National Security

Tell Me How This Starts

What war on the Korean Peninsula would look like.

The Korean Peninsula is on a knife's edge, one fateful step from war. While Koreans are accustomed to periodic spikes in tensions, the risk of renewed hostilities appears higher than at any time in the past 60 years, when American, North Korean, and Chinese generals signed an armistice agreement. Far more than 1 million people died in the Korean War, with at least that many troops and civilians injured over the course of the three-year campaign.

The exact leadership dynamics at play in Pyongyang remain mysterious, but the domestic survival of the Kim family dynasty appears to hinge on maintaining a credible nuclear and missile threat -- backed up by a local great power, China. To achieve the former, Kim Jong Un appears willing to risk the latter. His regime's unrelenting verbal threats are intended to rally domestic support, and its reckless brinksmanship is aimed at forcing the outside world to back down and back off. In the past days and weeks -- adding to the tension created by its recent nuclear and missile tests -- Pyongyang has severed a hotline with Seoul, renounced the 1953 armistice, conducted cyberattacks, and, against its own financial interests, closed down the Kaesong Industrial Complex, which is the only economic thread holding together relations with the South.

There is no single red line that, when crossed, would trigger war, but the potential for miscalculation and escalation is high. North Korea has a penchant for causing international incidents -- in 2010 alone it used a mini-submarine to sink the South Korean naval vessel Cheonan and shelled South Korea's Yeonpyeong Island. The brazen and unprovoked killing of military personnel and civilians shocked many South Koreans, some of whom faulted then-President Lee Myung Bak for a tepid response. The new president, Park Geun Hye (South Korea's "Iron Lady") is determined not to echo that weakness and has vowed a strong response to any direct provocation. Meanwhile, the United States, via the annual Foal Eagle and Key Resolve exercises, has many troops, ships, and planes on maneuvers in the region and, as an additional show of resolve, flew long-range B-2 stealth bombers from Missouri to Korea and dispatched F-22 fighter jets as well.

The desire to show strength, the fear of looking weak, and the presence of tons of hardware provides more than enough tinder that a spark could start a peninsula-wide conflagration. An accident -- such as a straying missile, an incident at sea or in the air, a shooting near the Northern Limit Line or the Demilitarized Zone -- could trigger an action-reaction cycle that could spiral out of control if Pyongyang, running out of threats or low-level provocations, were to gamble on a more daring move. It might calculate that a bold gesture would sow doubt and dissent in South Korea, drive a risk-averse United States to back down and restrain its eager ally, and hand China a fait accompli in which Beijing has no alternative to protecting its upstart neighbor. It might be very wrong.

Let's say that the North decides to fire its new mobile KN-08 intermediate-range ballistic missile, capable of reaching U.S. bases in Guam. An X-band radar based in Japan detects the launch, cueing missile defenses aboard Japanese and U.S. ships. The U.S.S. Stetham, an Arleigh Burke-class destroyer equipped with Aegis phased-array radars, fires its SM-3 missiles, which hit and shatter the KN-08 warhead as it begins its final descent. The successful intercept is immediately touted internationally as a victory, but, now desperate for tactical advantage that will allow it to preserve its nuclear and missile programs, the North Korean leadership orders an assault on South Korean patrol vessels and military fortifications built after the 2010 shelling incident.

The regime feels safe in striking out along the maritime boundary because the two sides have repeatedly skirmished in the area in the past 15 years. But President Park, determined to show backbone, dispatches on-alert F-15K fighter aircraft armed with AGM-84E SLAM-Expanded Response air-to-ground missiles to destroy the North Korean installations responsible for the latest assault. For good measure, they also bomb a North Korean mini-submarine pier as belated payback for the sinking of Cheonan. North Korean soldiers and military officers are killed in the attack. Pyongyang vows a merciless response and launches a risky salvo of rockets into downtown Seoul, in hope of shocking the Blue House into seeking an immediate cessation of fighting. But far from ending the tit-for-tat attacks, North Korean actions have now triggered the Second Korean War.

U.S. and ROK Combined Forces Command implements a pre-arranged plan -- perhaps using submarine-launched Tomahawk cruise missiles and Massive Ordnance Penetrator bombs dropped from a B-2 -- to eliminate North Korea's two major missile launch facilities: Tonghae in the northeast and Sohae in the northwest, both of which are fairly close to the Chinese border. North Korea responds with more rockets and Scud missiles, accompanied by North Korean Central News announcements suggesting that they could be armed with biological agents. China, seeking to restrain all sides, pours troops and materiel across the border to protect its interests and instigates a secret plan to replace Kim Jong Un with a senior general who understands the North's total dependence on its only ally. The resulting confusion leads to a belief that North Korea, and not just the Kim regime, is collapsing. Meanwhile, the United States quietly embarks on a secret mission to secure North Korea's nuclear weapons.

