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  • Posts Tagged ‘DPRK’

    Korea in 2014: Big 3 Impacts to Watch

    December 19th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    1. NORTH KOREA’S NEXT MOVE: North Korea could decide to initiate provocative acts in 2014, including the early part of the new year. The months of January and February are particularly noteworthy, since these months include dates commemorating the birth of both of the DPRK’s former leaders, Kim Il Sung and Kim Jong Il. Precedent also exists for such provocative acts. Earlier this year (in 2013), North Korea also tested its nuclear weapons technology at the start of the Chinese New Year, which both Koreas recognize and celebrate. Although the financial markets generally have not overreacted to North Korea’s often purposely provocative acts, given the high inter-linkage of the Asian markets, an unexpected known-unknown black swan event could lead to market surprise to the downside.
    2. BANK OF KOREA’S (BOK) KEY RATE HIKE: the BOK has left its key rate steady at 2.75% for seven consecutive months, as the local economy is showing signs of a moderate recovery amid tame inflation.But the BOK is likely to increase its rate in 2014. The BOK’s decision to keep its rate steady at the end of 2013 came as a set of data pointed to a moderate recovery of the Korean economy while the timing of the Federal Reserve’s monetary stimulus tapering still remains uncertain. The South Korean economy grew 1.1% on-quarter in the third quarter, the same pace as in the second quarter, on improving domestic demand and a pickup in facility investment. The country’s industrial output grew 1.8% on-month in October, the fastest gain in 11 months, indicating that the economy might be picking up. South Korea’s inflationary pressure remains subdued as consumer prices are running below the BOK’s 2.5-3.5% inflation target band for the 18th straight month in November. The on-year growth of consumer inflation picked up to 0.9% in November from 0.7% in October.
    3. REAL ESTATE AND CONSUMER DEBT MAY MOVE UPWARDS: The South Korean real estate market has been relatively static in 2013. But a pick up in the real estate market could occur based on relaxed policies in 2014. This potential positive upward movement in the nation’s residential real estate market, however, must also be managed with the nation’s burgeoning consumer debt levels. A survey of 20,000 households conducted jointly by the Bank of Korea (BOK), Statistics Korea and the Financial Services Commission showed households had an average debt of 58.1 million won ($55,000) in March, up 6.8% from the previous year. The debt of those households in the lowest-income group rose 24%, from 10 million to 12.4 million won, while the other groups, not including the richest, saw their average debt increase between 9.7 and 16.3%. Of households in debt, 8.1 percent said they may not be able to repay the money they owe, up from last year’s 7%. The survey showed that the lower a household’s income level, the higher the ratio of people who said repayment was unlikely.
    If you are interested in how Asia-Pacific Global Research Group can help your organization, CONTACT US HERE.

    Purge in Pyongyang: 5 Risks of North Korea’s Ouster of Its #2 Leader (Jang Song Thaek)

    December 13th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    WSJ interview segment with Korea specialist, Jasper Kim (December 13, 2013):
    YONGYANG, North Korea (AP) — North Korea said Friday that it executed Kim Jong Un’s uncle, Jang Song Thaek (장성택) as a traitor for trying to seize supreme power, a stunning end for the leader’s former mentor, long considered the country’s No. 2. Several days ago, North Korea accused Jang of corruption, womanizing, gambling and taking drugs, and said he’d been “eliminated” from all his posts. Jang also was accused of trying “to overthrow the state by all sorts of intrigues and despicable methods with a wild ambition to grab the supreme power of our party and state.”
    CNN interview segment with Korea specialist, Jasper Kim (December 13, 2013):

    Our view, at Asia-Pacific Global Research Group, is that Jang’s purge and subsequent execution is highly concerning for the following 5 reasons:
    1. LACK OF POLITICAL PROTECTION: One view among some analysts is that Jang’s purge reflects a strategic power consolidation effort by Kim Jong Un. However, we believe that with Jang no longer in the political picture, Kim Jong Un has very little political protection and sounding board/advisor, while also severing the cord between KJU and his father (which is more harmful than helpful since it is because of KJU’s blood line that enabled him to gain power). After all, his uncle Jang Song Thaek never, as far as we know, represented a credible threat to the leadership of his nephew, Kim Jong Un.
    2. IS IT KIM JONG UN OR THE MILITARY THAT TRULY OUSTED JANG?: Many analysts do not question whether the execution of Jang Song Thaek reflected the true intent and desires of Kim Jong Un or not. We believe the evidence as of yet is not fully persuasive that this was the case. Another scenario could exist, which may be as or less likely but still entirely possible, in which Kim Jong Un approved the execution of his uncle (Jang) due to the fact that Kim had no viable alternative due to tangible pressure from the military.
    3. LINGUISTIC HINTS AS POSSIBLE EVIDENCE: the substance and style of the language and wording used by the KCNA is one that is more reflective of diction that would be used by the military elements of the DPRK leadership than from Kim Jong Un himself. At the very least, a scenario could exist in which the military had an influential hand in terms of the announcement’s wording.
    4. WARNING SIGNAL TO PRC: Jang served as a symbolic bridge between the DPRK and PRC. Jang was also a supporter of PRC-type economic reforms. As such, Jang’s purge will place a grinding halt to any such similar suggested reforms and any such political progressive espousing such stance (i.e., it is not just one step, but many steps back). The PRC may also interpret Jang’s ouster as an anti-China political stance since Jang was a well known and generally liked figure in the PRC.
    5. IS THIS THE END OR JUST THE BEGINNING?: Jang’s purge represents a known-unknown variable in terms of what other internal struggles above and beyond the usual are occurring as we speak since Jang’s ouster would create an obvious power vacuum and/or ripple effect. Another risk exists in the form of future provocative acts by North Korea on the backdrop of such political reconstitution to either reflect away internal political strife or to show the international community that the DPRK is still acting under one rule. Either way, the international community should be prepared. The best case scenario is that the DPRK remains stable. The worst case scenario, albeit more remote, is one that involves a full-scale implosion.
    For a recent related CNN story North Korean execution raises more question than answers (featuring Korean experts, dJasper Kim and Andrei Lankov), click HERE.
    For a BBC World News interview (with Jasper Kim) regarding the Purge in Pyongyang, CLIDK HERE (interview begins at around the 7:30 min mark).
    If you are interested in how Asia-Pacific Global Research Group can help your organization, CONTACT US HERE.

