It is a wonder in itself that an impoverished, isolated nation with a crumbling economy and a history of idle threats could cause so much grief to the rest of the world. But when a totalitarian regime with anti-Western sentiment announces that it has abandoned diplomacy and admits that it possesses nuclear weapons, the world takes notice.

Officially, North Korea maintains that its weapons programs are purely for deterrence purposes. It faults the U.S. – which has refused bilateral negotiations – for harboring imperialist ambitions and forcing the regime to take defensive measures. In an official statement released on January 4th, North Korea vehemently maintained that if “the U.S. imperialists misjudge North Korea’s might and will and launch a preemptive attack, North Korea will deal a mortal blow to those who started the war with a powerful counterstrike.” Such aggressive posturing by North Korea is neither surprising nor a cause for alarm.

Until recently North Korea insisted that the nuclear problem was an issue solely between it and the United States, despite involvement by other nations in negotiations. However, in its latest statement Pyongyang says it "has no justification to take bilateral talks” with the U.S. on this issue seriously. The withdrawal from six-party talks has prompted a diplomatic standstill, with officials on both sides of the Pacific scrambling to devise an appropriate response to these developments.

The policy pursued by the Bush administration towards North Korea has proven to be ineffective, some might even say disastrous. Isolation and “tailored containment” have only deepened North Korea’s distrust of the outside world and accelerated weapons development. Containment isn’t viable as a long-term strategy because it is synonymous with toleration. In the post-9/11 world, allowing a totalitarian regime to proliferate nuclear weapons technology is eminently dangerous.

North Korea poses a palpable security threat. Reports have surfaced that it solicited nuclear technology advice from Pakistan’s Dr. Abdul Qadeer Khan (who also sold weapons technology to Libya). According to the CIA World Factbook, North Korea spends almost 23% of it’s GDP on the military. Faced with a stagnant economy and the diminshing flows of international food aid, the country may be forced to adopt more desperate revenue-raising measures. In such a scenario, sale of weapons technology to terrorist groups and other rogue nations cannot be ruled out.

But what are America’s options? Does it actively confront Kim Jong-Il on every turn? Can external economic pressure make a difference in a country so committed to self-reliance (or “Juche” as it is locally known)? Should it continue to push the six-party talks? Can China be persuaded to assume a leadership role in the region and adopt a tougher stance against the country?

Confrontation is not a viable option. North Korea already has a deep suspicion of American intentions in the region, and further provocation along the lines of Mr. Bush’s “Axis of Evil” pronouncement will only serve to give credence to North Korean claims. Moreover, trade embargoes and economic pressure from regional allies will probably not have the intended effect. North Korea is in the midst of an enormous humanitarian crisis. It is widely believed that thousands, if not millions, died in the 1990s as a result of famine and malnutrition due to the diversion of foreign aid for military purposes. Economic sanctions will not portend well for the millions who depend upon international food aid.

Nonetheless, the status quo is simply not working. The multi-lateral approach, begun in 2003 with the six-party talks (which include Russia, China, South Korea, Japan, North Korea, and the United States) has collapsed. The Non-Proliferation Treaty signed by the North Korea in 1985 has fallen by the wayside, the Denuclearization initiative of 1992 is all but forgotten, and the US-DPRK Agreed Framework of 1994 is no longer in effect. But the failure of these talks should not deter future efforts at a diplomatic solution. In this case, diplomacy is the only option. With American forces concentrated in Iraq and other, more pressing issues taking up the agenda, it is unlikely that Mr. Bush will (or should) expend political capital on a case for war with North Korea. Moreover, a military option is not favored by American allies in the region.

The solution lies with China. As North Korea’s biggest trading partner and historical ally, China has been engaged in tacit cooperation with Mr. Kim’s regime in exchange for assurances that North Korea would dismantle its nuclear enrichment programs. The recent announcement is a big blow to Chinese efforts, as Beijing scrambles to revise its policy towards its neighbour and hold off Western alarm at the possibility of a WMD-armed North Korea threatening Japan and South Korea.

China has many incentives to contain North Korea. In order to bolster its own status in the region and prevent countries such as Japan and South Korea from courting U.S. involvement, it must downplay the nuclear threat. Increasing American influence in the region could lead to policy changes in neighboring governments with regards to Taiwan, the biggest thorn in the side of the mainland Chinese regime. Moreover, a collapse in Kim Jong-Il’s regime or a foreign invasion would lead to a massive spillover of refugees into Chinese territory, a scenario Beijing is naturally averse to.

In order to put the pressure on Mr. Kim, China needs to refuse cooperation with the North Korean regime on matters such as refugee return in the case of the thousands of North Koreans who cross the border into China every year. More often than not, they are intercepted by Chinese authorities and, to the chagrin of humanitarian groups, duly returned to North Korea, where they face lifetime sentences in forced labor camps. Refugee return has been a priority for Mr. Kim’s government. Accounts of escaped dissidents provide a more realistic outlook into the world’s most secretive regime. Deference by China on this issue would be a good start.

The process could be accelerated if the U.S. designates North Korea as a top priority and pressures China into engaging Mr. Kim’s regime. China must be made cognizant of its own interests while fearful of a U.S. presence. A delicate balance must be struck between active engagement and passive diplomacy. Let us hope Ms. Rice’s State Department is up to the challenge.