North Korea – is there a next move?

With confirmation of the underground nuclear test yesterday by the Democratic Peoples Republic of Korea (DPRK) drawing the ire of world leaders across the spectrum, there appears to be little that can be done other than a full scale assault on facilities or so called ‘regime change’.

With neither option favoured by the DPRK’s main powerful neighbour China there are talks of possible sanctions, though once again this is only likely to harm the DPRK’s 23 million population, not the ruling elite.

So unless the US can pull a miracle out its pocket – not something George W Bush has shown himself good at so far – it looks likely that the whole geopolitical situation in the region will dramatically change over the next few years, especially as the DPRK sits between the regions three superpowers; China, Japan and South Korea.

Japan is the nation most likely to change over the next few years, already becoming more strident and nationalistic after years post war navel gazing it is starting to feel more confident on the world stage. There are calls to revise the Japanese constitution – drawn up with the firm guidance of the USA after the end of the Second World War – so that Japan can redefine the rules of engagement of its current defence force. Of course this would be a concern to the Chinese, who still hold strong the memories of Japans pre-war activities on its own territory.

The certainty that faces Mr Bush this morning as he meets with his advisors is that whatever path the USA chooses to take today will have far wider and longer repercussions than had it made those decisions a few months ago.

The next few days and weeks of sabre rattling will undoubtedly cause market uncertainty and volatility in the region. Good for traders, but perhaps not so good for the regional economy.