North Korea Propaganda Video Sets Obama On Fire, But Don't Jump to Any Conclusions

North Korea has recently continued its provocative propaganda campaign against the United States in a new video which shows President Obama and American soldiers against a foreground of burning flames. North Korea's technological progress and strategic concerns are the source for its propaganda and are useful for political legitimacy, but we must look deeper in the changes taking place inside the country to fully grasp North Korea's geopolitical shfits.

Several factors embolden North Korea: its recent nuclear test and rocket launch, the upcoming sequester in the United States, and classic strategic concerns with the concentration of South Korean and U.S. military assets next door.

While Pyongyang’s freshman class of Photoshop beginners has yet to look professional, the video does symbolize the fact that North Korea can sustain advanced technological capacities as evidentiated by their recent nuclear test and rocket launch. These can be used to advance economic development, export technology, and become a serious short to medium-term strategic threat to Asia and the world with the hard currency to support it.

Second, America’s upcoming sequester suggests that Washington is gradually slipping into a scondary political position similar to that of Russia in the 1990s – powerful, but no longer the most important or the sole deciding voice in global affairs. Even with a military far more capable than any other in the world, political and economic clout is more important in determining sustained influence. Considering the increasingly inward focus in Washington, the signal Pyongyang is reading says that it can be more brazen at the price of what amounts to a slap on the wrist by Washington and company.

Third, the formal state of war between the two Koreas, coupled with American support for the South, sum up to a very logical strategic threat for North Korea. Keeping the tension simmering is a key source of political capital for both Koreas and the United States. Specifically, much of the hot rhetoric belies the legitimacy of the North Korean regime. Keeping it going through a show of force or propaganda is of fundamental importance, at least for public relations purposes.

There is a deeper perspective to consider in respect to the quiet changes happening in North Korea. The gradual modernization of the country, most pronounced through telecommunications, suggests that it is slowly transitioning away from the command-and-control Stalinist framework to a more flexible political system. Also key is the proposal for a pipeline going from Russia through China and into the peninsula for the export of Russian natural gas to South Korea, and this would translate into lucrative transit fee profits for Pyongyang. Most telling is nothing less than a geological shift in North Korean policy, when in the aftermath of Kim Jong-un’s speech earlier this year concerning the transformation of North Korea’s economy, North Korea showed its first solid progress through consultations with German experts on attracting foreign investment. It is expected that we’ll see the first changes later this year.

From the investor point of view, North Korea is a lucrative destination. Its lack of ethnic conflicts combines with a highly technical and industrialized economy (if antiquated) and educated workforce, whose overall labour costs remain very low.

North Korea will continue to produce amateur propaganda, its provocative geopolitical behaviour will not be abated. All the same, the country is on the precipice of fundamental changes, and the results might come a lot sooner than we think. That's where we need to shift the focus, if qualitative changes in Pyongyang's strategic behaviour are to be expected.