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China recently became the second largest net oil importer in the world behind the United States and the world's largest global energy consumer. Gas imports have also risen in recent years, and China became a net natural gas importer for the first time in almost two decades in 2007.

Japan is the third largest net importer of crude oil behind the United States and China, as well as the world's largest importer of liquefied natural gas (LNG), owing to few domestic energy resources.

Hydrocarbon reserves in the East China Sea are difficult to determine. The area is underexplored and the territorial disputes surrounding ownership of potentially rich oil and natural gas deposits have precluded further development.

China began exploration activities in the Each China Sea in the 1980's, discovering the Pinghu oil and gas field in 1983. Japan co-financed two oil and gas pipelines running from the Pinghu field to Shanghai and the Ningbo onshore terminal on the Chinese mainland through the Asian Development Bank and its own Japanese Bank of International Cooperation (JBIC).

Only the Pinghu field, operational since 1998, has produced oil in significant quantities to date. Pinghu's production peaked at around 8,000 to 10,000 barrels per day (bbl/d) of oil and condensate in the late 1990's, and leveled off to around 400 bbl/d in recent years. In the medium-term, the East China Sea is not expected to become a significant supplier of oil.

EIA estimates that the East China Sea has between 1 and 2 trillion cubic feet (Tcf) in proven and probable natural gas reserves.

In 2012, an independent evaluation estimated probable reserves of 119 Bcf of natural gas in LS 36-1, a promising gas field north of Taiwan currently being developed as a joint venture between CNOOC and U.K. firm Primeline Petroleum Corp.

The uncontested Pinghu field began producing in 1998, reaching a peak of approximately 40 to 60 million cubic feet per day (Mmcf/d) in the mid-2000's and declining in recent years.

China began producing at the contested Tianwaitian/Kashi field in 2006, claiming it as part of its Exclusive Economic Zone.

The Chinese government prioritizes boosting the share of natural gas as part of total energy consumption to alleviate high pollution from the country's heavy coal use. To that end, Chinese authorities intend to ramp up production and increase East China Sea gas to flow into the Yangtze River delta region, which includes Shanghai and Hangzhou, two large cities with growing gas demand.

In the 1990's, several foreign companies drilled a series of dry holes in uncontested waters.

In 2003, Unocal and Royal Dutch Shell announced a joint venture (JV) with CNOOC and Sinopec to explore gas reserves in the Xihu/Okinawa trough. However, Unocal and Shell withdrew from exploration projects in late 2004, citing doubts over the commercial viability of developing energy resources in the disputed area.

The companies plan to build pipelines and a 42 Mmcf/d onshore processing terminal at Wenzhou to accept the future gas supplies from the LS 36-1 field.

Despite multiple rounds of high-level negotiations between China and Japan, the two countries have thus far been unable to resolve territorial issues related to the East China Sea.

Until these disputes are resolved, it is likely that the East China Sea will remain underexplored and its energy resources will not be fully developed.

The Daioyu/Senkaku Islands consist of five uninhabited islets and three barren rocks. Approximately 120 nautical miles southwest of Okinawa, the islands are situated on a continental shelf with the Xihu/Okinawa trough to the south separating them from the nearby Ryukyu Islands.

For several decades after 1945, the United States administered the islands as part of the post-war occupation of Okinawa. The islands generated little attention during this time

Although China had not previously disputed Japanese claims, the PRC claimed the islands in May 1970 after Japan and Taiwan held talks on joint exploration of energy resources in the East China Sea.

China claims the disputed land based on historic use of the islands as navigational aids. In addition, the government links the territory to the 1895 Shimonoseki Peace Treaty that removed Japanese claims to Taiwan and Chinese lands after World War II.

Japan claims that it incorporated the islands as vacant territory (terra nullius) in 1895 and points to continuous administration of the islands since that time as part of the Nansei Shoto island group.

Japan defines its boundary as the UNCLOS Exclusive Economic Zone (EEZ) extending westward from its southern Kyushyu island and Ryukyu islands.

China defines its boundary using the UNCLOS principle of the natural extension of its continental shelf.

Under UNCLOS, Article 121 (3), "Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf". The Japanese have claimed that the disputed islands generate an EEZ and continental shelf. China has not taken an official position on the status of the Daioyu/Senkakus as rocks or islands.

