Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, Stratfor cannot guarantee their complete accuracy. Video Transcript: Colin Chapman: While President Xi Jinping gives the keynote speech at this weekend's Boao Forum on the Chinese island of Hainan, attended also by business icons like Bill Gates and George Soros, one friend of China will not be there — North Korea's Kim Jong Un, now pondering his next move in the escalating threats uttered from Pyongyang. It has now got to the point where you have a former CIA director, Michael Hayden, saying the possibility of North Korea funding a nuclear attack is somewhere between extremely remote and zero. All at the same time saying the current situation is extremely dangerous. Note the use of the word "extremely." But what does this really mean? Welcome again to Agenda. I'm Colin Chapman, and with me again is Stratfor's Rodger Baker. Rodger, this is an issue where the volume keeps being turned up. Alarm bells are sounding, but is there any risk of real conflict? Rodger Baker: Well I think one in looking at his statements you have to look at the difference between nuclear and conventional warfare. The North Koreans have developed a nuclear device that they are able test underground. It's highly unlikely that the North Koreans have developed a deliverable nuclear weapon. And therefore, North Korea striking with a nuclear weapon at South Korea and particularly the ability of the North Koreans to strike at Japan or the United States is extremely remote. At the same time, North Korea does have a very large conventional force. That conventional force is forward deployed, and the North Koreans and the South Koreans are exchanging certain types of rhetoric; they're both adjusting their rules of engagement or are at least claiming to be adjusting those. And therefore the chance of an accidental or of an event triggered off misunderstanding or miscalculation could occur. And that's I think where the danger comes from. The danger is not coming from the carefully choreographed moves of the North Koreans to try to shape the psychological battlefield, or even the counter moves by the United States to play in the same sort of psychological space. But it comes from the potential for a miscalculation or a misunderstanding at a very small level that could quickly escalate out of control. Colin: Rodger, what are the chances of the two major powers — China and the United States — coming to an agreement on the way out of this conflict? Rodger: Well the United States and the Chinese are going to have some meetings coming up in the not too distant future. Certainly, North Korea's going to be in discussion during those. The United States, however, has really tried to stick to its policy of ignoring the North Koreans to death. At this particular moment, they really want to emphasize that the pattern of North Korea being able to raise tensions in order to trade down to close to the status quo for money and rewards is no longer a pattern that the U.S. is going to continue feeding into. And so in some sense the impression and the face that the U.S. is putting on this is that they're not willing to enter any form of negotiation at this time with the North Koreans until after the North Koreans reduce tension — so not enter talks to bring tensions down but to wait until tensions come down to enter talks. The Chinese have been trying to play off the North Korean threat as something that "hey it's going to get out of hand, the South Koreans might act soon, we really need to ratchet this back." And the Chinese are trying to say, "hey, United States, you need to come to us so that we can talk to the North Koreans for you." And right now, the U.S. and the Chinese are on a very different page about what to do about this crisis. Further, its not entirely clear the Chinese are suffering from this crisis right now. In fact, it has taken most of the world attention off of what had been focused on what was perceived as Chinese maritime aggression in the region and it shifted it all to North Korea. Colin: It happened to be North Korea's escalating threats encouraged the hawks — those in armchairs — calling for action. But is there any pre-emptive military action that could be taken? Rodger: There really is no pre-emptive military action the South Koreans could take that doesn't risk triggering off a complete war. The problem is that what the North Koreans have that threatens South Korea is not necessarily the nuclear program. It's not even really even the missile program. It's the frontline artillery. And there's no way to take out, to attack, to destroy that frontline artillery without basically triggering the response from North Korea to start shelling the greater Seoul-Incheon area. So the South Koreans don't have a pre-emptive military move to deal with the North Koreans or to force the North Koreans back down. The North Koreans right now, everybody's interpretation — at least from the government level in looking at the North Koreans — is that the North Koreans are not intent on actually triggering a war, that North Korea is just as concerned as everybody else about a war and perhaps even more because although the South Korean economy may be devastated in the short term, the likelihood of the North Korean regime being able to continue in the long term is very, very low. So they will lose a war, effectively. The risk though is not in a conscious decision by the North Koreans or even a conscious pre-emptive decision by the South Koreans. But that the South Koreans feel after years of not physically responding to the North Koreans, they've had to change the impression that they would respond physically now, that they misinterpret an action by the North Koreans and respond anyway. Colin: Rodger a few days ago I happened to be talking to Alexander Zhebin, a North Korean expert from the Academy of Sciences in Moscow. He was once the Tass correspondent in Pyongyang, and he argued that the issue for Kim Yong Un was getting a guarantee that his regime would survive, and that once he got that, progress could be made. Do you see any truth in this? Rodger: I think there is actually some truth in that. The North Koreans…their entire policy that they've been pursuing is a policy of securing and strengthening the Kim regime and securing the elite; it's maintaining control within North Korea. And their pattern of raising tensions and backing down and then they have to raise tensions higher the next time before they back down, has really been going on for about 20 years. It's reaching its limits of efficacy. And the North Koreans are having to shift and adjust. The North Koreans by pulling out of the armistice agreements, by the steps that they're taking are trying to redefine any talks that happen, not as talks about reducing the nuclear program or pulling back on its missile development, but as talks about the fundamental status of security on the Korean Peninsula. And that really is something the North Koreans would like to adjust. They have lived since the end of the Korean War under how they perceive under the guns of the Untied States — that they are under constant threat from the much larger United States. And whether the U.S. really has an interest in going after North Korea or not doesn't matter to the North Koreans. They perceive that it does. For them, changing that dynamic, creating a peace accord with the United States, gaining formal recognition for their regime gives them some sense of space, it gives them the ability internally to show how strong they are internationally that even the United States recognizes this regime. And that would give them some space to play around with some of their economic experimentation and maybe even open them up to some international trade and find some ways to attract some investment, particularly to build up North Korea's ailing infrastructure. Colin: Of course, they've carried out on threat, albeit not a military one. They've blocked off access to South Korea's managers to the Kaesong industrial zone. Has that had any real impact? Roger: Up to this point, we haven't seen a substantial impact yet on Kaesong, although the North Koreans have threatened to withdraw their own citizens as well. Most of the South Korean companies there are still encouraging their workers who are currently in North Korea to remain in North Korea and not leave, so only a small number are leaving. All indications are that the factories are still operating; they're still producing. They still have a week or two or maybe more of raw materials and supplies that they can draw upon to stay in action. The North Koreans in the past have disrupted operations during times of high risk and high crisis and this looks like this is one of those types of situations again, although their threat to withdraw their workers may push it a little further. From the North Korean point of view, Kaesong is probably economically more important for them than it is for South Korea, although there are a lot of small South Korean companies operating there that could be seriously damaged if the facilities close. But for the South Koreans, it is much more psychologically important because it really is the centerpiece of South Korean policy toward North Korea and it's that tiny piece that keeps a connection between the two. And from the South Korean perspective, as long as Kaesong is open, they see it as a signal from the North that they're really not going back to confrontation. Colin: Well, stay tuned to Stratfor to see how it plays out. Rodger Baker there, ending Agenda. Thanks for being with us.