SIMULEX 2017 Scenario Background

Crisis in the Western Pacific/East Asia Region

This year’s scenario features escalating crises on the Korean Peninsula and elsewhere in the Western Pacific.  The time-frame is 2019.  Player teams include the United States, China, Japan, South Korea, Taiwan and North Korea.

It is April 2019. The Middle East remains in turmoil even though ISIS has been defeated by a U.S.-led coalition. There are reports of increasing nuclear cooperation between Iran and North Korea. Russia continues to pose threats in the Baltic and Ukraine. However, by early 2019 the focus of international attention remains the Asia-Pacific area, as it was in late 2017. Here we have a series of flashpoints that includes the South China Sea, the cross straits relationship between China and Taiwan, the Diaoyu-Senkaku Islands, and above all the Korean Peninsula. At the center of this crisis setting are the People’s Republic of China (PRC) and the Democratic People’s Republic of Korea (DPRK), otherwise known as North Korea. The Trump Administration’s efforts to enlist Chinese help against North Korea have not succeeded. Instead, China has adopted a hedging strategy reducing its economic links to North Korea after various international sanctions, while still attempting to prevent North Korea’s collapse. In other words, China opposes the reunification of the Korean peninsula that would follow in the aftermath of a collapse of the DPRK. As a result, the United States has imposed a series of economic sanctions against China. It is increasingly apparent that China and the United States continue to have clashing geopolitical interests in the Asia-Pacific area.

In 2019 China’s impressive military build-up includes regional power projection forces as well as nuclear weapons. A second aircraft carrier has entered service. China’s strategic-nuclear force consists of submarine-launched ballistic missiles as well as land-based ICBMs, including a new generation of mobile missiles with MIRVs and penetration aids. Among the newest Chinese missiles is the DF-21D, widely believed to place at risk the carrier-based power projection capability on which the United States has relied to assure its dominance in the Western Pacific. China is restructuring its ground forces to provide more rapid, flexible special operations as well as army modernization to increase mechanized and more mobile units, precision-guided munitions, improved C2 capabilities, air defense, ground-air coordination, and electronic warfare. China also continues to develop space and counterspace capabilities encompassing space-based intelligence, reconnaissance, meteorological and communications satellites. The PLA Air Force is the largest in Asia and the third largest in the world. It is in the midst of an unprecedented expansion across a broad spectrum of capabilities. Taken together, China’s military poses a growing and formidable challenge to the United States and its regional allies and coalition partners in the crucially important area-denial/anti-access dimension of power projection.

Integral to the Asia-Pacific crisis landscape of 2019 is cyberspace and its central role in China’s anti-access/area-denial strategy designed to deter and counter U.S. and other adversary operations in the Western Pacific. North Korea also has a formidable cyber war capability, as demonstrated in the SONY hacking incident in November 2014. In the years leading up to 2019 China has placed high priority on informationized warfare as a means to reduce or eliminate existing U.S. technological advantages. This includes data collection for defensive and offensive cyber operations and efforts to constrain U.S. operations by targeting network-based logistics, command, control, communications, and other capabilities essential to U.S. power projection, deterrence, and escalation in a crisis. At the same time, the United States itself is unsurpassed in its cyber capabilities.

Alongside its impressive military capabilities there is another troubling dimension of the 2019 East Asia geostrategic landscape. There are signs of domestic political instability in China. The anti-corruption campaign mounted with increasing intensity by President Xi Jinping has not restored confidence in the Communist party and its leadership. China’s leadership remains fearful of future socioeconomic turmoil. A net assessment of China’s economy yields conflicting trends. In 2019 China remains a voracious consumer of oil, natural gas, metals, and minerals and has benefited from lower commodity prices. However, China also faces countervailing problems arising from an aging population that is the long-term result of its one-child policy, together with declining rates of GDP growth with conflicting international estimates of the actual growth rate as well as structural problems in its economy resulting from sclerotic state-owned enterprises and continuing corruption.

Specifically, China’s structural economic problems include the need to develop a rule of law based on a transparent legal system in order to improve the enforcement of contracts and reduce financial fraud. The thousands of state-owned enterprises retard innovation and growth. Against such companies, private sector firms face legal discrimination and restrictions on market access – to mention only the most obvious obstacles that China’s communist leadership has not (or cannot) remove. They weigh heavily on the country’s economic future.

Apparently uncertain about China’s longer-term prospects, the leadership concludes that now is the best time for a more active assertion of China’s international strategic goals. In fact, the window of opportunity perceived to exist may close over the next several years with the belief that time may not be on China’s side to realize its international ambitions. This sentiment runs counter to other Chinese estimates over the years that China, planning for the long term, could await events in its favor. The immediate effect is to increase the short-term assessment of the leadership that now is the moment for intensified international action. With the removal of opponents, including tens of thousands from the party and the jailing of some of China’s wealthiest and most influential individuals, the regime concludes that now is the optimal time to step up its international efforts on behalf of national interests and goals, especially in the South China Sea, the Taiwan Strait, and the Diaoyu-Senkaku disputes. Also weighing in Beijing’s calculations is the fact that the United States in the Trump Administration has embarked on a major military modernization program designed to reverse the downward trends of the Obama years in which the so called “rebalance” or “pivot” to Asia is now viewed as more rhetoric than substance. This adds to China’s conclusion that the time is now propitious for Beijing to press forward with its expansionist Pacific strategy before the United States can fully and effectively react.