In the first case, Japan does not acknowledge China's claim to the islands, and thus it does not recognize a dispute, instead characterizing Beijing's moves as Chinese aggression.

In the second instance, China sees its increased presence as a way to either cow the other claimant or to help China build a stronger case should the dispute ever go to international arbitration.

Japan has already recognized several shortcomings in its own defense capabilities

But most Japanese plans are slated for implementation no sooner than 2015. This leaves Tokyo unable to effectively counter Chinese activity for two more years.

Washington has said it does not recognize any sovereignty over the islands, but it does recognize Japanese administrative control, meaning that by default, Washington supports Japan. But the United States does not want a violent clash between Japan and China. By increasing its direct involvement, Washington can reassure Tokyo of its support, softening the pressure for Japan to take more aggressive action, and it can serve notice to China that more aggressive action would involve not only Japan but also the United States. 


But this approach assumes China is willing to step back. In China's view, the United States is trying to contain Beijing and encroach on its sphere of influence. Beijing sees the evidence of this in Washington's pivot to Asia, in the expansion of its political and defense relations with Southeast Asian states and in its strengthened military posture throughout the region, particularly in Australia and the Philippines.

In 2001, after a collision between a Chinese Jian-8 and a U.S. EP-3E, China held the plane on Hainan Island and demanded a U.S. apology. But more than just seeking an apology or trying to pry secrets from the plane's airframe, China used the opportunity to try to show other Asian states that the United States and its military could be countered in Asia.

Japan is making more moves to guard against China's rise

North Korea has also spurred Japan to change.

Japan's neighbors are naturally wary when they see the country relatively unified, experimenting with new policies and trying to show that it remains a major world power.

The U.S. tried for decades to encourage Japan to contribute more to international security, but Japan offered mostly tokens of support, using its pacifist constitution as a means of dodging heavier commitments.

Essentially, Washington must worry about both China's challenge to the status quo and Japan's potential recalcitrance to China's rise. Washington wants its allies, both Japan and also Korea, to carry more of the burden of preserving order, but it does not want to lose control over the initiation of conflict, which is a risk when the allies start taking on more responsibility and improving their power projection capabilities as they've done, for instance, with aerial refueling.

Later in the week, Ben Levisohn authored a column in Barron's called "Smoke Signals from China." He wrote, "In the classic disaster flick 'The Towering Inferno' partygoers ignored a fire in a storage room because they assumed it has been contained. Are investors making the same mistake with China?"

Meanwhile, Goldman Sachs -- where in November 2001 Jim O'Neil coined the term BRICs and forecast that China might surpass the United States economically by 2028 -- cut its forecast of Chinese growth to 7.4 percent. 

Suddenly finding Stratfor amid the conventional wisdom regarding China does feel odd, I must admit. Having first noted the underlying contradictions in China's economic growth years ago, when most viewed China as the miracle Japan wasn't, and having been scorned for not understanding the shift in global power underway, it is gratifying to now have a lot of company.

One of the things masking China's weakening has been Chinese statistics, which Krugman referred to as "even more fictional than most."

China in fact has had an extraordinary period of growth. The last 30 years have been remarkable, marred only by the fact that the Chinese started at such a low point due to the policies of the Maoist period.

China's growth surge was built on a very unglamorous fact: Chinese wages were far below Western wages, and therefore the Chinese were able to produce a certain class of products at lower cost than possible in the West.

China had another essential policy: Beijing was terrified of unemployment and the social consequences that flow from it. This was a rational fear, but one that contradicted China's main strength, its wage advantage.

Growing the economy is possible, but not growing profitability. Eventually, the economy will be dragged down by its inefficiency. 

As businesses become inefficient, production costs rise. And that leads to inflation. As money is lent to keep inefficient businesses going, inflation increases even more markedly. The increase in inefficiency is compounded by the growth of the money supply prompted by aggressive lending to keep the economy going. As this persisted over many years, the inefficiencies built into the Chinese economy have become staggering. 

China's overall per capita GDP is around the same level as the Dominican Republic, Serbia, Thailand or Jamaica.

The Chinese have maintained a strategy of depending on exports without taking into account the operation of the business cycle in the West, which means that periodic and substantial contractions of demand will occur. China's industrial plant is geared to Western demand. When Western demand contracted, the result was the mess you see now.