    3 Reasons why North Korea repatriated 6 South Koreans

    October 29th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    South Korea’s Unification Ministry announced the return of the six men, aged between 27 and 67, at the truce village of Panmunjom Friday, along with the body of the South Korean wife of one of the defectors. The six South Korean citizens was a curious move by North Korea, in which the KCNA (Pyongyang’s official news agency) announced that it “leniently pardoned” the individuals prior to their release back to South Korea.
    In a continued series of predictably unpredictable (yet potentially rational) moves by one of the world’s most secretive and closed states, here are three things to know about North Korea’s latest move:
    1. COLD WAR CALCULUS: North Korea’s move was more than a mere “olive branch” based on good will for recent failed talks related to family reunions and other related efforts, as many have speculated. Instead, it is part of Pyongyang’s ongoing Cold War calculus, which somewhat resembles a multi-dimensional chessboard in which the country’s top minds game scenarios on how to maximize the chance of power perpetuation. In its Cold War calculus, Pyongyang has concluded that a perceived good will gesture at this point would maximize future economic and non-economic benefits in various forms, including bilateral and multilateral talks with members of the international community.
    2. EMPATHY EFFORT FROM THE INTERNATIONAL COMMUNITY: North Korea has repatriated six South Korean nationals to be perceived in a better light from the purview of the international community, both at the leadership level as well as the everyday person. The DPRK understands that such perception is one important piece among many complex moving pieces to garner possible support through efforts meant to garner empathy from those outside its traditional allies (namely, Beijing) in a form of international security hedge play.
    3. PROVOCATION PRECURSOR: One pattern from Pyongyang is that a perceived good will gesture can at times be followed by a direct or indirect act of provocation. This is somewhat akin to a finance play involving a perfect hedge that involves taking a risk position for potential gain that is completely (perfectly) hedged by another play to mitigate such related risk. If Pyongyang believes in that such international security hedge can work in reality, then it may actually incentivize North Korea to take even more risk now or in the future.
    For a related article by by Tim Hume, in which Jasper Kim is quoted, CLICK HERE.



    September 12th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Former NBA superstar Dennis Rodman has become a cult of diplomatic personality. In the past few months, the colorful “bad boy” (a term from his days as a player on the Detroit Pistons) has turned into a new post-NBA career track – as the world’s basketball diplomat-in-chief – through two high profile trips to North Korea.
    Here are 5 ways Dennis Rodman–the former NBA superstar–holds significant sway with North Korea and its unpredictable “X-factor” leader, Kim Jong-Un:
    1. RODMAN KNOWS MORE ABOUT NORTH KOREAN LEADER KIM JONG-UN THAN JUST ABOUT ANYBODY IN THE WORLD: No single person has had such a unique “backstage pass” into the mind and thinking of Kim Jong-Un through his two visits to North Korea. Kim Jong-Un granted Rodman one of the most scarce seats in the world – a seat next to the young DPRK leader – which culminated into a seemingly win-win relationship. Rodman wants recognition and fame, which access to the highest levels of North Korea’s leadership can provide. Kim Jong-Un wants an apolitical trustworthy global iconic figure that can portray a more flattering and perhaps more nuanced image of him—especially since he represents one of the world’s most reclusive and unknown leaders in the world—despite having one of the world’s largest militaries and a potentially devastating nuclear arsenal. 
    2. RODMAN AND KIM JONG-UN HAVE SIGNIFICANT SHARED INTERESTS: At first blush, Rodman and Kim may seems universes apart. But underneath the superficialities, the two have significant shared interests. Rodman wants to be known as “the person who brought global basketball to North Korea.” Kim wants to be known as “a leader that is not as brutish as the world may portray him to be.”  
    3. SUCH SHARED INTERESTS CAN LEAD TO “BASKETBALL DIPLOMACY”: How can the two shared interests be converted into an actionable outcome? One is through basketball diplomacy—a form of cultural diplomacy leveraging soft power (defined as “getting others to want what you want” by Harvard professor, Joseph Nye).
    4. BASKETBALL DIPLOMACY CAN LEAD TO REAL DIPLOMACY: Many have discounted the potential for basketball diplomacy leading to real diplomacy. One such argument is that North Korea is in effect “using” Rodman for its purposes. We disagree. The argument can be made that the alternatives—6-party talks, bilateral diplomacy, sanctions, etc.—have led to little or zero substantive results. So why not give it a try? Basketball diplomacy, as Rodman is envisioning it, is not a “state sponsored” event—not yet anyway. Surprisingly for many, the private sector and private citizens can also play a potentially important role in gaining trust between North Korea and the international community. Diplomats don’t have a monopoly on good faith diplomatic efforts, nor should they, in our view.
    5. RODMAN’S CALL OUT TO OBAMA MAY BE A NEEDED “WAKE UP CALL”: Rodman’s statements upon his return to Beijing from Pyongyang referencing President Obama and former Secretary of State Hillary Clinton in less than flattering terms were admittedly not ideal. But given the lack of progress in U.S.-DPRK relations, such blunt analysis from a well-known figure such as Dennis Rodman may be the unlikely informal diplomatic figure that “sets the ball in motion.” Even if his efforts come to no resolution, how much different is this than with what has transpired thus far with the so-called experts?

