North Korea mixed things up a bit in early 2016, this time starting with a nuclear test – its fourth – and then following up a month later with a missile test/satellite launch; usually the order is reversed. Other than that it was déjà vu all over again, only worse. There were also a number of shorter-range ballistic missile launches and the usual threats (with graphic video), while the prospects for dialogue seemed to dim even further. Meanwhile, Chinese activities in the South China Sea (SCS) are being described by everyone (except Beijing) as further militarization of its artificial islands, as everyone (except Beijing) eagerly awaits the ruling by the Permanent Court of Arbitration in The Hague on a case the Philippines has brought against China’s SCS claims – Beijing has already preemptively rejected the Court’s jurisdiction, so no happy ending appears in store for anyone. The G7 also weighed in on the SCS issue, much to China’s dismay. It’s for certain the G20 won’t (since China is host this year). The AIIB is taking shape, with most worries not being realized. Finally, after eight months of listening to pundits predict that the Trump phenomenon was sure to fade, Donald Trump has become the “presumptive” Republican nominee. His opponent seems likely to be former Secretary of State Hillary Clinton, in what is shaping up to be a battle of the known versus the unknown (and largely unpredictable).

DPRK: going from bad to worse

Pyongyang began the new year with a bang. On Jan. 6, the DPRK conducted its fourth nuclear test. While experts doubt Pyongyang’s claim that it was a hydrogen bomb, international condemnation was quick. Not so quick was the United Nations Security Council (UNSC) response. In the past, Pyongyang has violated UNSC resolutions, waited for the new list of sanctions to be announced, and then conducted another provocation to demonstrate its complete disdain for the UNSC. This time, the North apparently got tired of waiting. While the Security Council dithered and a late January visit to Beijing by Secretary of State John Kerry moved the parties no closer to an agreement on just what the next round of sanctions should entail, Pyongyang decided to go ahead with another satellite launch (a.k.a. missile test), albeit not until after Chinese diplomat Wu Dawei made a trip to the North to try to persuade them not to do so.

This apparent slap in the face to Beijing – the North reportedly moved the launch up a day to coincide with the eve of Chinese Lunar New Year – resulted in the “toughest ever” UNSC sanctions, which Pyongyang immediately rejected and disrespected by launching a series of additional shorter-range ballistic missile tests, including from road-mobile launchers and a submarine. As DPRK Foreign Minister Ri Su-Yong observed when he visited the UN in April, “If they believe they can actually frustrate us with sanctions, they are totally mistaken…. The more pressure you put on to something, the more emotionally you react to stand up against it.”

Ri’s bravado notwithstanding, there is no doubt that the sanctions, at least on paper, are the toughest ever. The sanctions laid out under UNSC Resolution 2270 “have broader scope, target more DPRK pressure points, and have unprecedented inspection and financial provisions, including mandatory inspections of cargo to and from the DPRK and a requirement to terminate banking relationships with DPRK financial institutions.” The US Mission to the UN Fact Sheet claims that the sanctions “make it much harder for the DPRK to raise funds, import technology, and acquire the know-how to continue its illicit nuclear and ballistic missile programs.” All this assumes, of course, that they will be religiously enforced. Call us skeptics on this one!

Much more likely to be strictly enforced were new unilateral sanctions announced by the Obama administration under Executive Order 13722, which, among other measures, froze North Korean government assets in the United States, banned US exports to or investment in North Korea, and expanded a US blacklist to anyone, including non-Americans, who deals with North Korea. The ROK also instituted its own tough sanctions and in a sign that it was no longer “business as usual” shut down the Kaesong Industrial Complex, which had been an important source of hard currency (and jobs) to the North. 