The Chinese can prevent the kind of crash that struck East Asia in 1997. Their currency isn't convertible, so there can't be a run on it. They continue to have a command economy; they are still communist, after all. But they cannot avoid the consequences of their economic reality, and the longer they put off the day of reckoning, the harder it will become to recover from it.

The Chinese economic performance will degrade, but crisis will be avoided and political interests protected. Since much of China never benefited from the boom, there is a massive force that has felt marginalized and victimized by coastal elites. That is not a bad foundation for the Communist Party to rely on.

Rather than the feared repatriation of funds, the United States will continue to be the target of major Chinese cash inflows.

In a world where Europe is still reeling, only the United States is both secure and large enough to contain Chinese appetites for safety. Just as Japanese investment in the 1990s represented capital flight rather than a healthy investment appetite, so the behavior we have seen from Chinese investors in recent years is capital flight:

The major shift in the international order will be the decline of China's role in the region. China's ability to project military power in Asia has been substantially overestimated.

Its naval capacity is still limited compared with the United States. The idea that it will compensate for internal economic problems by genuine (as opposed to rhetorical) military action is therefore unlikely.

China will continue to be a major power, and it will continue to matter a great deal economically. Being troubled is not the same as ceasing to exist. China will always exist. It will, however, no longer be the low-wage, high-growth center of the world. Like Japan before it, it will play a different role.

in 2008 China and Japan had signed a resource-sharing deal for a disputed oil field, called Chunxiao by Beijing and Shirakaba by Tokyo. Then, two years ago, Japan accused China of breaking its word by going ahead on its own.

Looking at who had sought oil or gas there previously - as far back as the 1980s -- points to who now might lose out under today's conditions.

A number of foreign firms have partnered with China in the ocean since the country began exploring there from 1983

The first assumption was that the United States was the dominant political and military power but that such power was less significant than before, since economics was the new focus. The second phase still revolved around the three Great Powers -- the United States, China and Europe -- but involved a major shift in the worldview of the United States, which then assumed that pre-eminence included the power to reshape the Islamic world through military action while China and Europe single-mindedly focused on economic matters. 

Nothing is as it was in 1991.

Europe primarily defined itself as an economic power, with sovereignty largely retained by its members but shaped by the rule of the European Union. Europe tried to have it all: economic integration and individual states. But now this untenable idea has reached its end and Europe is fragmenting.

Germany wants to retain the European Union to protect German trade interests and because Berlin properly fears the political consequences of a fragmented Europe.

In the indebted peripheral region, Cyprus has been treated with particular economic savagery as part of the bailout process. Certainly, the Cypriots acted irresponsibly. But that label applies to all of the EU members, including Germany, who created an economic plant so vast that it could not begin to consume what it produces -- making the country utterly dependent on the willingness of others to buy German goods.

Europe can no longer afford pride, and it is every nation for itself. Cyprus set the precedent that the weak will be crushed. It serves as a lesson to other weakening nations, a lesson that over time will transform the European idea of integration and sovereignty.

Authoritarian nationalism is an old European cure-all, one that is re-emerging, since no one wants to be the next Cyprus.

It is nice to imagine expanded domestic demand, but in a country as impoverished as China, increasing demand requires revolutionizing life in the interior. China has tried this many times. It has never worked, and in any case China certainly couldn't make it work in the time needed.

It is interesting to recall the extravagant claims about the future of Japan in the 1980s. Awestruck by growth rates, Westerners did not see the hollowing out of the financial system as growth rates were sustained by cutting prices and profits. Japan's miracle seemed to be eternal. It wasn't, and neither is China's. And China has a problem that Japan didn't: a billion impoverished people. Japan exists, but behaves differently than it did before; the same is happening to China.

Both Europe and China thought about the world in the post-Cold War period similarly. Each believed that geopolitical questions and even questions of domestic politics could be suppressed and sometimes even ignored.

Periods of prosperity, of course, always alternate with periods of austerity, and now history has caught up with Europe and China.

The greatest military power in the world has the ability to defeat armies. But it is far more difficult to reshape societies in America's image.

The United States has emerged into the new period with what is still the largest economy in the world with the fewest economic problems of the three pillars of the post-Cold War world. It has also emerged with the greatest military power.

Now, we are at a point where the post-Cold War model no longer explains the behavior of the world. We are thus entering a new era. I don't have a good buzzword for the phase we're entering, since most periods are given a label in hindsight.

