The discipline of game theory cautions us against assuming that a situation better for all parties will automatically come to pass through the operation of self-interest. Even if the desired situation is a Nash Equilibrium, in the sense that no party can do better by unilateral deviation, society may not be able to move out of a “bad equilibrium" on account of a lack of institutions or leadership. If the targeted outcome is not even a Nash Equilibrium, then the challenges are even greater.

This central message of game theory is useful in the context of the North Korean crisis. Since US President Donald Trump’s inauguration, North Korea has conducted 11 missile tests and now seems to have the capacity to launch an intercontinental ballistic missile targeting Alaska. Meanwhile, the US has placed an anti-missile defence system in South Korea whose main city, Seoul, is within 35km of the border with North Korea, and threatened direct military action. With neither side willing to budge, the standoff between two nuclear-armed states is bringing back memories of the Cuban missile crisis of 1962, when the Soviet Union had surreptitiously placed missiles in Cuba, bringing several US cities within striking distance.

Many observers have suggested that a mutual compromise is the only way back from the nuclear precipice. While the desirability of such an outcome can hardly be questioned, what is the possibility of its occurrence? Parallels with the Cuban missile crisis, where the Soviets had withdrawn their missiles in Cuba in return for the US retiring its missiles in Turkey, may be misplaced.

The Cuban crisis pitted two equally powerful adversaries, the US and the Soviet Union, against each other. The present conflict appears to pit a large country against a country which is minuscule in every respect except for its nuclear capability. Further, in contrast to Cuba, the present conflict is merely the tip of the iceberg, embedded as it is within a much deeper tussle over the South China Sea involving the US and a significantly different cast of characters, including China. What do these differences in the two situations imply?

I will argue that when both adversaries are large, there exists a large set of mutually acceptable concessions. This is because the side for which a concession is being contemplated has far-flung interests and, therefore, can be accommodated in a number of ways. Further, the side making the concession usually has several alternative ways of targeting a single enemy position, and can afford to give up one of these positions without significant cost. In other words, the costs of making a concession are low, the benefits of a concession can be high, and the all-important optics can be managed to the satisfaction of all concerned. For instance, besides missiles in Turkey, the US had positioned “Jupiter" missiles in Italy as well as “Thor" missiles in Britain targeting the Soviet Union. Hence it could withdraw the Turkish missiles while leaving the military balance virtually unchanged. Further, the US could have chosen to make concessions in one of the many theatres of conflict involving the Soviet Union, including the border of North Korea and South Korea.

However, when one adversary is small, both geographically and in terms of influence, then the space of compromises that would appeal to the smaller player is restricted. The US could offer to limit its naval bases in the Indian Ocean, but what good would that do to Kim Jong-un? Further, the large country would usually have established only a limited number of attacking positions with respect to the small country. This makes it difficult for the large entity to find a concession that would be acceptable to the adversary as well as to itself. Consequently, a conflict between two unequally sized adversaries both possessing nuclear weapons is more intractable than a match-up between equally sized foes. This may be called the paradox of asymmetric nuclear standoffs.

In the present impasse, a paring down of the US base in South Korea is the principal concession that the North Korean leader, who rightfully perceives an existential threat from the US, would desire. However, in the context of the conflicts in the South China Sea, the South Korean base remains one of the US’ most reliable assets, given the changing attitude of the Philippines under President Rodrigo Duterte. Hence, the one concession that Kim Jong-un seeks is precisely the concession Trump cannot afford to make.

What are the potential windows of opportunity that could arise? First, a shift in the stance of China. As US ambassador to the UN Nikki Haley said, “The only country that can stop North Korea is China, and they know that." Today, all of Trump’s trade threats notwithstanding, it may be in China’s interest to allow North Korea to fight a proxy war with the US on its behalf. However, if the North Korean dictator becomes too unpredictable and begins to pose a threat to China, the situation could change. Second, a change in the strategy of the US in the South China Sea from a reliance on hard power to a reliance on soft power would give some wiggle room to reduce US military presence and accommodate North Korea’s concerns. Although unlikely, a falling out of China and Russia (for instance, over China’s India policy) could also change the ground realities.

In sum, we cannot simply assume that a process of de-escalation that works against the US’ core interest in the South China Sea will see the light of day without a major shift in entrenched positions. Things may have to get worse in order to get better.

With inputs from Siddharth Mishra and Rajat Sharma, students at MDI Gurgaon.

Rohit Prasad is a professor at MDI, Gurgaon, and author of Blood Red River. Game Sutra is a fortnightly column based on game theory.

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