North Korea: “The Cheonan Was Bait for an Internal Propaganda Frenzy “

The Cheonan sinking is an important internal propaganda victory that Pyongyang  created. With the loss of 46 South Korean sailors, Washington and Seoul had no choice. They took the bait.  In so doing, they have predictably teed up the opportunity now for Kim Jong Il to do a little defense of the homeland frenzy. This internal, “Defense of the DPRK” propaganda barrage that now follows the Washington Seoul “spanking” is  extremely valuable to the regime to enhance its stability at this delicate and difficult time of transition. The Dear Leader and his elite, inner circle know full well that, given Kim Jong Il’s 2008 stoke, his clock is already in overtime.

While we may never know for sure, the sinking of the Cheonan appears to be part of a deliberate teasing to coax a limited military response out of Seoul and Washington. Given the sophisticated, Kasparov-like chessmaster moves made by Pyongyang (typically outgunning U.S. negotiators concentrating on their checkers board), the Cheonan incident is just one of several moves coming up. Brinksmanship?  Hardly.  Pyongyang knows full well that at worst it faces a limited spanking response like perhaps joint military exercises (for show) or perhaps beefed up security between U.S and ROK forces on the peninsula combined with some rhetoric. Nothing more. Should Seoul engage in even the most benign cross-border military skirmish, Kim Jong Il can  then get away with his slash back and propagandize that as blocking the aggressor from the South, no matter how minimal the “deterrent” response is from Washington and Seoul.

There is another piece to this already complicated puzzle. Kim Jong Il needs a leadership-anointing opportunity to assist his youngest son, the Swiss-educated  Jong-Eun, to obtain some kind of military leadership, albeit limited, in defense of the fatherland. He also needs to cinch down the military power base for Jong-Eun. So how would this work? Whip the country and the KPA into a war frenzy, organize rallies in Pyongyang, put the KPA on alert, cut off trade and communications with the South. Perhaps even give “Brilliant Comrade ” (Jong-Eun) a military leadership role in the slash back exercise which can then be internally propagandized and then jerk him back to safety once the slash back has been undertaken. Military anointment completed and the internal film and propaganda machinery can then be unleashed. But before “Brilliant Comrade” is placed in the limited line of fire, the Dear Leader needed to test the waters and set up the U.S. an South Korean response. Hence, the Cheonan incident. The timing of this Cheonan chess move is not coincidental—the DPRK Party Congress is set to meet in a few weeks and it is likely that Kim Jong il will confirm then that the baton will pass to Jong-Eun.

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The Real Nightmare of a North Korea Collapse & Implosion

The Real Nightmare of a North Korea Collapse & Implosion

June 1,  2010 by davidfday  

Some commentators suggest that this Cheonan incident may have created be the perfect storm to elbow the regime over the cliff. The consequences of such a “Diem” strategy towards the DPRK would be disastrous. Even without being elbowed, the regime is still going to implode. It is not a question of whether.  It is simply a question of when—and and serious economic sanctions run the terrible risk of shoving the DPRK right over the edge.

A DPRK implosion will cause a massive disaster crisis on a scale the likes of which the world has never seen before. On the human side, the disaster will involve hundreds of thousands of refugees seeking to breach the Chinese and Russian borders in the Northern part of the country and even greater numbers attempting to cross the heavily- mined DMZ to get to Seoul. There are multi-million numbers involved in human relief efforts that will have to be sustained for a lengthy period of time since there is no economy. Then there are the WMD weapons, expertise, nuclear materials, and rogue military issues also in the equation which will have to somehow be handled with lightening speed before being spirited away into undesirable hands. The current regime is already unstable and approaching a delicate leadership time—a collapse risks an implosion of epic proportions, making Haiti look like a garden party. Russia and China understand this and will not buy into any serious, biting economic sanctions that shove North Korea closer to the brink.

There are two critical points here. The first is that there can never be stability on the Korean peninsula until the DPRK can create a modicum of economic progress. Every day that the country can move a bit towards its 2012 economic goal of “A Mighty and Prosperous Nation” is a win and pushes the implosion nightmare back a notch or two. This will require heavier involvement of the private sector, not less. As a policy goal, Seoul and Washington must find ways to get more of the private sector underway in North Korea. The heroine for peninsula stability last year was Hyun Jung-Eun, chairwoman of South Korea’s Hyundai Group who successfully negotiated the reopening of North-South trade after the Dear Leader shut it down. Hyun Jung-Eun personifies the type of private sector leadership that can brunt or possibly block the implosion nightmare– if given enough time.