First, the United States remains the world's dominant power in all dimensions. It will act with caution, however, recognizing the crucial difference between pre-eminence and omnipotence.

Second, Europe is returning to its normal condition of multiple competing nation-states. While Germany will dream of a Europe in which it can write the budgets of lesser states, the EU nation-states will look at Cyprus and choose default before losing sovereignty.

Third, Russia is re-emerging. As the European Peninsula fragments, the Russians will do what they always do: fish in muddy waters.

The deals they are making, of which this is a small sample, are not in their economic interests, but they increase Moscow's political influence substantially. 

Fourth, China is becoming self-absorbed in trying to manage its new economic realities.

And fifth, a host of new countries will emerge to supplement China as the world's low-wage, high-growth epicenter. Latin America, Africa and less-developed parts of Southeast Asia are all emerging as contenders

Its two great counterbalances are losing their ability to counter U.S. power because they mistakenly believed that real power was economic power. The United States had combined power -- economic, political and military -- and that allowed it to maintain its overall power when economic power faltered. 

And while China is reaching for military power, it will take many years to produce the kind of power that is global, and it can do so only if its economy allows it to. The United States defeated the Soviet Union in the Cold War because of its balanced power. Europe and China defeated themselves because they placed all their chips on economics. And now we enter the new era.

But what if the opposite occurred? What if an economic and political crisis ignited a downward trend in Chinese military procurements, or at least a less steep growth curve?

This is also quite possible: to assuage public anger at poverty and lack of jobs, China's leaders might, for political reasons, ask the military to make sacrifices of its own. After all, a Chinese Spring might be all about demanding more freedom and not about nationalism. Over time, this could affect the foundations of the Eurasian maritime order, albeit to a lesser extent than the collapse of the Berlin Wall shook the foundations of the European continental order.

Stalled Chinese defense budgets would reinvigorate a Pax Americana from the Sea of Japan to the Persian Gulf, despite the debacles of the Iraq and Afghanistan wars, and despite the U.S. military budget crunch.

Remember that Japan occupied Korea from 1910 to 1945, and the hostility between Japan and Korea is thus much greater than the hostility between Korea and China.

With more than 1,500 ballistic missiles aimed at Taiwan from the mainland and 270 commercial flights per week between the two Chinas, U.S. military aid to Taipei is designed to defend Taiwan against a sudden Chinese attack, but not necessarily to postpone an inevitable unification of sorts.

India, like Vietnam and Taiwan, gains most from a profound economic and political crisis inside China. Suddenly China would be more vulnerable to ethnic unrest on the Tibetan plateau abutting the Indian subcontinent.

If India were among the biggest winners in the event of severe Chinese internal turmoil, Pakistan would be the biggest loser. China has been Pakistan's greatest and surest patron in recent decades, and has given Pakistan stores of infrastructure aid -- highways in the north and a port in the south -- without lectures about human rights and terrorism, or threats about withdrawing aid.

Such a bleak scenario for China overall would leave the United States and its allies -- both de facto like India and Vietnam, and de jure like Japan and Australia -- in a commanding position around Eurasia's navigable southern rimland.

While both the United States and China face epochal budgetary and economic crises -- which in both countries bleed over into the political realm -- the crisis in China is far more profound than in the United States. After all, the system of governance in Washington simply enjoys so much more legitimacy than the one in Beijing, with the American public institutionally better equipped to vent its frustrations than the Chinese one. Such internal realities will remain the overriding geopolitical facts in Asia.

Unless domestic consumption expands dramatically, China can continue growing rapidly only by increasing investment well beyond what is economically useful or by forcing larger trade surpluses onto a reluctant world.

Many reasons have been given for low Chinese consumption -- demographics, Confucian culture, skewed tax incentives, amateurish marketing, the sex imbalance, the tattered social safety net, etc. If Beijing takes administrative steps to address the correct cause of low consumption, so goes the theory, it will automatically rise.

The other, smaller (but rapidly growing) school of thought argues the model itself prohibits high consumption: growth is high because consumption is low.

Contrary to conventional thinking, the Chinese have no aversion to consuming. They are eager shoppers, as even the most cursory visit to a Chinese mall will indicate. The problem is that Chinese households own such a small share of total national income that their consumption is necessarily also a small share.

