Is A Korean Endgame In Sight?

It seems to be pure coincidence that the recent firefight between North and South Korea came just as Wikileaks released a trove of American diplomatic secrets, but the two events may soon become entwined.

Thanks to Wikileaks, the North Koreans are perfectly aware – if they were not previously – that their supporters in Beijing are growing tired of dealing with fallout from Pyongyang’s provocations, despite China’s reluctance to publicly criticize its protégé. The North also got a look at South Korea’s game plan to use commercial deals to buy Chinese support, or at least acquiescence, to reunification of the Korean peninsula under the Seoul government.

The Chinese do not relish having an American ally, hosting nearly 30,000 U.S. troops, in control of territory right up to the Chinese-Korean border. Diplomats believe, according to the leaked documents, that this is a major reason for China’s loyal support of the demonstrably weird Kim family dynasty in the north.

China is extremely sensitive to U.S. military activity near its territory. It protested vociferously earlier this year when an American aircraft carrier was scheduled to participate in exercises in the Yellow Sea between Korea and China. It protested again, though less loudly, when similar exercises took place last month following the North Korean shelling of southern-held Yeonpyeong Island.

As long ago as 2001, China harassed and forced down a U.S. Navy reconnaissance aircraft that was flying over international waters off China’s Hainan Island. The Chinese held the American crew for a week and carefully picked apart the high-tech U.S. spy plane.

Against this history, the Wikileaks disclosures raise another interesting possibility that has received little attention so far. How would China react if it understood that Korean reunification would get most, or all, U.S. troops out of Korea entirely?

Our troops are in South Korea to show the U.S. commitment to defend against attack from the North. If the Northern government went away, so would this need for defense. Nobody sees any need to defend the Seoul government from China, and in any case, the relatively small U.S. presence would not make much difference.

If the South controlled a reunified Korea, American troops could be redeployed to bases in Japan or elsewhere. The entire world knows that our thinly stretched military could use the manpower that Korean reunification would free up. This, in fact, might be one of the benefits China sees in having the North Koreans around. With those wild and crazy guys keeping American strategists awake at night, the Americans have less time to spend thinking about containing China’s increasingly aggressive claims to offshore territory and resources.

But getting U.S. troops farther away from China would be a powerful inducement to Beijing. The Chinese need not publicly switch sides. They merely have to stop subsidizing the destitute North Korean government and facilitating its exports of nuclear and military technology, as likewise indicated by the Wikileaks disclosures.

A desperate North Korea, backed into a corner, might lash out at the South and try to provoke a war in the belief that the Chinese would feel forced to intervene, as they did to rescue the North from an American counterattack in the early stages of the 1950-53 conflict.

It is important that the Chinese make the Koreans understand that today’s China is very different. Back then, the Communists had just taken control in China, and they were closely aligned with the Soviet Union, as well as with Kim il-Sung, the founder of the communist North Korean state. Modern China is communist in name only. It is focused on gaining wealth and power, and it views Russia as a rival it left in the dust long ago. There is more money to be made in a Korea without the North Koreans.

The Kim family may be beyond persuasion, but North Korean generals could be another story. It is possible that they can be made aware that Chinese help will not be forthcoming, leaving them doomed to lose any conflict with the South and the United States. They may desert their leadership, particularly if it asks them to do something as suicidal as deploy the North’s nuclear arsenal, such as it is. China can help make that happen.

Wikileaks notwithstanding, if the Chinese decide to pursue this course, we are not likely to hear about it until long after the fact.

The Chinese have no easy choices here. As much as they might relish getting American forces out of Korea and away from the Yellow Sea, they probably are not enthusiastic about having a free, democratic and prosperous Korea right on their border. It would be good business but bad politics, as some Chinese citizens might find the combination of freedom and prosperity irresistible. They could defect, but they might instead choose to demand the same at home. This is not what China’s leaders want.

Nobody in China or out wants to live in a place anything like North Korea. In that respect, from the Chinese perspective, the Kims are ideal neighbors. But they become less appealing when they interfere with business or, worse, risk triggering a war that attracts more American military to China’s neighborhood. The Chinese have to decide, ultimately, which type of Korea they want to have in their backyard.

So the recent events highlight the risks of keeping the Northern government in power, while the Wikileaks disclosures point to the prospect that China could gain commercially and militarily by allowing reunification with the South. We may now be getting a picture of what the endgame looks like for the Korean conflict that began six decades ago.

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About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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