Turkey’s Erdogan may call off U.S. trip after Congress votes: officials

Turkey’s Erdogan may call off U.S. trip after Congress votes: officials
By Orhan Coskun and Dominic Evans

ANKARA (Reuters) – President Tayyip Erdogan may call off a visit to Washington next week in protest at votes in the House of Representatives to recognize mass killings of Armenians a century ago as genocide and to seek sanctions on Turkey, three Turkish officials said.

Erdogan is due in Washington on Nov. 13 at President Donald Trump’s invitation, but said last week that the votes put a “question mark” over the plans.

“These steps seriously overshadow ties between the two countries. Due to these decisions, Erdogan’s visit has been put on hold,” a senior Turkish official said, adding that a final decision had not been taken.

Turkish sources say Trump and Erdogan have a strong bond despite anger in Congress over Turkey’s Syria offensive and its purchase of Russian air defenses, and despite what Ankara sees as Trump’s own erratic pronouncements.

Those personal ties could be crucial given NATO member Turkey’s purchase of Moscow’s S-400 missile defense system, which under U.S. law should trigger sanctions.

Turkey is already suspended from the F-35 fighter jet program in which it was both joint producer and customer, and the offensive it launched against Kurdish forces in northeast Syria on Oct. 9 set the stage for further U.S. retaliation.

Although Trump appeared to clear the way for the incursion by withdrawing troops, the White House briefly imposed sanctions before lifting them after a deal to halt the fighting and clear the Kurdish fighters from the border.

Then, two weeks after that deal, the Congressional votes infuriated Turkey once more.

‘POLITICAL TIMING’

Turkey accepts that many Armenians living in the Ottoman Empire were killed in clashes with Ottoman forces during World War One, but contests the figures and denies that the killings were orchestrated or constitute genocide.

“They took advantage of the current political climate against Turkey in Washington to pass this resolution,” a source close to the presidency said. Like the other officials, he spoke on condition of anonymity.

Trump has expressed sympathy for Turkey over its purchase of Russian defense systems, blaming his predecessor for not selling Ankara U.S. Patriot missiles. His eagerness to pull U.S. forces out of Syria also aligned with Erdogan’s plan to send troops across the border to drive back the Kurdish YPG.

However, last month Trump threatened to “obliterate” Turkey’s economy, and Trump sent Erdogan a letter on the day the offensive started warning him he could be responsible for “slaughtering thousands of people”.

“Don’t be a tough guy. Don’t be a fool!” Trump wrote.

A Turkish security official cited Trump’s letter, along with the votes in Congress, as damaging: “If the atmosphere doesn’t change, there won’t be any point to this visit”.

Erdogan himself said three weeks ago he could no longer keep up with Trump’s blizzard of tweets.

Still, for Ankara, Trump remains the best hope of salvaging a partnership between two countries that, despite their difficulties, want to quadruple their annual trade to $100 billion.

“The two leaders have a good relationship,” the source close to the presidency said. “President Trump wants to have good relations with Turkey in spite of his own establishment.”

(Editing by Kevin Liffey)

Turkey’s Erdogan says Russian S-400s will be fully deployed by April 2020

FILE PHOTO: First parts of a Russian S-400 missile defense system are unloaded from a Russian plane at Murted Airport, known as Akinci Air Base, near Ankara, Turkey, July 12, 2019. Turkish Military/Turkish Defence Ministry/Handout via REUTERS

By Sarah Dadouch

ISTANBUL (Reuters) – Turkish President Tayyip Erdogan said on Monday that the Russian S-400 missile defense system, parts of which have been delivered to Turkey over the past four days, would be fully deployed in April 2020.

Turkey’s purchase of the Russian system has raised tensions with its NATO allies, particularly the United States, which has warned Turkey that it will respond with sanctions.

Speaking at Istanbul’s Ataturk Airport on the third anniversary of 2016’s attempted coup, Erdogan said eight planes had already brought parts of the Russian system and more were coming, as he had repeatedly promised.

“With God’s permission, they will have been installed in their sites by April 2020,” he told the crowd.

“The S-400s are the strongest defense system against those who want to attack our country. God willing, we are doing this as a joint investment with Russia, and will continue to do so.”

U.S. officials have said that in addition to being hit with legislation aimed at preventing countries from purchasing military equipment from Russia, known as CAATSA, Turkey could be thrown off the F-35 stealth fighter jet program.

