Wednesday, April 18, 2012
Iran's armed forces will make its enemies regret any act of aggression against the Islamic Republic, President Mahmoud Ahmadinejad warned on Tuesday as Iranians marked National Army Day with a military parade near the capital Tehran.
Although Ahmadinejad did not specify any countries, such language used by Iranian officials is a common reference to the West, especially the United States and Israel.
The harsh tone was typical of speeches for military events but it contrasted sharply with a sense of cautious progress after the direct talks with world powers last week on Tehran's nuclear ambitions. The remarks could leave Western officials confused by the mixed signals.
"Our armed forces will make the enemy face heavy and shameful regret if they commit any aggression and violate Iran's interests," Ahmadinejad said in a speech broadcast live on state TV.
Both the U.S. and Israel have not ruled out a military option against Iran's nuclear facilities, which the West suspects are geared toward making nuclear arms — a charge Tehran denies, insisting its program is for peaceful purposes only. Iran's refusal to halt the uranium enrichment program has been its main point of contention with the West.
"The foreign interference will bear nothing but destruction, rifts and insecurity" in the region, Ahmadinejad said.
The comments are typical of rhetoric that has been coming out of Tehran, belligerent one day, conciliatory the next.
Iran has hinted at more flexibility after Tehran and the world powers agreed to hold more talks on its controversial nuclear program following their Saturday discussions in Istanbul, which both sides praised as positive. A second round is planned for next month in Baghdad.
Prior to the talks in Istanbul with the five permanent UN Security Council members plus Germany, Tehran offered to scale back uranium enrichment but not abandon the ability to make nuclear fuel. At the same time, however, it ignored another Western concern — Iran's existing stockpile. The West wants Iran's current reserves of 20 percent-enriched uranium to be transferred out of the country.
After Istanbul, Iranian officials urged the West to start taking steps to lift sanctions imposed by the U.S. and the EU over Iran's nuclear activities.
During the parade on Tuesday, Iran displayed an array of its homemade short-range missiles, tanks, drones and air defense system as well as some of its jet fighters, warplanes and military helicopters. Iran has tried to build a self-sufficient military program since 1992.
On the sidelines of the parade, Iran's army chief Gen. Ataollah Salehi told the state IRNA news agency that U.S. warships in the Gulf are "sweet targets" for Iranian armed forces.
Salehi, who is known for anti-U.S. rhetoric and had threatened U.S. ships in the Gulf before, did not elaborate.
In January, he warned an American warship not to return to the Gulf shortly after the aircraft carrier USS John C. Stennis and another vessel left the region. Another carrier, the USS Abraham Lincoln, entered the Gulf without incident later in January.
Iran has also in the past threatened to shut the Strait of Hormuz, a strategic waterway in the Gulf through which a fifth of the world's oil passes, a move that could send oil prices soaring.
Among the weaponry on display Tuesday was "Qadr," or a Sacred Night mentioned in the Quran, a 2,000 pound guided bomb. Iran has earlier suggested it could counter the U.S. naval presence in the Gulf.
A year ago, in Action Comics, Superman declared plans to renounce his U.S. citizenship.
"'Truth, justice, and the American way' - it's not enough anymore," the comic book superhero said, after both the Iranian and American governments criticized him for joining a peaceful anti-government protest in Tehran.
Last year, almost 1,800 people followed Superman's lead, renouncing their U.S. citizenship or handing in their Green Cards. That's a record number since the Internal Revenue Service began publishing a list of those who renounced in 1998. It's also almost eight times more than the number of citizens who renounced in 2008, and more than the total for 2007, 2008 and 2009 combined.
But not everyone's motivations are as lofty as Superman's. Many say they parted ways with America for tax reasons.
The United States is one of the only countries to tax its citizens on income earned while they're living abroad. And just as Americans stateside must file tax returns each April - this year, the deadline is Tuesday - an estimated 6.3 million U.S. citizens living abroad brace for what they describe as an even tougher process of reporting their income and foreign accounts to the IRS. For them, the deadline is June.
The National Taxpayer Advocate's Office, part of the IRS, released a report in December that details the difficulties of filing taxes from overseas. It cites heavy paperwork, a lack of online filing options and a dearth of local and foreign-language resources.
For those wishing to legally escape the filing requirements, the only way is to formally renounce their U.S. citizenship. Last year, IRS records show that at least 1,788 people did, and that's likely an underestimate. The IRS publishes in the Federal Register the names of those who give up their citizenship, and some who renounced say they haven't seen their name on the list yet.
