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Did Donald Trump just “pledge that the U.S. will wage pre-emptive war” against North Korea? This question from Brookings Institution head Strobe Talbott isn’t academic — it’s now a central part of investors’ 2017 calculations.

It’s also among the reasons last year’s 9 percent gold rally (to about $1,151 per ounce) has legs as geopolitics trumps economics in the world’s most dynamic region. Escalating Washington-Pyongyang tensions alone could make surveys predicting a 12 percent or 13 percent bullion surge this year look conservative. The South China Sea and Taiwan, remember, are additional flash points that could take risk-on trades to new heights.

Trump’s people caution against reading too much into the president-elect’s tweets. Yet one he sent Jan. 2 — “North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S. It won’t happen!” — has security wags in a whirl and asking questions akin to Talbott’s. South Korean and Japanese officials are channeling Kellyanne Conway, explaining what they hope Trump might, possibly, perhaps have meant. I guess Trump’s offer to discuss nukes with Kim over a hamburger is off the menu.

One theory is that Trump aims to knock rivals off balance and increase bargaining leverage. Trump’s chat with Taiwan President Tsai Ing-wen could have been a sign, for instance, of the lengths he’ll go to win trade concessions from Beijing, including upending the “one-China” policy. Trouble is, China will push back. It briefly seized a U.S. Navy drone in the South China Sea, sailed an aircraft carrier close to Taiwan and conducted military drills in disputed waters.

It’s impossible to know where Trump might strike next. He’s even firing 140-character attacks at U.S. intelligence agencies, while tweeting affectionately at Vladimir Putin. But will North Korea, China and others get the distinction between rhetorical pokes and actionable threats?

We’re entering what Ian Bremmer of Eurasia Group calls a “geopolitical recession.” Cooler heads might have prevailed if not for the last Republican administration’s antics. When President George W. Bush in 2002 lumped three enemies together and invaded one, Iraq, he increased incentives for Pyongyang and Tehran to develop nuclear deterrence. He also set a precedent that make Trump’s present-day tweets dangerous — and, perhaps, even actionable from Pyongyang’s point of view.

As nutty and murderous as the Kim dynasty is, the family isn’t the worst clan in Pyongyang. The assessment of experts like Bradley Martin, author of “Under the Loving Care of the Fatherly Leader,” is this: Be careful what you wish for when hawking the view regime change would bring peace to North Asia. Kim Jong Un’s missile tests and provocations are as much about placating the trigger-happy generals peering over his shoulder as trolling Washington. The worry is that Trump will embolden the generals to push Kim toward an attack before the United States does. The folks at Brookings and other think tanks may get nuance. Isolated, Cold War commanders perpetually at DEFCON 2, not so much.

A new tack is welcome, considering the paltry results of Presidents Barack Obama, Bush and Bill Clinton. But Trump might first want to take office and devise a specific strategy that involves Seoul, Tokyo and Beijing. China is the key, of course. In a Nov. 30 column, I recommended naming, shaming and punishing mainland companies helping Kim evade U.N. sanctions. Thus far, Trump’s tweets have China on its hind legs, reducing the odds of cooperation.

Bullish gold bets also may profit from South China Sea intrigue. When Howard French was writing his new book about China’s global ambitions, “Everything Under the Heavens,” the world assumed a Hillary Clinton presidency. Given Trump’s recent tweets, it’s impossible to know how he’ll respond to, as French puts it, Beijing “supplanting American power and influence in its nearby maritime regions, which are seen as an irreplaceable steppingstone along the way to becoming a true global power in the 21st century.”

Beijing is pushing ahead with giant reclamation projects on disputed islands. On Dec. 5, Trump decried Chinese efforts “to build a massive military complex in the middle of the South China Sea.” Yet the ambitions of President Xi Jinping, China’s most influential leader in generations, may result in more pushback than Trump anticipates. Recent years have seen an explosion of fighter-jet confrontations between China and Japan. You don’t need Tom Clancy’s imagination to game out how a miscommunication or accident could create a crisis at any moment. Both Xi and Prime Minister Shinzo Abe are ramping up military budgets and capabilities.

That’s putting a fast-growing number of vessels and aircraft in dangerously close proximity. Trump, who’s won no points in Pyongyang suggesting Tokyo and Seoul develop nukes, is almost sure to introduce more U.S. warships into the mix. If so, he’s just as sure to add luster to safe havens like gold.

Based in Tokyo, William Pesek is executive editor of Barron’s Asia and writes on Asian issues. www.barronsasia.com

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