US President Donald Trump has capped off a week of escalating tension with North Korea with some of his toughest talk yet.
After tweeting that military solutions were "fully in place, locked and loaded", he later underscored his comments, saying the message to North Korea was "pretty obvious".
"I hope that they’re going to fully understand the gravity,” Trump said. “What I said is what I mean. Those words are very very easy to understand."
The risk that these tensions may spill over into some kind of conflict in the Pacific has significantly escalated over the past five days, reflected in global markets sinking and the so-called "fear index" -- a measure of anticipated market volatility -- spiking.
It all stems from the threats from North Korean dictator Kim Jong-un this week to launch missiles at Guam, the US territory in the Pacific which is around 3000km north of Cairns.
While US defence officials this week accepted that it is possible North Korea has the capability to attach a nuclear warhead to an ICBM, a nuclear conflict remains an extremely remote possibility. Robert Carlin, former chief of the Northeast Asia Division at the State Department’s Bureau of Intelligence and Research, characterised it more as posturing than a threat to actually strike Guam even with conventional weapons, which would likely lead to a significant military response from the US.
Carlin said North Korea’s threat amounted to the regime saying: “We’re going to put our missiles 25 or 30 kilometers offshore. Your bombers come within tens of kilometers of the Demilitarized Zone. If you can ‘reach out and touch’ us, we can ‘reach out and touch you'."
While a de-escalation of the current tensions may still be achievable through diplomatic channels, the nature of Kim's threats and his statements to his people this week now has him on a path where the standoff will inevitably need to be brought to a head, according to Kevin Lai, a strategist at Japanese investment bank Daiwa Capital Markets.
Lai wrote in a client note (emphasis added):
[Kim] has made clear to his people that a plan is under way to fire four ICBMs into the sea off Guam by mid-August. He knows Guam is a major platform for the US to launch any attacks against his country, as strategic bombers would play a key role and most of them are stationed in Guam.
By making such a promise, Kim looks to have chosen a path of no return. If he delivers the plan, the US will almost certainly respond aggressively with a range of military options — and the situation will escalate to a major military conflict involving several more parties, including South Korea and Japan. There would be little room for either side to step back. If Kim doesn’t deliver, he risks creating a political crisis for himself and permanently weakening his regime. He is now in a position similar to the one Saddam Hussein was in before Desert Storm. His primary goal is regime survival.
Giving up nuclear weapons would mean abandoning that goal; bending to US pressure would leave him politically vulnerable at home. Perhaps Kim believes the US will soon engage in ‘regime change’ through military strikes, and he wants it to happen sooner rather than later. Perhaps he thinks that, by making a credible threat to the US, he can extract the best deal from negotiations (if they reopen in the future). This is where we think things could go very wrong. There have been numerous miscalculations before, and one more would take us to a disastrous
Earlier this year Lai sketched out four major endgame scenarios. "We believed there was a 60% chance a diplomatic resolution would fail, within which a major military conflict was 20%. The other 40% is simply that the US will have to tolerate and live with North Korea’s nuclear threat forever. As things stand, our assessment holds," he said.