The State Department said records it keeps differ from those published by the IRS. They indicate that renunciations have remained steady, at about 1,100 each year, said an official.
The decision by the IRS to publish the names is referred to by lawyers as "name and shame." That's because those who renounce are seen as willing to give up their citizenship primarily for financial reasons.
There's also an "exit tax" for the very rich who choose to leave. During the last 25 years, a number of millionaires and billionaires have renounced their citizenship. Among them: Ted Arison, the late founder of Carnival Cruises, and Michael Dingman, a former Ford Motor Co. director.
But those of more modest means renounce, too. They say leaving America is about more than money; it's about privacy and red tape.
LIABILITY, NOT PRIVILEGE
On April 7, 2011, Peter Dunn raised his right hand before a U.S. consular officer in Toronto and swore that he understood the consequences of giving up his U.S. citizenship. Dunn, a dual U.S.-Canadian citizen who has lived outside the United States since 1986, says he renounced because he felt American citizenship had become more of a liability than a privilege.
As an American, Dunn had to file tax returns and report all of his bank accounts - even joint accounts and his Canadian retirement fund. If he didn't, he would be breaking U.S. law and could face penalties of up to $100,000 or 50 percent of his undeclared accounts, whichever is larger. Dunn says he was tired of tracking IRS policy changes, and he had no intention of returning to the United States. Renouncing his citizenship, as he puts it, was "a no-brainer."
"If it was just me then it would be one thing," says Dunn, a part-time investor who worried that having to share information with the IRS would deter future business partners - and upset his wife, who is Canadian. "Disclosing joint accounts I hold with my wife and anyone I ever want to do business with - that's just too much. My wife's account is none of their business."
Dunn, who blogs about expatriation, takes issue with being characterized as a tax evader. He says the taxes he pays in Canada are higher than what he would pay in the United States, and he says he had always complied with the IRS before renouncing. But, Dunn says, the IRS approach to enforcing compliance is misguided. "It's making life difficult for a lot of people," he says. "It's driving us away."
OLD, NEW REGULATIONS
Dunn is referring to two filing requirements that affect Americans abroad: the Report of Foreign Bank and Financial Accounts - which has been around since 1970 but now carries penalties for noncompliance - and the Foreign Account Tax Compliance Act, passed in 2010 with the aim of reducing offshore tax evasion.
The first regulation requires all Americans, including those living abroad, with at least $10,000 in overseas bank accounts, to file a supplementary form disclosing all of their foreign accounts. That includes any accounts in which the U.S. citizen has a financial interest. That could include a joint account with a spouse or child, accounts for corporations in which the American owns more than 50 percent of the value of shares of stock, or any trust or estate that benefits the U.S. citizen.
The tax compliance act - the newer law - asks foreign financial institutions such as banks, hedge funds, and private equity funds to provide the IRS with information on U.S. clients.
The United States and five European Union countries recently announced their intent to allow institutions to report the information through their own governments, rather than directly to the IRS. Institutions that do not comply will be subject to a 30 percent withholding tax on certain U.S.-sourced payments and proceeds of property sales beginning in the 2013 tax year - for instance, dividends on investments in U.S. companies.
Some expatriates say they were unaware of the first regulation for years and even decades. In 2008, the IRS received only 218,840 such filings. American nationality law grants citizenship to almost everyone born in the United States or born abroad to American parents, regardless of how much time they've spent in the United States. Many may not even know the extent of their U.S. ties.
In 2004, the stakes for noncompliance rose. Failure to file meant potential fines and criminal charges. Americans abroad can be punished for noncompliance even if they owed no income tax - and IRS data show that most of them don't owe money.
Income up to $95,100 isn't taxed under a rule called the Foreign Earned Income Exclusion. In 2009, the income cap was $91,400, and 88 percent of all taxpayers claiming the foreign earned income exclusion owed nothing. Since 2008, the IRS has offered several voluntary-disclosure grace periods during which expatriates can file back taxes without facing criminal charges - but with the possibility of incurring penalties.
Marylouise Serrato, head of American Citizens Abroad, a nonprofit organization based in Geneva, says that many members feel scared about reporting requirements they did not know existed. Their disenchantment, she says, is pushing some to renounce.
