Kim is shrewd enough not to court annihilation by using a nuclear device. "He is very knowledgeable about what goes on in the international scene," South Korean President Kim Dae Jung recently told Time. And yet Kim apparently is convinced that he will someday go to war with the U.S. According to Kim Hyun Shik, a former professor at Kim Il Sung University in Pyongyang, the North Korean leader watched the Gulf War closely and even ordered a film produced that analyzed the weak points of the U.S. military. The conclusion: Iraq lost because it lacked the will to attack U.S. troops in Saudi Arabia and explode gas and oil pipelines. He made his military officials watch the film to boost morale. But Lee Young Kuk, a former bodyguard to Kim, says his ex-boss "is afraid of the U.S. He knows he can't beat them."

The CIA isn't sure the North Koreans have the skill to make a nuclear device small enough to load onto its missiles. But if they do, the danger is great. Pyongyang wields a huge stash of short- and medium-range missiles, including at least 100 Nodong missiles capable of striking Japan. U.S. intelligence officials say Pyongyang wants to become the first rogue state capable of striking the U.S. homeland with a missile. In 1998 the North Koreans test-fired a three-stage Taepo Dong-1 rocket that landed in the Pacific Ocean. The Pentagon believes that North Korea is developing an intercontinental ballistic missile, the Taepo Dong-2, that could reach Alaska, Hawaii and possibly California. The North Koreans had pledged not to test-fire any long-range weapons until this year. If testing resumes, a U.S. military official says, Pyongyang may be able to target the continental U.S. with a nuclear warhead "within several years."

The U.S. has so far failed to devise a strategy to thwart Kim's ambitions before he realizes them. Many Korea watchers in Washington say the White House's rhetorically bellicose approach toward Pyongyang—underlined recently by Bush's declaration that "I loathe Kim Jong Il," made to the Washington Post's Bob Woodward—has heightened the regime's paranoia about a U.S. attack and accelerated its nuclear rush. Says Derek Mitchell, who worked on Asia policy in the Clinton Pentagon: "People talk about North Korea being crazy, but it's not. It's purely rational for a nation with no assets being threatened by the world's major power to develop insurance against attack."

Kim's moves also betray a mounting desperation. Some North Korean defectors believe Kim is trying to stockpile nukes before the U.S. can coordinate an attempt to topple him. Other defectors say that few North Koreans would rise up to defend the regime if it came under threat. Since taking over upon his father's death in 1994, Kim has overseen a collapsing economy and a famine that killed more than 2 million people. The government cultivates a cult of personality around Kim—citizens are told to treat him as a demigod, and pictures of father and son hang in every public building in Pyongyang—but popular disgruntlement is growing, as North Koreans returning from China's boomtowns dispel any notion that life is better inside the Hermit Kingdom. There are even reports of rising dissatisfaction among the élite as the regime stumbles from crisis to crisis and corruption increases. A U.S. intelligence source says a Washington-led embargo against Pyongyang would take time to loosen the regime's grip on power, since Kim has already shown that he's "willing to let a lot of people die off." But eventually sanctions might take their toll, as even top government officials and members of the security services began to feel the pinch. "If the regime can no longer maintain the lifestyles of [those] people," says the source, "it could be in serious trouble."

A hard-line containment policy, though, would also erode Washington's moral credibility, putting the U.S. in the position of starving a country into submission. Even if the White House figures a way out of the current standoff without resorting to sanctions or military force, the U.S. may at some point have to face the prospect of outright confrontation. Administration officials concede that the White House may wind up engaging in a direct dialogue with the North Koreans, while never calling it that. But the U.S. will demand assurances that North Korea keep its commitments this time. If it doesn't, the White House may yet decide that, as with Baghdad, the only way to disarm the regime in Pyongyang is to change it.

—Reported by James Carney and Mark Thompson/Washington, Donald Macintyre and Kim Yooseung/Seoul, Andrew Purvis/Vienna and Hiroko Tashiro/Tokyo

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