South Korean Defense Minister Confirms Torpedo Sunk Cheonan; Next Step: Escalation
As Zero Hedge first reported, rumors within the South Korean community that North Korea would receive the full blame for the tragic sinking of the South Korean ship Cheonan have turned out to be true. Today, the WSJ confirms: "South Korea's top military official said Sunday that a torpedo likely
exploded under the Cheonan, the South Korean patrol boat that sank a
month ago near the maritime border with North Korea, edging Seoul even
closer to declaring it was attacked by forces from the North." So with the obvious finally confirmed by everyone, the only question now is "what's next?" According to the WSJ, "South
Korea faces several constraints in penalizing Pyongyang, starting with
the prospect that a military response could escalate into a war that no
one here wants. And the timing of a response may be shaped by an
approaching election and the amount of time and effort it takes to
rally international support for economic penalties." Alas, the animosity between the two countries runs so deep that mitigating the populist response may just be a task a tad too impossible for either administration to accomplish.
Defense Minister Kim Tae-young stopped just short of blaming North
Korea for the March 26 sinking that killed 46 sailors. "I think the
bubble jet effect caused by a heavy torpedo is the most likely cause,"
Also Sunday, the lead investigator of the sinking said his team had
concluded that a "non-contact" explosion tore the ship apart. A salvage
crew on Saturday recovered the ship's second severed half, its bow,
after raising its stern on April 15.
The statements marked a turning point in an investigation that has
already seemed long in a place where suspicion of North Korea runs
high. The event has received saturation media coverage. Government
officials have already said privately that they strongly suspect the
North is behind the sinking.
But officials largely insisted on waiting to make a final statement
until the ship was recovered, a process hampered by late winter weather
and difficult sea conditions. In the meantime, officials privately say,
they are looking for concrete evidence to build a case to penalize
Such a response is unlikely to include military force. South Korea
has stopped short of such a response to previous acts of aggression,
from the 1987 explosion of a Korean Air jet near Myanmar to the July
2008 killing of a South Korean tourist at a North Korean resort by a
North Korean soldier. Though the public favors punishing the North,
there is no appetite for any action close to war that would disrupt the
South Korean economy or destabilize the North enough to require the
South to take it over.
President Lee Myung-bak said last week he has no intention of invading the North.
The likely recourse, according to a high-ranking government
official, is that South Korea would ask the United Nations Security
Council to create new economic penalties that would be imposed by many
countries. Meanwhile, Seoul would end its own remaining economic
activities with North Korea.
It is easy to see why neither side wants war to be the ultimate outcome. Yet that may be more difficult to achieve than anticipated:
If North Korea is ultimately blamed, South Korean officials don't expect difficulty building public support to penalize it.
While the long-tense relations between the two Koreas thawed after
leaders met for a summit in 2000, the goodwill didn't last long. It
began to disappear after a 2002 naval clash near where the Cheonan sank
killed six South Korean sailors and eroded further when Pyongyang
tested a nuclear weapon in 2006. In the past year, two spy
incidents—including the arrest announced last week of two men sent to
kill a prominent North Korean defector—stamped out much of the
remaining sympathy for the North.
No matter what, we are confident that US capital markets will reward the stocks of defense (and offense) companies richly. After all war is what got America (and the world) out of the Great Depression. Baby steps.