Tuesday, May 26, 2009

Geopolitical question of the day

Been way too busy to update the blog for some time, but in reading some investment/market related news from the weekend, a few thoughts came up I thought I would share. The talk of the world is, of course, the North Korean nuke test -- which was successful and estimated to be the size of the atomic bombs used in WW2 against Japan.

So, the question is: If China were to invade North Korea so as to "secure the peace" -- and in doing so setup a puppet government, or just outright annexed North Korea, would anyone stop them?

No, I don't think anyone would.

I think it's natural to jump to the "what should the USA do?" question -- but really, if this were to play out, the question is what would the USA do in response to a Chinese invasion of North Korea? Probably not a thing. It's hard to imagine we would. The Japanese would not be pleased, and probably not the South Koreans either, but I don't think the USA would do anything more than "urge caution and restraint," and I'm sure the Russians would do nothing.

So if you are the Chinese, what would you do? A North Korean nuke dropped on Seoul or Tokyo would throw a big fat monkey wrench into the world economy and would obviously destroy any semblance of economic stability in Asia. With the Chinese economy on the upswing, and the world already in recession, would you risk letting that happen, on a purely economic basis?

And then what happens? Does this establish precedent that if a country tests a nuke, a bigger country can invade and "keep the peace?" Does the USA invade Iran? Does Israel bomb Iran? India into Pakistan? China into Pakistan? The USA into Pakistan? Russia into Georgia?

Seems like quite a mess, doesn't it? Yet, at the same time, it seems like "hey, free country" for China to take N. Korea if it sees fit. Certainly if this were a game of Risk, you'd do it. The question is, how do the Chinese view it?