North Korea tested two surface-to-air short-range missiles between March 7 and 8, sparking all sorts of reports about accidents and direction. The key initial debate was whether the launches were intentional or accidental, and the related debate was over direction; did North Korea launch them toward the Chinese border or over the East Sea?
To a great degree, neither question is all that important. Sure, an accidental launch may mean some troubles with equipment, but every country has troubles, and at least these were not apparently launched over a major population center like the South Koreans did accidentally back in 1998, with the NIKE missile launching (and exploding and falling) over Inchon.
As for the direction, there are no conflicts as to the missiles remaining in North Korean territory. If they shot them East, as is normal, it is nothing new. If they flew North, even that isn't all that odd, as the short range would be easily calculated to remain in North Korean territory. Sure, China or Russia might wince for a second, but two SAMs are obviously not the preface barrage for an invasion across the Yalu River.
Rather, there are two other aspects of the launch that seem more interesting. First, unlike North Korea's silkworm and seersucker anti-ship missile tests in February, March and October 2003 and in May 2005, these were not anti-ship but anti-air missiles (at least if the initial reports are accurate). Why the shift?
It could be that Pyongyang simply hasn't tested its air defense in a while, and really wanted to try it out. On March 2, Kim Jong Il did visit KPA Air Force Unit 991. It could be that the exercises were air defense exercises. It could be a way to reinforce the monthly North Korean complaints of "aerial espionage" by the United States. Or, a very minor chance, it could have been an unsuccessful launch at a U.S. aircraft operating in the area. If the latter is correct, then Pyongyang was sending a much more robust signal than normal.
But this still gets into the main reason for the launch - sending a signal. Pyongyang is sitting on the sidelines right now, watching Iran get all the attention. The North Korean leadership is also mulling a new special economic zone near the Chinese border on the Yellow Sea (perhaps Sinuiju, perhaps Bidan Island). And the North Koreans are looking to find a way to incentivise Washington into acquiesce to Pyongyang's concerns on the counterfeiting issue and return to the six-party talks. And in a convoluted way, popping off a missile is intended to assist with this, as Washington has been touting the North Korean missile threat just at this time, and North Korea is obliging that sense of dread.
In return, North Korea gets prime billing at the State Department daily briefing, and may remind those in Washington that North Korea could be dangerous too, and therefore need dealing with. Pyongyang has offered bilateral talks with Washington on counterfeiting, and then laid out that those talks need to precede the return to the six-party talks. Washington has said the six-party talks can become the forum to discuss North Korean missiles. So if Washington wants to talk missiles, it must first talk counterfeiting. And now missiles are high on the U.S. radar screen (perhaps literally).
Now, all this rolls back to a fundamental question; why does North Korea really care about U.S. actions over counterfeiting? Closing down contact with one Macao bank isn't all that bad, and if North Korea is clever enough to produce the so-called "super notes," it is certainly clever enough to launder them. This then gets us back to the economic issue. Pyongyang's plans for Sinuiju or Bidan include banking. A way to move currency in and out of the country. Possibly even setting up shelters for foreign money to move all over the place. A new Switzerland or Caymans, perhaps. But, if Washington is putting the kibosh on interaction with North Korean financial institutions, then all bets are off.
Note that Ri Gun reportedly told U.S. Assistant Treasury Secretary Daniel Glaser that North Korea would like to set up a bank in the United States to handle its international accounts. Banking, or more specifically facilitating the flow of money, is a key element to North Korea's future economic plans. It wants to be a Hong Kong, or at least a place where money can move, sit quietly, and not be too deeply scrutinized by international investigators, and where North Korea can profit off of the movement and interest.
So missile tests, talks on counterfeiting, nuclear negotiations, and economic desires have all come together in a convoluted but nevertheless interesting flow. And all for the cost of two little old SA-2s or something similar. Now, if only North Korea's diplomatic Rube Goldberg devices worked, this would be brilliant.