That would mean it would no longer make F-35 parts or be able to buy the jets it has ordered.

On Sunday, Erdogan said that U.S. President Donald Trump has the authority to waive sanctions on Turkey for its purchase of Russian air defense systems and should find a “middle ground” in the dispute.

Tensions between Turkey and Western allies have risen in recent months over the purchase of the S-400 system, with a series of other actions taken by the NATO member state compounding the situation.

German and Austrian ministers said on Monday that the European Union would endorse a symbolic punishment for Turkey over what it calls “illegal” drilling for oil and gas off Cyprus and threaten harsher sanctions unless Ankara changes tack.

Foreign Minister Mevlut Cavusoglu had said on Sunday that Turkey will continue drilling for gas in waters off Cyprus if the internationally recognized Greek Cypriot government does not accept a cooperation proposal put forward by Turkish Cypriots.

After sacking the central bank governor this month, citing differences over the timing of rate cuts, Erdogan said on Sunday that Turkey would make serious cuts to interest rates and aims to reduce inflation to single digits by the end of the year.

In his first remarks since taking office nine days ago, new governor Murat Uysal was reported as hinting at rate cuts, saying there was “room for maneuver” in monetary policy.

Turkey’s benchmark interest rate was hiked to 24% last September to stem a sharp fall in the lira and has remained there to prevent renewed losses in the currency as the economy tumbled into recession.

Ratings agency Fitch downgraded Turkey’s sovereign rating to BB- on Friday, saying the central bank chief’s dismissal heightened doubt over the authorities’ tolerance for a period of slower growth.

On Monday, agency S&P Global said Turkey’s credit rating is only likely to be affected by U.S. sanctions if they specifically target the country’s banks.

(Reporting by Sarah Dadouch and Ali Kucukgocmen; Writing by Sarah Dadouch; Editing by Catherine Evans)

Exclusive: Japan seeks new U.S. missile radar as North Korea threat grows – sources

Exclusive: Japan seeks new U.S. missile radar as North Korea threat grows - sources

By Tim Kelly and Nobuhiro Kubo

TOKYO (Reuters) – Japan is worried the United States has so far declined to arm it with a powerful new radar, arguing the decision makes the U.S. missile defense system it plans to install much less capable of countering a growing North Korean threat, three sources said.

Japan wants to have a land-based version of the Aegis ballistic missile defense (BMD) system operational by 2023 as a new layer of defense to help counter North Korea’s missile advances.

Yet, without the new powerful radar, known as Spy-6, Japan will have to field the system with existing radar technology that has less range than a new generation of BMD interceptor missiles, the sources who have knowledge of the discussion told Reuters.

That could mean that while the interceptor has enough range to strike a missile lofted high into space, the targeting radar may not be able to detect the threat until it is much closer.

Japanese officials have witnessed a demonstration of Spy-6 technology, which boosts the range of BMD radars dozens of times, but efforts to secure the equipment from their ally have come to naught.

“So far all we have got to do is smell the eel,” said one of the officials, referring to a savory fried eel dish popular in Japan.

The military threat to Japan deepened on Tuesday when Pyongyang fired an intermediate range ballistic missile (IRBM)over Japan’s northern Hokkaido island. Japanese Prime Minister Shinzo Abe slammed the action as “reckless” and “unprecedented.”

Japan’s Defence Ministry and the Pentagon did not immediately respond to requests for comment.

IRONCLAD

Washington’s reluctance to share the radar may make Tokyo feel more vulnerable to North Korean attack and blunt U.S. efforts to assure its Japan about its commitment to defend its East Asian ally to as tensions in the region intensify.

The new U.S. Ambassador to Japan, William Hagerty, dubbed their security partnership as the “greatest on earth” in his first meeting with Abe on Aug 18.

The U.S.’s top general, Joint Chiefs Chairman Gen. Joseph Dunford described that alliance as “ironclad” in talks with the Chief of Staff of Japan’s Self Defence Forces, Admiral Katsutoshi Kawano the same day.

Still, a pledge to let Japan have Spy-6 has not been forthcoming. Japan has not yet placed an order for Aegis Ashore, but has informally asked Washington to let it have the new radar technology.

“There is no guarantee that Japan is going to get it,” said another of the sources. The U.S. Navy supports giving Japan the new radar, the source said, but may be thwarted by reluctance from the Missile Defence Agency, which is responsible for developing BMD technology.

