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NightWatch 20110714


For the Night of 13 July 2011

South Korea-North Korea: Update. Officials from the two Koreas once again failed to reach agreement on the disposition of the tourism facilities and property rights at the Mount Kumgang resort in eastern North Korea.

During a series of five meetings, which included that with South Korean private investors at the site on Wednesday,13 July, the North Koreans reiterated their determination to dispose of South Korean assets as prescribed by the North's new international tourism special district law. The law enables expropriation of the assets.

The North Koreans set 29 July as the new deadline by which the South should respond to its proposal for another meeting or else risk giving up its tourism rights.

Comment: The North's willingness to set successive new deadlines for settling the property rights issues means it has not yet achieved its financial goals. That, in turn, means the threat of nationalization is hollow because the North would obtain no cash from that action.

It might be willing to offer a share in management rights to Chinese or Russian entrepreneurs, but if it had a ready buyer, there would be no new deadline. The potential Chinese and Russian buyers know the only tourists and sources of profits are in South Korea..

Any sale of assets to Chinese or Russian entrepreneurs also would be encumbered by South Korean liens and legal claims to the properties that can be enforced in foreign courts, that is, outside North Korea.

Such sales would be subject to the market. As noted above, Mount Kumgang's appeal as a tourist spot is rooted in Korean culture. Thus, South Koreans control the value of the property and facilities because North Koreans are too poor to engage in tourism.

The North Korean purpose in the wrangling over Mount Kumgang is to squeeze more hard currency from South Korea, but South Korea has the upper hand no matter what the North does. That's because the tourists are all South Koreans. The North is running another bluff from which it cannot profit.

The North's leaders are avaricious, but have no business sense. Their threats and posturings are likely to blow up one of their only sure cash cows - the Diamond Mountain (Mount Kumgang) resort.

North Korea-China: Kim Chong-il on Tuesday held talks with visiting Chinese officials that were "aimed at solidifying the two nations' alliance. "Kim's youngest son and assumed successor, Kim Jong Un, took part in the meeting with Chinese Vice Premier Zhang Dejiang and other delegates.

The official Korean Central News Agency said Chinese officials with backgrounds on North Korea's nuclear activities and in dealings with the United States also took part in the discussion.

Comment: The guest list for the official banquet provided more insight into the purpose of this visit than the official news release. Most of the Chinese guests were second and third tier officials whose job is to execute, rather than make policy. The head of delegation was himself a Vice Premier - an economist with ties to Jilin Province and North Korea.

Possibly the most important Chinese official below the head of delegation was the current Governor of China's Jilin Province which borders North Korea. His presence signifies a business visit devoted to the next steps in developing the joint Chinese-North Korean economic zone. This topic received no news coverage. The visit was not related to the nuclear issue, based on the composition of the delegations.

The North Korean heir-designate is getting an education in development from the Chinese, for good or for ill.  Jong Un's presence reinforces other reporting that economic progress tops the North Korean national agenda at this time.

India: According to the Ministry of Home Affairs, on 13 July in Mumbai, three coordinated attacks using home-made bombs killed 21 and injured 141people. Because of the close timing of the blasts, "we infer that this was a coordinated attack by terrorists," Home Minister Palaniappan Chidambaram said.

India's preliminary investigations into the blasts found that seven improvised explosive devices were used and were wrapped in cloth bags and tiffin boxes. The Home Affairs Ministry said that the Indian Mujahidin is the most probable perpetrator.

Comment: The style of the attacks was amateurish compared to the sensational November 2008 attacks in Mumbai. The Indian Mujahedin appears to be a home grown Indian Muslim operation, aided by and possibly a proxy for Pakistan-based Islamic terrorists, but operating more or less autonomously.

The immediate effect of this attack will be to focus official investigations against the Indian Islamic population which exceeds 120 million people, rather than against Pakistan. Indian pressure on Pakistan to do more to restrain terrorists will ease for a time. Nevertheless, the involvement of Pakistani terrorists almost certainly will emerge.

One likely casualty of this attack will be the recent resumption of talks between Indian and Pakistani senior civil servants, which was just getting started again.

Afghanistan: In Kandahar on 13 July for the funeral of his half-brother Ahmed Wali Karzai, President Karzai announced that Shah Wali Karzai, his other brother, will replace Ahmed Wali Karzai as the chairman of the provincial council.

Prince Ali Seraj, of the national coalition of tribes, told Al Jazeera, "I believe and my people believe that this assassination was at the hands of a friend, who came from the same tribe and who had been serving for seven years so it is very difficult for Taliban to penetrate such a relationship. We believe it was totally personal."

Comment: The best views of the best Afghanistan analysts are that the killing of Ahmed Wali Karzai involved a criminal or personal dispute, not Taliban instigation. Wali Karzai blundered in a way that has not yet become public and paid for it with his life.

Ahmed Wali Karzai was a bit of an upstart in the arcane Pashtun politics in Kandahar Province, in the NightWatch experience. Several governors of Afghanistan were far more influential locally, but were hostile to Karzai and the Popalzai clan of the Durrani Pashtun confederacy.

With US military backing, President Karzai was able to install his half-brother as the local power broker. But the men he supplanted were real warlords; some from the Ghilzai Pashtun confederacy.

The point is that Wali Karzai's death will uproot and destabilize the system of patronage that he developed and which depended on him and US backing of the Karzai regime. But other systems preceded him and other leaders are available to replace him and maintain stability as well as he did, which was not very well.

One such leader is the current governor of Nangarhar Province, and former governor of Kandahar, Gul Agha Sherzai. Sherzai was removed from Kandahar in 2004 because of allegations of corruption and ties to the drug syndicates. At that time, Sherzai was considered as indispensable as was Wali Karzai.

In Afghanistan, so-called power vacuums do not exist because power is layered, diffuse and dynamic. There is always another leader with his own following and power structure who is ready and waiting for his opportunity to lead. Kandahar will not fall apart more than it already has. It has remained one of the most violent places in Afghanistan in 2011.

Libya: Rebel forces have retaken the village of Al-Qawalish, a rebel spokesman said 13 July. Forces loyal to Libyan leader Qadhafi took control of the village earlier in the day, but the rebels staged a successful attack to seize it back, the spokesman said.

Comment: This fighting is taking place south by southwest of Tripoli in the Nafusa Mountains. This is Berber territory, though the ethnic identity of the fighters has not been published. The significance is that there are three areas in Tripolitania that are not under Qadhafi's control. One is the coastal region west of Tripoli and bordering Tunisia. The next is the Berber territory and the third is Misrata. Qadhafi's domain is shrinking and his forces are exhausting themselves.

Europe: France advocates an emergency eurozone summit to prevent the Greek debt crisis from affecting Italy and Spain, a French government spokeswoman said 13 July. The spokeswoman said the focus of their work right now is how to involve the private sector in the Greek rescue plan. French President Nicolas Sarkozy said France backs European Council President Herman Van Rompuy's latest call for a eurozone meeting, saying France always supports holding eurozone meetings in times of need.

Comment: The bailouts add more debt to economies unable to pay existing debt. It is a short term shell game that looks unsustainable and unable to prevent a wider loss of confidence that obligations will be met by other nations. The Eurozone states have no solution, only short term fixes. The Germans can provide loans to the Greeks, but that actually worsens Greece's long term debt problems. If some European banks are buying Greek bonds, who holds their bonds and derivatives? This looks like a bubble that is close to bursting. Feedback invited.

End of NightWatch for 13 July.

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