When North Korea decided to cancel a meeting with the South last minute, speculations arose that Kim Jong Un might be changing his mind regarding peace and openness. The DPRK government then criticized the United States for flaunting their own military prowess during a joint exercise in South Korea and put peace talks with their southern counterparts and with the United States in doubt. As a result, the White House spent the rest of the week giving interviews regarding the upcoming summit; some officials stated that the plans are still underway, why President Trump himself said that he wants to have the summit, but is uncertain of Kim’s resolve.
This is why the markets opened in shock today as President Trump announced he is canceling the summit planned for June 12. The American government has spent decades trying to find a peaceful solution, attempting to begin a diplomatic relationship with North Korea and to bring the DPRK out of its self-imposed isolation. South Korea, too, has for years tried to secure peace with the North, and President Moon over the past months has been focused on reaching a peace settlement with North Korea and convincing them to give the United States a chance. This is the long, hard work that President Trump appears to have undone overnight.
Just weeks after Trump, against all international advice, decided to pull out from the Iran nuclear deal, he now put an end to a meeting that he seemed to be looking forward to for weeks. Politicians from all around the world are now worried that this is causing a significant PR problem for the United States: they do not appear able to keep their commitments. This also comes at a time when the US is negotiating with China regarding trade policies, in an attempt to avoid a trade war that can harm the global economy. Needless to say, the fact that America does not appear trustworthy right now puts those negotiations in jeopardy.
The decision from the White House was so sudden that the South Korean government, the chief mediator between the US and North Korea, was not notified in advance. The South Korean government voiced their disapproval and disappointment before the US government through their official channels. Meanwhile, South Koreans headed to the American embassy in Seoul to protest against the decision, as they feel this jeopardizes peace in the region.
Japan, too, got involved in the matter, urging the United States to reconsider. Japan and South Korea are the two countries that, due to their geographical proximity, are under the greatest risk whenever North Korea is conducting missile tests. Both countries have also suffered kidnappings of their citizens by the DPRK. If Trump’s decision ends up offending Kim Jong-un, it is South Korea and Japan that will likely feel endangered first.
Moreover, North Korea just blew up one of their nuclear facilities as a gesture of friendship to the West, only to have the summit canceled by the US President out of the blue. After the news broke out, however, Pyongyang stated that they would still be open to negotiations, in case the US government wants to settle on another meeting.
The risky atmosphere in the region that Trump’s announcement has created has contributed to more insecurity on the financial markets. This is why right now investors are turning to the Japanese yen and gold as well-known safety assets, and both instruments are seeing a growth in value.