"Americans abroad are terrified. We've had people pay tens of thousands of dollars in fines. We've had people … pay huge amounts of back taxes," she says. "Up to this point, we never heard of anyone renouncing, or if they did, they didn't talk about it," says Serrato, who says her group does not advocate renunciation.
"Now," she says, "we're seeing a lot of people speak openly about it and come to us for information."
Congress is taking note. "While I fully support measures that reduce fraud and address offshore havens, the U.S. should not have policies that place undue burdens on legitimate Americans abroad," says Representative Carolyn Maloney, D-N.Y., and the chair of the Congressional Americans Abroad Caucus. Maloney says she has taken the matter to the Department of the Treasury, which oversees the IRS.
'TOO EXPENSIVE TO KEEP'
Lawyers report that banking is a big reason why people renounce. "I hear about banking problems again and again and again," says Phil Hodgen, an attorney who has been helping Americans expatriate since 2008. The new reporting rules, he says, pose "a huge administrative burden. It's made Americans too expensive to keep."
Francisca N. Mordi, vice president and senior tax counsel at the American Bankers Association, says she has received a number of calls from Americans in Europe complaining about banks closing their accounts. "They're going to drop Americans like hot potatoes," Mordi says. "The foreign banks are upset enough about the regulations that they're saying they just won't keep American customers, and it's giving (Americans living abroad) a lot of sleepless nights."
Taxpayer complaints sometimes make their way to Nina Olson, the U.S. taxpayer advocate for the IRS, who addressed some of the international tax issues in a December report.
"The complexity of international tax law, combined with the administrative burden placed on these taxpayers, creates an environment where taxpayers who are trying their best to comply simply cannot," the report reads. "For some, this means paying more U.S. tax than is legally required, while others may be subject to steep civil and criminal penalties. For some U.S. taxpayers abroad, the tax requirements are so confusing and the compliance burden so great that they give up their U.S. citizenship."
In the same report, the IRS responded to the criticism, stating that the penalties for failing to report foreign accounts issued in its guidelines are maximums, not set amounts. It said the agency will not fine filers if the lapse is due to a "reasonable cause." The IRS also acknowledged the need for more public awareness, and it detailed its efforts to inform Americans overseas through fact sheets, a telephone help line and Twitter.
The IRS did not respond to requests for comment.
WOMEN IN A TOUGH SPOT
Around the world, American women's clubs - known for promoting American culture overseas through Fourth of July celebrations and Thanksgiving dinners - are growing empathetic toward those who renounce.
The American Women's Club in Dusseldorf, for instance, now links to renunciation information on its Website. The Federation of American Women's Clubs Overseas has opposed new IRS rules, in part because the rules were pushing members to give up their citizenship. "The candidates are not tax-evaders or un-patriots," reads the organization's last annual report.
In Europe, American women say they feel pressure to renounce even from their husbands.
"American women married to non-Americans are only just now finding out that they have to disclose years and years of income and accounts," says Lucy Stensland Laederich, a leader of the women's club who lives in Bordeaux, France.
Laederich has been acting as the group's liaison with politicians and bureaucrats in Washington, D.C., and plans to attend a meeting to discuss expatriate tax issues with Maloney and Treasury Department officials on Tuesday.
"When they decide to come clean and report everything," she says, "they have to go ask their husbands for all of their bank information, retirement funds, and investment accounts, everything."
Some of their husbands, Laederich says, refuse to hand over information to the IRS. That leaves the women in difficult predicaments.
"Your options are to ignore the IRS and stick your head in the sand; take your name off of all the accounts and live in a completely cash economy; divorce; or renounce U.S. citizenship," Laederich says. "We've seen all of these things happen."
DIVORCE OR DISCLOSE
Genette Eysselinck, a friend of Laederich's, renounced early this year. Her husband, a European Union civil servant, saw no good reason to share his account information with the IRS, she says. And after considering all her options, Eysselinck decided that renouncing was the best path.
"It created a lot of tensions around here," she says. "Divorce seemed a little extreme, so I asked myself, 'What am I gaining as an American?' And the cons outweighed the pros."
Eysselinck was born in Fort Bragg, North Carolina, and says she grew up on military bases all over the world. Her father, she says, was an Air Force pilot. Eysselinck has lived abroad for decades and no longer has any close connections in the United States.
She spent her final months as an American collecting paperwork and filing tax returns from the past five years, even though she says she owed nothing. Her last act as a citizen was to swear before an American flag that she renounced all ties with the United States. She called the process "gut wrenching."
