The Real Danger Is Around U.S.-China Relations, Not North Korea: Ian Bremmer

Is Eurasia Group’s Ian Bremmer more worried about Trump than Kim Jong-Un?

People watch a television screen showing a television screen showing an image of Kim Jong Un, leader of North Korea (Photographer: Jean Chung/Bloomberg)
People watch a television screen showing a television screen showing an image of Kim Jong Un, leader of North Korea (Photographer: Jean Chung/Bloomberg)

On Sunday, North Korea reportedly tested a hydrogen bomb with “unprecedentedly big power”. This prompted U.S. President Donald Trump to threaten further sanctions including a trade ban on all countries which trade with North Korea. Nikki Haley, the U.S. ambassador to the United Nations has said North Korea was “begging for war”.

Tensions have been escalating between the U.S. and North Korea all through the year and each week seems to present a new flashpoint. Will it come to war?

“It certainly doesn’t feel to me that Kim Jong-Un is desperate, and absent that it’s hard to imagine he’s going to take steps that would directly imperil his regime,” said Ian Bremmer, political scientist and president of Eurasia Group, in an interview to BloombergQuint.

It might well be that Trump’s uncertainties in the next year on North Korea are greater than Kim Jong-Un’s.
Ian Bremmer, President, Eurasia Group

Here are edited excerpts from the interview.

BQ: What explains North Korea’s belligerence this year?

Bremmer: There’s no question that Kim Jong-Un has been expanding his willingness to show-off his military cap despite escalation from the Americans on the rhetorical diplomatic and economic front. And the Chinese. And I think the point is he’s in a stronger position than many presume. His economy is actually doing better. He has consolidation of power. And ultimately he wants to prove, kind of like Bashar Assad in Syria, when Obama said Assad must go, Assad ended up in a stronger position because he could prove that the Americans and allies weren’t willing to force him down. And I think that’s exactly what Kim Jong-Un is doing.

He wants to actually prove to the world very publicly that Trump doesn’t have a fist in his glove. And so far he’s doing so quite effectively.

: How far do you think he’ll go to prove this hypothesis?

Bremmer: I don’t know that he has to go much farther than he has. He says he has tested a hydrogen bomb but most people don’t believe that. They believe that it’s probably an advancement of the previous A bomb. He can continue to test more advance weapons. He can continue to test more capable ICBMs (inter-continental ballistic missiles). And basically make himself a nuclear power more akin to Pakistan as opposed to a smaller rogue.

But ultimately does it really matter? Does it really matter that he has an ICBM as opposed to a ballistic missile. I think that’s not where the danger is. The danger comes in the uncertainty around the Trump administration.

The danger for the markets comes around U.S.-China relations and the potential for that to become a much more fractious economic relationship - that would matter a lot to the markets.

And the danger also is on North Korea’s cyber capabilities. The fact that North Koreans have increasingly a capacity to break things internationally and also to steal money. We‘ve seen them do that it in the attacks on the central Bank of Bangladesh and the SWIFT codes. We’ve seen it with the WannaCry virus recently. There’s a lot of that sort of thing. Clearly it’s not just a question of deterrance. It’s a question of North Korea as a government supporting direct criminal activity where there’s no effective policing. That’s where I think you get in more trouble. Not in the very heated rhetoric, the fire and fury you see from Trump. I don’t think many people believe we are really close to direct military confrontation between these two countries.

: In a column you authored in August you listed 5 reasons for why you thought the situation could go sidways and the first one you listed was “The wild card in the White House”. President Trump and his advisers have responded by suggesting further sanctions. How do you expect this to turn out?

Bremmer: There have been sanctions. The Chinese have done more multilaterally and unilaterally to hit the North Koreans. But ultimately China’s not going to cut off their energy exports to North Korea because they don’t want to threaten the viability of the North Korean regime. They also don’t want the potential for North Korean escalation against the region, against China, that would destabilise the region. Because they are going to pick up the pieces in a much more direct way than the Americans would. So I really don’t think there’s much farther to go in terms of the economic sanctions.