    The Kaesong Negotiations: Why the two Koreas succeeded in getting to yes (and its implications)

    August 15th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    This blog post is based on an earlier version of a Wall Street Journal (WSJ) post and video interview that can be viewed here.
    After seven rounds of meetings and 133 days, the ongoing Kaesong Industrial Complex negotiations between the two Koreas culminated into a five-point agreement. The agreement’s key provisions included language to not disrupt operations within the complex unilaterally, provide for the guarantee of safety of Kaesong assets and workers, restore customs and telecommunications operations, maintain and promote the complex to attract international investments, and the creation of a joint Kaesong Industrial Complex committee
    What led to the bargaining breakthrough? The first six rounds of talks were mainly fruitless efforts of what negotiation analysts refer to as “positional bargaining,” in which each party states and restates its positions on a particular issue. Such positional jockeying can often lead to impasse, and even at times, a strategy of purposeful strategic non-cooperation in a form of “prisoner’s dilemma” (a simulation game in which two parties have a choice to cooperate or betray one another). This seemed to be the case with North Korea, which took the view that elongating and escalating the Kaesong negotiation process would yield a net benefit—the same modus operandi it employs with its ongoing nuclear nonproliferation negotiations.
    If North Korea viewed the Kaesong bargaining process as a prisoner’s dilemma, then what does it take to break its bad behavior? In prisoner’s dilemma, players betray rather than cooperate mostly out of fear and distrust, viewing the outcome as a zero-sum game in which player A’s gain must come at the expense of player B. But if fear can be mitigated and trust furthered, a greater likelihood towards cooperation exists.
    With such agreement leading to other talks related to inter-Korean relations, the one open question now is just how long the Kaesong agreement will last? If precedent is any indicator, it won’t take too long before discord strikes again.
    Contact us here at Asia-Pacific Global Research Group to see how we can help.

    Below is Jasper Kim’s video interview with the WSJ today:


    Why North Korea is a risk-taker

    May 23rd, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    The analysis below is an excerpt based on the original piece, North Korea’s Risk-taking Explained (by Jasper Kim, Wall Street Journal, Korea Realtime, May 22, 2013), which can be read in full HERE.

    Most commentators who track the country say it would never aim to initiate a war with South Korea and its allies because that would inevitably lead to the end of the Kim Jong Un regime. Self-preservation is something the Pyongyang leadership has been very successful at over the last six decades.

    So what explains the North’s apparent affinity for risk in routinely confronting the South, mostly verbally but occasionally with deadly force?

    Mathematical modeling helps explain the counter-intuitive marriage of risk-taking and rationality at the heart of decision making in North Korea.

    Consider you have one of the two choices:
    A: Receive $80 guaranteed; or
    B: Receive a 90% chance to receive $100

    Which option should a rational decision maker chose? Studies show that most people would decide to take option A, the sure thing. The thinking is that it is generally better to receive a guaranteed return even if it means receiving less.

    But the rational choice is actually option B. Getting to the answer requires what’s called a standard expected value calculation. The expected value of option A is $80 (100% x $80 = $80). The expected value of option B is $90 (90% x $100 = $90). So, because $90 (option B) is greater than $80 (option A), option B would be the rational choice even though it involves taking a risk. 

    In the above example, the expected higher gains in option B — equivalent to regime survival — have incentivized risk-taking by North Korea, especially if it doesn’t believe an option A exists.

    * The U.S., South Korea and Japan are defensively postured and risk-averse because the aspiration point is primarily maintaining their current position (in terms of preserving military and economic interests);
    * North Korea is offensively postured and risk-seeking because its aspiration point is gaining more than its current position (in terms of actively pursuing economic and non-economic assistance and diplomatic recognition).


    Given the current incentive structure from North Korea’s view, the Stalinist state sees only incentives to take further risks. As a result, the DPRK’s provocation cycle will only continue, unless the current incentive scheme is changed.