"I grew up in a military family where patriotic feeling was very strong" Eysselinck says. "I'm amazed at how terrible I felt renouncing. But it was the only way to get them off my back. It's very distressing and time consuming to keep up with all the paperwork. But if it's this bad when I'm 64, how bad will it be when I'm 74?"
A leading earthquake scientist has warned that the planet could be cracking up after a series of massive quakes in just 48 hours. Expert Gheorghe Marmureanu – from Romania’s National Institute of Earth Physics – says 39 quakes had hit the globe within two days. The series started with two massive quakes in Indonesia measuring 8.6 and 8.2 on the Richter scale rapidly followed by three more only slightly smaller in Mexico within hours.
“There is no doubt that something is seriously wrong. There have been too many strong earthquakes,” said Marmureanu. He added: “The quakes are a surprise that cannot be easily explained by current scientific knowledge.
With the Indonesian quake for example, statistically, there should be one big earthquake in this part of Asia every 500 years. However, since 2004, there were already three quakes with a magnitude of over 8, which is not normal
The US and China have been discreetly engaging in "war games" amid rising anger in Washington over the scale and audacity of Beijing-coordinated cyberattacks on western governments and big business, the Guardianhas learned.
State department and Pentagon officials, along with their Chinese counterparts, were involved in two war games last year that were designed to help prevent a sudden military escalation between the sides if either felt they were being targeted. Another session is planned for May.
Though the exercises have given the US a chance to vent its frustration at what appears to be state-sponsored espionage and theft on an industrial scale, China has been belligerent.
"China has come to the conclusion that the power relationship has changed, and it has changed in a way that favours them," said Jim Lewis, a senior fellow and director at the Centre for Strategic and International Studies (CSIS) thinktank in Washington.
"The PLA [People's Liberation Army] is very hostile. They see the US as a target. They feel they have justification for their actions. They think the US is in decline."
The war games have been organised through the CSIS and a Beijing thinktank, the China Institute of Contemporary International Relations. This has allowed government officials, and those from the US intelligence agencies, to have contact in a less formal environment.
Known as "Track 1.5" diplomacy, it is the closest governments can get in conflict management without full-blown talks.
"We coordinate the war games with the state department and department of defence," said Lewis, who brokered the meetings, which took place in Beijing last June, and in Washington in December.
"The officials start out as observers and become participants ... it is very much the same on the Chinese side. Because it is organised between two thinktanks they can speak more freely."
The International Monetary Fund (IMF) has for the first time accepted the prospect of the euro breaking up.
The International Monetary Fund (IMF) has for the first time accepted the prospect of the euro breaking up.
In its flagship economic survey of the world economy, the IMF acknowledged there were fundamental "flaws" in the design of the single currency and said that one prospective "tail risk" is a "disorderly default and exit by a euro area member".
It is the first time the IMF has openly contemplated such an outcome.
The announcement comes amid growing consternation about the plight of Spain, which has suffered an exodus of bank deposits and is struggling to raise money at reasonable rates.Its previous forecasts disregarded such a scenario, and its managing director, Christine Lagarde, said earlier this month that it had no agenda to see the euro collapse.
Many now believe that Spain could follow Greece, Portugal and Ireland in having an emergency bailout.
The IMF said it was impossible to quantify the impact of a country defaulting or exiting the currency union.
But in its World Economic Outlook, it added: "If such an event occurs, it is possible that other euro area economies perceived to have similar risk characteristics would come under severe pressure as well, with a full-blown panic in financial markets and depositor flight from several banking systems.
Only last month, IMF Chief Christine Lagarde said the euro would not collapse
"Under these circumstances, a break-up of the euro area could not be ruled out. The financial and real spillovers to other regions, especially emerging Europe, would likely be very large.
"This could cause major political shocks that could aggravate economic stress to levels well above those after the Lehman collapse."
However, the IMF's working assumption is that "policymakers succeed in containing the sovereign crisis through continued crisis management and further advancing measures toward its resolution".
Nonetheless, it raised its forecast for overall world economic growth this year by 0.2% points to 3.5%.
It also increased its economic growth forecast for the UK this year from 0.6% to 0.8%, the first such increase in recent years, which is likely to reinforce Chancellor George Osborne's insistence that he is following the right path.
However, it is the IMF's warning over Europe which is likely to disturb policymakers most profoundly.