Officials there are wary to release advanced technology, even to a close ally, before the United States has fielded the technology. The United States’ first Spy-6 equipped Aegis warship is not slated to begin operations before 2022, one of the sources said.

Tokyo will need permission to use Spy-6 well ahead of that roll out date to give the maker, Raytheon Co and Aegis system integrator Lockheed Martin Corp time to build and test the system.

Any decision to hold back Spy-6 could therefore add significantly to Japan’s already rising bill for missile defense by forcing it to pay to upgrade or replace Aegis Ashore systems after deployment.

Tokyo plans to build two Aegis Ashore batteries, costing around $700 million each without missiles, the sources said. That would mean its southwestern Okinawa island chain would likely be protected by one of Japan’s existing BMD warships.

The Aegis system’s new SM-3 Block IIA defensive missiles, designed to hit warheads Pyongyang may try to fire over its missile shield, can fly more than 2,000 km – about twice the distance of the current SM-3 missiles.

The interceptor missiles will cost around $30 million each, the sources added.

(Reporting by Tim Kelly and Nobuhiro Kubo in TOKYO; Additional reporting by Idrees Ali in WASHINGTON; Editing by Lincoln Feast)

South Korea does not aim to change U.S. missile defense deal: security adviser

FILE PHOTO: A Terminal High Altitude Area Defense (THAAD) interceptor (R) is seen in Seongju, South Korea, April 26, 2017. Lee Jong-hyeon/News1 via REUTERS

By Christine Kim and David Brunnstrom

SEOUL/WASHINGTON (Reuters) – South Korea does not aim to change its agreement on the deployment of a U.S. anti-missile system to protect against North Korea, in spite of a decision to delay its full installation, Seoul’s top national security adviser said on Friday.

Chung Eui-yong called the decision to delay installation of remaining launchers of the Terminal High Altitude Area Defense (THAAD) system, pending a review of its environmental impact, a domestic measure to ensure a democratic process.

“The decision to introduce THAAD was made to protect South Korea and the U.S. forces in South Korea from a growing threat from the North. We won’t take this decision lightly,” Chung told a news briefing.

He said South Korea would discuss ways to strengthen the joint defense against North Korea’s weapons programs during a summit between new South Korean President Moon Jae-in and U.S. President Donald Trump in late June.

Two launchers of a full six-launcher THAAD battery, as well as the system’s far-reaching radar, which China worries could upset the regional security balance, have already been installed on an old golf course in South Korea’s southeastern city of Seongju.

Moon’s office said on Wednesday that deployment of the four remaining launchers would be halted for the environmental assessment, which may take well over a year, according to a senior administration official.

Moon vowed in his election campaign to review the decision to deploy THAAD, which was made by his conservative predecessor, Park Geun-hye, greatly angering South Korea’s neighbor China, an important trading partner, and some domestic critics.

U.S. officials have sought to play down the impact on relations with South Korea, a long-time treaty ally where more than 28,000 troops are based, although a Pentagon spokesman made clear it would like to see the full battery installed.

“We believe considering the threat from North Korea, a full THAAD battery is the best addition to the defense of (South Korea),” Commander Gary Ross said.

A senior official of the U.S. administration told Reuters that U.S. diplomats had sought clarification from South Korean officials as to whether the environmental review was a prelude for a rejection of the whole THAAD system, and were assured that South Korea planned to uphold its end of the agreement.

The issue was discussed by Trump, U.S. Defense Secretary Jim Mattis and Secretary of State Rex Tillerson at a White House meeting on Thursday.

A State Department spokeswoman, Katina Adams, said the decision to deploy THAAD was an essential response to North Korea’s fast-developing nuclear and missiles programs, which has seen dozens of launches and two bomb tests since the start of last year.

“Each launch … further demonstrates the rationale and necessity of the U.S.-(South Korea) Alliance agreement to deploy THAAD,” she said.

The State Department said U.S. Under Secretary of State Thomas Shannon would visit Seoul from Tuesday to Thursday next week after a stop in Tokyo on Monday to discuss responses to North Korea.

North Korean leader Kim Jong Un has spoken of his aim to develop an intercontinental ballistic missile capable of hitting the mainland United States with a nuclear weapon, presenting Trump with perhaps his most pressing security problem and underscoring the need for close cooperation with Seoul.