Grand Bargain offered and rejected

During his rare interview with the Associated Press in New York, Ri also offered a grand bargain to the US: “Stop the nuclear war exercises in the Korean Peninsula, then we should also cease our nuclear tests.” Ri reportedly told the AP that “It is really crucial for the United States government to withdraw its hostile policy against the DPRK and as an expression of this, stop the military exercises, war exercises, in the Korean Peninsula. Then we will respond likewise.” If the exercises are halted “for some period, for some years,” he added, “new opportunities may arise for the two countries and for the whole entire world as well.” President Obama, in response, stated that Pyongyang would “have to do better than that,” noting that there were better channels of communication than media interviews. Seoul likewise rejected the overture, calling the proposal “absurd.”

The North’s demands that the US end its “hostile policy” are not new. But just what this would entail was spelled out in a recent PacNet #25 by DPRK researcher Jong Nam Hyok from the Foreign Ministry’s Institute for American Studies: “The danger of a war can be completely averted only when the US withdraws its troops stationed in south Korea, quits reinforcing its armaments, and suspends hostile military acts such as joint military drills as a result of the conclusion of a peace agreement.” Then, and only then, would Pyongyang be prepared to talk about denuclearization: “As long as belligerent and hostile relations between the DPRK and the US continue to exist, talk of ‘respect for sovereignty,’ ‘equality,’ and denuclearization of the Korean Peninsula sounds hollow, devoid of any practical significance.”

Washington has rejected the freeze proposal and quest for direct peace talks; the US position has long been that the road to peace on the Peninsula must run through Seoul. Pyongyang’s insistence that the peace accord be bilateral is – and should be – totally unacceptable to Washington. Jong’s PacNet showed a glimmer (but only a glimmer) of flexibility in this regard: “Given the fact that it is a party to the Korean War and to the issue of reunification, one cannot say that south Korea is totally irrelevant to establishing lasting peace mechanism by way of replacing the Armistice Agreement with a peace agreement. Nonetheless, under the circumstances where the US stations its huge armed forces in the south targeting the DPRK and takes hold of wartime control over the south Korean armed forces, it is meaningless to give precedence to north-south talks on signing a peace agreement.” The day the DPRK starts referring to its southern neighbor as the Republic of Korea or ROK, perhaps some forward movement might occur.

Threats and more threats

As hostile as US policy may appear to be to Pyongyang, the reverse is equally if not more true. In additional to the standard rhetoric of turning Seoul or Washington into a “sea of fire,” the North has also claimed that its hydrogen bomb was the biggest ever – “much bigger than the one developed by the Soviet Union” – also claiming that it could be delivered on the United States: “If our bomb is fitted to an Intercontinental Ballistic Missile (ICBM) and falls on New York, Manhattan Island, all of the residents will die instantly with the whole of their city … no, the whole of the mainland being completely devastated.”

When the South Korean press started reporting that the annual Key Resolve/Foal Eagle exercises this year included a “beheading” or “decapitation” mission against Kim Jong Un himself – which neither the US military nor South Korea’s Defense Ministry has confirmed – Pyongyang responded by threatening a “preemptive nuclear strike of justice,” with the Korean People’s Army warning it would “liberate the whole of south Korea including Seoul … with an ultra-precision blitzkrieg strike of the Korean style.” The threats of preemption became so bold that it prompted the Russian Foreign Ministry to issue the following the statement (as translated by ITAR TASS): “We consider it to be absolutely impermissible to make public statements containing threats to deliver some ‘preventive nuclear strikes’ against opponents,” the statement warned, “Pyongyang should be aware of the fact that in this way the DPRK will become fully opposed to the international community and will create international legal grounds for using military force against itself in accordance with the right of a state to self-defense enshrined in the United Nations Charter.”

Through it all, the US appeared hopeful and receptive to some form of dialogue. Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel stressed in early April that “the United States and our partners have not given up on diplomacy. We’ll keep trying to find the way forward,” further stating that “the way forward isn’t hard to visualize. It starts with the DPRK freezing all of its nuclear activities like Iran did … and it starts with a credible declaration of its past activities and IAEA inspection of its nuclear site.” He also noted that “the goal of sanctions is not to destroy North Korea. It’s to bring North Korea’s leaders to their senses.” The goal is to bring North Korea’s leaders to the realization that at the end of the day, there is no viable alternative to authentic negotiations to the nuclear issue.”