It cut its economic growth forecast for Spain this year from -1.6% to -1.8%, which is lower than Madrid's official forecast and makes it harder to meet its deficit reduction plans.
That comes with Spain facing government borrowing costs of more than 6%, a sign that investors are fearful of buying the country's debt.
And in a further blow, the country has become embroiled in a row with Argentina, which is set to nationalise its oil company YPF, the majority stake of which is owned by Spanish oil group Repsol.
(Reuters) - Economic experts watching Spain don't know how much money will be needed or precisely when, but some are near certain that Madrid will eventually seek a multi-billion euro bailout for its banks, and perhaps even for the state itself.
Prime Minister Mariano Rajoy has repeatedly said Spain doesn't need or want an international bailout, and the European Union, which along with the IMF has already rescued Greece, Ireland and Portugal, also dismisses such talk.
But economists believe that Spanish banks will have to turn to the euro zone's rescue fund, the European Financial Stability Facility (EFSF), for help in covering losses caused by a property market crash which has yet to end.
Likewise, investors are fretting about how Rajoy's centre-right government can enforce deep austerity while reviving a recession-bound economy at the same time.
"They're going to need EFSF money to recapitalize the banking sector," said Carsten Brzeski, a senior economist at ING in Brussels. "I think we'll only see a real end to the Spanish misery if the real estate market stabilizes."
Madrid is likely to hold out for some time. "The underlying picture in Spain is dramatic, but is it dramatic in the way that it needs a bailout package tomorrow? No," Brzeski said. "But if you look ahead, let's say the next six months, I would not be surprised if they (the banks) have to get some kind of European support."
Market concerns about the euro zone's fourth largest economy have deepened in the past week. Yields on the government's 10-year bonds, which reflect the risk investors attach to owning Spanish debt, have risen above 6 percent, a level that has proved a trigger point for other troubled euro zone countries.
At the moment the EU is backing Madrid. Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, said Spain was taking the necessary steps to get its economy back on track, despite a recession and unemployment at 24 percent.
"I don't think Spain will need any kind of external support," Juncker said. "I would like to invite financial markets to behave in a rational way. Spain is on track."
German Finance Minister Wolfgang Schaeuble also rejected comparisons with countries which are already on bailout programs. "The fundamental data in Spain is not comparable to those in the countries that are under a program," he told Reuters. "Spain needs to work to win confidence, however, if the positive developments are to continue."
Markets took fright earlier in the year when Rajoy relaxed his government's targets for cutting the budget deficit.
However, not all economists are so pessimistic and some say the four-month-old government is starting to knuckle down to meeting the new targets, which still demand deeply unpopular austerity, and tackling the economy's structural problems.
"We've seen more progress in a few days than in four months," said Gilles Moec, a Deutsche Bank economist. "It's a country that's intrinsically sustainable, but it's a country that needs to make decisions."
Others beg to differ and fear Spain will drag in Italy, which has suffered similar problems with rising borrowing costs.
"As I look at my screen and Spain 10-year yields are up at 6 percent - things are starting to get worrying again," said Peter Westaway, chief economist for Europe at Vanguard, an investment management firm overseeing $1.8 trillion in assets.
"If they go up to 6.5 to 7 percent, that could become very problematic, and if Italy started to go back above Spain again, then that would be really serious."
Spain has one thing on its side. It has already raised nearly half the 86 billion euros it needs to borrow from financial markets this year, sucking up some of the 1 trillion euros of cheap three-year loans that the European Central Bank has pumped into the euro zone banking sector.
This means the government could hang on for months before having to turn to the EU for help with its own funding needs.
A 380 BILLION EURO PROBLEM
However, that still leaves the banks. One of the critical "unknowables' for Spain is just how bad a situation its banks are in. The Spanish housing market, once a driver of the economy, has been in turmoil for more than four years, but prices still haven't fallen as much as economists think is needed to squeeze the air out of the bubble.
Only when prices have bottomed will assessors be able to calculate how just much bad mortgage debt is sitting on the banks' balance sheets, and therefore how much extra capital the sector requires to return it to health.
"Prices have dropped by about 15-20 percent from peak to now and they will probably have to drop another 15-20 percent before they reach bottom," said Brzeski. He estimates Spanish banks may need as much as 80 billion euros of extra capital once all bad mortgage debt is accounted for.
