February 28, 2016: The problem with North Korean officials fleeing to China has gotten worse in an embarrassingly obvious way. In January 2016 rumors began to surface in northeast China of a small team (it turned out to be three people) of North Korean secret police trying to discreetly find and bring back three senior North Korean officials who had fled to China. Actually, one of the three was working in China when he disappeared. Apparently the North Korean government wanted to keep this incident quiet but the three men the agents sought were known to some of the Koreans and Chinese questioned and that was eventually made the investigation too interesting to keep quiet about. It was also noticed that the three agents seemed increasingly desperate as time went by with no results. That was probably because North Korea, in fear of secret policemen defecting to China, only sends those who have something to lose (like wife, parents, children) back in North Korea. Moreover these agents are often told that failure is not an option. This has led to some agents fabricating evidence to satisfy their bosses back home. If that led to innocents being punished, so what. Getting away with that sort of things is what secret police do. China cooperates with all this as it has done for decades.

In mid-2015 China allowed North Korea to expand the use of North Korea secret police in China as long as these agents spoke fluent Chinese and wore Chinese police uniforms and tried to act Chinese. By the end of 2015 there were believed to be over a hundred of these agents in China looking for North Korean illegally in China. When such people are found Chinese police must be called in to make the arrests and then send the escapees back to North Korea for punishment. The North Korean agents are also expected to report anything of interest (to local police or intelligence) to China and to behave themselves. In return these North Korean agents are allowed to go anywhere in China, which allows the agents to pursue North Koreans travelling south to get to an South Korean embassy in Southeast Asia when enables the one to ask for asylum and be moved to South Korea.

Apparently the three defecting North Korean officials have still not been found. The three were probably involved in some corrupt deal that was in danger of being found out. For senior officials the punishment for this sort of thing is death. Another possibility is that China is only cooperating here in the hopes of being contacted by the defectors with an offer of much insider information in return for protection. If such a deal were made it would be done so quietly.

Another response to the disappearance of senior officials are new rules requiring senior officials (about 200 people) to report their locations on an hourly basis and submit reports on daily activities. The secret police monitor this data for suspicious behavior and act accordingly. Suspicious activities include corruption, defecting, working for foreigners or plotting to overthrow the government. Not reporting on these activities by other officials is also an offense. In addition all government officials must now have approval from the secret police before speaking with any foreigner. Violating this rule will be punished with loss of employment or worse (imprisonment or execution).

Over the last few years loyalty has become an obsession with North Korean leader Kim Jong Un. But his secret police report that disloyalty continues to increase at all levels. The government has ordered more loyalty lectures for all North Koreans but secret police informants note that these additional mandatory lectures make people angry and decrease loyalty to the government. The recent atomic bomb and long range missile tests were meant to increase pride in North Korea and loyalty to the government. That did not happen and most North Koreans are more concerned about getting more food and fuel (for warmth, transportation and electrical power). What most North Koreans really want the government can’t deliver. And the threat of new economic sanctions means less food and fuel.

China Changes Sides

A major worry for North Korea recently China agreeing increase economic and diplomatic pressure on North Korea. This includes no more sales of aviation fuel. Other petroleum products will be sold. China stopped gifts of oil back in 2013. China is also reducing some North Korean imports, like coal. North Korea also gets half its food imports from China. There is also the threat of interfering with smugglers getting forbidden goods into North Korea. This includes large quantities of luxury goods to keep senior officials loyal and the Kim clan comfortable. North Korea will now be looking for illegal aviation fuel as well. While Russian smugglers can supply whatever China blocks, it costs more and takes longer to route smuggled goods through Russia. In part this is because Russia is also under a growing list of sanctions. Then again this makes Russia more willing to tolerate smuggling into North Korea.

China is also cracking down on North Korean use of Chinese banks. China has long tolerated North Korea using Chinese banks to avoid a growing list of international sanctions. In northeast China, where a lot of this illegal banking takes place, North Korean bank accounts are being emptied. Some of the cash is being switched to accounts owned by locals who have no obvious connection to North Korea. But a lot of the cash is staying cash and despite the risk of theft or getting caught by the Chinese police, North Korea is preparing to use cash transactions despite China now enforcing banking sanctions.