Nevertheless, Trump, who campaigned on a populist “America First” platform, risked increased tensions with the U.S. ally when he told Reuters in an interview just before Moon’s election he would either renegotiate or terminate a “horrible” free trade deal with South Korea and said Seoul should pay for THAAD, which he priced at $1 billion.

(Reporting by Christine Kim and Soyoung Kim in Seoul and David Brunnstrom and Steve Holland in Washington; Editing by Robert Birsel and James Dalgleish)

Japan favors Aegis Ashore over THAAD to boost missile defense: sources

The deckhouse of the Aegis Ashore Missile Defense System (AAMDS) at Deveselu air base, Romania, May 12, 2016. Inquam Photos/Adel Al-Haddad/via REUTERS

TOKYO (Reuters) – Japan is leaning towards choosing the Aegis Ashore missile-defense system over another advanced system called Terminal High Altitude Area Defense (THAAD), government and ruling party sources said.

Faced with North Korea’s rapid missile and nuclear development, and its threats, Japan has been looking into introducing a new missile-defense layer – either the THAAD or the Aegis Ashore, a land-based version of the Aegis system developed for war ships.

Lockheed Martin Corp makes both systems.

The government now favors the Aegis Ashore system as it comes with a wider coverage area, which would mean fewer units needed to protect Japan, and it is also cheaper, three government and two ruling party sources said.

The sources, who spoke this week, declined to be identified because they are not authorized to speak to media on the topic.

An Aegis Ashore unit costs about 70 billion-80 billion yen ($618 million-$706 million), while a THAAD unit costs more than 100 billion yen, the sources said.

Also, the introduction of Aegis Ashore would help reduce the burden of round-the-clock vigilance shouldered by Japanese warships equipped with the Aegis system, they said.

The government will make a final decision on the new system in coming months, after sending, possibly this month, an inspection team to Hawaii, where U.S. forces operate Aegis Ashore test facilities, they said.

Japan’s ruling Liberal Democratic Party in March urged Prime Minister Shinzo Abe’s government to consider acquiring the capability to hit enemy bases and to beef up missile defense.

($1 = 113.3300 yen)

(Reporting by Nobuhiro Kubo; Writing by Kiyoshi Takenaka; Editing by Robert Birsel)

U.S. moves THAAD anti-missile to South Korean site, sparking protests

A U.S. military vehicle which is a part of Terminal High Altitude Area Defense (THAAD) system arrives in Seongju, South Korea, April 26, 2017. Kim Jun-beom/Yonhap via REUTERS

By Ju-min Park and Jack Kim

SEOUL (Reuters) – The U.S. military started moving parts of an anti-missile defense system to a deployment site in South Korea on Wednesday, triggering protests from villagers and criticism from China, amid tension over North Korea’s weapons development.

The earlier-than-expected steps to deploy the Terminal High Altitude Area Defense (THAAD) system was also denounced by the frontrunner in South Korea’s presidential election on May 9.

South Korea’s defense ministry said elements of THAAD were moved to the deployment site, on what had been a golf course, about 250 km (155 miles) south of the capital, Seoul.

“South Korea and the United States have been working to secure an early operational capability of the THAAD system in response to North Korea’s advancing nuclear and missile threat,” the ministry said in a statement.

The battery was expected to be operational by the end of the year, it said.

The United States and South Korea agreed last year to deploy the THAAD to counter the threat of missile launches by North Korea. They say it is solely aimed at defending against North Korea.

But China says the system’s advanced radar can penetrate deep into its territory and undermine its security, while it will do little to deter the North, and is adamant in its opposition.

“China strongly urges the United States and South Korea to stop actions that worsen regional tensions and harm China’s strategic security interests and cancel the deployment of the THAAD system and withdraw the equipment,” Chinese foreign ministry spokesman Geng Shuang told a briefing.

“China will resolutely take necessary steps to defend its interests,” Geng said, without elaborating.

China is North Korea’s sole major ally and is seen as crucial to U.S.-led efforts to rein in its bellicose, isolated neighbor.

The United States began moving the first elements of the system to South Korea in March after the North tested four ballistic missiles.

South Korea has accused China of discriminating against some South Korean companies operating in China because of the deployment.

The liberal politician expected to win South Korea’s election, Moon Jae-in, has called for a delay in the deployment, saying the new administration should make a decision after gathering public opinion and more talks with Washington.

A spokesman for Moon said moving the parts to the site “ignored public opinion and due process” and demanded it be suspended.

Television footage showed military trailers carrying equipment, including what appeared to be launch canisters, to the battery site.