In a paper published this week, Daniel Gros and Cinzia Alcidi of the Centre for European Policy Studies estimated that the total accumulated overhang in the Spanish property and construction sector is more than 380 billion euros - equivalent to 37 percent of GDP.
"A housing overhang per se does not have to lead to an acute financial crisis if it was financed by domestic savings," they write. "Unfortunately this is not the case in Spain."
As a result, economists expect Spain's banking sector will have no choice but to recapitalize.
The government is unlikely to fund such an operation while it is trying to slash the budget deficit, and private investors are reluctant to invest in such a troubled sector.
That leaves the European Financial Stability Facility as the most likely option for the banks - and possibly also for the government eventually.
"Spain is not going to run out of cash (yet) and it's pre-funded its borrowing requirement," said Megan Greene, a senior economist and euro zone specialist at Roubini Global Economics. But she added: "There's a chance that the banking bailout could come sooner, but I really think it's going to be next year."
Even if it does hang on until 2013, Greene still expects Spain to need both a banking and a sovereign bailout - a program similar to that provided to Ireland or Greece.
"The banking sector is only one piece of the puzzle in Spain," she said. "A banking bailout could deal with one part of the problem, but eventually the sovereign is going to need a bailout too."
WHAT TO DO WITH ITALY
Doubts persist that the euro zone is any better placed to handle a rescue of Spain than it was two years ago, despite having already bailed out the three other countries and having set up an 800 billion euro fund to tackle the problems ravaging the region's economy.
"When it comes to deciding how to deal with Spain, I really think they are back to the drawing board," said Greene. "They basically haven't learnt anything from the first three bailouts."
Then the problem for euro zone policymakers will be what to do about Italy, the eighth largest economy in the world, with GDP 50 percent larger than Spain's.
For months, Spanish government bond yields and those in Italy have moved in near lock-step, reflecting the twinned risk investors see in both southern European states.
"Spain and Italy are inextricably tied," said Greene. "If Spain gets a bailout then the EU needs to be ready to provide support to Italy too."
A senior U.S. military officer said yesterday all options are on the table to counter North Korea’s armed provocations, including a surgical strike on its nuclear facility.
Admiral Samuel J. Locklear, the commander of the U.S. Pacific Command, visited Korea for the first time since he assumed the post in March. During the visit, Admiral Locklear met with the National Defense Ministry press corps and spoke about a wide range of issues including North Korea’s latest rocket launch and the possibility of a nuclear test, as well as the U.S.-South Korea military alliance.
He expressed skepticism about the communist regime’s true long-range missile capability.
Following the North’s failed launch of a long-range rocket, which exploded only minutes after liftoff Friday, speculation has risen that Pyongyang will conduct a third nuclear weapon test. The North conducted its first nuclear test in October 2006, three months after a long-range missile test. In April 2009, the North also launched another long-range rocket and carried out the second nuclear test a month later.
Admiral Locklear said the United States is paying close attention to the possibility of the North’s nuclear test. Asked if a surgical strike on the nuclear test facilities is being discussed in the United States, commander said, “We are considering all options,” but he added it would be inappropriate for him to comment specifically on future military operations.
“It’s true that in the past the North Korean government has followed this type of missile launch with further provocations,” he said.
Admiral Locklear said the U.S. will work closely with its allies in the region to monitor the situation in the North.
He also refrained from assessing the North’s true missile capability, particularly after, what appeared to be, a new inter-continental ballistic missile was displayed at a military parade in Pyongyang on Sunday. He declined to comment on whether it was real or a dummy, but added, “I can assure you that the U.S. and our allies are monitoring very closely future developments of these types of missiles. We will be assessing the capabilities as we move forward.”
Calling the midair explosion of the long-range rocket on Friday “a fairly catastrophic failure,” Locklear said, “It certainly caused me to question their competency and advanced missile technology.”
Dealing with the new regime of Kim Jong-un is the first challenge in the region, he said. Should the North Korean leadership choose to abide by international obligations and cease provocations, this would be the preferred path, he said. But if further provocations is the path it chooses, the challenge for Washington and Seoul will be demonstrating the strength of their alliance through strong, mutual monitoring of the North.
Meanwhile, the National Defense Ministry yesterday announced that it will end the operation to retrieve debris from the North’s rocket. The operation began immediately after the rocket exploded and fell into the Yellow Sea, but no progress was officially reported until yesterday.
The Ministry said, “No progress was made in that operation.”
Korea JoongAng Daily