Market Insights


TitleKim 2, Trump 0: Hype with No Payoff for Trump and the United States2018-06-14 08:21

Kim 2, Trump 0: Hype with no payoff for Donald Trump and the United States  (Images of Al Capone’s Vault by Geraldo Rivera keep floating across my vision.)


Donald Trump made great fanfare about his willingness to meet Kim, Jong-un if the DPRK would commit to “complete, verifiable, irreversible denuclearization” (CVID). Leading up to the summit, he insisted that this was the only acceptable outcome.  However, the communique at the conclusion of the summit was a short statement absent any commitments and vague on details – much watered down from what the KPRK had promised to Trump’s predecessors Obama, Bush, Clinton.  (Furthermore, in the past, the DPRK had barely uttered these commitments before reneging. In other words, a promise by NK has zero value.)


Kim Jong-un came out of the summit smiling. A ruthless, murdering, 30-something dictator is on stage as equals with the most powerful leader in the world.  He has achieved something that his father and grandfather could never do. And he did not have to give up anything to achieve it.  And he and his new bud Donald have promised to do it again.  His creds back home are huge with the citizens of NK but more importantly with the ‘inner circle’. 


Secondly, the US has promised to scrap the next major annual military exercise scheduled for August.  Furthermore, Trump has acknowledged that they are “provocative war games” using the North’s terminology and belying the US decades-long position that they are purely defensive.  (Trump using the North’s terminology earns Kim extra points.)


Trump has unilaterally declared that North Korea is no longer a nuclear threat.   This dramatic change from just days before was precipitated by what? His own intelligence (or lack thereof)?  Kim has apparently seduced him with a charm offensive and Trump fell for it hook, line and sinker. 


On the positive side, there is a clear success from the summit. rather than threatening nuclear anhelation and exchanging insults, the two leaders are talking even if it is all platitudes.


It is just possible that Kim, at 35, looks into the future, decides that he does not want to be the leader of a basket case for the coming 35 years and realizes that he has to change. Furthermore, he might be enjoying international travel and the world spotlight.  The problem is that the West has nothing to offer Kim that he can use. Kim really has no way out of the quagmire that he inherited (and expanded).  A security guarantee, diplomatic recognition, lifting sanctions, and economic support offer more of a threat to his future than a solution.  His sole source of legitimacy is his ancestry. Any economic development would expose the total failure of his economy and the horror that his family has inflicted of his own people. They already know that the mantra that they are living in a workers’ paradise is a lie.  With economic opening and international exchange, they will be confronted with this inconvenient truth.   If Kim changes the paradigm in the North, his potential to be leader for another 35 years is also at risk. Unfortunately for Kim, even scoring 2:0 in the summit does not present him with a long term solution. 


##US North Korea Summit# Kim Scores
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