August 14, 2017

North Korea’s Rational Analysis

The United States has several thousand operational nuclear missiles. It has a large fleet of strategic bombers, an enormous navy, and hundreds of thousands of soldiers and marines. The US could bomb, blockade, and invade North Korea if it chose to incur the cost.

Yet North Korea is threatening to fire missiles at Guam, a US island territory in the Western Pacific where a substantial portion of the American strategic forces are now stationed. The North Koreans have been unyielding in insisting that they intend to complete a force of nuclear-tipped intercontinental ballistic missiles that could strike the US.

This seems to be irrational behavior. But if these are the deeds of an irrational regime, how has this same regime, founded by the current leader’s grandfather, survived since 1948? It survived a devastating war, managed to stay nimble during the Sino-Soviet confrontation, and endured the fall of the Soviet Union and the transformation of China, starvation in the 1990s, and confrontation with the United States. The regime should have collapsed many times. It didn’t.

If survival is a measure of rationality, and it should be, then the leadership class (and it is of course more than just one person) could not have lasted for almost 70 years if it were irrational. North Korea may have bizarre values, but its leaders have not been stupid. So the question is, what are they seeing now?

Before we begin…

Thank you to those who have already secured a place at our upcoming conference, Rising and Falling Powers: Separating Signal from Noise, which takes place October 25 in New York City.

The rate at which tickets are being booked tells me two things. First, that like me, our readers value the civil discourse and one-on-one conversation that our conferences provide in abundance.

And second, that many of you are concerned about the current state of geopolitical affairs and want to go beyond the “fire and fury” noise dominating the headlines.

Both of these things are heartening.

If you’re interested in joining us at the Yale Club this fall, click this link to secure your place.

The Price of War

At root, the North Koreans don’t believe that the United States will attack them. Yet they have spent years creating a nonnuclear but devastating response to an American attack. The artillery massed near Seoul can cause an overwhelming number of South Korean casualties. The South Koreans actually fear the North’s artillery more than they fear a nuclear strike. Nuclear weapons cause fallout, and the winds blow in many directions. Even a so-called tactical nuke is massive and, if used against the South, could easily devastate North Korea as well. But the North’s artillery could wreak havoc. The artillery emplacements are both well-defended by anti-air missiles and widely spread, so that it would take many airstrikes or a bloody invasion from the South to destroy them—a process that would take days at least. Therefore, the North believes that the South will oppose an American attack (albeit quietly), which might cause military problems for the US—and certainly political ones.

Moreover, the US is not fully certain that North Korea doesn’t have nuclear weapons already. The North Korean threat to hit Guam with missiles acts as a deterrent. Authorities in Guam have even briefed the public on how to protect themselves in the event of a nuclear attack. The point isn’t that North Korea intends a first strike—that would open the door to North Korea’s destruction. But the US must be open to the possibility that in a war, North Korea could knock out Guam and then use the delay to complete (if they don’t have it already) a nuclear weapon capable of reaching the American mainland.

Finally, an extended war could draw in China. The Chinese have been playing their own game. North Korea doesn’t trust China for reasons going back to the Korean War: The Chinese allowed the North Korean military to be ravaged and only intervened when they felt threatened. The North Koreans regard China as an unreliable but powerful neighbor, not a trustworthy partner. They know, however, that the United States has no appetite for a war with China on the Asian mainland. The US can’t discount the possibility that China would intervene, further raising the risks of an American attack.

There is, therefore, a military reality (artillery), a military possibility (a counterstrike against Guam), and a strategic uncertainty (China) that will slow—and has slowed—any American response to North Korea’s weapons development. The North Koreans know that the US is inclined to negotiate temporary agreements with them rather than take military action. Former President Bill Clinton, for example, agreed to inducements to North Korea in return for promises that Pyongyang later ignored. The American record through all administrations since then is that the US does not want war and will negotiate. We have now been told that a new cycle of negotiations has been going on for months. Of course, we also know that it didn’t work; if success were still a possibility, the talks’ existence would have remained a closely guarded secret.