The second point is that the current disaster relief efforts in Haiti and the Gulf of Mexico do not even rise to the level of dress rehearsals for a collapse of North Korea. Seoul will have to bear the brunt of the implosion nightmare. Unless the Blue House is sufficiently satisfied watching Washington’s current response to the crises in Haiti and with the BP oil spill, and is convinced that Washington is fully capable of handling a multiple-fold Haiti with lightning speed and minimal hiccups, it would be well-advised to get a massive, DPRK disaster master plan in place yesterday. This means strategic disaster planning, the staging of huge amounts of supplies, disaster management training and development, and repeated, coordinating rehearsals. The response time will need to be in hours, not days or weeks and a blistering fast disaster response cannot be cobbled together on this massive scale when it occurs. It will be way too late.

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Vietnam Looking to Elbow a Place with China and India with Foreign Investors

Vietnam Looking to Elbow a Place with China and India with Foreign Investors

By David Day. August 2010

For Vietnam, stepping onto the world stage in recent years has meant admission to the WTO, a Nonpermanent seat on the UN Security Council, launching the country’s first telecommunications satellite (Vinasat 1 built by Lockeed Martin) and hosting the APEC Summit in Hanoi.

Lockeed-Martin’s Vinasat 1

Vietnam continues to weather the global recession in reasonably well with foreign investment possibly doubling to $15 billion this year. Its largest export market is now the U.S. with over $12 billion last year. This Fall will see Intel’s new $1 billion chip assembly plant open outside Ho Chi Minh City.

Vietnam is now poised for yet another breakthrough. Political tensions in Thailand are helping Vietnam to get onto contingent plan target lists of foreign investors seeking political stability. Political stability is one factor working in Vietnam’s favor now. Another is labor costs. Vietnam is attempting to capitalize on the 30 to 40% labor differential with manufacturing plants in China. This is a huge incentive for China-based operations to begin looking to the south. The labor cost differential with China has been compounded by other problems nagging China operations: labor strikes and shortages.

Outside of the tech industry, where Vietnam has done very well in terms of attracting foreign investment, its aging colonial infrastructure has been a hindrance to all kinds of foreign investment.

There are two recent developments in Vietnam that will catapult the country forward in terms of attracting foreign investment at this critical juncture during the global recession. The first is the development of a number of major superhighway systems north of Hanoi that will link into highway systems in southern China. These new highways will allow a supply chain linkage between Chinese and Vietnamese manufacturing operations.

The second is a proposed Shinkansen-like bullet train between Ho Chi Minh City and Hanoi. The proposed bullet train, which would be completed by 2035, would travel the 1,600 km from Hanoi in the north to Ho Chi Minh City in the south in less than six hours. Vietnam’s current charming but woefully outdated trains take more than two days to make the trip. While this $56 billion project has recently been rejected by the National Assembly, Japan’s Transport Ministry continues to voice support for the project and has promised assistance should the Vietnamese government ultimately decide to proceed with the project once concerns of National Assembly members are adequately addressed (we believe that this is likely to occur despite the current clamor). Vietnam Railways Corp. was planning to use Japanese technology to build the high-speed train line. Sumitomo Corp. had teamed with Mitsubishi Heavy Industries Ltd. to bid on the project. Itochu Corp. was heading a competing group with Kawasaki Heavy Industries Ltd.

Proposed Vietnamese “Shinkansen” Linking Hanoi & HCMC

Given the importance of a high-speed rail link between Hanoi and Ho Chi Minh City, and the challenges Vietnam Airlines, and its related carriers have in meeting the staggering business traffic demands between the two cities, a Vietnamese “Shinkansen” would be an enormous contribution to the national infrastructure. No question that Vietnamese officials are eyeing the success of the Tokyo-Osaka Shinkansen as a precedent for a sorely needed rail upgrade in their own country.

Financing the north-south linkage is another matter.

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New Business Models, IP & Corruption

New Business Models, IP & Corruption

April 18, 2009 by davidfday

These two Videos, both dated April  17, 2009, illustrate the broad ends of the intellectual property spectrum vis.a.vis copyright infringement.  Google setting up free downloads in China in concert with music labels in effort to capture part of share of advertising revenue.  Essentially, this  is the “Free” business model developing in the digital world.

http://edition.cnn.com/video/#/video/showbiz/2009/04/17/chang.china.google.w.music.cnn

On the very same date, contrast Google’s new tactic in China with the 2nd video which is the conviction of 4 persons involved in the Pirate Bay website in Sweden for the crime of copyright violations. This is the “classic” intellectual property prosecution which may become a thing of the past if the Google model in China really takes hold.

http://edition.cnn.com/video/#/video/international/2009/04/17/curry.pirate.bay.verdict.cnn

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China’s Confrontation in the Yellow Sea — Part of a Broader Strategy?