The unfolding Asia-Pacific security setting is further complicated by the ongoing crisis in the Korean Peninsula. According to intelligence reports, the North Korean leadership also views 2019 as an especially advantageous time to launch its own offensive against South Korea for several reasons. Most importantly, Pyongyang believes that the present Asia-Pacific military balance offers a unique window of opportunity to move against South Korea. North Korea has demonstrated repeatedly that it has an ICBM capability to strike the United States. It has conducted numerous missile tests, together with nuclear weapons tests, including a hydrogen bomb. North Korea has also mastered nuclear warhead technology. There is growing evidence of widespread cooperation on nuclear matters between Iran and North Korea. Both Beijing and Pyongyang share an interest in pushing the United States out of the Western Pacific. While China has sought stability in the Korean Peninsula, it has also provided vitally important nuclear weapons technology to Pyongyang. The various efforts by the United States and its allies to cut off North Korea’s nuclear weapons program have not succeeded. North Korea views its possession of nuclear weapons as providing a strategic advantage that can be effectively exploited in the unfolding security setting of 2019. The North Korean economy has gone from a condition of bad to worse in recent years, including widespread food shortages as a result of the international embargo.

The crisis that breaks out in April 2019 poses several interrelated challenges for the United States and its allies. North Korea feels emboldened to strike against South Korea at a time when China is stepping up pressure against Taiwan, as well as in the South China Sea, and the Diaoyu-Senkaku dispute. Pyongyang concludes that its nuclear weapons capability will constrain the United States in any Korean peninsula military scenario. China sees the opportunity to assert itself in the South China Sea and the Diaoyu-Senkaku dispute as a result of U.S. preoccupation with the Korean peninsula. By early 2019 China has built a total of seven artificial islands with airstrips and other efforts to back Beijing’s claim to “indisputable sovereignty” over the South China Sea. China views this maritime region, comparable in size to the Caribbean and somewhat larger that the Mediterranean, as a vitally important “strategic hinterland” stretching from the Southeast Asia coast to the Philippines and Indonesia. China has asserted numerous claims to the South China Sea over the centuries. Control of the South China Sea would allow China to dominate the sea lines of communication (SLOCs) linking the Persian Gulf and Indian Ocean to the East China Sea and Western Pacific. This would include maritime traffic to and from Taiwan, Japan, and South Korea. Furthermore, the South China Sea contains important untapped oil and natural gas reserves that could reduce China’s dependence on other energy imports. Last but not least, control of the South China Sea would allow China to break through the first island chain into the western Pacific, thus achieving a major strategic goal. It would also place pressure on Taiwan, whose strategic importance to China in this strategy cannot be overstated.

In early 2019 the growing Chinese presence in the South China Sea has further raised alarm bells in East Asian capitals, especially in Hanoi, Manila, Taipei, Seoul, and Tokyo, about Beijing’s ultimate intentions. Such speculation is reinforced by other developments as well. In recent years there has been a dramatic increase in China’s deployment of ships and aircraft near Taiwan. China views Taiwan as a vitally important strategic point in a strategy to break through the first island chain into the Pacific Ocean. Control of Taiwan would have both defensive and offensive implications. Without Taiwan, China remains trapped inside the first island barrier. With Taiwan, over which China claims sovereignty, Beijing extends its power into the Pacific. Therefore, China has an important interest in which control of the South China Sea is vital to the control of Taiwan. By the same token, control of Taiwan enhances Beijing’s ability to dominate the South China Sea.

In Japan there are fears that China’s growing military capabilities, together with a declining U.S. forward presence, pose a threat that can only increase in the years ahead. Whatever the economic problems experienced by China in recent years, Japan’s economy remains more or less stationary, with anemic growth rates and demographic trends leading to a forecast that an aging population will lead to a decline from 128 million to less than 50 million over the next fifty years. Japan’s defense spending is also outpaced by China with important implications including an eroding Japanese qualitative advantage. In this setting Japan has strengthened its alliance with the United States in an effort to compensate for disparities favoring China and in order to reverse declining U.S. military capabilities in the Pacific. There is now major support in Japan to go nuclear. Japan has a highly sophisticated scientific/industrial infrastructure that provides easy and quick progression across the nuclear threshold should such a decision be taken. In fact, Japan has chosen its own hedging strategy: drawing closer to the United States in its security relationship while also moving toward nuclear status. The United States has reassured Japan of its commitment by reaffirming that the Article 5 U.S.-Japan Security Treaty guarantee covers all Japanese territory, including specifically the Senkaku Islands. Nevertheless, Japan faces intensified Chinese pressure in and around the Daioyu-Senkaku with a dramatic increase in Chinese air and naval activity, including several armed standoffs in the early months of 2019 and the expansion of the air identification zone first announced in 2014 by China.

On the Korean Peninsula, relations between North and South Korea have deteriorated further in recent years. The August 2015 mini-crisis was followed by renewed shelling of Yeonpyeong Island by North Korea in March 2018, together with the sinking of a South Korean patrol boat in international waters in the Yellow Sea in November 2018. Furthermore, in January 2019 North Korea fired artillery shells again across the DMZ into South Korea inflicting numerous civilian casualties and reaching to several miles from Seoul. This is the Asia-Pacific setting in which the multidimensional crisis extending from the Korean Peninsula to the South China Sea erupts in April 2019.

Additionally, detailed information about the crisis will be made available at the beginning of and during the exercise.