While hope may spring eternal, by the end of April, the North seemed to have slammed the door shut on any prospects of future dialogue: “Our consistent principled stance is to never hold dialogue under unilateral pressure. Dialogue and military threat, and dialogue and sanctions can never go hand in hand… Our nuclear issue has already left the dialogue table long ago because of the United States’ increasingly hostile acts.” With reports that another nuclear test was in the offing, perhaps to commemorate the Workers Party Congress in early May – the first such gathering in 36 years, apparently aimed at validating and solidifying Kim Jong Un’s rule – the situation appears destined to get worse.

South China Sea: militarization, by almost any measure

When it comes to situations moving from bad to worse, the South China Sea situation also ranks high on anyone’s list. Any semblance of credibility remaining behind Chinese President Xi Jinping’s statement that “China does not intend to pursue militarization” of the Spratly Islands – made to President Obama during Xi’s visit to Washington last September – quickly evaporated during the past four months. Then again, the Chinese have long maintained that their claim to all territories in the South China Sea is “indisputable,” despite there being five other claimants (Brunei, Malaysia, the Philippines, Taiwan, and Vietnam); perhaps Beijing’s definition of “militarization” likewise differs from those used by the rest of the world.

Details regarding the Chinese build-up on and around its manmade islands can be found elsewhere in the journal or on the CSIS website under its Asia Maritime Transparency Initiative. The US view on what’s happening was summed up pretty succinctly by US Pacific Command Commander Adm. Harry Harris during his Feb, 23 Senate testimony: “In my opinion China is clearly militarizing the South China Sea. You’d have to believe in a flat earth to believe otherwise.” In response, the US continues its “freedom of navigation” operations throughout the South China Sea, to demonstrate that it will “continue to fly, sail, and operate wherever international law allows.” This was underscored in April when Secretary of Defense Ashton Carter sailed aboard the USS Nimitz aircraft carrier during exercises off the Philippines, where he announced that the US would begin conducting joint South China Sea air and naval patrols with the Philippine Armed Forces.

International law is likely to be put to the test this spring when the Permanent Court of Arbitration in The Hague presents its ruling on a case the Philippines has brought against China’s nine-dashed line claim. Most (but not all) legal experts expect the ruling to be in Manila’s favor. But, other than allowing the Philippines and its supporters (the US clearly among them) to claim the moral high ground, the practical outcome remains unclear since Beijing has preemptively announced that it will not abide by the Court’s ruling. The international press is filled with speculation that a negative ruling might also prompt Beijing to declare an air defense identification zone (ADIZ) in the South China Sea. While this is possible, we would remind readers that there is less to an ADIZ than meets most eyes. As spelled out in last year’s PacNet #36, there are no sovereignty claims associated with declaring an ADIZ; nor does establishment of an ADIZ prevent others from flying through any area not otherwise legally designated as sovereign territory.

The South China Sea situation was also a topic of discussion at the G7 Foreign Ministers Meeting in Hiroshima on April 10-11. The ministers adopted a Statement on Maritime Security which called on all states to “refrain from such actions as land reclamations” and building outposts “for military purposes” that could risk stability or change the status quo. Disputes should be solved “in good faith and in accordance with international law.” That anodyne language infuriated China, even though no country was specifically identified as being at fault.  A Chinese Foreign Ministry spokesman urged the ministers to “stop making irresponsible remarks and all irresponsible actions, and truly play a constructive role for regional peace and stability.” Presumably that means being quiet and letting the claimants work things out among themselves.

G7: Japan’s turn to shine!