Even now, however, the Second Korean War has only just begun because, as conflict breaks out, all participants expand their strategic goals. South Korea -- which initially had hoped only to force North Korea to calm down enough to re-enter negotiations on nuclear weapons, expanded inter-Korean economic ties, and human rights -- now believes North Korea is going to collapse and starts to implement an assertive reunification policy. The U.S. policy of deterrence and strategic patience has failed, so Washington decides to pursue active denuclearization and regime change. It joins with Seoul in planning postwar reconstruction in which the peninsula is reunified.

China, which was slow to curb its ally's proliferation and never had a good handle on Kim Jong Un, seeks to ensure that the new leader of North Korea can restore stability. China also wants a new leader in Pyongyang to adopt a pro-China policy -- one which includes continued preferential access to North Korean mineral deposits for its state-owned enterprises. Russia supports China, and it is promised unfettered access to the warm-water port in the Rason Special Economic Zone in northeastern North Korea.

It is easier to start a war than to stop one, but in the best case the Second Korean War might end with an international conference -- perhaps in Jakarta under the auspices of the Association for Southeast Asian Nations -- in which the United States and South Korea come to a modus vivendi with China and a greatly weakened North Korea over the country's future, addressing succession and confederation with the South,  as well as the verified destrcution of nuclear weapons. In the worst case...well, an awful lot more people would die.

The Korean War began in June 1950 as a result of a conscious policy choice on the part of North Korean founder Kim Il Sung. With the Chinese civil war successfully concluded and authoritarianism on the rise, Kim concluded the time was ripe to deliver a knock-out blow and bring a long Korean civil war to a similar conclusion. He spent 10 days amassing 900,000 soldiers near the 38th Parallel, and in the pre-dawn hours on June 25, he ordered the invasion of the South. Hiding in plain sight, the troops nonetheless surprised the Republic of Korea Army, because the presumption was that Kim would never launch a full-scale war that could embroil a war-weary region in another major conflagration.

The presumption, as we know now, was dead wrong. The United States mobilized a formidable international coalition under U.N. auspices and, together with the ROK Army, regrouped and launched their own counteroffensive. American leadership, too, was susceptible to overtly optimistic appraisals. By October, General Douglas MacArthur was so confident of rapid victory that he assured President Harry S Truman that the war would be over by Christmas. But the ferocity of inter-Korean tensions, mixed with Cold War superpower aims, assured the war slogged on until 1953.

The war's renewal would be more likely to result from miscalculation than from deliberate choice. Kim Jong Un may not want war, but amid heightened tensions there are many ways one could start -- and it could well be that it is the United States that miscalculates. There is no sound empirical method for identifying the particular catalyst that would trigger war, but should war begin again in earnest, its intensity and its duration could prove a nasty surprise, as it did the first time. And the consequences could affect Northeast Asia for the rest of the century.

U.S. Marine Corps photo by Lance Cpl. Patrick J. McMahon/ Released


Patently Reasonable

India's Supreme Court has ruled against Big Pharma and for the country's generic drug companies. But who's the big winner in the end?

When the Swiss pharmaceutical firm Novartis lost its battle in India's highest court on Monday, April 1, it was hailed as a major victory in India. The Indian Supreme Court rejected a plea by Novartis for patent protection for the drug Gleevec, which has been called a "miracle drug" for patients with some forms of leukemia. Now, Indian companies are free to make and distribute low-cost versions of the drug to the 300,000-some Indian patients currently using Gleevec. "It is a very happy day for us. Now we can cater to all cancer patients," said Kiran Hukku of Cancer Patients Aid Association, which led the case against Novartis.

But Monday's verdict is about much more than leukemia patients in India. It's about India's ability to legally continue to uphold its reputation as "the pharmacy to the third world." Over the last decade, Indian pharmaceutical companies have pioneered the method of making cheap drugs by copy-catting brand-name medications when they go out of patent for everything from HIV to malaria. These drugs are used widely in India, where tens of millions of people still live on less than two dollars a day and cannot afford basic health care costs. It's estimated that less than 10 percent of drugs sold in India are under patent. That number can be partly accounted for by the country's thriving business in counterfeit drugs, which makes up between 8 and 25 percent of India's drug market.  But Indian drug makers also export about $10 billion worth of generic medicine every year. That means tens of millions of people across the developing world have come to rely on India's cheap drugs.

Essentially, the battle between Indian and multinational pharmaceutical companies boils down to a fundamental disagreement about the definition and the ethics of innovation. India's pharmaceutical companies have a very different business model than that of the research-focused big international pharma companies. Firms like Switzerland's Novartis and America's Pfizer -- which is the world's largest pharmaceutical company -- often spend decades and billions of dollars developing a single medication. They say they need patent protection on their drugs in order to support the high research costs that come with innovation. Indian companies do not invest in research and development on the same scale. Rather, they wait until successful drugs come off patent, and then make copycat versions to sell at a fraction of the cost across the developing world. Indian generic manufacturers sell their version of Gleevec for about $175 a month; the brand-name medication costs patients in India $1,900 a month, although Novartis has a support program that has provided over $1.7 billion worth of Gleevec, free of cost, to Indian patients since 2002.