 

China’s Confrontation in the Yellow Sea — Part of a Broader Strategy?

May 6, 2009 by davidfday

This most recent PRC interference with a U.S. Navy ship in the Yellow sea these past few days appears consistent with an ongoing, stepped-up PRC policy looking towards an expansion of its territorial claims well into international waters. To be sure, China’s territorial waters claims are not new, it is just that we are now seeing more aggressive and confrontational action on the part of the PRC. This most recent China/U.S. naval confrontation in the Yellow Sea follows last month’s nearly mirror-image confrontations of the U.S. Impeccable in the South China sea. These events bear careful watching as they pose the risk of misunderstanding, miscalculation and injury not only to the U.S. and China, but to competing territorial claimants in the Region as well as international maritime players.

China's Claim to the South China Sea

Complicating this picture, we need to be mindful that Hanoi, having finally resolved a 30-year northern border dispute with China, is beginning now to focus on its age-old dispute with China over the South China sea’s Paracel and Spratley Islands. While, to be sure there are other national interests claimed over these islands, the Vietnamese are the most likely to pose intense resistance to China’s claims in the South China Sea.

Known Oil fields Overlayed with Competing Territorial Claims

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Myanmar’s Dance

Myanmar sits between India and China, a key strategic position combined with extraordinary natural resources.

Historically, in its post-British colonial era, Myanmar has “danced” in its foreign policy and sought to maintain its neutrality, wary of foreigners. Myanmar’s dance continued throughout the Cold War as a strategy necessary to preserve its own sovereignty. This wariness extended to Western diplomats and China alike. However, as the General Than Shwe/Junta era began to take hold and the resulting U.S. sanctions began to bite, Myanmar “leaned” heavily towards China as its sanctions bypass route.

The new Thein Sein government started to shake the West with its political reforms and the release of political prisoners, including Aung San Suu Kyi. These reforms also included legal changes that would now permit Aung San Suu Kyi to run for political office. Indeed, her party, the National League for Democracy, has seized upon this legal change, re-registered under the new law, and Aung San Suu Kyi herself has formally announced that she would run in the next elections.

Then there is the pushback against China commenced with the abrupt decision to suspend the construction of a controversial China-backed hydroelectric dam that would have flooded an area the size of Singapore. Given the magnitude of Chinese investment and influence in Myanmar, this has been a stunning move.

The question then becomes, what is the next step in Myanmar’s dance? That step will be heavily influenced by Myanmar’s bid to assume its leadership bid as ASEAN’s chair in 2014. However, Myanmar’s bid for the 2014 ASEAN chairmanship means that it will have to present itself as an ASEAN member and not China’s little client. In order to accomplish that by 2014, we are going to see a number of previously unthinkable reforms coming out of Naypyidaw. The notion that Suu Kyi will now run for election is but one example of the previously unthinkable.

Indonesia, interestingly, is playing a key role from its ASEAN leadership chair position, steering Myanmar in a reform-minded direction so as to position and prepare Myanmar for its own 2014 ASEAN chair. Coupled with Jakarta’s efforts, the current United States efforts on the” pivoting” front to re-engage with Asia, such as entering the East Asia Summit and cultivating stronger ties with Southeast Asia, also contains a strategy designed to encourage Myanmar into further reforms. To that end, Secretary of State Hillary Clinton recently dangled the bait that Myanmar would find a partner in the U.S. if further reforms were made. The possibility of removing sanctions and promises of cooperation will assist in expanding U.S. influence with Myanmar,and likely move the country into a more balanced relationship between the U.S. and China.

Myanmar took Clinton’s bait, Suu Kyi and her party are now planning to participate in the next elections, and Clinton herself is now “pivoting” and enroute to Myanmar. The winds are now shifting in the U.S./Myanmar relationship. New partners and new steps are now in play.

The China relationship is still out there. While there is a certain frostiness to the current relations between China and Myanmar, it must be remembered that Myanmar must live with China next door and its dance in the future will always need to maintain considerable weight on that foot.

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The Negotiations Master—Kim Jong Il still has it

The Negotiations Master—Kim Jong Il still has it

By David Day

Over the past year, we have watched the Dear Leader’s private train slide into China on several occasions with educated speculation that he was paving the way for a baton hand-off in Pyongyang to Kim Jong Eun. There was a need, it was argued, for Beijing to bless the heir apparent. Some of these China visits included factory tours, fueling the speculation that the Kim Regime was preparing to “open up” and was ready now for some type of economic liberalization. These visits were followed by, more recently, announcements of large China-fueled infrastructure projects just inside the North Korean border.

