Jacob L. Shapiro: Hello everyone from Orlando, Florida. I am here with George Friedman this week who’s joining us for the podcast. Hi George, how’s it going?

George Friedman: I get by, how are you?

JLS: I’m doing alright. We’re here for Mauldin Economics’ Strategic Investment Conference and we decided to take a step away and put out this podcast this week for y’all. So the main thing that we want to talk about today is North Korea. George actually started off the conference proceedings here with something of a bang when he laid out some intelligence that we’ve been picking up from North Korea that seems to suggest that the United States is more likely than less likely to strike North Korea so George how about you lay out for podcast listeners exactly what you’ve been seeing?

GF: Well to begin with, Business Insider published something that I said the war was imminent, which I didn’t say but Business Insider wanted it to be. What basically we saw last week was first another carrier, the Reagan which is based in Japan being deployed toward the Korean peninsula. We also some very heavy exercises, some of which were scheduled, some not, in South Korea. We also saw some very heavy brass including the Chief of Naval Operations had been back visiting Guam. Guam is a very important because Guam is the strategic base for the bombers: B1s, B2s, B52s – will be coming out of there if there is an attack.

And finally, we saw something, which is interesting, which is that the Guam Chamber of Commerce on May 31st will be getting a briefing from DHS people, Department of Homeland Security, on civil defense. Now, what really struck me is I haven’t seen the term civil defense since I was a kid and suddenly it shows up in Guam and oddly enough all the other different movements that were taking place while not insignificant were not as significant to me as this. Why would they be holding briefings in Guam on civil defense? And that really stuck with me and then I went back to what I saw happening in February.

In February, there was a kind of fundamental shift in U.S. policy toward Korea. What had happened was the Koreans appear to have launched a missile fueled by solid state fuel. Now that’s important, because if it’s liquid fuel then satellites will have some warning time that it’s being fueled and getting ready to go. You don’t get that warning time with solid fuel. It’s ready to go from the very beginning and you won’t even know that it’s fueled.

Now there’s a question obviously of what state the development of a warhead is because it’s not easy to build a nuclear warhead. It’s pretty easy to detonate a device on the ground, much harder to build a warhead that you can fit on top of missile that can survive the launch and the reentry.

So, when the solid fuel issue emerged, suddenly the United States had to reevaluate its position. And if everyone recalls back in March, we started having all sorts of meetings, pronouncements on both sides, hysterical threats coming out of North Korea, just all the operatic things that lead up to a conflict. Then, the Chinese President Xi visited and Trump tweeted that if the Chinese help us with our problem with Korea, we would be much more forthcoming on trade issues. Now this has always been the case in U.S. policy going back for years but interestingly enough no one has ever tweeted it before, which I thought was charming. I thought isn’t that nice? You know, it was very nice to let us all know what we already know.

Things went quiet and were quiet until very recently. But either the Chinese didn’t help or the Chinese were unwilling to take the step you needed and in the end, we wound up in the last week with some significant movements of weapons into position that remind me at least of the kind of buildup we had during Desert Storm and other things of that sort. This is sort of the way we go to war. Sometimes, we’re hoping that they will accept this and capitulate. Saddam Hussein didn’t. We’re in a position either to bluff or play as the other side wants.

JLS: I want to push back a little bit against you to drill down deeper into this and one question I asked you yesterday was that when we think about North Korea and in general when we think of all regimes, we think of regime survival as being the most important thing. So first of all, why would North Korea get to a state where it would do something that they know would threaten the United States, they know that the United States is going to see this and it’s going to react in a particular way.

And then the other side of that equation is, what is in it for the United States to actually intervene here? Why not just let them have it? Are the North Koreas really going to fire it and risk mutually assured destruction because if they did fire something at the United States obviously many people would die but the United States would respond with overwhelming force and if you think through your method, it’s always said that actors don’t do things that are going to lead to their outright destruction. How do you respond to those two questions?

GF: Well that’s a shockingly good question, and don’t let it happen again. (laughs). Ok so first of all, the North Koreans and every country in the world is aware that the United States has a nuclear fetish. If you have a nuclear program, we’re going to negotiate with you. If you have a nuclear weapon, we’re not going to mess with you. The North Koreans badly want to reach a stage where they have a nuclear weapon. They survived very improbably the collapse of the Soviet Union and the transformation of China into a quasi-non-Maoist country. That they survived has been an extraordinary achievement. That they will continue to survive is their fundamental goal and they understand that South Korea really doesn’t want North Korea to collapse. Because then they would have to do what West Germany did with East Germany and this would be very expensive.

The Chinese are happy to have a buffer between them and South Korea. And very frankly, they use the North Koreans as kind of a tool. Every time, the U.S. presses the Chinese, North Koreans do something insane, the Americans go the Chinese and say “Hey, help us out.” They do, they come back to the table, we say now let’s get back to those trade talks and they say what? We just bailed you out and you want to talk about trade talks? It’s a good game, it’s not an iron clad game, but it’s one that they’ve been willing to do.