    Financial hedging strategies in an unlikely Korean conflict: Q&A with Jasper Kim

    April 30th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Below is an English-version interview excerpt with Yonhap News and Jasper Kim (Asia-Pacific Global Research Group; Director, Center for Conflict Management, Ewha University in Seoul) released on April 22, 2013 (followed by the original Korean version).
    While most believe North Korea would not intentionally enter into a war with South Korea, Jasper Kim warns us about the possibility of ‘black swan event’ occurring in the Korean peninsula.
    He suggests that a black swan event should be factored in a risk management strategy. He also stressed the importance of hedging strategies, which include call, put, and credit default swap options on Korea-linked financial products.
    Below is the Q&A interview session with Jasper Kim:
    Q. Does 김정은 (DPRK leader, Kim Jong-un) not have the upper hand within his own military?
    He has to appeal to the military since his regime is predicated on a “military first” policy. There could be internal strife and/or change within the DPRK, but we cannot figure that out exactly. He has to prove his leadership by being “hyper hawkish” and “super patriotic.”
    Q. How can a black swan event happen?
    A black swan event be triggered at any level. It will have serious damage militarily and economically. Analysts, especially in the Ivory Tower, assume that all actors behave according to “rational” behavior at all times in all scenarios. But if you walk along or near the DMZ, from my standpoint, it is clear that there are risks that even one instance of irrational behavior could lead to a possible black swan event in the Korean peninsula.
    Q. Is there a “learning effect” relating to North Korean risk?
    The prevailing school of thought among Korean analysts assume that North Korea’s future provocations are “known, known” variables. But I disagree. Given the extremely unprecedented nature of the DPRK leadership (eg, background, age, lack of military experience, third-generation of the Kim clan, etc), it is dangerous to assume that future events by North Korea will mirror those in the past. This is akin to driving a car forward using one’s rearview mirror.
    Q. What are your suggestions for markets to prepare for a possible black swan event?
    In the unlikely but possible chance of a black swan event in the Korean peninsula, financial markets in and around Korea will fall in the short run, perhaps in free fall fashion, depending on the severity of such black swan event. But assuming that such event will be resolved, there is likely to be buying opportunities when such markets go south. At the same time, to hedge against further downside risk during a possible black swan event, contingency exit plans must be executed. Upon the occurrence of a black swan event when markets enter into negative territory, the US, China, and Japan each and collectively have a vested self interest in supporting South Korea’s capital markets. Such support can come in various forms, including lines of credit (LOCs), swap agreements, and/or unified and consistent public statements from relevant institutions that the US, China, and Japan will provide adequate liquidity as needed and appropriate to South Korea. Such clear yet succinct statement will be something that financial players and traders will understand, thus instilling market confidence back to the South Korean markets.
    Q. You take the position that information, such as the internet, can transform North Korea from within?
    Yes, soft power such as information about the outside world and how the outside world views North Korea’s economic and political conditions could be pivotal to create a desire for change from within North Korea, which I have written about in a recent WSJ Korea Real Time piece.