Foreign ministers were meeting in advance of this year G7 Summit, which will be hosted by Japan in May on Kashiko Island in Shima, Japan. Tokyo is using the event to showcase its leading role in international management. The G7 remains as much a political as an economic gathering, so its agenda is ambitious. This year, topics will include Syria, ISIS, the global refugee crisis, and stimulating growth in Africa, along with developments closer to home such as North Korea and China’s behavior in the South China Sea. The assembled leaders will also take on economic uncertainty and issues identified in the G20 meetings (discussed below).

At the Hiroshima G7 Foreign Ministers Meeting, the ministers condemned the recent terrorist attacks in Turkey, Belgium, and other regions and announced that a G7 action plan on countering terrorism would be adopted at the G7 Ise-Shima Summit in May. They also condemned “in the strongest terms” North Korea’s nuclear test and missile launches and demanded an end to additional tests, launches, or other destabilizing or provocative actions. They acknowledged the threats posed by historical levels of refugees, the crises in Iraq, Syria, and Libya, as well as challenges posed by climate change, corruption, narcotics trade, and other problems.

Befitting a meeting in Hiroshima, they issued two statements calling for nuclear disarmament and nonproliferation, one of which is called the Hiroshima Declaration. In it, the foreign ministers reaffirmed their “commitment to seeking a safer world for all and to creating the conditions for a world without nuclear weapons.” The foreign ministers visited the Hiroshima Peace Memorial Museum; considerable attention was devoted to the reaction of US Secretary of State John Kerry, the first US secretary of state to visit. He called the museum “gut wrenching.”

Kerry’s visit prompted intense speculation on whether President Obama would in turn visit the site, which many Japanese (and other disarmament advocates) see as the culmination of his effort to eliminate nuclear weapons, announced in his 2009 Prague Speech. Reportedly, the president is leaning toward a visit during the Leader’s Summit in May, but there will be “no apology” for the dropping of the US atomic bomb – nor have the Japanese sought such a statement. Opinions are deeply divided on the wisdom of such a visit, with many in the US and in Asia unconvinced of the wisdom of such a gesture. The pros and cons of an Obama visit to Hiroshima are argued in PacNets #37 and #38.

Consistent with the Abe government’s intent to show that Japan remains a “first-tier nation” and one that should be leading on the global level, Tokyo is making the most of its G7 stewardship. Hosting the summit poses two challenges for Tokyo, however. The first concerns the Abe government’s efforts to keep the value of the yen low, which it sees as essential to the economic recovery that continues to sputter. In recent weeks, despite unprecedented monetary easing, the value of the yen is rising against the dollar, squeezing export margins, hurting corporate profitability, and undoing some of the most important gains of the last three years of Abenomics. Japanese attempts to keep the yen from strengthening look at lot like competitive devaluations to competitors and the G7 (and G20) call for currency stability risks exposing Japanese actions as self-interested or hypocritical.

The second problem concerns Russia. Note that Japan is hosting the G7, not the G8. The difference reflects Russia’s absence: its membership is still suspended after annexing Crimea and backing Ukrainian separatists. Yet Japan, and Prime Minister Abe in particular, desire a rejuvenated relationship with Russia. Japanese strategists worry about pushing Moscow further into Beijing’s orbit; they want to give Russian foreign policy makers more choices, which would, incidentally, diminish Chinese influence. Abe also seeks a resolution to the territorial dispute with Russia, signing a peace treaty, and reclaiming the four islands lost to the Soviet Union at the close of World War II. The biggest test for Abe is getting Russian President Vladimir Putin to visit Japan for a summit this year. That is a big request when Putin is being ostracized by the rest of the G7. Abe remains committed, however, and likely sees a deal with Putin as the cap on his tenure as prime minister. A mutually acceptable agreement seems extremely unlikely: Putin is a leader who takes territory, not one who gives it away.