Protesters shouted and hurled water bottles at the vehicles over lines of police holding them back.

The Pentagon said the system was critical to defend South Korea and its allies against North Korean missiles and deployment would be completed “as soon as feasible”.

‘WE WILL FIGHT’

More than 10 protesters were injured, some of them with fractures, in clashes with police, Kim Jong-kyung, a leader of villagers opposing the deployment, told Reuters.

Kim said about 200 protesters rallied overnight and they would keep up their opposition.

“There’s still time for THAAD to be actually up and running so we will fight until equipment is withdrawn from the site and ask South Korea’s new government to reconsider,” Kim told Reuters by telephone.

A police official in the nearby town of Seongju said police had withdrawn from the area and were not aware of any injuries.

The United States and North Korea have been stepping up warnings to each other in recent weeks over North Korea’s development of nuclear weapons and missiles in defiance of U.N. resolutions.

North Korea’s nuclear and missile threat is perhaps the most serious security challenge confronting U.S. President Donald Trump. He has vowed to prevent North Korea from being able to hit the United States with a nuclear missile.

North Korea says it needs the weapons to defend itself and has vowed to strike the United States and its Asian allies at the first sign of any attack on it.

The United States is sending the USS Carl Vinson carrier strike group to waters off the Korean peninsula, where it will join the USS Michigan, a nuclear submarine that docked in South Korea on Tuesday. South Korea’s navy has said it will hold drills with the U.S. strike group.

North Korea’s foreign ministry denounced a scheduled U.N. Security Council meeting on Friday, chaired by U.S. Secretary of State Rex Tillerson, saying the United States was “not morally entitled” to force members states to impose sanctions on it.

“It is a wild dream for the U.S. to think of depriving the DPRK of its nuclear deterrent through military threat and sanctions. It is just like sweeping the sea with a broom,” the North’s KCNA cited a foreign ministry spokesman as saying.

DPRK stands for the Democratic People’s Republic of Korea, the North’s official name.

China’s envoy on North Korea, Wu Dawei, met his Japanese counterpart, Kenji Kanasugi, for talks in Tokyo and they agreed that they would “respond firmly” to any further North Korean provocation, Japan’s foreign ministry said.

“We are against anything that might lead to war or chaos,” Wu said.

KCNA said earlier leader Kim Jong Un had supervised the country’s “largest-ever” live-fire drill to mark Tuesday’s 85th founding anniversary of its military, with more than 300 large-caliber, self-propelled artillery pieces on its east coast.

“The brave artillerymen mercilessly and satisfactorily hit the targets and the gunshots were very correct, he said, adding that they showed well the volley of gunfire of our a-match-for-a-hundred artillery force giving merciless punishment to the hostile forces,” KCNA cited Kim as saying.

There had been fears North Korea would mark the anniversary with its sixth nuclear test or a long-range missile launch.

(Additional reporting by Ben Blanchard in Beijing; Editing by Lincoln Feast, Robert Birsel)

Cruise control: China squeezes South Korea as boats and planes stay away

A Royal Caribbean cruise is seen at a port in Dalian, Liaoning province, China, July 20, 2017. Picture taken July 20, 2017. REUTERS/Stringer

By Adam Jourdan and Cynthia Kim

SHANGHAI/SEOUL (Reuters) – Pressure in China on travel firms forced airlines and cruise operators to cut routes to South Korea, as the fallout spread on Friday from a diplomatic row over Seoul’s plans to deploy a U.S. missile defense system against Beijing’s objections.

China Eastern Airlines Corp Ltd <600115.SS> and Spring Airlines Co Ltd <601021.SS> stopped offering flights on their websites between the eastern Chinese city of Ningbo and popular South Korean tourist island Jeju from next week.

Korea’s Eastar Jet said it was halting flights between the South Korean cities of Cheongju and tourist hotspot Jeju with various Chinese cities including Ningbo, Jinjiang and Harbin.

This followed Carnival Corp’s <CCL.N> Costa Cruises and Royal Caribbean Cruises <RCL.N> cutting South Korean visits by their China ships. Royal Caribbean cited “recent developments regarding the situation in South Korea”.

The moves reflect a more aggressive and blatant stance against South Korean business in China, although Beijing has not directly said it is targeting South Korean firms.

An internal South Korean government document seen by Reuters said Chinese authorities gave a “7-point” verbal instruction to travel firms to curtail or ban trips to South Korea.