One option might be for Beijing to engineer a huge shift of state wealth to the household sector through, say, a massive privatization program.

Another option, and ultimately the only sustainable path forward, would involve reversing the subsidies that generated such furious growth.

Unfortunately, the longer China waits to make the transition from this model of growth, the more difficult the transition will be.

The sooner China begins the difficult transition, the less costly it will be, but in no circumstance is it likely to be easy. They key will be to get consumption to grow quickly relative to GDP, and China might simply not have the time to do it by reversing the wage, currency, and interest-rate subsidies paid by the household sector.

The contrast with China is stark. China’s rapid ascent was made possible through massive annual production that makes up a much greater proportion of its overall worth than it does for other major economies.

Government spending will have to make up for both lost foreign demand and weak domestic demand. And, unlike Japan, China will face greater social fragmentation and unrest.

Regardless of the number of troops deployed, the U.S. military is always vastly outnumbered by the populations of the countries to which it is deployed. If parts of these populations resist as light-infantry guerrilla forces or employ terrorist tactics, the enemy rapidly swells to a size that can outnumber U.S. forces, as in Vietnam and Korea. At the same time, the enemy adopts strategies to take advantage of the core weakness of the United States — tactical intelligence. The resistance is fighting at home. It understands the terrain and the culture. The United States is fighting in an alien environment. It is constantly at an intelligence disadvantage. That means that the effectiveness of the native forces is multiplied by excellent intelligence, while the effectiveness of U.S. forces is divided by lack of intelligence.

The United States compensates with technology,

from space-based reconnaissance and air power to counter-battery systems and advanced communications. This can make up the deficit but only by massive diversions of manpower from ground-combat operations. Maintaining a helicopter requires dozens of ground-crew personnel. Where the enemy operates with minimal technology multiplied by intelligence, the United States compensates for lack of intelligence with massive technology that further reduces available combat personnel. Between logistics and technological force multipliers, the U.S. “point of the spear” shrinks. If you add the need to train, relieve, rest and recuperate the ground-combat forces, you are left with a small percentage available to fight.

the United States is well-suited for the initial phases of combat, when the task is to defeat a conventional force. But after the conventional force has been defeated, the resistance can switch to methods difficult for American intelligence to deal with.

The example of the capitulation of Germany and Japan in World War II is frequently cited

The back of the Wehrmacht was broken by the Soviets on their own soil with the logistical advantages of short supply lines.

The Germans had no appetite for continuing a resistance against the Russians and saw surrendering to the Americans and British as sanctuary from the Russians.

As for Japan, it was not ground forces but air power, submarine warfare and atomic bombs that finished them — and the emperor’s willingness to order a surrender.

Had the Japanese emperor been removed, I suspect that the occupation of Japan would have been much more costly.

The guerrilla has built-in advantages in warfare for which brutality cannot compensate.

In each case it is obvious: for political reasons.

In each case, the military was given an ambiguous mission. This was because a clear outcome — defeating the enemy — was unattainable.

The first is using the appropriate force for the political mission.

Moreover, it requires an offensive mission. Defensive missions (such as Vietnam and Korea) by definition have no terminal point or any criteria for victory.

Having destroyed the conventional forces of Iraq, the United States was unprepared for the Iraqi response, which was guerrilla resistance on a wide scale.

By having an unclear mission, you have an uncertain terminal point. When does it end?

Diplomacy for the United States is about maintaining the balance of power and using and diverting conflict to manage the international system. Force is the last resort, and when it is used, it must be devastating.

An elective war in which the criteria for success are unclear and for which the amount of land force is insufficient must be avoided. That is Gates’ message

The South China Sea conflict, for example, becomes understandable. Here are geographical features which, in their own right, are valuable because of the measureable energy deposits in surrounding waters. They also fall in the path of sea lines of communications vital for access to the Indian Ocean in one direction, and the East China Sea and Sea of Japan in the other, making the South China Sea part of the word's global energy interstate.

Indeed, nobody would prefer to say they are provoking a conflict because of rising Chinese sea power; rather, they would say they are doing so because of this or that infringement of maritime sovereignty over this or that islet. All the rest might have to be conjectured.

Even if one argues that these islets are worthless, he or she would miss the point. Rather, the dispute over these islets is a pretext for the rise of Chinese sea power and the fear that it inspires in Japan, helping to ease Japan out of its quasi-pacifistic shell and rediscover nationalism and military power.