To U.S. pharma companies, the divide seems stark: Indian companies are simply stealing and repackaging their intellectual property. Yet the view is not the same in India. There, they take the moral high ground, arguing that the long-term costs of drug production become irrelevant if they are not an option for millions of patients in the developing world. After the Novartis decision, an editorial in the Indian newspaper The Hindu declared, "The decision affirms the idea that a patent regime loses its social relevance when a drug is priced beyond the reach of the vast majority of a country's people." Popular sentiment against U.S. and multinational pharma companies, and support for domestic generic companies, remains strong.

Take Cipla, the country's most successful generics company. In 2001, Cipla made world headlines by offering to sell a generic version of a triple cocktail of antiretroviral drugs to HIV-positive patients in developing countries for $350 a year, per patient. The cost was radically lower: in the West, the cocktail cost between $10,000 and $15,000 a year, per patient. Today, some 40 percent of HIV/AIDS patients undergoing antiretroviral therapy worldwide take Cipla drugs. Cipla became known as the pharma company that cares. Its chairman and managing director, Yusuf Hamied, has been portrayed as a kind of Indian Robin Hood. In fact, he became a source of national pride in India. Hamied was awarded the Indian government's highest honor, the Padma Bhushan in 2005.  In an interview with Forbes Asia, Hamied claimed that he has done more humanitarian work than Bill Gates and Warren Buffet.

Last year, Cipla announced that it was slashing the prices on its cancer drugs by 75 percent, to make them not only affordable in India, but across sub-Saharan Africa and in other low-income regions. "We had taken the lead to provide affordable medicine for AIDS, and I think the time has now come -- 10 years later -- when we do a similar thing for cancer," Hamied told the Wall Street Journal. Not incidentally, Hamied is also one of the richest men in India. Last year, Forbes magazine declared that the ten richest tycoons who made their fortunes through generic drug manufacturing were worth a combined total of $25.7 billion. "India's Pharma Kings," the magazine dubbed them. Generic drugs may mean terrible business for multinational pharmaceutical companies, but clearly they have been a boon to India.

The sub-continent has been a frustrating market for big pharma. When India joined the World Trade Organization in 1995, the country was required to begin offering process patents on chemical compounds. However, it wasn't for another decade that India amended its patent protection act to recognize actual pharmaceutical products. When it did, pharmaceutical firms like Pfizer and Novartis streamed in. They had high hopes: India's economy was growing at 6 percent a year, and it was an essentially untapped healthcare market of 1.2 billion people.

But when India amended its patent law, it also added a provision that does not protect new forms of a known substance unless it results in "increased efficacy." This clause was intended to prevent the "evergreening" of drugs, the process of prolonging the life of a patent by making incremental or minor changes, such as changing the dosage or subtly altering the formula. India also sets a higher bar for patent approval than do many countries. In the Novartis case, advocates for low-cost medications argued that the company had not made fundamental changes to Gleevec. And on Monday, India's Supreme Court agreed, ruling that Novartis's Gleevec had failed "in both the tests of invention and patentability."

For multinational pharmaceutical companies, Monday's ruling was a major blow. Both Pfizer and the German multinational Bayer are already appealing decisions in Indian courts which have ruled that generic drug manufacturers can begin making their cancer drugs. Even if they lose these cases, though, neither company is likely to pull out of India altogether. Last year, Pfizer India saw revenues of $185 million.

Here in the United States, the industry group Pharmaceutical Research and Manufacturers of America called the decision "yet another example of the deteriorating innovation environment in India." The Global Intellectual Property Center (GIPC) at the U.S. Chamber of Commerce, echoed that overall criticism: "Unfortunately, this high court decision is a symptom of a much larger problem in inadequate protection of intellectual property rights in India." GPIC also noted that its recently released study comparing IP environments across the globe had found that that India "consistently ranked last among nearly every indicator."

India has disappointed big pharma companies on every front. Not only is its economy undergoing a dramatic slowdown, but the country's intellectual property and regulatory environment is not conducive to business, they claim -- and its crop of fast-growing, successful generics companies means increased competition on all fronts. Because lobbying is illegal in India and pharmaceutical companies can only do so much, the U.S. government has taken up a position as lead advocate for improving India's intellectual property environment. For the most part, it does so in an informal way, as with most issues. On Tuesday, the U.S. Trade Representative's office said it was reviewing the Supreme Court's order on Novartis.

After Monday's ruling against Novartis, the company suggested that it may begin to pull out of research and development in India. But that's unlikely. The possibility of great growth still beckons. According to the consulting firm PricewaterhouseCoopers, the country's pharmaceutical sector is expected to grow to at least $50 billion in sales by 2020, from close to $19 billion in 2009. But that same report acknowledges that Indian generics companies are capable of taking a chunk of that wealth. Something like $70 billion worth of drugs will go off patent in the United States over the next three years, the report says, and India will be well-positioned to take a substantial share of the resulting new generics markets. Which means we're likely to see a lot more frustrated multinational pharmaceutical companies pounding at the doors of the Indian justice system in years to come.