The fact that China is openly agreeing to actually enforce more sanctions has long been a worst-case scenario for North Korea. China long refused to back the strict UN sanctions on North Korea believing it could persuade North Korea to behave and fix its economy and foreign relations. The United States has been increasingly public in its criticism of the Chinese approach. Since 2015 China has, with little fanfare, been agreeing with the Americans. This included more public criticism, via state controlled media, of the North Korean leadership. China quietly cracked down on some of the illegal trade with North Korea resulting in overall trade declining 15 percent in 2015. That did not seem to have any impact on North Korean behavior. Then in late 2015 China announced that if North Korea continued work on its nuclear and ballistic weapons programs North Korea could no longer depend on support from China if North Korea got involved in a war. To emphasize that point China quietly increased cargo checks and border security on the North Korean border with an emphasis on stopping the North Korean smuggling of weapons and technology that is normally tolerated. North Korea may be able to ignore Chinese criticism but they cannot ignore the special kinds of economic pain China can inflict. So far in 2016 North Korea has responded with another nuclear test and another long range ballistic missile test. There are limits to what can be done. China could cut off all trade, which would cause a major economic crisis in North Korea and China would have to clean up the mess if there were a political collapse in North Korea. Chinese trade is essential for North Korea. While that trade only amounts to about five billion dollars a year, it is over 80 percent of North Korean foreign trade.

North Korea apparently fears that the only option the Chinese have left is to take over North Korea via a coup or outright invasion. Both options are expensive, embarrassing and risky. China and North Korea are both socialist police states and they go way back as allies. It would be embarrassing to the Chinese government to take over its “socialist brother” and that will be avoided until the North Korean nukes become a more immediate threat to China. The Chinese also advise Americans, and Westerners in general, to take into account that with China now unfriendly, North Korea has no useful foreign allies. There are countries like Iran and Cuba but there are not very useful. North Korea is still obsessed with the United States and China long believed that when the North Korean leadership got desperate enough they would be willing to do a real (enforceable) nuclear disarmament deal with America. Unfortunately China now seems to side with the U.S. and is seeking a unilateral solution.

South Korean Suspicions

As a side effect of the North Korean mess the United States has changed its attitude towards South Korean missiles defense, now saying there is no need to hurry the deployment of THAAD to South Korea. Because of the latest North Korean nuclear and ballistic missile tests South Korea sped up its efforts to obtain and put into service the American THAAD anti-missile system. China, Russia and North Korea have long opposed THAAD. South Korea wants THAAD for protection from North Korean missile attack and always resisted Chinese objections, even when China hinted that failure to drop THAAD might result in less trade with China. That was a signal to South Korean voters to carefully consider the cost of defying China. The Chinese will not come right out and say it but they object mainly because THAAD would also make South Korea less vulnerable to intimidation by Chinese ballistic missiles. South Korean voters understand that so the economic threats are having less impact that China expected. South Korean public opinion polls show voters are even more enthusiastic about the high tech and very expensive (over $100 million per launcher and associated equipment) THAAD system now that North Korea has launched another ballistic missile. Chinese leaders, as South Korea has long feared, made a deal with the Americans to back sanctions in return for delay or cancellation of the THAAD sale to South Korea. The Americans have denied this and China has openly said it still objects to THAAD but agrees that South Korea has the right to do what it considers best to defend itself against North Korea. South Koreans won’t feel better about this until THAAD arrives and is operational. That will still take a few years, without any new delays.

Much to the relief of China and disappointment in Russia American military commanders in the Pacific have gone on record that the United States considers North Korea, not China, the biggest military threat in the region. Russia comes second overall but China is second in the Pacific. China considers the United States a more immediate threat than North Korea which, no matter what it does, is still a miniscule military threat to China. Other nations bordering the South China Sea are more concerned about the Chinese threat and look to the United States for help.

February 24, 2016: China and the United States agreed on new sanctions against North Korea. This agreement was the result of meetings and negotiations that began shortly after the January 6^th North Korean nuclear test. In the past China has made a show of reluctantly going along with more sanctions on North Korea but this time China is making it clear that it is behind the latest round of sanctions and responsible for suggesting some of them. The message to North Korea is that China will not look the other way on any of these new sanctions, or most of the existing ones either.

February 17, 2016: Off the west coast a South Korean patrol boat fired warning shots at a North Korean patrol boat that had crossed the maritime boundary between the two countries. The North Korean boat quickly turned around and crossed back into North Korean waters. The North Korean government complained but that was all.