These included a ban on tour groups visiting South Korea from March 15, cruise ships not being allowed to dock in South Korea ports and a warning that those who violated the guidance would face “severe punishment”.

Reuters could not immediately reach China’s tourism administration for comment. China Eastern and Spring Airlines did not respond to requests for comment.

The crackdown has sent a chill across South Korea’s retail and tourism sectors, which rely heavily on China trade, and prompted South Korea to say it will consider filing a complaint against China to the World Trade Organization.

South Korea sold $124 billion worth of goods and services to China last year, about five times the amount it exported to nearby Japan and double the amount it shipped to its second-biggest overseas market, the United States.

Tourism is a particularly sensitive sector, with official South Korean data showing almost half of the visitors to the country come from China.

Asked about cruise operators cancelling South Korean port visits, an official from South Korea’s Ministry of Trade, Industry and Energy told Reuters the ministry was checking if any WTO rules have been violated.

“If we are to launch a dispute, we still need to make sure if anything has been ordered by Beijing,” the official said.

“RELEVANT DEPARTMENTS”

Political risk analysts said the widespread actions against South Korean firms pointed to centralized coordination.

Princess Cruises, also owned by Carnival, said in a statement on Friday it would remove visits to South Korea from routes after talks with “relevant departments”.

“Due to the current situation, Princess Cruises’ China team has been in close dialogue and prudent discussions with relevant departments,” the firm said. “All routes which involve South Korea have been altered.”

The diplomatic problems with its biggest trade partner have come at a difficult time for South Korea.

On Friday, South Korea’s Constitutional Court removed President Park Geun-hye from office on Friday over a graft scandal involving the country’s conglomerates.

Analysts said the upheaval had given China the opportunity to put pressure on Park’s possible successors to ditch or delay the installation of the U.S. Terminal High Altitude Area Defence (THAAD) missile system.

“I think they’ll keep up this pressure well into the period where we get a new government in South Korea,” said Andrew Gilholm, director of analysis for China and North Asia at risk consultancy Control Risks.

“Possibly the reason they’re pushing so hard is that they are trying to influence whatever policy the next government in Seoul takes.”

Meantime, South Koreans living in China have been advised by business groups to adopt a low profile, while residents and shopkeepers in a Shanghai neighborhood where many South Koreans live told Reuters of a growing sense of anxiety.

“I feel wherever I am people are watching me. On the street, in the car and at restaurants, I don’t feel I can freely speak Korean,” said Seo Lan Kyung, 48, a housewife who said she has been living in China for 18 years.

“I want to keep living here but increasingly there’s a feeling of impending crisis.”

(Additional reporting by Christian Shepherd and Muyu Xu in BEIJING, Alexandra Harney in SHANGHAI, Heekyong Yang and Hyunjoo Jun in SEOUL; Editing by Simon Cameron-Moore)

China hints at trade war strategy in South Korea standoff

A barbed-wire fence is set up around a golf course owned by Lotte, where the U.S. Terminal High Altitude Area Defense (THAAD) system will be deployed, in Seongju, South Korea, March 1, 2017. Kim Joon-beom/Yonhap via REUTERS

By Adam Jourdan

SHANGHAI (Reuters) – South Korean firms are being squeezed in China, in suspected retaliation for Seoul’s deployment of a U.S. missile defense system, highlighting the tools China can deploy to hit back at the corporate interests of trade partners it disagrees with.

The chill facing Korea Inc, from cosmetics and supermarket chains to autos and tourism, points to a potential risk for American companies, amid a more confrontational stance taken by new U.S. President Donald Trump

In China, state media and grassroots political groups have led angry calls to boycott popular Korean products. Photos on social media and local news websites showed crowds vandalizing a Hyundai Motor Co <005380.KS> car, and some Chinese tourism firms moved to cancel Korean tours.

Beijing is furious over a joint plan by South Korea and the United States to set up the Terminal High Altitude Area Defence (THAAD) missile system in South Korea. Seoul and Washington say it will defend against nuclear-armed North Korean missiles. But Beijing says its far-reaching radar is targeted at China.

The furor echoes protests in 2012 against Japanese firms during a row with Tokyo over disputed islands in the East China Sea. The dispute flared on Monday when Lotte approved a land-swap deal that moved the THAAD system closer to deployment.

On Thursday, Lotte Duty Free, an affiliate of Korean conglomerate Lotte Group, said it had been the target of a suspected Chinese cyber attack.