Then there is North Korea. With a gross domestic product of only that of Latvia or Turkmenistan, it might be assumed to be another worthless piece of real estate. Geography tells a different story. Jutting out from Manchuria, the Korean Peninsula commands all maritime traffic in northeastern China and traps in its armpit the Bohai Sea, home to China's largest offshore oil reserve.

India and China have territorial tripwires in the Himalayan foothills, an area which, again, might be judged by some as worthless. But these tripwires become more meaningful as India partially shifts its defense procurements away from confronting Pakistan and towards confronting China. It is doing so because the advance of technology has created a new and claustrophobic strategic geography uniting India and China, with warships, fighter jets and space satellites allowing each country to infringe on the other's battlespace. If a conflict ever does erupt between these two demographic and economic behemoths, it probably will not be because of the specific reasons stated but because of these deeper geographical and technological causes.

Israel has other fears that are less frequently expressed. For example, a nuclear Iran would make every crisis between Israel and Hezbollah, between Israel and Hamas, and between Israel and the West Bank Palestinians more fraught with risk. Israel cannot accept such augmentation of Iranian power. That could signal the real cause of a conflict, were Israel ever able to drag the United States into a war with Iran.

In all these cases, and others, the most profound lesson of Thucydides and Hobbes is to concentrate on what goes unstated in crises, on what can only be deduced. For the genius of analysis lies in quiet deductions, not in the mere parroting of public statements. What starts conflicts is public, and therefore much less interesting -- and less crucial -- than the causes of conflicts, which are not often public.

But the energy source to which most economies will revert if they shut down their nuclear plants is not wood, water, wind or sun, but fossil fuel. On every measure (climate change, mining impact, local pollution, industrial injury and death, even radioactive discharges) coal is 100 times worse than nuclear power. Thanks to the expansion of shale gas production, the impacts of natural gas are catching up fast.

The United States, with its array of advanced anti-submarine warfare assets and hydrographic research vessels deployed throughout the region, gives Beijing the unwelcome impression that Uncle Sam can’t stop peering into its nuclear nursery.

This concern helps explain China's growing intolerance to foreign military activities in the South China Sea. Tellingly, some of the most nerve-wracking standoffs involving US and Chinese forces have unfolded in close proximity to Hainan.

Similarly, the USNS Impeccable incident, during which a US hydrographic vessel was dangerously harassed by five Chinese ships, took place approximately seventy miles to the south of Hainan. During the confrontation, Chinese sailors reportedly attempted to unhook the Impeccable’s towed acoustic array sonars.

Thus in the course of a discussion with a former Chinese official, I was told that “even though territorial issues are of importance, our major concern is the sanctity of our future sea-based deterrent.”

He then went on to describe, with a flicker of amusement, how fishermen off the coast of Hainan regularly snag US sonars in their nets, and are encouraged to sell them back to the local authorities in exchange for financial compensation.

Needless to say, this location is hardly ideal.

Absolute control over the remote Spratly islands, in addition to the more proximate Paracels, would greatly facilitate this concentric defensive configuration.

Until not long ago, China’s strategic submarine force wasn’t really taken seriously.

China could soon equip its new class of Jin submarines with the JL-2 ballistic missile, which has a range of approximately 4 600 miles. This would enable Beijing, the report adds, to establish a “near-continuous at-sea strategic deterrent”.

On the contrary, it has proved to be a very effective maneuver.

There is brilliance in North Korea's strategy. When the Soviet Union collapsed, North Korea was left in dire economic straits.

Naturally, the goal of the North Korean government was regime survival, so it was terrified that outside powers would invade or support an uprising against it.

In the beginning, Pyongyang's ability to appear ferocious was limited to the North Korean army's power to shell Seoul.

The point was not that it was going to level Seoul but that it had the ability to do so.

since nothing was worth a nuclear war, enraging the regime by trying to undermine it wasn't worth the risk.

This was a double inoculation. The North Koreans' ferocity with weapons whose effectiveness might be questionable, but still pose an unquantifiable threat, caused its enemies to tread carefully. Why risk unleashing its ferocity when its weakness would bring it down? Indeed, a constant debate among Western analysts over the North's power versus its weakness combines to paralyze policymakers.

