Event

The war of words, succession of provocative moves and economic pressures between Pyongyang and Washington reached a new high in September. North Korea performed a sixth and its most powerful ever nuclear test, launched a new ballistic missile flying over Japan’s territory and threatened to blow up a hydrogen bomb over the Pacific Ocean. The US, from their side, introduced new UN economic sanctions unanimously adopted against North Korea’s oil imports (frozen volumes on an annual basis), textile exports (banned), expatriate workers (frozen number) and Kim Jon-Un assets (frozen). Donald Trump’s threat to destroy North Korea during his speech at the UN was followed by US sanctions targeting entities doing business with North Korea. China took additional financial sanctions by freezing accounts of North Koreans at five Chinese banks. At the end of September, Pyongyang declared that the US aircrafts flying near the Korean border were seen as an act of war, and threatened to retaliate.

Impact on country risk

Mr Trump and Kim Jon-Un’s warmongering tones are growing day after day and increasing risks of an accidental strike. There is a fear that the current vicious circle might end in an inevitable armed conflict without signs of moderation. Economic sanctions are considered provocations on the Korean side and keep justifying its ultimate goal of being able to potentially strike the US territory with a nuclear missile in order to ensure the regime survival. So far, no side seems ready to take the risk of striking first to avoid being responsible for having triggered a potentially destructive war. In the meantime, sharper sanctions are likely to hit the North Korean economy but will fail to convince Pyongyang to stop the development of its nuclear programme. Given both sides’ refusal to enter talks, the coming weeks and months promise to be highly risky for regional and global stability.

Analyst: Raphaël Cecchi, r.cecchi@credendo.com