    <인터뷰>제스퍼 김 이대교수, “北 블랙스완 리스크 경계해야”
    금융시장일반, 펀드 [2013/04/22 10:30 01]
    (서울=연합인포맥스) 태문영 기자 = “블랙 스완(Black Swan)은 (한국에) 군사적으
    로나 경제적으로 엄청난 피해를 줄 것이다. 금융시장에도 전염 효과를 낼 것이다. 아
    무도 도발에 대한 정의를 내릴 수 없다. 만약 총알 한 발 때문에 세계 1차대전이 발발
    했다면, 두 번째 한국전쟁이 일어날 가능성도 존재한다.”
    제스퍼 김 이화여자대학교 국제대학원 교수는 22일 연합인포맥스와의 인터뷰에서
    남북 간의 관계를 블랙 스완에 빗대어 설명했다.
    최근 개성공단 폐쇄와 북한의 도발 위협으로 남북관계는 위기를 맞았다.
    긴장 상태가 악화하면서 한반도의 지정학적 리스크가 재부각됐지만, 이전과 같이
    남북의 무력 충돌까지 치닫지는 않을 것이라는 전망이 아직은 많다,
    그러나 전혀 예상치 못했던 돌발변수가 발생하는 ‘블랙 스완’ 이벤트로 남북이 충
    돌할지도 모른다는 경고도 제기되고 있다.
    제스퍼 김 교수는 이와 관련해 북한 리스크로 촉발될 수 있는 블랙 스완 이벤트를
    경계해야만 하며 이 가능성을 리스크 관리 전략에서 고려할 사항에 넣어야 한다고 설
    김 교수는 (북한 관련) 상황을 모두 파악했다고 과신해서는 안 된다고 지적했다.
    그는 금융시장에서 예상치 못한 상황에 대비해 포트폴리오의 일정 부분을 헤지하는
    것이 중요하다고 강조했다. 또 심리에 좌우되는 금융시장에서 블랙 스완이 발생했을
    때 위기를 최소화하려면 한국과 주변국이 시장에 대한 신뢰를 보여줘야 한다고 진단
    다음은 제스퍼 김 교수와의 일문일답.
    – 북한이 개성공단을 포기한 이유와 그 주도 세력은.
    ▲ 남북관계는 군사와 외교, 경제 등 여러 차원(dimension)이 있는 체스판과 같다. 개성공단 문제는 새로운 차원이 추가된 것이다. 공단 폐쇄는 남북한 모두가 잃는 게 많은 루즈-루즈(lose-lose) 상황이다.
    공단 폐쇄 이유는 여러 가지다. 먼저 김정은 국방위 제1위원장의 지정학적 전략 계산에 근거한다. 개성공단에서 벌어들이는 외화와 일자리를 포기하는 대신 장기적으로 더 큰 뭔가를 얻어내기 위함이다. 미래의 편익이 개성공단 폐쇄에 따른 단기 손실을 상쇄하고도 남을 것이라는데 베팅한 것이다. 둘째로 김정은이 직접 선택한 것이 아니라 체제 내 파벌, 즉 군부의 명령에서 비롯됐을 가능성이 있다. 경제적 차원의 문제인 개성공단 폐쇄를 원한 군부의 저의는 긴장을 악화시켜 군이 영향력을 행사하도록 한다는 것이다.
    – 김정은이 군부에 우위를 점하고 있지 않다고 보나.
    ▲ 김정은은 무엇보다도 국내 청중, 즉 군부의 호감을 사야 한다. 북한의 위협 수위가 높아졌다는 점은 체제 내 갈등과 직접적인 관련이 있을 수 있다. 김정은이 정권을 잡은 지 1년이 약간 지났는데 지도부에 많은 변화가 있었다. 새로운 지도자가 들어섰기 때문에 자연스러운 현상으로 볼 수 있지만, 달리 보면 꽤 많은 일이 진행될지도 모른다는 점이 우려다. 우리는 이를 알아낼 수 없다는 점만을 인지할 뿐이다. 각 가능성이 좋지는 않다.
    김정은이 더 개방된 사회와 근대화를 원한다고 보나, 그전에 군부에 호소해야 한다. 따라서 그는 최소한 초기에 강경한 정도가 아니라 초강경한 태도를 보여야 한다. 자신이 초 애국적임을 군부에 증명해야 하기 때문이다. 또 너무 어린 나이를 벌충할 수 있어야 한다. 한국 문화나 정서상 나이가 갖는 의미는 크다.
    김정은은 근대화를 위해 쏟는 노력 그 이상을 군부에 기울여야 한다. 그렇지 않으면 그는 나약해 보이고 친미주의적으로 비칠 것이며, 그 순간 말로를 맞을 것이다. 따라서 그는 극도로 반미주의적 성향을 보여 그런 평가를 떨쳐내야 한다.
    – 블랙 스완 이벤트가 북한 군부 상층이 아니라 하층에서 발생할 수 있다는 지적이 있다.
    ▲ 블랙 스완은 군사적으로나 경제적으로나 엄청난 피해를 줄 것이며, 금융시장은 급락하면서 또 다른 전염 효과를 낼 것이다. 블랙 스완은 상하 모든 계층에서 일어날 수 있다.
    아무도 도발에 대한 정의를 내릴 수 없다. 미국과 남한 모두 도발에 대한 정의를 내리고 사례를 세우고자 했지만, 이는 이성적인 발상이다. 비무장지대(DMZ)에서 이성적인 행동만이 나오지는 않는다. DMZ에서 지치고 겁에 질린 사람들이 예기치 않은 총격을 유발할 수 있다. 만약 총알 한 발 때문에 세계 1차대전이 발발했다면, 두 번째 한국전쟁이 일어날 가능성도 존재한다.
    – 블랙 스완이 발생한다는 신호나 징조는 없나.
    ▲ 신호가 있겠지만, ‘과거에도 있었던 일이며 평소와 다름없다’고 해석된다.
    하지만, 일각에서는 과거의 패턴이 반복된다기보다는 새로운 패턴이 시작된다고 인식하며 전과 다른 계획을 세운다.
    대부분은 북한의 도발이 과거와 비슷하다고 판단할 것이다. 도발 후 수위가 높아지다 요구가 드러나고 상황이 진정되는 식이다.
    일부는 상황이 조금 달라졌다고 본다. 북한을 대표하는 지도자는 완전히 새로운 인물이다. 그는 알려지지 않은 ‘재화(commodity)’다. 어린데다 경험도 적고 외국에서 교육을 받았다. 그가 고위 군부 대신 권력을 쥔 유일한 이유는 성(姓) 때문이다. 김정은이 지도자가 되면서 북한 개방에 도움이 될 것이라는 시각이 있지만, 오히려 그 반대가 될 수 있다고 생각한다. 김정은의 자질이 고위 군부에 약점으로 인식되는 경우다. 김일성 세대에서 멀어지면서 이번 지도자를 어떻게 이해할지 모르겠다는 평가가 나올 리스크가 커진다.
