Enjoy this Fourth of July & Get Ready …

 

Celebrating the Fourth of July is a patriotic tradition. It is a day of remembrance of past sacrifices that have given us today’s freedom, prosperity & peace. This fourth could be a more somber day than recent ones. This may well be a Fourth of July that requires us to prepare for a major event, an event that may lead to serious repercussions for the economy and for peace. But like the momentous ones in the past, what America is forced to do may finally lead to a more sustainable peace in a much freer world.

Looking back to about 100 years ago, we see that almost every country in Europe saw a war coming, a war that no country in Europe wanted. Yet, the war did happen, a war in Europe that didn’t spread beyond Europe. But the scale of the war was such, the damage was such that it was given the name World War I. We forget that the period before World War I was a glorious period for globalization. Momentous inventions had united the world and led to prosperity & peace. That didn’t stop the war from coming.

The past couple of decades have been even more glorious for globalization. The world has become a richer, safer place and hundreds of millions of people have been brought out of poverty. Past three American Presidents dedicated themselves to prosperity through globalization.

In that pursuit, those three American Presidents chose to postpone the inevitable; they ignored what any realistic analysis would have told them. Instead, they devoted their energies to making China a prosperous economy in the hope that this prosperity would persuade China to impose discipline on their client state of North Korea.

China has played the North Korean card to get better & better trade benefits from America. North Korea has played the we are so crazy that we might just destroy the world if you don’t give us money card for the past two decades. China has played their card of give us better trade benefits & we will rein in North Korea card. We all see the results. China has become the second largest economy in the world & its client state of North Korea has become a source of enormous danger to all of Asia with its single-minded pursuit of nuclear weapons & ballistic missiles.

Two events have changed this game:

1. America has a new President who has publicly disclosed this game and has publicly resolved to end it. In fact, he has reversed it and put the onus on China – meaning if China wants beneficial trade relations with America, then China MUST intervene in North Korea to eliminate the risk to America.
2. North Korea has finally crossed the red line that has been laid out for past two decades – North Korea is now close to getting a nuclear warhead and a ballistic missile that can hit America. And Trump is not a President who will sit by & hope while this red line is crossed.

America does not want this war. It is likely, as Secretary of Defense Mattis has publicly warned, to have catastrophic consequences for the Korean peninsula, consequences no body wants to think about. North Korea certainly doesn’t want this war because the regime might not survive it. And the first & foremost goal of every authoritarian regime is survival. 

Yet, the war seems more & more likely. Perhaps because Kim Jong-un, the dictator of North Korea, may not survive if he makes peace & allows peaceful destruction of his regime’s nuclear & ballistic missile capabilities. So Kim might concludes he needs a limited war & a limited defeat to convince his people he had no choice but to surrender his nukes-missiles to protect his beloved North Korean people. In fact, he might emerge personally stronger from a limited war despite the destruction of his regime’s military might.

This is not far fetched. Think of Saddam Hussein facing Desert Storm. He knew his Iraqi Army would be routed and that he would suffer the humiliation of withdrawing from Kuwait with his military in tatters. But, as we all know, his personal aura remained untouched despite the defeat & he was actually able to project himself as a man who fought valiantly for Iraqi & Arab honor.  

Kim Jong-un may think along the same lines and he could be proven right. But that depends on how he fights the war. If he unleashes his massive artillery on Seoul and causes huge casualties, then neither he nor his regime will survive the war. But if he mainly fights a defensive battle and allows his military infrastructure to be destroyed without attacking South Korea, then he may well survive the war. And this is an outcome that will be accepted by China & one in which Kim will become even more dependent on China. This outcome will also enable China to maintain its “free trade” with America, something China wants & needs desperately. 

But no one knows how wars turn out and best laid plans of generals & leaders can go awry in the intense heat of war. So American leadership is unlikely to go into this war without making plans for all eventualities & without deploying all necessary assets. General Mattis, Secretary of Defense, and General McMaster, National Security Advisor, have, in the words of Dr. George Friedman, built their careers on “military integrity” and they have in President Trump, a leader “who has let them do what they have to do“. 

A great deal depends on China behaves. If China helps the US during the conflict when it arises, then China might be able to save the trade regime that has made China rich. If China acts as America’s adversary in this conflict, then China could kiss goodbye to favorable trade relations with America. And that will have a serious impact on all of Asia & possibly the global economy. 

How prepared is American military & President Trump? Look at his cool reaction to North Korea’s stupid act of testing what they called an ICBM this morning on America’s birthday. 

So celebrate & enjoy this Fourth of July and be somber about what the near future might hold. 

 

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