What the North Koreans want to do of course is to move from having a program to having a weapon. The United States is actually fairly content in letting them have a program. But they don’t want them to have a weapon. You asked why? First because once they have a weapon, we really can’t take steps against that. Even if they are not going to hit us, they might hit the Japanese or parts of South Korea or something like that.

And second, once that they have that cover, they can build ICBMs that put us in reach. Now, the probability of them using it is extremely low. But if you’re the president of the United States and you are facing something that is unlikely but catastrophic, you have pledged to preserve, protect and defend the constitution of the United States against all enemies foreign and domestic. That’s a very serious oath to take. And you know all military men do, I am not sure the president’s oath has that in it but it should. In any case, the president of the United States is going to look at very differently, what kind of risk can he take?

I think that North Koreans decided, looking at what appears looking from the outside chaos in Washington, that if there was a time to slip this through, this was the moment. The chaos from Washington is real but it doesn’t really define the posture of the American military. They remain fairly aware of what’s going on in the world. So, what happened is that with the evolution we saw with the missiles, the questions arose, how confident are we in our intelligence that the Koreans aren’t approaching a viable, nuclear weapon? And the answer comes back, if you are sitting at a coffee shop and BS’ing with the gang, not a chance. If you are secretary of defense, that kind of confidence can cost you.

So, they entered into the zone of uncertainty where we aren’t quite sure what they have or what they don’t have and that pushes us to make a decision. And the problem is that if they end up having the weapon, options are closed off. So for many, this is the last moment to exercise those options. And so, a carrier began to move, exercises were held. Two other carriers on the West Coast of the United States, they haven’t moved yet. If they move, that will be more of an indicator. But certainly, we’ve moved into a more aggressive posture.

Plus, the new President Moon of South Korea took a day off. This should not be such an exciting event except in South Korea apparently taking a day off is really a big deal for the president. You don’t do that. What he did is he went sort of incommunicado for 24 hours. Now personally, he might have wanted to get drunk, I don’t know. Or he went into some serious consultations of various sorts. It’s hard to tell. But the indicators are upticking to the United States at least establishing the possibility of an attack and possibly prepare for one.

JLS: Do you think this is going to be the nature of threats to the United States going forward in the next decades? I mean when we look at the things the United States has been involved in the world most seriously, it’s you know the Islamic State, North Korea, things that threaten the United States in some fundamental way. But it’s not the Soviet Union, it’s not even Russia or China, it’s not even going toe-to-toe with any kind of big power. I know you’ve written about the United States developing imperial power, developing imperial power, trying to develop any kind of self-awareness about its kind of imperial power. So do you think this is what U.S. conflict is going to look like in the coming decades or does this distract from some of the real state-on-state issues that the United States has with bigger countries?

GF: During the 20th century, the United States had two major systemic wars, the first and the second World War. And I would define a systemic war as when the entire international system destabilizes and you have large scale conflicts between nation-states, sometimes called peer-to-peer conflicts. We also had lots of minor interventions, we went into Mexico, we involved ourselves in the Philippines and had quite a civil war there, intervened in a civil war. We intervened in Nicaragua, in Haiti.

So, in fact the two types of war, one has a very limited political objective, sometimes attainable, sometimes not. The other is a systemic war whether there’s an unlimited possibility of disaster or triumph, where the world is changing its entire shape, I call that systemic wars because the entire system is reshaping itself. Every century has had some form of systemic war because nations rise and fall and they destabilize it.

When we look at the 19th century, it was Napoleonic wars where literally everything was on the table. In the 18th century, it was the Seven Years’ War which once again everything was on the table. So, the question is not is this way wars are going to be? The answer is there’s always two kinds of wars and my assumption is that the 21st century is not going to be the first century in which there is not a systemic war.

So, we will have large-scale war fare. We’ll also have more limited political wars, these are the ones we can afford to lose and we don’t do very well in these. Vietnam was an example of a limited war that we lost and the republic survived very nicely and moved on and the Soviet Union collapsed. Iraq has not yet been lost but it’s doing a very good imitation. So too Afghanistan. These are the regional wars that a great power may engage in. And let me say something about imperial wars before everybody gets upset.

An empire in my mind is not a formal entity like the British Empire was, like the Roman Empire was. It can be an informal reality. It is a situation of overwhelming economic presence throughout the world and great military power. The United States is one quarter of the world’s economy. That means that everything the United States does anywhere in the world is going to affect somebody.

The United States is also the only global military power. It became that in World War II when it invaded Europe and the Japanese Empire simultaneously in 1944, which was an enormous achievement. The United States doesn’t really want to be an empire. It’d rather watch the Super Bowl. But empire is a condition, it is not a decision, it is not a formal structure. It is simply that everything you do is going to tick somebody off. And sometimes they are going to try to do something against you.

The United States is in that condition. It really hasn’t accepted what it is, it has no ongoing operating system for managing it. It is now in the process of understanding the limits of this power but also understanding the reality of that power.