Betting on History

These are the reasons that the North Koreans have a high degree of confidence that the US won’t go to war. They also believe that, once they have nuclear weapons capable of reaching the US, they will not only be able to deter any action against them, but they will also be on their way to becoming a regional power. It isn’t only the US—China, Japan or Russia would be no more likely to risk inviting a nuclear response from North Korea. Equipped with nukes, North Korea, always the weaker of the two Koreas because of the South’s economy, may be able to change the peninsular balance of power.

The North Korean regime—a complex layer of officials atop the country who benefit greatly from their positions—intends not only to survive but also to have the ability to reshape relationships with its neighbors. It thinks it has the Americans blocked. In fact, it’s so confident that it is willing to place an existential bet on it. The North Koreans have been living on the edge of disaster for so long. They are emboldened by history.

They’re strange from the American point of view, but North Korea’s elites are far from irrational. And this is a disadvantage that they have. If others think they are irrational, then they are unpredictable. But if they are rational, then their actions can be predicted. And if their actions are to a degree predictable, then it exposes the weakness of their plan. The North Koreans think that the US is highly predictable. Taking actions that are not fully rational by North Korea’s model would enable the US to unravel the North Korean position.

The North Koreans think they have backed the Americans into a corner. The US is now grappling with the question of whether a nuclear North Korea is more or less dangerous than an attack on the North. The North Koreans are betting that, based on past performance, the US will choose not to attack. The decision now is up to the Americans, and no decision is itself a decision. In many ways, this is less about what North Korea is doing (that part is fairly obvious) and is instead about what the Americans are thinking.

And finally…

I should have mentioned that we will announce our panel of speakers for Rising and Falling Powers: Separating Signal from Noise in the coming weeks. When we do, the event is expected to sell out.

You can get in before that happens and save 10% per ticket today.

George Friedman
Editor, This Week in Geopolitics

Share Your Thoughts on This Article

Not a subscriber?
Click here to receive free weekly emails from This Week in Geopolitics.

Use of this content, the Mauldin Economics website, and related sites and applications is provided under the Mauldin Economics Terms & Conditions of Use.

Unauthorized Disclosure Prohibited

The information provided in this publication is private, privileged, and confidential information, licensed for your sole individual use as a subscriber. Mauldin Economics reserves all rights to the content of this publication and related materials. Forwarding, copying, disseminating, or distributing this report in whole or in part, including substantial quotation of any portion the publication or any release of specific investment recommendations, is strictly prohibited.
Participation in such activity is grounds for immediate termination of all subscriptions of registered subscribers deemed to be involved at Mauldin Economics’ sole discretion, may violate the copyright laws of the United States, and may subject the violator to legal prosecution. Mauldin Economics reserves the right to monitor the use of this publication without disclosure by any electronic means it deems necessary and may change those means without notice at any time. If you have received this publication and are not the intended subscriber, please contact [email protected].

Disclaimers

The Mauldin Economics website, Yield Shark, Thoughts from the Frontline, Patrick Cox’s Tech Digest, Outside the Box, Over My Shoulder, World Money Analyst, Street Freak, Just One Trade, Transformational Technology Alert, Rational Bear, The 10th Man, Connecting the Dots, This Week in Geopolitics, Stray Reflections, and Conversations are published by Mauldin Economics, LLC. Information contained in such publications is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained in such publications is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and there is no obligation to update any such information. You are advised to discuss with your financial advisers your investment options and whether any investment is suitable for your specific needs prior to making any investments.
John Mauldin, Mauldin Economics, LLC and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. Corporate policies are in effect that attempt to avoid potential conflicts of interest and resolve conflicts of interest that do arise in a timely fashion.
Mauldin Economics, LLC reserves the right to cancel any subscription at any time, and if it does so it will promptly refund to the subscriber the amount of the subscription payment previously received relating to the remaining subscription period. Cancellation of a subscription may result from any unauthorized use or reproduction or rebroadcast of any Mauldin Economics publication or website, any infringement or misappropriation of Mauldin Economics, LLC’s proprietary rights, or any other reason determined in the sole discretion of Mauldin Economics, LLC.

Affiliate Notice

© Copyright 2017 Mauldin Economics