North Korea explores bitcoin investment; defence white paper. By Hamish McDonald.

Kim’s missile testing back in world’s sights

North Korean students walk past the central station in Pyongyang last month.
North Korean students walk past the central station in Pyongyang last month.

Things are on the up and up for Kim Jong-un. At dawn on Wednesday, his boffins fired another ballistic missile, after a two-month pause in testing that had led some to hope North Korea was tacitly responding to United Nations sanctions and Chinese pressure. 

The missile went just 1000 kilometres horizontally, landing 210 kilometres from Japan’s coast, but 4500 kilometres vertically. On a flatter trajectory, this meant it could hit anywhere in the United States, leading Pyongyang to announce it now had achieved deterrence. Donald Trump tweeted he would “deal with it”. In Hawaii, state authorities tested a siren warning of nuclear attack, and advised people, if they heard it, to “get inside, stay inside and stay tuned” – a version of the old Cold War mantra of “adopt a crouching position, put your head between your knees, and kiss your ass goodbye.”

Once again, Kim is calling what he sees as Donald Trump’s bluff. Boosting his confidence may be another instance of Vladimir Putin outmanoeuvring Washington, as he’s done by restoring the Assad regime’s hold in Syria. As the venerable Australian National University scholar Gavan McCormack has just outlined in the Japan Focus website, Putin is orchestrating a Far Eastern regional settlement that includes North Korea – and cuts out the US.

In early September, Putin hosted leaders from both Koreas, Japan and China in Vladivostok for two days to discuss his initiative called the Eastern Economic Forum to link the economies of north-east Asia. Attending were Japan’s Shinzō Abe and South Korea’s Moon Jae-in, leading the two US allies in the region. Moon said it fitted with his own ideas of “nine bridges of co-operation” (gas, railroads, ports, electricity, a northern sea route, shipbuilding, jobs, agriculture and fisheries).

Though explicitly economic, the scheme would go a long way to meeting Pyongyang’s security concerns, McCormack thinks: “Unstated, but plainly crucial, North Korea would accept the security guarantee of the five (Japan included), refrain from any further nuclear or missile testing, shelve (‘freeze’) its existing programs and gain its longed-for ‘normalisation’ in the form of incorporation in regional groupings, the lifting of sanctions and normalised relations with its neighbour states, without surrender.”

Putin was more open about the security agenda. “Do you really think that because of the imposition of some sanctions, North Korea will abandon its course towards development of weapons of mass destruction?” he said. “Under these circumstances, winding up military hysteria will not bring us any good. All of this can lead to a global catastrophe on the planet and huge numbers of human casualties. There is no other way apart from a peaceful and a diplomatic one to resolve the North Korea nuclear problem.”

Given his adherence to Trump, why would Abe attend such a meeting, along with his foreign minister, Tarō Asō? McCormack thinks it might be a “plan B” against a failure of Trump’s isolation and squeeze approach, or even a move towards shrugging off the American embrace. One could add, Abe might be hoping it will lead to return of the southern Kuril Islands seized by the Soviets in 1945, or maybe he sees it as a northern rival to China’s One Belt One Road Initiative across Euro-Asia.


DPRK eyes bitcoin

Other things were up in the Korean peninsula this week. On Monday, the value of a single bitcoin hit $US10,000 in trading in Seoul, as central banks everywhere turned over the challenges of this virtual currency owned anonymously and housed on some 9500 computers around the world and out of their control.

With 16 million bitcoins in circulation, that’s $US160 billion out there. The latest surge in the bitcoin price, doubling in just two months, has every sign of a speculative bubble as well, likened to the mania for tulips that seized Holland in the 17th century.

However, many bankers see it remaining in use as a currency and store of value (especially in hyperflation-prone countries such as Zimbabwe and Venezuela), as a fast way of sending large sums of money across borders, and as a way of secretly paying for illegal items such as mail-order drugs or avoiding tax. It could be the new gold, only more transportable.

No wonder then that it is being keenly studied in North Korea. As the US-based website Vice News reports, the Pyongyang university long accused of training the regime’s best hackers invited Federico Tenga, Italian founder of a bitcoin start-up called Chainside, to give a week of lectures last month to its elite IT students about trading and “mining” bitcoin.

Pyongyang would need some very sophisticated computer ware to get into bitcoin mining, which would involve setting up a node containing a full copy of the entire bitcoin blockchain or distributed account that helps verify all transactions as they take place on the network. The fastest node gets rewarded with newly minted bitcoins. But it could be a nice little earner for a regime under tightening sanctions.


White paper tiger

A week has gone by, and it’s as if the Turnbull government’s foreign affairs white paper hasn’t happened. Some mild praise in Washington, some tut-tuts and a routine Global Times blast in Beijing, but nothing much has changed in Canberra, with not even a parliamentary debate scheduled.

That’s partly because, in the way of white papers, this one pulled its punches, but also because it’s deficient in suggesting specific follow-up to the priorities it outlines. Deepening ties and understanding with China? Implementing the Indo-Pacific concept to replace the Asia-Pacific? Nurturing the Pacific Islands and Timor-Leste and keeping out malign powers?

The Department of Foreign Affairs and Trade is wallowing in the wash of the Defence Department, which put out its own more robust white paper first, and will soon be trailing the new Home Affairs super-department as well. Most analysts see DFAT’s white paper putting a Pollyanna view on China’s rise and America’s disarray.

James Curran, a Sydney University specialist on the US relationship, finds Foreign Minister Julie Bishop’s constant use of “uncertainty” as a theme sitting oddly with her faith in enduring US regional leadership. Trump is the prime cause of this uncertainty, though not the only one, “yet Bishop believes it will pass and that the status quo ante will somehow be re-established,” Curran wrote in the Lowy Institute’s The Interpreter blog. “It is difficult to know why the minister has allowed hope to dictate to judgement.” He likens it to Harold Holt pleading with the British in 1967 to keep forces “east of Suez”.

Bishop and Labor’s Richard Marles and Penny Wong all agree on the importance of Australia’s inner ring of island neighbours. The white paper cites the importance of the seasonal worker scheme, recently extended to sectors such as tourism and aged care. It talks of opening Australian government regulatory agencies to the smaller states, and for the first time, of integrating the region with the Australian and New Zealand economies.

But it doesn’t convey the urgency of the problem. As it points out, Papua New Guinea’s population will grow from the present eight million to 18 million by 2050. It doesn’t mention the shambles of PNG’s recent elections and its deteriorating public finances, or cities such as Port Moresby and Honiara becoming urban nightmares with million-plus populations. It doesn’t discuss what to do if China’s regional approach changes, now that Xi Jinping is pushing the Chinese model for emulation. What happens if New Caledonia’s Kanaks vote to separate from France in next year’s referendum, or Bougainvilleans from PNG in 2019?

“We are left with a question,” wrote James Batley, formerly one of Australia’s top diplomatic troubleshooters in the Pacific and Timor-Leste, also in The Interpreter. “Do we have the wherewithal – the resources, the attention span, and the diplomatic and political capital – to fulfil the promise of bringing ‘greater intensity and ambition’ to our approach in the Pacific?”

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This article was first published in the print edition of The Saturday Paper on December 2, 2017 as "Kim’s missile testing back in world’s sights".

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Hamish McDonald is a Walkley Award-winning foreign correspondent.

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