By Debra Killalea

It may sound like the unthinkable but the US could actually gain from allowing North Korea to do the one thing they've warned they'll do.

A new report by UK investment bank Exotix Capital reveals this option could give the US a major advantage.

"Military strategists might argue there will be more to gain by learning from the test than intercepting the missiles," it notes.

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The report, MAD or Madmen, comes as North Korean leader Kim Jong-un said he would hold off on a planned missile strike near the US territory.

But Kim warned the highly provocative move would go ahead in the event of further "reckless actions" by Washington.

The apparent easing off comes after a war of words between Pyongyang and Washington which stepped up last week.

Kim threatened to fire a missile into waters off Guam after Donald Trump promised to react with "fire and fury" to any missile threat.

On Monday, Kim appeared in photos sitting at a table with a large map marked by a straight line between what appeared to be northeastern North Korea and Guam, and passing over Japan - apparently showing the missiles' flight route.

Kim said North Korea would conduct the launches if the "Yankees persist in their extremely dangerous reckless actions on the Korean Peninsula and its vicinity," warning the United States to "think reasonably and judge properly" to avoid shaming itself, state media agency KCNA said.

OPTIONS VS COST

Kim Jong Un during an inspection of the KPA's Strategic Forces praised the military for drawing up a
Kim Jong Un during an inspection of the KPA's Strategic Forces praised the military for drawing up a "close and careful" plan to strike Guam. Photo / AP

The Exotix Capital report reveals some of the military options available to the US.

Analyst Stuart Culverhouse also highlights the potential ramifications on the global economy if conflict actually occurred.

While noting the economic significance pales in comparison to the humanitarian cost, the report notes the South Korean economy wouldn't be the only one affected.

Trade and capital flows would both be affected across the globe, the report warns, noting "with South Korea in the immediate firing line, the twelfth biggest economy in the world (at market exchange rates) at US$1.5 trillion, the impact on the global economy of a strike against it would be significant."

The report goes on to say a conflict on the Peninsula would disrupt global supply chains and world trade volumes as well as shipping and air travel.

Domestic currencies would also be hit due to reduced trade and capital flight (money leaving the country).

'MORE CONCERNING'

North Korea has sparked global condemnation with its recent intercontinental ballistic missile launches. Photo / AP
North Korea has sparked global condemnation with its recent intercontinental ballistic missile launches. Photo / AP

The report highlights that while the world is used to colourful and bellicose statements from North Korea, "the situation is now more concerning than perhaps at any other time over the past 20 years."

Not only does North Korea now possess weaponisable nuclear missiles which could pose a threat to the US and its allies, but "we now have two unpredictable leaders at centre stage."

While noting whether North Korea has the ability to weaponise its ballistic and nuclear technology is still under debate, "recent events put the MAD doctrine (Mutually Assured Destruction), which has guided the non-use of nuclear weapons for 55 years - and arguably kept the world safer as a result - at risk."

MILITARY OPTIONS

US President Donald Trump. Photo / AP
US President Donald Trump. Photo / AP

According to the report, military options may be limited but that doesn't mean they won't be used and if this happens South Korea is likely to bear the brunt of any retaliation.

The report goes on to list military options, but acknowledges each has major drawbacks.

A pre-emptive strike on North Korea for example may damage its nuclear capabilities but it would be unlikely to disarm it fully and would result in a fierce attack on Seoul, just 70kms away.

The US could deploy the THAAD missile system but it hasn't been tested in a live environment and if it failed this could lead to massive embarrassment to the US.

And while letting missiles fall into the waters around Guam would enable the west to determine North Korea's exact capabilities, the Trump administration is likely to face pressure to carry out a stronger response.

PEACE AT ANY COST

A local news program reporting on North Korea's threats to strike Guam with ballistic missiles. Photo / AP
A local news program reporting on North Korea's threats to strike Guam with ballistic missiles. Photo / AP

Only yesterday, South Korean President Moon Jae-in, urged North Korea to stop provocations and to commit to talks over its nuclear weapons program.

Moon, in a televised speech to coincide with the anniversary of World War II's end and the Korean Peninsula's liberation from Japanese colonial rule, said Seoul and Washington agree that the nuclear standoff should "absolutely be solved peacefully."

He said no US military action on the Korean Peninsula could be taken without Seoul's consent and the North could spur talks by stopping nuclear and missile tests.

"Our government will put everything on the line to prevent another war on the Korean Peninsula," Mr Moon said.

"Regardless of whatever twist and turns we could experience, the North Korean nuclear program should absolutely be solved peacefully, and the (South Korean) government and the US government don't have a different position on this."

- with AP