Dueling world forums

While Tokyo enjoys the G7 limelight, Beijing is preparing to host its own international economic gathering, the G20, with the summit scheduled to be held in Hangzhou Sept. 4-5. China seeks to make the most of its first opportunity to host the G20, which it views as the pre-eminent world economic forum (at least until such time as it is invited into the G7 club). During the first four months of 2016, 28 G20-associated meetings were held, all but nine of them in China. The statement at the finance ministers meeting, which convened in Washington in April (concurrent with the IMF/World Bank meetings each spring) highlighted uncertainty and downside risks in the economy, which included financial volatility, low commodity prices, and low inflation. They also promised to “refrain from competitive devaluations and … not target our exchange rates for competitive purposes.” Coming on the heels of publication of the “Panama Papers” with its revelations about offshore tax havens, the group pledged to work harder to fight money laundering and tax avoidance.

The AIIB gets down to business

On Jan. 16, the Asian Infrastructure Investment Bank opened its doors with a lavish ceremony presided over by Chinese President Xi Jinping. The new bank is expected to lend $10-15 billion annually over its first five or six years on “high-quality, low cost” projects to help meet Asia’s basic infrastructure needs. The bank will begin lending in the second quarter of 2016 and has a target of $1.2 billion in loans that first year. Thirty founding countries hold just over 74 percent of bank shares; other governments that signed the AIIB agreement have until the end of the year to finish ratification procedures and claim their own shares. China provided $29.78 billion of the AIIB’s total capital stock of $100 billion, and then added another $500 million.

Questions about the AIIB’s operations have been resolved and many of those answers should quell concerns about the institution’s challenge to the international financial order. For example, it will lend in dollars, although it may raise capital in other currencies. The bank will have an internal department focused on compliance and integrity that reports directly to the bank’s board. Projects will be legally transparent and protect social and environmental interests, but the bank leadership cautioned that it will not force borrowers to adopt free-market practices favored by other international financial institutions like the IMF. On April 13, the AIIB signed a framework agreement with the World Bank to co-finance projects, and the two institutions are reportedly discussing nearly a dozen projects in Central Asia, South Asia, and East Asia. On May 2, the presidents of the AIIB and the Asian Development Bank signed a memorandum of understanding so that the two can work together on jointly financed projects. The first, a major new highway in Pakistan anticipated to cost $273 million, was announced a day later.

In Congressional testimony, the top US Treasury international official allowed that the bank could serve as a “constructive addition” to the world’s international finance if it follows best practices and institutes proper safeguards. US membership was a long way down the road, however. Meanwhile, Taiwan said that it would only apply for membership if it was treated with “equality and dignity,” neither of which was on offer when the AIIB president said that the island government was not a sovereign state and could therefore only apply though China’s Ministry of Finance.

A security institution as well

In late April, President Xi renewed his call for a new regional security approach that would feature “Asian security by Asians” at the fifth Foreign Ministers Meeting of the Conference on Interaction and Confidence Building Measures in Asia (CICA). Established in 1992, CICA includes 26 member countries and 12 countries and international organizations as observers. Xi stirred things up two years ago at the 2014 CICA Summit when he laid out a vision for regional security that he claimed would better reflect Asian needs and characteristics. In both speeches, he highlighted the need for mutual respect, consensus-building and accommodation of each other’s comfort levels, all of which sound good but are hard to detail in practice. Most observers see the rhetoric as meaning the end of US alliances in the region, a diminished US presence, and a higher Chinese profile.

In his remarks to the foreign ministers, Xi said that China would permit neither war nor instability on the Korean Peninsula, a warning that seemed to be directed at both Pyongyang and Washington – and reminded Seoul that for all its frustrations with Beijing, China remains a deciding force in peninsular affairs. Finally, Xi announced that China would be extending its chairmanship of CICA another two years. That is not unprecedented: Turkey did the same when its first two-year term expired in 2012.