So, I think we will have wars like in the Middle East. We will probably have less than that as we get more prudent in what we select. But always the war that matters is the systemic war, that’s the one you can’t afford to lose. So, if you lose in Vietnam and you lose in Iraq and you lose everywhere and probably if you lose in Korea, life goes on. World War II as the Japanese and the Germans learned, this was not good to lose this war. It really meant a great deal. The Russians understood that and the British and the Americans as well, although the probability of being defeated was slight.

Still, we must understand that the idea that because you’re having these wars there will never again be a systemic war is unrealistic. And the idea that because we have systemic wars, we should ignore the political challenges is also unrealistic. We have both kinds of wars. And the military unfortunately will frequently prepare for all the political wars and then have to suddenly reorganize for the systemic war.

JLS: So, taking us back to North Korea a little bit, you actually said at one point that you thought that there was maybe a 70 percent chance around that of war breaking out between the United States and North Korea. If we’re wrong, what does that look like? What do these movements then mean and then what happens afterwards?

GF: Well the nice things about these movements is you can turn around and go home. Which is to say, if this is a bluff to unnerve the North Koreans, at the same time that they are launching missiles, if that’s what this is, you can decide what to do later. If you wait with a deployment, then a window opens that you can’t close because they are not there. So, it’s a prudent move that gives you options.

Now, one of the things to remember is that we’re unsure of what the North Koreans have. We do know that the North Koreans have a very powerful counterpunch. They have masses of artillery just north of the DMZ within range of Seoul which is a city of 25 million people, which we are partnered with through alliance and which we have responsibility not to destroy their capital and 25 million people.

The North Koreans may estimate that we will be restrained because of the deterrent threat that they have toward the city. They may also assume the United States remains convinced that they don’t have nuclear weapons and will wait. And that may be true. But they’re betting at this point that they can bluff a nuke well enough to say: you don’t know if we have one or not, you don’t know if we got it in a missile or in a boat heading to San Francisco harbor, you don’t know. And so that achieves for them, the primary goal: don’t mess with us.

Their primary goal is regime survival. And do not think of them as stupid, and the kid may be fat but he’s not crazy. He’s enjoying life and he’s also not oddly enough the sole ruler of North Korea. The Democratic People’s Republic of Korea is a complex mechanism. It has a leadership that lives extremely well, does business around the world under very different circumstances. They have shown no suicidal indications. This is not Japanese kamikazes, and this is not ISIS. These are people who survived and want to continue to survive. They look at the United States as extremely irrational and totally unpredictable.

So what’s interesting in this is, they look at the United States as a dangerous country. They still haven’t figured out why we bombed Kosovo. I am having trouble, I’ve always had trouble understanding this, but they don’t look at us as a rational actor. They look at us as a country torn internally, externally incomprehensible, extremely dangerous and powerful, that they have to manage and manipulate. And that’s what they’re trying to do.

The Americans look at them as if they were ISIS, that they want to die. That they are so committed to the fat boy that they just wanna die. And that’s also a kind of crazy view but it leads us to have very extreme reactions to their behavior. They have extreme reactions to ours. Neither side understands each other, which is at this moment why the United States within its own parameters may choose to become aggressive earlier rather than later.

JLS: I want to ask you one more question, it’s going to be a little bit of a curve ball. Would you say that North Korea is the last totalitarian state in the world from the age of totalitarian states or do you think it’s just something completely different from the totalitarian states that ruled in the 1930s and 40s?

GF: Let’s define that, the totalitarian states, the Soviet Union, Nazi Germany particularly had overarching ideologies and part of the regime was that everything was turning around that ideology and what made them totalitarian is that there was a totalistic view of the world that the public absorbed, much of them believed. And those that didn’t were killed. That made it this way. This is more like what Karl Marx called an Oriental despotism and by that it is ruled by a family, not by a political party. It is ruled by a family that fights among itself apparently. But also has an infrastructure under it and it is infinitely more corrupt than Stalin or Hitler.

So one of things you have to remember about totalitarian societies is the incorruptibility of the leader. Stalin really didn’t steal very much. He didn’t need to, but you know he didn’t. Neither did Hitler, he was a very frugal person. Personal luxuries didn’t apply to them because they were, like Robespierre, ascetic, they didn’t do it.

No one will ever call the North Korean leadership ascetic. No one will ever claim they actually believe in anything beyond survival, although they may claim. They do have a reign of terror. Now, the reign of terror must be distinguished from totalitarianism. It can be very good, it can be very efficient. There are other countries where it is terrifying to disagree. Saudi Arabia is not one that I would, you know, run feminism up the flag pole.

So is it the only one? It’s a wonderful example of Oriental despotism. It’s not the only one but they do a mighty good job.

JLS: Fair enough. Thanks for joining us George and thank you all for listening. As always you can write into us at comments@geopoliticalfutures.com if you have any suggestions for topics or any critiques or other things that you’d like us to take up in this podcast and we will see you all next week.