So long as the North Koreans remained ferocious, weak and crazy, the best thing to do was not irritate them too much and not to worry what kind of government they had

Hence, we have North Korea's eternal nuclear program. It never quite produces a weapon, but no one can be sure whether a weapon might be produced.

Interestingly, North Korea never does anything significant and dangerous, or at least not dangerous enough to break the pattern. Since the Korean War, North Korea has carefully calculated its actions, timing them to avoid any move that could force a major reaction.

Over the years, the United States, Japan and South Korea have looked to the Chinese to intercede and persuade the North Koreans not to do anything rash. This diplomatic pattern has established itself so firmly that we wonder what the actual Chinese role is in all this.

It is impossible for us to know what the Chinese are thinking, and we have no overt basis for assuming the Chinese and North Koreans are collaborating, but we do note that China has taken an increasing interest in stabilizing North Korea.

It should also be noted that other countries have learned the ferocious, weak, crazy maneuver from North Korea. Iran is the best pupil. It has convincingly portrayed itself as ferocious via its nuclear program, endlessly and quite publicly pursuing its program without ever quite succeeding. It is also persistently seen as weak, perpetually facing economic crises and wrathful mobs of iPod-wielding youths. Whether Iran can play the weakness card as skillfully as North Korea remains unclear -- Iran just doesn't have the famines North Korea has.

I do not mean to appear to be criticizing the "ferocious, weak and crazy" strategy. When you are playing a weak hand, such a strategy can yield demonstrable benefits. It preserves regimes, centers one as a major international player and can wring concessions out of major powers. It can be pushed too far, however, when the fear of ferocity and craziness undermines the solace your opponents find in your weakness.

Satellite data collected since 1979 shows that both the thickness of the ice in the Arctic and range of sea ice have decreased substantially, especially during the summer months.

U.S. Geological Survey estimates from 2008 suggest that 13 percent of the world's undiscovered oil and 30 percent of undiscovered natural gas reserves are located in the Arctic Circle.

In 2012, 46 ships transporting a total of 1.3 million tons reportedly used the Northern Sea Route, which runs along the northern coast of Russia; this represents a considerable increase from 2011, when 34 ships transported approximately 820,000 tons. In response to the route's growing importance, Russia set up the Northern Sea Route administration in March to supervise shipping.

Europe has a vested interest in alternative shipping routes to Asia becoming more economically viable, since such routes would allow trade to circumvent numerous bottlenecks like the Suez Canal and increase access to Asia's growing consumer markets.

 China has also shown a particular interest in the Arctic, and has lobbied the Nordic countries to support Beijing's bid for observer status in the Arctic Council.

Sailing along the Northern Sea Route rather than through the Mediterranean Sea and Suez Canal significantly reduces the trip between Rotterdam and Shanghai -- the Northern Sea Route is around 20 percent shorter. This translates into significant savings in terms of fuel and crew costs.

The Arctic Council is just one of many bodies dealing with regional collaboration in the Arctic. The Barents Euro-Arctic Council, the Nordic Council and the Conference of Parliamentarians of the Arctic Region also coordinate intergovernmental or interregional collaboration in the Arctic on a number of issues.

On May 10, the U.S. government presented its new general strategy for the Arctic. Little concrete information was revealed, but a clearer plan for implementing the strategy reportedly will be worked out in the coming months.

Even with all of the armed forces in occupied Japan at his disposal, Douglas MacArthur could not simply bend the fate of the nation to his will. You would think he could have written any constitution he pleased, pointed his guns, and said “sign!” But the reality is that he was enormously constrained, and made many compromises in order to get an approximation of his ideal constitution passed.

The stressors that are much closer to home, on the other hand, are those that we have some reasonable ability to influence.

The only healthy way to live in a world you cannot control is to take pride in participating in something much larger than yourself—be it the community you live in, civil society, or one of the many communities of scholars. Participate, focus on a craft that takes a lifetime to master, and release the illusion of control.

The Chinese intervened in the war, pushing the Americans back from the Yalu and suffering huge casualties in the process. The Americans regrouped, pushed back and a stalemate was achieved roughly along the former border and the current Demilitarized Zone.

The great mystery of the post-Cold War world is the survival of the North Korean regime. With a dynamic South, a non-Communist Russia and a China committed to good economic relations with the West, it would appear that the North Korean regime would have found it difficult to survive.