“What’s happening to Korean companies now is a pretty good playbook for what might happen to U.S. firms over the next year,” said Andrew Gilholm, director of analysis for China and North Asia at risk consultancy Control Risks.

“Rather than the big dramatic trade war, everything goes to hell scenario under Trump, it’s probably more likely to be manifested as regulatory harassment of companies – one of the lower intensity tools for China.”

Korean stocks plunged on Friday, hitting cosmetics giant Amorepacific Corp <090430.KS>, carmaker Hyundai, and airlines Jeju Air Co Ltd <089590.KS>, Korean Air Lines Co Ltd <003490.KS> and Asiana Airlines Inc <020560.KS>.

POLITICAL PRESSURE

Some companies hinted at feeling political pressure to loosen or cut ties with South Korea. Korean media reported China had ordered tour operators in Beijing to stop selling trips to the country.

Three major Chinese tour operators Reuters spoke to, including China Youth Travel Service <600138.SS>, said they were still offering Korean tours. A customer service worker at Tuniu Corp <TOUR.O>, however, said the firm had stopped providing tours to Korea, citing the THAAD controversy. Tuniu did not respond to requests for comment.

Lotte also said searches for its products had been disrupted on major e-commerce platform JD.com Inc <JD.O>, though it did not directly say this was due to diplomatic tensions. JD.com declined to comment.

The CEO of Chinese retailer Jumei.com posted on his official microblog that his firm would no longer sell Lotte products. The firm did not respond to Reuters requests for comment.

“Some retailers have removed Lotte sales channels over the last week as a result of political pressure,” said a senior China-based retail industry executive, asking not to be named because of the sensitivity of the issues.

The Communist Party Youth League at central and local levels also fanned the flames online, calling for consumers not to buy products including cars, cosmetics and electronics.

“We say ‘no’ to Lotte!” the national-level Communist Youth League wrote in a post on its official microblog page.

‘IT’S BEING COORDINATED’

The consumer backlash followed. The number of posts mentioning Lotte’s Chinese name spiked to nearly 300,000 on Thursday from a normal level of a few thousand.

Photos posted on Chinese social media showed a large group of people surrounding a smashed up Hyundai car covered with black graffiti, prompting alarm over a repeat of issues that have hit faced Japanese carmakers. Other posts circulated online called for a blanket ban on all Korean tours.

China’s tourism administration posted a statement about South Korean “travel tips” on Friday, reminding Chinese holiday-makers “to soberly understand the risks of traveling abroad and carefully choose their travel destinations.”

The administration did not comment on any travel ban.

The normally hawkish state-run tabloid Global Times even struck a note of caution on Friday, warning vandalism of Korean products “won’t win the support of mainstream public opinion”.

However, Gilholm added the wide spectrum of measures taken against South Korea was unusually aggressive and authorities – though staying officially on the sidelines – played a role.

“For it to happen nationwide in such a short space of time it’s clearly been coordinated. You don’t see that being announced or admitted, but it’s being coordinated,” he said.

The Global Times warned last November the United States could face such a coordinated campaign. If Donald Trump triggered a trade war with China, Beijing would then target firms from Boeing <BA.N> to Apple <APPL.O> in a “tit-for-tat” approach.

“If Trump wrecks Sino-U.S. trade, a number of U.S. industries will be impaired,” it said in an editorial.

(Additional reporting by Cate Cadell and Xu Muyu in BEIJING, SHANGHAI newsroom. Editing by Bill Tarrant.)

China reacts with anger, threats after South Korean missile defense decision

FILE PHOTO: A Terminal High Altitude Area Defense (THAAD) interceptor is launched during a successful intercept test, in this undated handout photo provided by the U.S. Department of Defense, Missile Defense Agency. U.S. Department of Defense, Missile Defense Agency/Handout via Reuters/File Photo

BEIJING (Reuters) – Chinese state media have reacted with anger and boycott threats after the board of an affiliate of South Korea’s Lotte Group approved a land swap with the government that allows authorities to deploy a U.S. missile defense system.

The government decided last year to deploy the U.S. Terminal High Altitude Area Defense (THAAD) system, in response to the North Korean missile threat, on land that is part of a golf course owned by Lotte in the Seongju region, southeast of Seoul.

The board of unlisted Lotte International Co Ltd approved the deal with the government on Monday.