The race narrows and Trump prevails in the GOP

US politics entered uncharted waters with the presumed victory of Donald Trump in the race for the 2016 GOP presidential nomination – it won’t be official until the Republican convention in Cleveland in June.  Trump sealed the deal after his victory in the May 3 Indiana primary, which was followed by the suspension of the campaigns of his two remaining rivals, Texas Sen. Ted Cruz and Ohio Gov. John Kasich. Trump’s win demonstrated that the conventional rules of US politics no longer seem to apply (although eagle-eyed observers note that Trump performed almost exactly as polls a year ago predicted). The challenge for the GOP is now uniting behind his candidacy. That may prove more difficult than anyone anticipated with core members of the Republican establishment, such as former Presidents George H.W. and George W. Bush and House Speaker Paul Ryan, currently refusing to back the presumptive nominee.

In the Democratic race, Hillary Clinton continues to march toward the nomination – the numbers indicate her victory is assured – but Sen. Bernie Sanders insists that he will contest the nomination to the last vote. Sanders claims that momentum and enthusiasm are on his side, but the party establishment is behind Clinton and her supporters look more like a cross section of the Democratic Party than does Bernie’s crowd. The question for the Democrats is how far Sanders will go in pursuit of the nomination – will he embrace scorched earth politics? – and what will Clinton do to win over him and his supporters .

A Clinton presidency would travel a predictable path. Her policy preferences are on the record; the one anomaly is her disavowal of the Trans-Pacific Partnership (TPP) trade deal, one indication of Sanders’ influence on her campaign. Given Clinton’s commitment to the rebalance, however, it is hard to see her sticking with that position if she wins the White House.

Trump is another matter, however. His penchant for off-the-cuff comments and his lack of knowledge on key issues is for most observers embarrassing and worrisome (not for him, though).  On trade, for example, Trump disparages TPP – along with every other trade agreement his predecessors have signed – because the US got “a bad deal.” He would renegotiate TPP, and demand that all US trade partners stop “taking advantage” of his country. Trump has pledged to stop the hemorrhaging of US jobs and the flight of US companies, although how he would do that is unclear. (He has difficulty providing any policy details.) When pushed, he seems to favor big tariffs to raise the price of imported goods to balance US trade accounts.

When asked about US alliances, Trump is scathing, insisting that allies take advantage of the US and don’t pull their own weight.  He would demand more money from them to support the US presence and the effort his country makes in their defense. In his foreign policy speech delivered in Washington on April 27, he called for summits with US allies to discuss a rebalancing of financial commitments, as well as new strategies for tackling common challenges. (That speech was an attempt to show his serious presidential side: at it, he read prepared remarks from a teleprompter. Most reviews were pretty scathing, however.)  When asked if he was prepared for the consequences of a rupture with those allies in Northeast Asia, and the possibility that they might go nuclear as a result, Trump indicated he could live with that.

Trump’s foreign policy is evident on his baseball cap: “Make America Great Again.” His is an unabashed “America First” logic and rhetoric that many observers, especially in foreign countries, are quick to call isolationism. It is hard to say if that is a fair assessment since his pronouncements tend to be contradictory and his logic inconsistent. Without doubt, however, Trump believes that the US has not been served well by current diplomacy, that it is overextended, that it should be much more constrained in its overseas commitments, and when it does act it should do so without hesitation and without restraint (even by international laws or norms). Trump believes in peace through strength and that muscle is the most important currency in international affairs. This logic has many allies and partners of the US concerned; in every meeting and discussion, both formal and informal, the prospect of a Trump presidency is raised, with equal parts humor, disbelief, and alarm.

It’s useful to recall that Trump is not the first person to run under a “make America great” banner. An earlier populist used the same slogan, while threatening to recognize Taiwan as an independent country, recognize Jerusalem as the capital of Israel, and take back “our” Panama Canal. His hard-nosed approach had many detractors convinced that, if he won, the US would soon be at war with the Soviet Union. His name was Ronald Reagan, whose name Trump frequently invokes. That’s not to say that Trump would become more Reagan-like if elected. It is to say that reality, along with the checks and balances built into the US system, often temper what’s been promised (or threatened) during an election campaign. We can only wait and see!