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Asian Arms Race Would Follow A North Korea Nuke Test

File photo: South Korean Command soldiers during the recent wargames with the US. Photo courtesy of AFP.
by Staff Writers
Washington (AFP) Sep 03, 2006
A nuclear weapons test by North Korea would create tensions between Western powers and China, destabilize financial markets and trigger an arms race in Northeast Asia, a US study warns.

Of all of North Korea's neighbours, South Korea is the most economically vulnerable to destabilizing shocks if Pyongyang carries out a threat to detonate a nuclear device, said the study on the hardline communist state's security policy.

The most radical consequence of such a test, however, would be political: it may strengthen Japanese attitudes towards re-militarization, according to the study coordinated by the National Bureau of Asian Research, a nonpartisan US think tank.

While China would suffer the least direct economic impact, the study warned of "significant" indirect effects if Beijing's policy towards North Korea became entangled in trade policy tensions with the United States, the European Union and Japan.

The three powers are almost certainly to react strongly to a North Korean nuclear test -- including pressing for stepped up sanctions -- and China's response could emerge as a source of tension, it said.

Reports of suspicious activity in North Korea recently have fueled speculations the reclusive nation may be preparing for an underground nuclear test, its first since declaring in February 2005 that it possessed atomic weapons.

China is North Korea's traditional ally and main benefactor of aid and is the top broker in stalled international talks aimed at ending Pyongyang's nuclear weapons drive.

"If the diplomatic tensions over North Korea's nuclear program were to spill into trade policy and encourage protectionist behaviour in the United States, Japan or Europe, this would adversely affect China," Marcus Noland, a Korean expert at the Washington-based Institute of International Economics, told AFP.

China's rapid economic growth depends importantly on export surpluses that it maintains with the United States as well as Japan and Europe.

And if a dispute erupts with these three powers, "the Chinese government has the least room for maneuver due to the fact that the country's internal social and political stability may in part be tied to the regime's ability to deliver economic growth," Noland said.

He analyzed the economic implications of a North Korean nuclear test on Northeast Asia in the study aimed at gauging the effects of any fundamental shift in the unpredictable Stalinist regime's security policy.

Among the possible economic implications were capital flights, asset price declines and reduction in investments in South Korea and Japan. Seoul's sovereign debt could also be downgraded.

"Though not catastrophic," the economic implications "would not be benign," Noland said.

But the study pointed out that a North Korean nuclear test "could stimulate an arms race in Northeast Asia" leading "to the advent of nuclear weapons in Japan, Taiwan and South Korea."

These "developments would not be in China's best interests," it said.

China's strategic clout in the region was damaged when North Korea launched missiles over Japan in 1998.

It not only led to enhanced military cooperation among the United States, Japan and South Korea but also strengthened the hands of those in Japan supporting larger defense budgets.

If Pyongyang fires a nuclear test this time, it would "likely harden attitudes in Japan toward North Korea and strengthen political forces supporting re-armament," Noland said.

It would also galvanize diplomatic support for the US-led Proliferation Security Initiative, a plan to forcibly intercept ships or aircraft suspected of carrying so-called weapons of mass destruction.

North Korea has been one of the unstated targets of the plan, launched in 2003 in the immediate aftermath of the US invasion of Iraq and involving more than 70 countries including Australia, Japan and a number of European nations.

NKorea Opens Bank Accounts In Russia To Dodge Us Sanctions: Report

North Korea has opened some 10 bank accounts at Russian financial institutions in an effort to secure fund flows now blocked by US financial sanctions, a Japanese newspaper said Sunday.

Senior officials of the reclusive state were transferring their funds through the accounts, the Sankei Shimbun said, quoting several sources close to North Korean matters.

It was part of Pyongyang's efforts to escape pressure from the United States, which has moved to freeze North Korean funds it claims are the profits of drug trafficking, money laundering and other illegal activities, the daily said.

Washington was aware of North Korea's money flows through the Russian banks, the Japanese daily said, adding that it may step up pressure on Russian authorities to abandon such support.

North Korea has warned the United States it will take "all necessary counter-measures" against Washington for ratcheting up the pressure on the communist state through the financial sanctions.

In November, Pyongyang walked out of six-way talks on its nuclear ambitions after Washington accused a Macau-based bank of helping Pyongyang launder earnings from fake US currency, and told US financial institutions to stop dealing with the bank.

North Korea Accuses US Of Threatening War After Anti-Missile Test

Seoul (AFP) Sept 2 - North Korea on Saturday accused the United States of threatening war by carrying out a test of its missile defense system and conducting joint military exercises with the South.

The North's semi-official Committee for Peaceful Reunification of the Fatherland also attacked South Korea for taking part in the annual war games and said it would only drive Pyongyang to build up its self-defence capability.

"The US staged not only a large-scale north-targeted naval and air combined maneuver in the waters around the Korean Peninsula with troops of its allies involved but carried out a missile test-fire to strike the DPRK and intercept its missiles," the committee said in a statement carried by state media.

It called the "Ulchi Focus Lens" military drills, which ended on Friday, "little short of a declaration of war against the DPRK (North Korea)", saying the exercises had been "of a more provocative nature" than previous war games.

Some 9,000 US troops and an undisclosed number of South Korean soldiers took part in the 10-day exercises.

The United States also successfully tested its controversial ballistic missile defense system over the Pacific on Friday, almost two months after North Korea stoked international tensions with its long-range missile tests.

The US Missile Defense Agency said a ground-based interceptor missile launched from Vandenberg Air Force Base in California hit a dummy armed missile in space that had been fired from Kodiak, Alaska.

"It is the height of folly for the US to threaten the DPRK and try to bring it to its knees, pursuant to the policy of 'strength'," the committee said, according to the statement carried by the Korean Central News Agency (KCNA).

"This desperate effort on the part of the US will only harden the will and determination of the army and the people of the DPRK to bolster up its deterrent for self-defence," it said.

Turning on South Korea, the committee -- which is in charge of inter-Korean exchanges -- said Seoul had committed an "unpardonable crime against the nation" by joining the United States in the war games.

"The South Korean authorities' act of supporting the US in its dangerous war moves against the North is a serious perfidy to the June 15 joint declaration and an unpardonable crime against the nation," it said, referring to a 2000 inter-Korean declaration for peace and reconciliation.

It said the South's participation in the joint drills "totally bedevils inter-Korean relations and brings dark clouds of a nuclear war to this land." Relations between the two Cold War rivals have been soured since North Korea conducted the missile tests in July, provoking international condemnation and a sharp rebuke at the UN Security Council.

The North left six-party talks on ending its nuclear weapons programmes last November and said it would not return until US financial sanctions against it were dropped.

The ABC television network, quoting US officials, said last month that the North -- which claims to have built nuclear weapons -- may be preparing an underground nuclear test.

The United States and South Korea -- both parties to the stalled six-way nuclear disarmament talks with North Korea, along with China, Japan and Russia -- have warned Pyongyang against any such tests.

North Korea said in February 2005 that it had nuclear weapons, but there have never been reports that it has actually tested a nuclear bomb.

Source: Agence France-Presse

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Long-Range North Korean Missile Fell After Two Kilometers
Tokyo (AFP) Sept 1, 2006
A North Korean ballistic missile theoretically capable of reaching US territory fell into the sea after flying just two kilometers during a test launch last month, a report said Friday. Pyongyang on July 5 test-fired six short and mid-range missiles and one long-range missile, the Taepodong-2. All of them fell harmlessly in the Sea of Japan.

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