basis in the second quarter of 2012, the lowest rate of economic growth in China since early 2009 and clearly securing new supplies of resources from what would amount to “domestic supplies” would clearly give a jump start to the economy ahead of the crucial Communist Party Congress in October 2012. Cleary the prizes are high but it seems that the stakes could also be higher, as many are claiming the rush to secure these could lead to a new regional conflict.
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