Game of Bluffing – US Orders China to Cut off Oil to North Korea, Or Else…

Once again Nikki Haley is writing checks the US can't cash

As expected, there isn’t much President Donald Trump could do to badass North Korea Kim Jong-un after the hermit kingdom blasted another ballistic missile. Mr. Kim has self-proclaimed his regime a “nuclear state” after his latest round of demonstration – sending Hwasong-15 in a 53-minutes ride above the space, reaching a height of up to 4,500 kilometres (2,800 miles).

In retaliation to the North Korea’s latest missile test, which can now reach Washington, Trump could only say – “It is a situation that we will handle. We will take care of it.” Unlike previously where the U.S. president would start a furious war of words with Kim on Twitter, this time he wasn’t interested at all. Instead, he started a new war with British Prime Minister Theresa May.

Trump apparently retweet three anti-Muslim videos from a leader of an anti-immigrant political group in the U.K. Eager to score some brownie points, May condemned Trump’s hateful message, only to be lectured by Trump. The U.S. president told the British PM to do her job and focus on the destructive radical Islamic terrorism taking place in U.K. instead.

President Trump appears to have given up on Dictator Kim, leaving the fight on North Korea to U.S. Ambassador to the United Nations Nikki Haley. While Trump has called Chinese President Xi Jinping and say the time has come for China to cut off crude oil supplies to the North, the U.S. president didn’t find it urgent enough to use Twitter to pressure China, as he had done previously.

In what appears to be a threat to China, Nikki Haley said – “We now turn to President Xi to also take that stand (cut off oil supplies to North Korea). We believe he has an opportunity to do the right thing for the benefit of all countries. China must show leadership and follow through. China can do this on its own, or we can take the oil situation into our own hands.”

What immediate actions – presumably unilaterally – that the superpower U.S. would take against the North Korea is unclear at the moment. Short of a pre-emptive military strike and a full scale trade war against China for not doing what the U.S. has ordered it to do, there isn’t much the Yankees can do to intimidate North Korea that they had not already tried.

Haley said that crude oil is the driver of North Korea’s nuclear program. Of course, she was sending a message to Beijing that Pyongyang could be brought down to its knees if the Chinese do according to Washington’s plan. She noted that North Korea came to the negotiating table shortly after China briefly cut off oil shipments in 2003, so the U.S. wants the same trick.

Although the U.S. sanctions have helped to disrupt 90% of North Korean trade and 30% of oil imports, China continues to send North Korea crude oil, the raw input for fuels like gasoline and diesel. Energy Information Administration (EIA) claims China sends an estimated 10,000 barrels per day to North Korea’s only operating refinery near the Chinese border.

In September, China announced it would reduce shipments of refined petroleum products to North Korea to 2 million barrels per year. Fighting a losing battle against the notorious Kim Jong-un, the U.S. is out of ideas and is depending on Beijing to completely cut offenergy exports to North Korea. China’s refusal to play balls, however, has been frustrating to Washington.

Why should China take orders from America, when such a drastic action of suffocating North Korea would push the defiant kingdom to the wall and risk retaliation? As much as the U.S. wants the world to believe that North Korea’s nuclear program is a threat to the world, in reality, the hermit kingdom’s enemies have always been the U.S., South Korea and Japan only.

The U.S. can easily solve the problem it created in the first place. It was the CIA who admitted that Kim Jong-un is not crazy but a “very rational actor”. In fact, despite his young age, Mr. Kim is a brilliant villain when compared to Libyan dictator Muammar Gaddafi and Iraqi Saddam Hussein. Kim wants to stay alive and nuclear weapon is his only passport to survival.

However, both alpha-male Donald Trump and Kim Jong-un cannot afford to lose face. The U.S. refuses to stop its provocative joint South Korea war games. Likewise, the North Korea refuses to stop its nuclear program. Therefore, the Korean Crisis has nothing to do with China but everything to do with the U.S. flexing its military muscles in the Korean Peninsula.

Even if China has the capability to turn off the crude oil pipeline to North Korea, it would be a political suicide for President Xi Jinping to do as ordered by the U.S. since such action would be seen by the Chinese Communist Party as “kowtowing to America”. Furthermore, North Korea is its biggest bargaining chip as check and balance to the U.S. presence in the region.

Hence, the next logical step that the U.S. would take, before putting boots on the ground for a Korean War 2, is to unleash a trade war on China. Two days ago, Commerce Secretary Wilbur Ross has used the powers of his department for the first time in 20 years to self-initiate anti-dumping duty and countervailing duty cases against the People’s Republic of China.

The investigations cover more than US$600 million worth of imports of common alloy aluminium sheet from China. Besides sending a message that President Trump is fulfilling his promise to American businesses, workers and farmers about enforcing trade laws and protecting American business, the action is seen as a first step toward a possible large scale trade war against China.

Will President Xi Jinping cowardly surrender to this initial threat by agreeing to tighten the tap on crude oil pipeline to the North? If he does, it would send a signal that Washington could hold a weak Xi Jinping to ransom. More importantly, it would be interpreted as a bluff to China’s earlier threat – Beijing to defend North Korea if Washington attacked first.

Washington knew that they have very little to lose even if a Korea War 2 breaks out. Their homeland is thousands of miles away. The refugees as a result of a war would be China’s problem. North Korea’s bombardment using 11,000 conventional artilleries would be South Korea’s problem. Ballistic missiles reaching Japanese soil would be Japan’s problem.

On the other hand, if Beijing shows signs of retaliation and calls Washington bluff, Trump might think twice about engaging the Chinese in a full-blown trade war. China might not necessarily lose in a trade war since the fact remains that both nations’ economies are heavily intertwined today. Knowing Trump’s business background, it’s safe to call his bluff.

Of course, China could be playing “tai-chi” with America, as what it appears to be doing now. Dragging its feet while giving more time to North Korea to fine-tune and perfect its ballistic missiles and even its nuclear weapon seems to be working. North Korea is too precious a chess piece to be sacrificed. Take away its nuclear program; Kim Jong-un is no different than Robert Mugabe or other dictators America works with.

Source: Finance Twitter