    – 북한 리스크에서 학습효과가 있다고 보나.
    ▲ 김정은의 정권 장악 이후 학습효과가 약간 없어졌다고 본다. 그가 어떤 시각을 가지고 있으며 무엇을 원하고 이를 어떻게 성취할지 아무도 정확히 모른다. 그 자신도 이제 막 권력을 잡았기 때문에 잘 모를 수 있다. 그는 군부에 통솔력을 증명해야 하며, 이것이 그가 초강경 발언을 쏟아내는 이유다.
    다음 도발이 언제 어떻게 발생할지 모르기 때문에 앞으로도 북한의 행보에 그때그때 일일이 대응해야만 하며, 같은 도발이 있다 해도 상황이 달라질 수 있다. 대응 절차를 세우기가 매우 어려울 것이다. 도발의 정의는 과거 사례를 기반으로 했기 때문이다.
    – 블랙 스완에 대한 대응에 대해 설명해달라.
    ▲ 누구도 블랙 스완이 발생하길 원하지 않는다. 단지 리스크 관리를 위한 계산에 블랙 스완이 고려돼야 한다고 생각한다.
    미국 주택시장 거품이 붕괴하기 전 위기 가능성을 경고한 사람들은 비이성적이라는 평가를 받았지만, 2008년 이들은 갑자기 천재가 됐다. 통념과 반대되는 생각이 언제나 가장 대중적인 생각은 아니다.
    한반도의 평화는 유지돼야 한다. 다만, 일어날 가능성이 매우 작은 상황이 발생했을 때를 대비한 비상계획이 있어야 한다.
    비상계획은 블랙 스완 발생 전후를 모두 아우른다. 이벤트 발생 시 그 여파를 완화하고 사후에는 또 블랙 스완이 나타나기 전에 방어를 위해 쓸 수 있는 수단을 제시하는 것이다.
    예를 들어 금융시장에서 북한 관련 블랙 스완이 발생할 것으로 생각한다면, 국채에 대한 풋옵션이나 신용부도스와프(CDS) 등의 수단을 써서 포트폴리오 전체가 아니라 일부분만 헤지해놓으면 된다.
    – 금융시장이 쓸 수 있는 다른 전략이 있다면.
    ▲ 가격이 하락하면 한국 금융시장이 평가절하되므로 중장기적으로 저가매수 기회가 생길 것이다. 그러나 블랙 스완이 발생했을 때 유일한 방법은 시장에서 탈출이다. 그러나 미국이나 일본, 중국 등 주변국이 크레디트라인이나 외환 스와프를 체결하는 등 한국의 유동성을 지지한다는 짧은 발언을 하는 게 유일한 방법이다. 특히 G2 국가가 중요하다. 금융시장은 심리와 신뢰를 기반으로 한다. 중국과 미국은 신용을 지지할 수 있다. 신뢰가 있다면 시장은 리스크를 저가매수기회로 여길 것이나, 그 반대라면 시장은 바닥을 형성하지 못하고 떨어질 것이다. 다른 국가들이 유동성을 공급한다는 발언으로 한국시장에서 시장 변동을 막지 못한다면 그 여파는 전 세계로 퍼져 모두에게 영향을 줄 것이다. 이런 상황은 아무도 원하지 않는다. 따라서 한국에 도움과 지지를 보내는 일이 모두의 이익에도 맞는다.
    모든 것이 시장에 영향을 미칠 수 있기 때문에 그 어떤 것이라도 블랙 스완이 될 수 있다. 하지만, 금융 시장에서 좋은 점은 리스크를 관리할 헤지가 가능하다는 것이다. 따라서 금융시장에 대한 믿음이 있다. 다만, 모든 가능성을 파악했다고 자만하는 순간 추락해버릴 것이다.
    – 미국이 대화 의지를 보였고 북한은 먼저 사과를 요구했다.
    ▲ 신경전이 계속되나, 이견이 조금씩 좁혀지고 있다. 적어도 아예 대화를 거부하진 않았으니 긍정적이라고 본다. 양측 모두 유연성을 발휘할 여지가 있다. 시간이 지나면서 북한과 미국은 직간접적으로 대화할 것으로 생각한다.
    중국과 미국 북한의 ‘G3’ 회담이 효과적이라 본다. 기존 6자회담 참가자는 너무 많다. 북한이 양자회담을, 다른 국가와 6자회담을 원한다면 3자회담이 타협점이라 생각한다. 대화를 통해 서로 이해관계를 확인하는 것이다. 가장 중요한 것은 신뢰다. 6자회담은 이제 너무 형식적이어서 원조를 받을 수는 있어도 신뢰를 쌓을 여지가 매우 작다. G3에서라면 원조와 신뢰 모두를 얻을 수 있다. 신뢰와 신용이 없다면 금융시장에도 도움이 되지 않을 것이며 지정학적으로도 부정적이다.
    대북 정책에서 성과를 기반으로 한 관계 형성이 괜찮은 대안이라 생각한다. 북한이 특정 기준을 충족하거나 목적을 달성하고 나서 이를 증명하면 더 많은 지원을 약속하면서 한 단계씩 나아가는 것이다. 기본급에 성과급을 더해주는 것과 비슷하다.
    – 북한에 정보의 자유로운 이용이 필요하다고 언급한 바 있다. 실현 가능하다 보는지.
    ▲ 가능하다고 본다. 이미 한국 매체에 대한 암시장이 형성돼 있고 북한 내부에는 인터넷과 휴대전화가 있다. 주민들이 외국 정치권에서 하는 말은 선전이라 생각해 믿지 않지만, 보고 듣는 한국 비디오와 음악은 믿을 수 있다. 이를 원하는 주민들 때문에 티핑 포인트(tipping point)가 발생하면 모든 게 급격하게 바뀔 수 있다.
    소프트 파워(soft power)가 (북한을) 움직일 것이다. 문화와 정보, 이에 대한 갈구가 외교보다 더 큰 힘을 발휘할 수 있다.
    – 경제적 원조보다 영향력이 클지.
    ▲ 개성공단 문제만 봐도 알 수 있다. 개성공단으로 어떤 효과를 거뒀다고 확신하기 어렵다. 북한과 남한 근로자들이 함께 일한다면 이론상으로는 서로 더 가까워지고 극적인 효과가 있어야 하나 그렇다는 이야기를 듣지 못했다. 경제 개혁은 긍정적이나, 남북관계에서 기대만큼 게임체인저(game changer)는 아니다.
    – 북한 리스크 이외에 ‘코리아 디스카운트(Korea Discount)’ 요소가 있다면?
    ▲ 대부분 기업 경영구조와 관련한 것이긴 하나, 많은 진전이 있었다. 또 일본과 중국이라는 두 강대국 사이에 있기 때문에 영토 분쟁 리스크 요인이 있다. 이 역시 블랙 스완이 될 수 있다. 하지만 ‘코리아 디스카운트’는 대부분 북한과 관련한 것이다.