February 13, 2016: The U.S., Japan and South Korea agreed to expand the scope of the year old Trilateral Information Sharing Agreement. Just creating this deal took over a decade of effort. The agreement exists to better counter North Korean aggression. Creating, and expanding, this agreement was long believed impossible because of long-standing political obstacles to greater Japanese and South Korean cooperation. Despite the threat both countries faced from North Korea (and China) such cooperation has been impossible to achieve. Until 2014 South Korea turned down all Japanese proposals that both nations coordinate military policy against common enemies China and North Korea. Such cooperation is still very unpopular in South Korea because of continued anger over 40 years of brutal Japanese occupation early in the 20th century. This the Japanese consider self-destructive as it wallows in the past at the expense of dealing with current and future threats. Yet Japan continues to ignore the fact that its post-World War II policy (documented in decrypted Japanese diplomatic messages sent out right after the Japanese surrender in August 15, 1945) of claiming to be a victim in World War II and guilty only of trying to liberate all Asians from Western oppression is the obstacle. That “Japan as victim” view was never very popular with Japan’s neighbors, who saw Japan as no better (and often a lot worse) than Western imperialists. To the countries of East Asia Japan compounds these historical sins by continuing to insist that Japan is innocent of any wrongdoing. This made it difficult to unite to deal with threats from North Korea and China, but eventually both Japanese and South Koreans agreed to cooperate to protect their common interests.

February 12, 2016: Japan is imposing new sanctions on North Korea, including limiting money transfers (to $870) between Japan and North Korea. Japan will also ban all North Koreans from entering Japan. Exceptions can be made but they have to be negotiated. North Korean vessels can no longer dock at any Japanese port nor can any ships that have been to North Korea.

February 11, 2016: South Korea ordered South Korean firms to cease operations at the Kaesong Industrial Complex (KIC) because of the recent atomic bomb and long range missile tests. South Korea supplies the electricity and water to KIC and those were shut off today. South Korea noted that the North Korean government took 80 percent of the wages (about $150 a month) of North Koreans working at KIC and that money helped make possible continued work on nuclear weapons and long range missiles. Since 2005 the North Korea government has made at least half a billion dollars from the KIC. North Korea responded to the closing by seizing all South Korean property there. KIC was financed and run by over a hundred South Korean firms employing (at the closing) 50,000 North Koreans and about a thousand South Koreas. This closure appears final and the South Korean firms will lose half a billion dollars in equipment and facilities and about $200 million in inventories. The property and inventory now belongs to the North Korean government which is selling it off for whatever it can get. Resuming production at KIC is difficult because there is already a severe electricity shortage in North Korea and water supplies depend on electrical power. Over 100,000 North Koreans are now out of work (KIC staff plus local businesses). Despite the high government “tax” on their pay KIC workers were making more than the average North Korean and, more importantly, had dependable electricity and water supplies. There was also free medical care and all sorts of other fringe benefits. That’s all gone now and the North Koreans affected blame their government, not South Korea, for the loss. This is a major disappointment to the North Korean government, which now has lost $72 million a year in foreign currency plus the loyalty of several hundred thousand North Koreans who benefitted, directly or indirectly, from the KIC.

Similar tensions caused a five month closing in 2013. This cost the South Korean firms running KIC about a billion dollars and when KIC reopened it was running at only half its pre-closure rate. Many of the firms there have shut down completely. North Korea was demanding more money from the South Korean firms at Kaesong and caused more companies to leave. North Korea closed the facility to punish South Korea for trying to get the North Koreans to halt their nuclear weapons program. The northern leaders soon discovered that the foreign currency generated by Kaesong was sorely missed. Few of the senior people in North Korea know much about accounting or how the world economy works, but the cash shortage created by the Kaesong shutdown got their attention. This was seen as an opportunity by China who soon convinced the northern leadership to make up with South Korea and get Kaesong operating again. China also pointed out that Chinese firms in North Korea (especially mining operations) are major suppliers of foreign currency and that China could shut these down if North Korea does not become more cooperative.

February 10, 2016: South Korea has officially begun an effort to develop and build their own jet fighter (KFX) to replace its aging U.S. built F-4 and F-5 fighters. The KFX is intended to be an aircraft somewhere between the F-16 and the F-35 and will have some stealth capabilities. The KFX is expected to enter service in about ten years now that the government has found the cash and foreign partners to make it happen. Indonesia will be a partner in this effort by contributing 16 percent of the $8.5 billion required. South Korea will buy at least 120 KFXs while Indonesia will buy up to fifty as the first export customer. Indonesia will also get access to some of the technology and build some of the components.

February 3, 2016: General Ri Yong Gil, chief of staff of the North Korean army, was arrested yesterday at a major conference. He was later executed for corruption and conspiring against the government. His successor was announced several weeks later without any mention of his predecessor. This is normal up north in situations like this. There were reports in 2015 that Ri was one of the veteran generals complaining about the appointment of inexperienced (in military matters) civilians to general rank mainly because these men were considered more loyal to the Kim dynasty.