North Korea

So let's review the last 60 years on the Korean Peninsula. Japan occupied Korea through the end of WWII, after which the North was controlled by the Soviet Union. After the Korean War (1950-1953), Kim Il-Sung adopted a policy of "self-reliance" which set the stage for North Korea's isolation from the rest of the modern world. It also resulted in the longest cease-fire in history. The United States has maintained a heavy troop presence there ever since the war.

According to the CIA Factbook, North Korea "demonized the US as the ultimate threat to its social system through state-funded propaganda, and molded political, economic, and military policies around the core ideological objective of eventual unification of Korea under Pyongyang's control. "

KIM Il Sung's son, KIM Jong Il (who died of heart attack over the weekend), was officially designated as his father's successor in 1980, assuming a growing political and managerial role until the elder KIM's death in 1994.

Under Kim Jong Il, North Korea focused exclusively on becoming a nuclear power at the cost of starving its own people. A German documentary film maker recently gained access to North Korea. Kim Jon Il's obsession has turned the capital, Pyongyang, into a bizarre movie set. Traffic cops stand in intersections directing non-existent traffic. High rise buildings are empty facades with elevators that don't operate.

The nuclear program was no empty promise. North Korea seemed to take great delight in firing ballistic missiles over Japan or at the Hawaiian islands. The missiles were clearly capable of carrying nuclear weapons.

The cost has been millions of North Koreans starving. It has often been speculated that the North would revolt against Kim but he was fondly referred to as "Dear Leader". A North Korean newscaster broke down in tears while announcing the death of Kim Il-Jong.

Kim Il-Jong did realize he needed to set a succession plan in motion. Instead of the 70-year senior Kim, North Korea now has his inexperienced 28-year old son Kim Jong-eun. Much like when an established monarch would pass, Kim Jong-eun is not guaranteed to remain in power.

First, it has long been assumed the only thing preventing the reunification of the Korean peninsula was Kim Jong-Il. Rival North Korean generals and Workers’ party officials will jostle for positions. China may not support reunification efforts which would allow a US ally to be on its border.

Kim Il-eun was promoted by his father to four-star general (though he has never been in the military). He may feel it necessary to prove his "street creds" by escalating hostilities against South Korea or US forces stationed in the Pacific. Or some of the general staff may take advantage of the younger Kim's lack of experience to start aggression.

The one good signs seems to be shares on Seoul’s Kospi index closed down 3.4 per cent. China may not want an economic crisis on its borders. Foreign investors, already leery about the European economic crisis, may become skittish about Pacific markets. This may create an incentive for cooler heads to prevail.

The one area that should cause some concern is the history between Pakistan and North Korea. Pakistan sold Stinger missiles to North Korea back in the late 1980s. Pakistan and US relations have heated up over the recently killing of Pakistani soldiers by US forces. Kim Jong-eun may be drawn into escalating this tension. The US is not in a position to deal with this two-pronged attack and still be able to keep Iran in check.