    North Korea’s “war” declaration: made for domestic consumption but potential for “black swan”

    March 30th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    North Korea has just declared “war” on South Korea.
    This is the latest in a streaming series of increasingly bellicose statements from the DPRK and its 20-something leader, Kim Jong-Un.
    While many commentators are taking a bet (position/view) that North Korea will not do anything that will provoke war on the Korean peninsula, we believe that a certain amount of attention must be focused on a possible “black swan” event in which a small foreseen or unforeseen event can trigger retaliation by the other side per the responding country’s rules of engagement. Unlike recent skirmishes and attacks along the inter-Korean border region, this time both Koreas are on extremely high levels of military alert akin to two sprung traps in which even a small event can trigger a larger-scale conflict.
    We also believe that most of North Korea’s rhetoric is for the public consumption of North Korea’s military brass and general public, in that order. Such acts are in part an effort, perhaps even a desperate one, to secure domestic support, implying that Kim Jong-Un may be losing support at home. Because of Kim Jong-Un’s age (under 30), and inter alia, that he is the nation’s 3rd-generation ruler from the Kim dynastic clan (a “3-3” risk factor), North Korea’s leader has to take a constant “hyper-hawkish” stance to dispel any notion that he may be weak and dovish towards the nation’s historic enemies. Within a Korean cultural context, even one day difference between two people can vastly change relational dynamics.
    Below is a quote from a recent CNN story and video clip related to North Korea’s increasing threats, featuring Jasper Kim of the Asia-Pacific Global Research Group:
    “First and foremost, it’s for his domestic audience,” said Jasper Kim, founder of the Asia-Pacific Global Research Group in Seoul, South Korea. “Because without the support of the military, he won’t be around for much longer. And so he has to bolster his support with the brass.”



    Korean War 2?: Heightened tensions on the Korean Peninsula push to the edge

    March 22nd, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Is the Korean peninsula on the verge of a Korean War part 2?
    According to Asia-Pacific Global Research Group founder (and professor at Ewha Womans University in Seoul, Korea), the risks of this are certainly notable. Jasper Kim notes that both North and South Korea are engaging in a “dangerous game of tit-for-tat” at all levels–military, paramilitary, and cyber, which “has the potential to end very badly given that the two Koreas are like two sprung traps, which can be triggered at any time.”
    We believe that the two Koreas are engaged in a worrisome form of bilateral, bellicose brinksmanship. The recent cyberattacks against some of South Korea’s major broadcasters and banks are likely just the beginning of a continued series of purposely provocative attacks meant to shore up domestic support in North Korea, especially from its military for Kim Jong-Un, while simultaneously trying to ensure a type of “zone defense” in North Korea in the form of nuclear and non-nuclear missile technology.
    Below are recent CNN TV appearances on this issue featuring Jasper Kim:


    Kim Jong Un and Dennis Rodman: the odd ambassadorial couple (5 Points)