When you talk about Trump the first point that’s important is that he can hit the Chinese directly in a way that other administrations would be reluctant to do even if that causes significant economic fallouts for the U.S. That has been an orientation and inclination of President Trump since he’s been elected. It’s not about Steve Bannon, it’s about Trump himself. And he’s been restrained in doing that from some of his advisers like Gary Cohn, but that doesn’t mean they are going to be effective in continuing to do that given the North Korea situation.

The other point is military - would Trump consider a direct launch of pre-emptive strikes against the North Korean military threat?

The National Security Adviser McMaster has hinted that might be a direction he would support, certainly the Secretary of Defence Mattis has strongly opposed it. If Mattis were to resign, if he was forced out, I’d be more concerned about that. But we are not there yet. But if you ask me how comfortable I am that the existing generals Mattis, Kelly and others are going to still be there in a year’s time, at best that’s... (unclear audio).

So if you think of the longer-term orientation of the U.S.-North Korea conflict, because of Trump there is a lot more risk here.

: The U.S. made comments today regarding considering imposing a complete trade ban on North Korea’s trade partners. China tops that list. What kind of response are you expecting from China?

Bremmer: The Chinese are not going to respond to hype and rhetoric, they are going to wait to see what actually happens...that’s intelligent.

It seemed to me that the reason that Trump made that tweet is because he had heard from his Secretary of Treasury Mnuchin that there were going to be considerably harder sanctions being suggested by him including against those countries that continue to trade with North Korea. And I think that Trump saw that, kind-of didn’t really pay attention to the details, and said we’re going to cut off all trade.

It’s very clear that the ability of the U.S. to follow through on a threat to literally cut off trade with China - North Korea’s economy is completely dependent on Chinese trade, over 80 percent of the import and exports - there’s no possibility of that happening.

I think unfortunately here Trump’s lack of foreign policy experience, his willingness to shoot-off at the mouth, when he doesn’t know the details and isn’t willing to develop the expertise, does actually hurt his credibility.

: Given the uncertainty surrounding anybody in Trump’s team and how long they’ll last there, what are the chances of pre-emptive strikes over the next 12 months or so?

Bremmer: The chances of that happening grow more significant if we see that the existing constellation of national security advisers are no longer around Trump. We’ve already seen people like Mattis and Tillerson are willing to publicly break with the President and not care about the consequences, basically daring Trump to fire them for insubordination. And so far Trump’s perspective has been - I need these people, I can tolerate a level of independence in what they actually do, I’m still the guy. Will that be true if Trump’s under a lot more pressure, his approval goes down to 20 percent, Mueller’s investigations start coming after his family, that’s the open question.

: Where does this go from here? In your column in August you said “this seems to defy solutions”.

Bremmer: There’s a reason why it’s been getting worse for the last 20 years and that’s because American presidents don’t know how to deal with North Korea. I do think ultimately some form of diplomacy is important. Even if doesn’t go anywhere you want more information and contact between the sides so you have a better sense of how to make policy. This Trump administration has a hard time engaging in that kind of intelligent diplomacy. They also just aren’t staffed for it right now.

Clearly there’s a greater fat-tail risk that you would see a mistake, that you’d see direct confrontation militarily between the two sides.

But the real thing the markets need to watch for is an economic deterioration in U.S.-China relations on the back of North Korea because that’s something Trump wants to do anyway and he thinks will play well to his base.

He may well be right about that, so that’s what I’ll be watching for.

: You said in the column that “at a certain point someone desperate will act, forcing everybody's hand”. Are we at all looking at any kind of strike by North Korea?

Bremmer: The reason why you ask the question is because it is what people like to listen to when they talk about North Korea. The idea of the worst possible case scenarios is what drives headlines. But the fact is that the North Korean economy is doing much better than it was five years ago, ten years ago. Kim Jong-Un is much more secure in his power than he was when he first took over. People thought this young inexperienced guy, there could be a fight internally with his generals, that clearly is not the case. It certainly doesn’t feel to me that Kim Jong-Un is desperate, and absent that it’s hard to imagine he’s going to take steps that would directly imperil his regime.

In the press we like to show the crazy side of Kim Jong-Un and like to show how isolated and depressed and hermetic this totalitarian regime actually is. But history implies something rather different. It might well be that Trump’s uncertainties in the next year on North Korea are greater than Kim Jong-Un’s.