From the Chinese point of view, North Korea served the same function in the 1990s as it did in 1950: It was a buffer zone between the now economically powerful South Koreans (and the U.S. military) and Manchuria.

The reason for intervening in the first place was murky. The U.S. military presence between 1953 and 1991 was intended to maintain the status quo during the Cold War. The willingness to remain beyond that is more complex.

With the loss of its Cold War patrons and the changing dynamic of the post-Cold War world, the North Koreans developed a survival strategy that Stratfor identified in the 1990s. The Koreans' intention was to appear -- simultaneously -- weak, fearsome and crazy. This was not an easy strategy to carry out, but they have carried it out well.

First, they made certain that they were perceived to be always on the verge of internal collapse and thus not a direct threat to anyone but themselves.

The ability to maneuver itself into a position equal to these powers was North Korea's greatest achievement, and it had a tremendous effect on stabilizing the regime by reinforcing its legitimacy internally and its power externally.

Crucially for Pyongyang, North Korea was of tremendous use to one power: China. Even more than North Korea's role as a buffer state, its antics allowed China to emerge as mediator between the inscrutable Pyongyang and the frustrated United States.

It's not just their work; it's their way of life. As workers move to factories, the social fabric is torn apart. But that rending of life opens the door for a mobile workforce able to take advantage of new opportunities. Traditional life disappears; in its place stand the efficiencies of capitalism.

Low-wage countries seize the opportunity and climb upon the escalator of the international system, and with them come the political and business elite and the poor, for whom even the brutality of early industrialism is a relief.

In looking at this historically, two markers showed themselves. One is a historical first step: garment and footwear manufacturing, a highly competitive area that demands low wages but provides work opportunities that the population, particularly women, understand in principle. A second marker is mobile phone assembly, which requires a work force that can master relatively simple operations. Price matters greatly in this ruthlessly competitive market.

We were not looking for the kind of large-scale movements that would be noticed globally, but the first movements that appear to be successful. Where a handful of companies are successful, others will follow, so long as there is labor, some order and transportation.

The Cultural Revolution had ended a few years before. It was a national upheaval of violence with few precedents. Mao Zedong died in 1976, and there had been an intense power struggle, with Deng Xiaoping consolidating power in 1977. China was politically unstable, had no clear legal system, sporadic violence and everything else that would make it appear economically hopeless. In fact, Egbert F. Dernberger and David Fasenfest of the University of Michigan wrote a paper for the Joint Economic Committee of Congress titled "China's Post-Mao Economic Future." In this paper, the authors state: "In the next seven years as a whole, the rate of industrial investment and production, more than the total of the last 28 years, imply a level of imports and industrial labor force such that the exports, transportation facilities, social overhead capital, energy and middle-level technical personnel requirements would exceed any realistic assessment of Chinese capabilities."

I don't mean to criticize the authors. This was the reasonable, conventional wisdom at the time. It assumed that the creation of infrastructure and a managerial class was the foundation of economic growth. In fact in China, it was the result of economic growth. The same can be said for rule of law, civil society, transparency and the other social infrastructure that emerges out of the social, financial and managerial chaos that a low-wage economy almost always manifests.

When you look at map, much of this new activity is focused in the Indian Ocean Basin. The most interesting pattern is in the eastern edge of Sub-Saharan Africa: Tanzania, Kenya, Uganda and Ethiopia. Sri Lanka, Indonesia, Myanmar and Bangladesh are directly on the Indian Ocean.

A special word needs to be included on Mexico. The area north of Mexico City and south of the U.S. borderlands has been developing intensely in recent years. We normally would not include Mexico but the area in central-southern Mexico is large, populous and still relatively underdeveloped.

All of this has to be placed in context. This is not the only growth process underway. It is most unlikely that all of these countries will succeed. They are not yet ready, with some exceptions, for advanced financial markets or quantitative modeling. They are entering into a process that has been underway in the world since the late 1700s: globalism and industrialism combined.

It can be an agonizing process and many have tried to stop it. They have failed not because of their respective ruling classes, which would have the most to lose. It doesn't take place because of multinational corporations. They come in later. It takes place because of profit-driven jobbers who know how to live with instability and corruption. It also takes place because of potential workers looking to escape their lives for what to them seems like a magnificent opportunity but for us seems unthinkable.