February 19, 2011
On 18 February 2011, Admiral Robert F. Willard , Commander, U.S. Pacific Command (PACOM), stated that the potential for North Korea to undertake new provocative action within months, was a more immediate concern to the United States than North Korea’s development of a new missile/rocket launch facility along the border with China. This was reiterated later in the day by Prime Minister Kim Hwang-Sik, citing diplomatic isolation and economic difficulties as contributing to the potential for further provocation. Sources have cited various reasons for an imminent provocation, including US-ROK Combined Forces Command, Key Resolve and Foal Eagle exercises, scheduled for 28 February to 10 March; a proposed, but as yet unscheduled South Korean nationwide military-civilian defense drill; and diplomatic isolation, exemplified by the abject failure of North Korea’s direct appeal for food aid. The heightened immediate risk is offset by a general consensus that medium-term risk of escalation is considerably lower, outside of miscalculation outliers. Provided the anticipated provocation is within the boundary of expectations, the inevitable short-term fall in affected markets will attract a stronger rebound.