Latest Events - Korean Peninsula

Several noteworthy events took place surrounding Korean Peninsula tensions over the last 24 hours. Reuters discusses the first two issues in this report.

"We oppose any military act by any party conducted in China's exclusive economic zone without approval," China's Foreign Ministry said in an online response to a question regarding China's position on the George Washington participating in joint naval exercises.

This is the first reaction to the US moving the USS George Washington (CVN 73) into the Yellow Sea. As far as China is concerned, they believe no one should be allowed to operate a warship, much less an aircraft carrier, within their exclusive economic zone. There is no international law that China bases their political protest on, as maritime boundary definitions in the UNCLOS are defined as:

• Coastal waters—the zone extending 3 nm. from the baseline
• Territorial sea—the zone extending 12 nm. from the baseline
• Contiguous zone—the area extending 24 nm. from the baseline
• Exclusive Economic Zone—the area extending 200 nm. from the baseline except when the space between two countries is less than 400 nm

China's criticism was to be expected, and one reason why I believe the Obama administration has taken this course of action. Territorial sea only extends 12 nm, and only if US Navy forces move within the territorial waters of China would there be any violation of international law. The Reuters report also discusses the latest statement by North Korea:

"The situation on the Korean peninsula is inching closer to the brink of war due to the reckless plan of those trigger-happy elements to stage again war exercises targeted against the (North)," the North's official KCNA news agency said.

Shortly after the statement, the North Korean military held an exercise near Yeonpyeong island firing artillery at least twice over a period of two and half hours. This article in the New York Times has the details, and nice photo of how clearly one can see the smoke from the artillery from Yeonpyeong island.

The press has been given access to Yeonpyeong island to see the damage, and as one might imagine the pictures on TV and online just piles on the political pressure for the government to act. It is an unfortunate situation, because the new Defense Minister is in a difficult place regarding how to respond to any new attacks after having just seen the old Defense Minister resign for not retaliating forceful enough. What does that mean next time the North tries another limited skirmish on the border?

As the Wall Street Journal notes, Asian markets are nervous.

South Korea's Kospi dropped 1.3%, Japan's Nikkei Stock Average shed 0.4%, Hong Kong's Hang Seng Index fell 0.8% and China's Shanghai Composite declined 0.9%. Australia's S&P/ASX 200 edged up 0.1%. Dow Jones Industrial Average futures were down 75 points in screen trade.

If I am to be a selfish American, I would note that the Asian concerns of war combined with the European concerns of debt certainly gives investors in the global economy a lot to think about. The consequences of that concern has been a nice little bump for the dollar. It is remarkable how quickly signs of war between nations in either Asia or the Middle East usually bounces US currency positively, a reminder that the gold standard was replaced with the F-16 standard over 30 years ago. I say this as a key reminder. Should China decide to start selling off their holdings in Treasuries, it is important to remember that means someone else is buying. Worth thinking about.

The Navy exercise between the US and South Korea that begins Sunday is a short term action, but long term actions are necessary. What the Cheonan and now this latest incident has highlighted is a broad flaw in US policy, and while everyone would love to see a diplomatic solution to all of these problems, the patience of the region with the US governments ineffective diplomatic solutions for North Korea has all but expired. Both South Korea and North Korea have stopped working with the Red Cross, which was the last link the two countries had before this latest incident.

There is a realization in Washington, DC that future North Korean attacks will make a future US policy response that 'calls for restraint and emphasizes diplomacy' a failure of US obligations to partners like Japan and South Korea. This realization has become a serious political problem for the White House. It will be interesting to see how the President handles this very serious problem, particularly given how forceful South Korea is likely to be to the next North Korean attack, not to mention how skeptical Japan has become of us given our repeated inadequacies dealing with North Korea. It will also be interesting if and how the media reports on this very serious foreign policy problem facing the Obama administration - one he can't exactly kick down the road.

I suspect the administration is looking for a policy action akin to the "Stuxnet option" someone deployed against Iran. By that I mean the US would love to be able to deploy an untraceable damaging attack that disrupts North Korean capabilities in an indirect way, and after the fact everyone believes it was done by the US although no one has the proof necessary to prove it.

One final Navy note - don't be surprised if - just as the USS George Washington (CVN 73) begins exercising with the South Korean Navy in the Yellow Sea, a second US carrier battle group quietly enters the western Pacific.