Kim Jong Il’s current trip to Russia was not just to provide a change of scenery or demonstrate that there are places he can visit other than the PRC. Despite his age and frail health, the Dear Leader still retains his tactical genius. The Russian trip suggests the timing and the key trump card that Kim Jong Il may soon play—the Trans- Siberia/Korean pipeline.

Russia and South Korea have already entered into a MOU for a huge US$90 billion deal between Russia’s Gazprom and South Korea’s state-owned KoGas. The latter, the world’s largest single buyer of natural gas, will take 10 billion cubic meters annually for 30 years – via a pipeline to be built across North Korea. The sticking point in this enormous energy deal is, of course, North Korea. This week, North Korea also inked the same accord.

The tactical genius of Kim Jong Il is now beginning to surface.  2012 is a Presidential election year in South Korea and President Lee Myung-bak, an uncomfortable hard-liner for the North, is now on his way out. 2012 is also the magical, propagandized, “Mighty and Prosperous Nation” year (the 100th anniversary of the birth of the Great Leader, Kim Il Sung, the 70th birthday of the Dear Leader, Kim Jong Il, and the 30th birthday (give or take) of the heir apparent, “Brilliant Comrade,” Kim Jong Eun—the 100, 70, 30 numbers are significant in the North Korean culture).

There is one other piece to this puzzle and that is Japan. Fukushima and Japan’s nuclear domino shutdowns/decommissionings have left certain parts the country desperately short of energy. This Summer, Tokyo Electric has been able to manage as a result of drastic austerity measures. In the reasonably short term future, Japan will find it impossible to fill its resulting power gap with renewables. Natural gas and coal are the only practical alternatives, with the cleaner, natural gas being the preferred choice. Russian natural gas piped to Busan, South Korea is going to open up critical and easier access for Japan.

As for the tactical genius, Kim can balance China’s growing influence on North Korea with both Russian and South Korean financial influence in the form of a mixture of pipeline lease rent and energy which the North Korean grid sorely needs. A deal to move forward with a pipeline has the added bonus of fitting squarely with the needs of the Pyongyang “Mighty and Prosperous Nation” propaganda machine to have something significant to announce for 2012.

A key issue which Russia and South Korea will undoubtedly have to be concerned with is the pipeline “valve” question (see, the North Korean shutdown of the Mt. Geumgang resort as an example).

Perhaps the economics will force the valve to remain open, but they need to be prepared that Pyongyang will be maneuvering to retain control. Yet another flash of Kim Jong Il’s tactical genius is in the works.

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Yet Another China Foreign Policy Stumble: The South China Sea

China has had a number of foreign policy gaffes over the past couple of years and its very recent attempt at imposing a fishing ban in the South China Sea (known to the Vietnamese as the “East Sea”) is yet another stumble.  Attempting to protect and encourage the replenishment of fishing stock during the spawning season, China announced on May 11, 2011 a fishing ban to run from May 16 through August 1 over an area hotly contested by several South East Asia countries, most notably by Vietnam.

While replenishing the fishing stock may well be a noble ideal, China’s unilateral action is guaranteed to gin up a firey defiance by the Vietnamese, with fishermen ignoring the ban, boat seizures and violent confrontations– all too predictable.

Vietnam has a 1000 mile coastline to protect and its Eastern Sea is an essential part of its defense perimeter that it has, and will continue to jealously protect. China knows this all too well– given its historical battles and scrapes with Vietnam in these same waters over the millennia.

China’s unilateral muscle-flexing in the South China Sea is hardly simply to protect the  fishing stock which Vietnam’s marine industry depends upon. China had to know full well that its fishing ban would necessarily force a response from Vietnam  and give the PRC an opportunity to reinforce its imprimatur over the disputed waters.

For Vietnam, the Eastern Sea is its “line in the sand.”  Vietnamese public opinion will not stand for any moves by China to nip bites out of Vietnamese waters. China knows this but its policymakers blundered ahead anyway.

Defiance by little colorful Vietnamese fishing boats is one thing. China did not anticipate, however, the announcement by the Vietnamese Navy that it now intends to conduct live firing exercises off of Vietnam’s central coast directly into waters affected by the fishing ban.

Such are the perils of unilateralism–especially when you have a little sleeping tiger to the south.

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