China objects to the deployment in South Korea of the THAAD, which has a powerful radar capable of penetrating Chinese territory, with Beijing saying it is a threat to its security and will do nothing to ease tension with North Korea.

Lotte should be shown the door in China, the influential state-run Chinese tabloid the Global Times said in an editorial on Tuesday.

“We also propose that Chinese society should coordinate voluntarily in expanding restrictions on South Korean cultural goods and entertainment exports to China, and block them when necessary,” it said in its English-language edition.

The paper’s Chinese version said South Korean cars and cellphones should be targeted as well.

“There are loads of substitutes for South Korean cars and cellphones,” it said.

China has already twice issued “solemn representations” to South Korea about the most recent THAAD-related developments, Chinese Foreign Ministry spokesman Geng Shuang told a daily briefing in Beijing.

But it welcomes foreign companies to operate in China, he said. “Whether or not a foreign company can operate successfully in China, in the end is a decision for the Chinese market and consumer,” he added.

Late on Monday, the ruling Communist Party’s official People’s Daily said cutting diplomatic ties should be considered.

“If THAAD is really deployed in South Korea, then China-South Korea relations will face the possibility of getting ready to cut off diplomatic relations,” it said on the WeChat account of its overseas edition.

The official Xinhua news agency also said in a commentary late on Monday that China “did not welcome this kind of Lotte”.

“Chinese consumers can absolutely say no to this kind of company and their goods based on considerations of ‘national security’,” it said.

South Korea’s defence ministry said on Tuesday it had signed a land swap deal, with Lotte exchanging the golf course for military property. A South Korean military official told Reuters the military would begin area patrols and install fences.

The Lotte Group said on Feb. 8 Chinese authorities had stopped construction at a multi-billion dollar real estate project in China after a fire inspection, fuelling concern in South Korea about damage to commercial ties with the world’s second-largest economy.

Asked if South Korea had demanded the Chinese government suspend any economic retaliation, South Korean Defence Ministry spokesman Moon Sang-kyun said: “We have continuously persuaded China so far and will keep continuing efforts to do so.”

South Korean government officials have said THAAD is a defensive measure against North Korean threats and does not target any other country.

South Korea’s central bank said this month the number of Chinese tourists visiting the tourist island of Jeju had fallen 6.7 percent over the Lunar New Year holiday from last year, partly because of China’s “anti-South Korea measures due to the THAAD deployment decision”.

(Reporting by Ben Blanchard; Additional reporting by Ju-min Park in SEOUL; Editing by Paul Tait and Clarence Fernandez)

Israel completes advanced testing of mid-range missile interceptor

inactive version of Israel's air missile defense system

By Ori Lewis

JERUSALEM (Reuters) – Israel has completed successful tests of an advanced version of its ‘David’s Sling’ intermediate missile interceptor system that it is developing jointly with the United States, the Defence Ministry said on Wednesday.

The system is designed to shoot down rockets with ranges of 100 to 200 km (63 to 125 miles) such as those in the arsenal of Iranian-backed Hezbollah, a Lebanese group which last fought a war with Israel in 2006, or aircraft or low-flying cruise missiles.

An initial version of David’s Sling completed testing in December 2015 and has been handed over to the Israeli air force but it has not yet been declared operational, a ministry official said.

The system is being developed and manufactured jointly by Israel’s state-owned Rafael Advanced Defense Systems Ltd and Raytheon Co, a top U.S. arms maker.

The advanced testing announced on Wednesday included the interception of air-launched incoming test target missiles high over the Mediterranean, Moshe Patel of the Israel Missile Defense Organization said in a telephone briefing.

“The tests were intended to simulate anticipated future threats and in the coming years our system will deliver to the Israeli air force more capabilities and more confidence,” Patel said.

David’s Sling will fill the operational gap between the already deployed Iron Dome short-range rocket interceptor and the Arrow ballistic missile interceptor, both of which are in service.

Last week Israel handed over control of its U.S.-funded Arrow-3 missile interceptor, a “Star Wars”-like extension of its capabilities which is designed to safely destroy incoming long-range missiles in outer space.

That system has been developed jointly by state-owned Israel Aerospace Industries and U.S. firm Boeing Co..

The U.S.-funded short-range Iron Dome interceptor built by Israel’s state-owned Rafael Advanced Defense Systems Ltd. was used extensively with high success rates in a 2014 Gaza war against Hamas militants.

(Writing by Ori Lewis; Editing by Gareth Jones)