Yet the current crisis in North Korea has such potential significance to international relations, the future of Asian finance/markets that it is no longer possible to remain blissfully ignorant of the world’s last bizarre Stalinist Hermit Kingdom, a third-generation House of Kim dynastic dictatorship. North Korea is incapable of reform in the Chinese/Vietnamese model since its elite would be wiped out if the DMZ ever thawed akin to the fall of the Berlin Wall.
West Germany’s standard of living was estimated at four times the DDR (the Soviet puppet regime in East Berlin). South Korea’s standard of living is an estimated 20 times that of the isolated, impoverished, famine-haunted North Korea. There is no soft landing scenario for Pyongyang’s elite if the North Korean regime lost its totalitarian chokehold on power.
North Korea’s ideology is a death-obsessed, mystic ultra-nationalism akin to the imperial Japanese kamikaze (divine wind) death cult during the Pacific War. After all, Japan was Korea’s colonial master for generations. The closest analogy to North Korea is Tojo’s Japan or Hitler’s Third Reich, not the transition economies of Vietnam or China. Kim Il Sung, who seized power as Stalin’s protege in a Soviet tank in 1945, forged a state whose military high command grotesquely consumes its meager economic resources. Like Bismarck’s Prussia, North Korea is an army with a country, not a country with an army.
Ultra-nationalism and sacrifice seems to be a Korean cultural phenomenon. I was stunned to see South Korean women voluntarily donate their gold ornaments to repay the IMF loan during the Asian crisis of 1998. Even though South Korea is an open society with Psy, Samsung and K-pop bands, with the highest Internet bandwidth density in Asia, it was the second most-nationalist country in the world in a recent poll. North Korea is first, an ultra-nationalist state. So the Pyongyang regime’s propaganda is obsessed with its self-styled sacred quest to reunify the Korean peninsula after taking out the 28,000 American combat troops stationed in South Korea.
Capricious, militaristic, nuclear-armed, North Korea does not fit into any western rational actor model of game theory. The deterrence models of the Cold War make no sense here. The West has forgotten but the North Koreans never allow their people to forget the millions who died in the 1951-53 Korean war, the fact that Seoul changed hands 16 times, that Pyongyang almost became the target for the world’s third city to be nuked after Hiroshima and Nagasaki. If ever Samuel Huntingdon’s Clash of Civilizations made sense, it is in North Korea.
Miscalculations can be catalysts for brutal wars. No major Great Power wanted war in August 1914 yet Europe sleepwalked into World War I, with the loss of 10 million lives. President Bush’s team actually expected the Iraqi people to embrace US troops on the eve of the Iraq Invasion in 2003. Could Baby Kim’s cabal in Pyongyang miscalculate and plunge the world into the most horrific Asian war since Vietnam? I do not know. However, I do know that both Presidents Lee Myung Bak and Madame Park have abandoned the sunshine policy that governed in Seoul in 1998-07. South Korea is now prepared to respond to North Korean aggression with war. This is ominous.
South Korea now trades at eight times forward earnings, thanks to consistent foreign selling since last November in one of Asia’s most foreign owned free float war nets. Add yen contagion and the won at 1,180 seems all too credible. Tech woes have taken their toll on the Kospi. Some of the world’s iconic brands are South Korean. Yet the awful reality of Pyongyang remains a sword of Damocles over one of the most vibrant societies on earth.
Though no damage has been reported so far, residents should brace for aftershocks, authorities say