Don't panic over North Korea

In the business world this usually manifests itself in a boardroom struggle and someone​ ​leaves. Clearly, in the global leader environment, these spats usually occur between the

democratically elected leaders (the good) and the unelected leaders (the bad) and this is fed to us by​ ​the media in this way and sensationalised to get the scariest scenario. Whether democracy always​ ​delivers good leaders is a moot point, but what they can’t do is operate in a unilateral dictatorial way​ ​without opposition outrage and ridicule all over the media, as we have encountered with Donald​ ​Trump.

We all know about the ambitions of Kim Jong-un and how he obtained power at his tender age. It​ ​should come as no surprise that he has adopted the same controversial strategies of his father.

However, what we should gain solace from is that this appears to be a war of words; posturing and​ ​deliberate actions designed to humiliate the US and its allies. His strategy will be to raise the fear​ ​bar as high as possible and then engage in talks to extract the maximum economic concessions​ ​whilst complying with whatever controls the UN wants to implement on a nuclear capable North​ ​Korea.

The mind-set being illustrated is a complete defiance of the assumed right that the US (and​ ​by default the UN) considers it has to determine what sovereign actions North Korea should be​ ​allowed to undertake. Any dictator by definition requires absolute control, usually through fear, and​ ​so when some external power comes along and decrees ​"​Thou shalt not​..."​ they are never going to​ ​accept it.

Kim Jong-un knows that Saddam Hussein played this game which ended in his WMD bluff being​ ​called. ​"​Overwhelming shock and awe’​"​ followed and we live with the aftermath today. He also​ ​knows that this will not be repeated and certainly not whilst China stands by its warranty to defend​ ​North Korea if a pre-emptive strike should occur. He is very unlikely to launch a nuclear missile​ ​anywhere, but he will create the impression as much as he can that he has the capability. And this is​ ​probably what he has just successfully done. Nobody knows exactly what his capability is, just like​ ​Saddam Hussein, but the latter’s removal created the mess we now have in the Middle East and​ ​spawned the creation of ISIS.

As there is no religious angle involved in North Korea, the main obstacle to military action is China​ ​and their objection to the expansion of the West on their doorstep, as well as US trepidation with​ ​China. This is what also drove the actions of Putin in Ukraine and Assad in Syria, again exploiting the​ ​perception that the US (and NATO) doesn’t have the stomach for another invasion or to antagonise​ ​Russia or China. So the war of words is likely to continue with the military might of the US looking​ ​impotent as another military dictator humiliates which ever US president has the privilege.

Of course what would be genuinely scary is if there was a radicalised religious motive behind the​ ​nuclear capability but thankfully, this is not today’s scenario.

So, in summary, whilst the situation is​ ​alarming, the markets are remaining calm, taking the view that no-one is actually likely to launch​ ​anything specifically with the intention to kill huge numbers of innocent people.

Of course, this also assumes Kim Jong-un isn’t a madman. Yet, his actions are very deliberately​ ​thought out and he is testing the red lines to the limit – hardly actions of an insane person.

The best​ ​outcome would be that at some point, Russia or China can act as peace-broker, most likely Putin as​ ​that would polish his ego considerably having been quietly observing of late.

​​What we wouldn’t​ ​advocate is any form of panic into cash. Over the years, these threats have come and gone, the​ ​world moves on and companies continue to prosper – that is the important bottom line.