North Korea: Ready, Aim, Extort

Any day now, North Korea is expected to test-launch a ballistic missile that could finger the very outer edges of America. Which isn't to say that anyone thinks Pyongyang will blast Anchorage anytime soon, but just testing that kind of missile--and then putting it up for sale on the international arms market--is enough to make huge swaths of the world very nervous. It's a perfect setup for high-priced extortion, and last week diplomats were struggling: Do we let the North Koreans launch, or can we buy them off? On the brink of collapse and with its people racked by starvation, North Korea's most successful business is one that involves pulling cash and aid out of South Korea, the U.S. and Japan in exchange for abandoning an arms buildup. Nobody knows just what "Dear Leader" Kim Jong Il and his comrades would do to save themselves and their regime. And nobody wants to find out.

U.S. diplomats still hope they can scuttle this launch at the negotiating table. They've done it before. Pyongyang agreed to abandon plans to convert nuclear-reactor fuel into nuclear weaponry when the U.S. and Japan agreed to pay for oil imports and build two new reactors. And South Korea's President Kim Dae Jung has embarked on a policy of engagement, offering food and investment from South Korean companies. As thanks, North Korea has sent fishing boats into South Korean waters and provoked a naval clash (Seoul's forces sank one ship), dispatched a suspected spy vessel into Japan's seas (Japanese self-defense forces opened fire for the first time since World War II) and arrested foreigners (later released). It might sound like the moves of a country in chaos, but observers say it's deliberate. "They're great poker players," says a senior U.S. official.

This time the strategy could backfire. Last week in private talks in Geneva, Washington and its allies in Tokyo and Seoul told the North Koreans they'll cut off financial and humanitarian aid if a missile is launched. That stance prompted a bellicose reaction from the North Koreans, who swore, "We are ready to annihilate mercilessly our enemies." Such talk has Japan nervously talking about remaking its demilitarized constitution.

Can Pyongyang's missiles hit a target? Probably not for a long time. But, says Gill Jung Il, a North Korean specialist at Seoul's Yonsei University, "accuracy is not the issue here. Perhaps the fact that Taepo Dong lacks accuracy makes it a more potent weapon. No one would know where it would hit." It's hard to think of a more perfect weapon for North Korea: unpredictable and potentially dangerous.

--By Tim Larimer/Tokyo. Reported by Barry Hillenbrand/Washington and Stella Kim/Seoul