Korea: Just Down the Street

By David Robinson of Aloha, Oregon. David is a a commander in the Navy Reserves and a former instructor at the U.S. Naval Academy. In 2010, he was a Democratic candidate for Congress in Oregon's 1st District. Previously, he contributed "Afghanistan: Double-Down Is Not A Viable Option".

It may be just over 5,000 miles away and the U.S. may have only 28,000 troops there, but Oregonians should think of Korea as being just down the street.

Any potential or actual conflict on the Korean Peninsula should concern Oregonians. Beyond Oregon’s young men and women serving in uniform being at risk because of the U.S. – Korea mutual defense agreement, a Korean conflict would directly impact the Oregon economy and Oregon jobs.

Conflict first order effects would be between South Korea and Oregon. In 2008, six percent of Oregon’s foreign exports were to South Korea, and 41% of Oregon’s foreign exports are in the technology sector (pdf). The majority of Korea’s technology sector businesses are concentrated in Seoul which is only 25 miles from the North Korea border. North Korea, in less than one day with its 10,000 pieces of artillery aimed at Seoul, could wipe out $1.5 billion of Oregon’s export economy.

Decisions made by both the Chinese and U.S. governments will dictate second order effects in Oregon. China is politically aligned with North Korea and has a direct interest in maintaining North Korea as a buffer state. Thirteen percent of Oregon’s foreign experts are to China; if China engaged in the conflict militarily or politically, Oregon could lose $2.5 billion of trade income. Oregon job losses due to the loss of $4 billion in combined Korea and China export income would be staggering.

Third order effects present a real nightmare for not just the Oregon economy, but the U.S. and world economies. China and South Korea collectively hold approximately $1 trillion in U.S. Government debt, and much more in consumer debt. Korea likely would dump its holdings on the world market to pay for the conflict and rebuilding, and China may dump its debt to punish the U.S. economically. These actions would cause a significant rise in interest rates for Americans, and any action by the U.S. to control interest rates would likely cause hyper-inflation. High interest rates, high inflation, and decreasing foreign exports – the 1970’s U.S. economy revisited. The impact on the Chinese economy would be as bad as or worse than in the U.S. – a lose-lose scenario built by President Clinton when he granted Most Favored Nation Status to China.

While both China and North Korea want to maintain the threat of conflict to keep the U.S. focused on political and military issues, no country wants open conflict on the Korean Peninsula. Both China and the U.S. know an open conflict could destabilize the world economy, North Korea knows that it would ultimately lose without Chinese direct military intervention (a topic beyond the scope of this article), and South Korea doesn’t want to bear the staggering cost of reunification.

Let’s hope politicians from all countries keep tight control of their militaries.

Comments

  • (Show?)

    Thanks for the analysis. The ball is in the Chinese court. If they can't keep the madness in North Korea contained, all hell could break loose.

  • (Show?)

    David,

    While I agree with the general thrust of your post (the significance of Korea, the hope of keeping tight control of militaries), there are nuances I would suggest:

    (1) As I see it there are significant differences between North Korea and China. I would not go so far, as you do, to say that China is “politically aligned with North Korea:” maybe on some issues, but not as a general proposition. Nor do I see China as wanting “to maintain the threat of conflict to keep the U.S. focused on political and military issues.” China is a rising economic and military power. It expects increasing respects, but is focused largely, and for its own political survival, on its own internal economic development. It wants, IMHO, neither a war nor a collapsed state on the Korean peninsula to hinder that economic development. Nor does it want South Korea to just absorb North Korea. In my view, the future of North Korea is more China’s problem to solve than a US problem to solve.

    (2) North Korea is a failed totalitarian state. It has no economy and no civil society. It does have nuclear weapons. It is dangerous. As a totalitarian state, is going through an uncertain, and destabilizing, succession process. Strange things may happen. The US and China share a common interest, as you point out, in not letting events get out of control.

  • (Show?)

    Another wrinkle is that the Chinese position re North Korea is not monolithic. The technocrats that have brought China to it's current powerful position in the world economy are furious with North Korea and many favor dropping support and letting the chips fall where they may. The various branches of the People's Liberation Army are still thinking that a "buffer state" in a possible landwar is useful in the 21st century. Western military brass have similar areas of cloudy thinking based mostly upon obsolete personal experience.

  • (Show?)

    Based on memo's from wikileaks(true or not I don't know):

    China is growing tired of the idiots to the south.

    China is open to the concept of a unified Korea headed by Seoul.

    China sees great opportunity in exporting to a unified Korea.

  • (Show?)

    Why not just go ahead and sign a formal peace treaty with North Korea? (As you know, the current state of affairs is merely a truce).

    North Korea has been ready, for years, to sign such a treaty:

    http://www.guardian.co.uk/world/2010/jan/11/north-korea-peace-treaty-us-nuclear-talks

    The result of such a treaty would likely be the quicker disintigration of the North Korean regime and quicker re-unification with the South.

    So, let them keep their nukes and go ahead and sign a formal peace treaty and, then, begin negotiations on nukes and other issues (human rights).

    What would be the harm in taking this approach?

    • (Show?)

      Would South Korea be open to such an option? I'm honestly asking as I have almost zero knowledge of the political machinations in that area.

      • (Show?)

        Mel Harmon- I believe So Korea's position on this has been changeable due to circumstances.

        In 2007, the two Koreas signed a cooperation pact that also included a recommendation to all parties that were party to the '53 truce to go ahead and sign a formal peace treaty. But, since then, events have been that the relations between the two Koreas have worsened (due in large part to North Korean military strikes, but I wouldn't say the South's hands are completely clean as regards use of military against the North, either).

        I believe the USA could convince So Korea to enter into a formal peace treaty, as the USA will guarantee So Korea's security. The big stumbling block is the demand that No Korea dismantle its nuclear weapons and program, prior to negotiations for a formal treaty.

        As I've said, I think the constructive thing at this point would be to drop that stipulation and just proceed with the treaty.

        I'd bet all kinds of right-wingers would start talking about Hitler and Neville Chamberlain. But I really don't think No Korea is in any position to start a war. China would not defend them, at this point.

  • (Show?)

    As the great Chris Hedges said at Powell's last night, the last major political figure in the U.S. to really challenge the military-industrial complex was Henry Wallace (possibly George McGovern would've gone that route, too).

    So, a peace treaty as a precursor has not been the way the U.S. does things. It would be good if that were to change. And possibly is the best way to diminish North Korean belligerence and reactionism.

  • (Show?)

    After reading this post, I happened to run across a post on the situation on the Korean peninsula by Professor Martin Hart Landsberg of Lewis and Clark College. He is an economist and I understand that he has spent considerable time over the years in South Korea. Here is a link to his post: http://media.lclark.edu/content/hart-landsberg/2010/12/02/the-korean-crisis/ He has a somewhat different perspective on what's going on there - its worth a read.

guest column

connect with blueoregon