Edward Harrison is the founder of the blog Credit Writedowns and is a finance specialist at Global Macro Advisors. Previously, Edward was a strategy and finance executive at Deutsche Bank, Bain, and Yahoo. He started his career as a diplomat and speaks German, Dutch, Swedish, Spanish and French. Edward holds an MBA from Columbia University and a BA in Economics from Dartmouth College.
UPDATE: 9 Jan 2018: Note that Gerry Seib at the Wall Street Journal confirms this analysis. He writes that “U.S. officials are quietly debating whether it’s possible to mount a limited military strike against North Korean sites without igniting an all-out war on the Korean Peninsula.” My comments from yesterday follow below.
This year, I’ve started blogging regularly again. And when I penned my first post last week, I said that I had an overwhelming sense of unease despite the synchronized global economic boom. And while I couldn’t explain where that downbeat mood was coming from, I knew it had a lot to do with both the uneven distribution of economic gains and the political environment.
After I wrote that post, I noticed that Eurasia Group’s Ian Bremmer is using the term, “Geopolitical Depression” to describe the politics of the day. And he says that 2018 will bring a disastrous geopolitical event that rivals the 2008 financial crisis. That’s pretty damn alarming — and so it made me think about my own sense of unease. As a result, I’ve looked at Bremmer’s list of potential crisis triggers and the one that standlegs out for me is North Korea. I want to use the bombing of Kosovo as a historical precedent to explain what could be driving US policymakers’ thinking. Downside risk is high.
Back in 1999, when this happened. I had already left the US Foreign Service. But I had a keen interest in what was going on because the Ambassador at my post in Bonn, Germany, Richard Holbrooke, had left post to take on the role as Assistant Secretary for Europe at State. He became the point man in the Clinton Administration for US policy in the former Yugoslavia. And in that role, he had been integrally involved in the 1995 NATO bombing campaign in Bosnia and Herzogovina. Eventually, he negotiated a peace treaty at the end of 1995 called the Dayton Agreement to end the Bosnian War.
But elsewhere in the former Yugolslavia, there was turmoil. And by 1998, Kosovar Albanians had taken up arms to gain independence from what was then called the Federal Republic of Yugoslavia and Serbia. The US and its allies in NATO decided by early 1999 that diplomacy wasn’t possible in the hostile environment and that the conflict could not be settled without a military intervention. So NATO tried to force an external peacekeeping force onto the situation, something that Yugoslavia rejected.
That’s when the bombing campaign began. The rationale: end all military conflict and force Milosevic out of Kosovo in order to be able to resume diplomatic talks. The bombing went on for three months until the end of June 1999, after which Kosovo was politically supervised by the UN. The war ended, but to this day, the official status of Kosovo remains in dispute.
The key takeaway here was that the US and its allies were willing to use force once it felt all diplomatic approaches ended. Moreover, because of the military campaign and refugee status of many families in Kosovo, the US and its allies felt pressured by time to make a decision as to when to end diplomatic entreaties and to start to use force.
Now, the way I see the strategy, the State Department played point, while the US Department of Defense waited on call to strike with NATO if diplomacy failed. And the US told Milosevic and the world that this was what would happen: diplomacy first, and military strikes if necessary. We should remember, however, that the legitimacy of these strikes are still called into question by various parties. The Russians only acquiesced to the bombing at the time because they were dependent on American money after having defaulted on their debt obligations the year before. But within Russia, there was outrage. The sense was that this was totally illegitimate, exemplifying the dangers of a unipolar world.
Fast forward to today, and the same strategy is on display with North Korea. When Rex Tillerson appeared on CNN two days ago to defend President Trump, all of the headlines were about Trump’s mental health. But Tillerson also defended Trump’s foreign policy. And that was the more important takeaway. Listen to what US Secretary of State actually said about North Korea.
“While it is our objective — the President’s been very clear — to achieve a de-nuclearisation through diplomatic efforts, those diplomatic efforts are backed by a strong military option, if necessary.”
This is exactly what the US told Milosevic in 1999. Milosevic didn’t listen and the bombing campaign began. In this case, the US is telling Kim Jong-un that he needs to de-nuclearise or the US will bomb his country’s nuclear and military sites. Note that the US Joint Chiefs of Staff allegedly believe the only way to destroy North Korea’s nuclear arsenal is via a ground invasion of North Korea. Nevertheless, how ever you look at it, as with the Kosovo bombing, time is of the essence because the longer the US waits to use a military option, the more advanced North Korea’s nuclear capabilities will be.
US intelligence told Trump when he came into office that North Korea wouldn’t be able to build a missile capable of reaching the US mainland until 2020 or 2022. But they already have that capability. So because US intelligence agencies underestimated the advancement of North Korea’s military nuclear capabilities already, it stands to reason the US military is even more keen to act. And Trump could be as well. And given Trump’s ‘America First’ doctrine, he won’t necessarily need NATO as a vehicle to confer legitimacy on his course of action.
The big difference to Kosovo, of course, is that North Korea can strike back militarily — against South Korea, against Japan, and now even against the US mainland. If Trump really does decide to use the military option against the North Koreans, it could mean nuclear war.
The bottom line: Ian Bremmer is right; 2018 could bring a disastrous geopolitical event. Financial markets are acting like the situation in North Korea is not serious. Meanwhile Pentagon Papers whistle-blower Daniel Ellsberg says the odds are 50-50 that we see military action sometime this year. And with the Kosovo precedent, you don’t need to believe Donald Trump is unhinged to believe Ellsberg is right. If Trump and his advisors believe diplomacy is failing, time will become the inhibiting factor as North Korea’s military capabilities grow; Trump will be under pressure to act on North Korea. Model that outcome all you want, you’re not going to be able to predict what happens.