    March 5th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    (The questions below were based in part on an interview with a local South Korean broadcaster)
    1) What is the significance of Dennis Rodman’s visit to North Korea?
    From a political standpoint, Rodman’s visit to North Korea – accompanied by the Harlem Globetrotters basketball team and executives from VICE media group (a news and media group set to debut a related show on HBO in April 2013) – was significant in terms of Kim Jong-Un’s efforts to turn the one-off basketball event into a global diplomatic event that could appeal to the masses, and as a result, serve as a highly calibrated opportunity to continue its push for legitimacy (from the international community) and sympathy (at the grassroots level from average citizens in and beyond Asia).
    2) Why did Kim Jung Un allow Rodman and the Harlem Globetrotters into Pyongyang?
    Our view is that the DPRK leader took a creative low risk potentially high reward strategy of using the meeting between the highly visible American basketball envoy and North Korean officials (including Kim Jong Un himself) into a shuttle basketball diplomacy forum–by openly declaring that (1) the North Korean leader not want “to do war” with the United States; and (2) Kim Jong Un’s public declaration for President Obama: to “call him [Kim Jong Un].”
    What was notable and fairly striking was that such comments were made so public to such a sports cult of personality like Dennis Rodman – who is both famous and infamous within and beyond the basketball court – instead of through more discrete private diplomatic channels. The bottom line is that the highly covered and highly unlikely meeting of basketball enthusiasts from the U.S. and DPRK was a global public platform for Kim Jong Un to reach out to people around the world at the grass roots level – through the medium of basketball – to place pressure on the international community to perhaps rethink the way that people view the closed Stalinist state (as perhaps not so closed after all).
    Such event viewed in context with the DPRK’s past recent acts of increased communication with the international community such as by (1) allowing global media outlets to report on the failed missile launch in early 2012; (2) increased and more rapid reporting of both positive and negative local news events (e.g., failed and successful missile launch attempts in 2012); (3) greater openness in the frequency and range of prominent foreign dignitaries (eg, from Bill Clinton to Eric Schmidt); and (4) increased use of mobile phones by both DPRK citizens (through Orascom/Koryolink, a 3G joint venture service) as well as foreigners being allowed to use social media and the internet (including Google) while visiting and reporting on North Korea, which led to the first tweet from the so-called Hermit Kingdom, represents a less than subtle message from Kim Jong Un to the outside world that he views the opening of the DPRK as inevitable and perhaps even favorable.
    Not one event is a game changer, but the culmination of such emerging pattern of openness is certainly deserving of serious attention and analysis.
    3) Rodman and Kim Jong Un watched a basketball game together and sometimes talked without a translator. The former NBA star was also invited to Kim Jong Un’s palace for a lavish dinner party. Why did the young leader meet and spend significant time with Rodman, but not Google’s Eric Schmidt?
    Kim Jong Un’s decision to meet former NBA superstar Dennis Rodman and not Google’s Eric Schmidt (earlier in January) was probably based on comfort level and cost-benefit analysis by the DPRK leadership. In short, meeting with Dennis Rodman provides relatively more potential upside relative to its possible downsides. Rodman is not known for his diplomacy, which in part, led to Rodman’s positive comments towards Kim Jong Un during his visit as a “friend for life” and “good guy.” Of course, the young Kim Jong Un’s affinity for the Chicago Bulls team (that won six national championships in the 1990s), and in particular, NBA superstar Michael Jordan is well known. So along with the political upsides of the meeting, Kim Jong Un also had the opportunity to directly communicate with one of his coveted sports heroes. On the other hand, Eric Schmidt would represent more possible downside than upside since Schmidt and Google are vocal proponents of free, open, and transparent access to information and the internet–things that are not plainly existent in North Korea today.
    4) Rodman’s visit has attracted a lot of attention worldwide. What did Rodman gain from the trip?
    Rodman gains from added publicity. As the mantra goes, “There’s no such thing as bad publicity.” And certainly, a high profile visit to North Korea – perhaps the most closed state on earth – catapulted Rodman into the top headlines of news affiliates around the world. Vice, the company that organized and sponsored the trip, also benefits for the same reason–attention and publicity, which can easily be monetized and highly beneficial for their new eight-part TV upcoming series debuting next month in April. As one part of the quid pro quo for the trip, VICE agreed to donate basketball backboards and scoreboards to North Korea, which is actually an effective demonstration of “soft power” and “cultural diplomacy,” ironically made by an upstart magazine rather than at the state level.
    5) The visit came only about two weeks after North Korea’s third nuclear test. Does the trip signify a thawing of US-DPRK relations?
    In short, we believe that the event is an olive branch from the DPRK generally, and Kim Jong Un, specifically, to the U.S., generally, and President Obama (a huge basketball fan and former basketball player), specifically. Kim believes that the shared interest in U.S.-style basketball can serve as the foundation from which to develop stronger (or at the very least, less antagonistic) relations between the U.S. and North Korea. Also note that the teams were not set up in a “U.S. v. DPRK” team competition, but rather, blended teams in which each team had players from both countries, which culminated into a 110-110 tied score (whether the tied score was pre-orchestrated is another issue). Little downside and even some possible upside could be created by perhaps mirroring the basketball diplomacy efforts with a similar basketball game in the U.S. (possibly in Washington D.C.).
    In a time of heightened tensions in and around the Korean peninsula, perhaps it is one of America’s most iconic sports, basketball, that can help bring the U.S. and DPRK closer together to forge a diplomatic solution to the ongoing impasse.
    Of course, as many commentators have already noted, North Korea has one of the most dire human rights conditions on the planet. So, obviously, the “sports sunshine policy” analysis here should not be construed to condone or find acceptable the conditions that exist and have existed in the DPRK and its citizens. Also, Dennis Rodman’s role and visit to the DPRK is in no way one as a state-appointed diplomat or ambassador. Rather, this research note’s takeaway is that the sports sunshine policy option between the U.S. and DPRK should be one that could be explored as a way to break the half-century impasse.
    Below is an ABC news clip related to Dennis Rodman’s recent trip to North Korea.

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