North Korea’s Nuclear Test: What Are The Implications?

North Korea’s third nuclear test, conducted on Tuesday February 12, was no surprise. The regime’s media has openly been discussing a test in recent weeks, and South Korean authorities had warned a detonation could come at any time.

BMI has been expecting a new nuclear test on and off for some time now. The timing appears to have been chosen to commemorate the birthday on February 16 of North Korea’s late leader, Kim Jong Il; this is in line with Pyongyang’s history of carrying out grand gestures ahead of dates of national importance.

The timing may also be interpreted as a snub to South Korea’s outgoing president, Lee Myung-bak, who leaves office on February 25. North Korea blames Lee’s hardline stance for a sharp deterioration in inter-Korean relations since he took office five years earlier. In Business Monitor Online today, we discuss several implications of the nuclear test. Some of these are listed below:

  • The detonation’s yield was estimated at 6-7 kilotons (kt). This is a ‘bigger bang’ than the first two nuclear tests North Korea has carried out – but is still far less than the 16-21 kt explosions of the bombs dropped on Japan in 1945, let alone the warheads possessed by the world’s major nuclear powers.
  • North Korea has ruined any chances of improving relations with South Korea, and incoming president Park Geun-hye, any time soon. This will be to Pyongyang’s disadvantage.
  • The nuclear test demonstrated that China – which opposed the move – has very little influence over North Korea’s decision-making.
  • The test will bolster the position of Japan’s nationalist politicians, who want a more robust military.
  • South Korea’s financial markets were very muted in response, demonstrating that the nuclear test had largely been factored in already. Overall, BMI has observed that the Kospi index and the won currency have been very resilient to Pyongyang’s provocations over the past decade.

What Next?

With the world’s major powers condemning North Korea, Pyongyang is likely to be isolated for the foreseeable future. Hopes have largely faded that leader Kim Jong Un will take his country along a reformist path.

In the 14 months since he took office, there have been mixed signals about Kim’s intentions. He has modernised North Korea’s public image and purged several powerful generals. He allowed Eric Schmidt, chairman of Google, and Bill Richardson, a former US governor of New Mexico, to visit the country in January. In his new year’s address, Kim even sounded relatively conciliatory towards South Korea.

All this seemed to suggest Kim could be a reformer. Yet at the same time, Pyongyang has carried out two rocket launches and now a nuclear test, and retained its official ‘military-first’ ideology. None of this means reform is impossible, but it does suggest North Korea will not change its tune any time soon.

By maintaining its hardline policies, Pyongyang is alienating friend and foe and depriving itself of economic opportunities.