STOP THE CASH FLOW TO PYONGYANG

Now that the North Koreans have admitted that they have nuclear weapons and
have threatened to test or export them, America and its allies are in a
fix. Should they heed Pyongyang's demand that the United States agree to a
nonaggression pact along with economic and energy aid under a
re-established Agreed Framework? Or should Washington take preemptive
action, in the way it did against Iraq, and bomb Pyongyang's known nuclear
facilities?

The choice couldn't be any clearer -- or, for practical purposes, any more
wrong. Targeting North Korea's known bomb-making facilities makes no sense.
It not only risks a more frightening North Korean counterstrike against
South Korea's own reactors but also a complete breakdown of America's
security relations with Tokyo and Seoul. Bombing what can be targeted also
leaves Pyongyang with what cannot be targeted -- one or more covert bombs
and a set of hidden uranium-weapons plants that could provide the material
for several more bombs a year.

On the other hand, giving Pyongyang the nonaggression pact it craves -- one
that would recognize and treat it as an equal of the U.S. -- would only
confirm to the world's nuclear wannabes (starting with Iran) that going
nuclear wins you what you want. Pyongyang, after all, is not just pleading
out of fear. It hopes that if it can make Washington formally agree that
North Korea is no longer a military threat, South Korean support for
stationing American troops on the Korean Peninsula will implode and
Pyongyang's hand in negotiating the terms of Korean unification would be
strengthened.

Nuclear inspections might sound appealing, but in North Korea -- where the
International Atomic Energy Agency (IAEA) has hardly gone much further than
its first inspections in l992 -- they would have far less chance of success
than in Iraq. Put aside that Pyongyang has publicly rejected the idea of
ever allowing the IAEA to complete the inspections it was blocked from
carrying out more than a decade ago. Ignore that North Korea has scorned
Iraq for having committed the grave error of submitting itself to intrusive
inspections by the United Nations. Gloss over the lack of information about
the location of its uranium bomb-making facilities or weapons-grade
plutonium. The fact is that unless Pyongyang has a major change of heart
and gives up its tyrannical ambitions to unify the peninsula under its
military control, there is no way to be sure that it has surrendered all of
its hidden nuclear assets. Without a North Korea eager to prove that it is
out of the bomb-making business, inspections will never find what they must
to force Pyongyang to disarm.

What, then, should be done? Pyongyang might make more nuclear weapons. It
may export its nuclear capabilities; North Koreans recently were sighted at
Iran's uranium-enrichment plants. It might fire nuclear-capable rockets
over its neighbors. All of these threats are real. None, however, is worth
jeopardizing America's alliances with Japan and South Korea, which is
exactly what the U.S. will risk if it starts a war that is unwinnable
without them. Each of the threats, moreover, can be mitigated if the U.S.
and its friends act now to rein in Pyongyang.

How? First, the U.S. must continue to protect its troops and allies.
Second, the U.S. must stop helping the North Korean military. In February,
Japan's foreign minister pleaded with the U.N. to do more to block
Pyongyang's illicit drug exports to Japan. This trade, which violates
international strictures against selling drugs , is conducted entirely by
North Korea's military and annually nets it several hundred million dollars
in hard currency. Pyongyang spends a good portion of this money to acquire
foreign parts and technology that it still needs to complete its two
unfinished military reactors, its uranium-bomb plants, and its long-range
missiles. North Korea's share of the Japanese illicit drug market is
estimated to be approaching 50%.

Meanwhile, there are Seoul's cash transfers. Hyundai, South Korea's most
subsidized entity and the largest corporate sponsor of Seoul's "sunshine"
policy, is reported to have funneled $1.68 billion directly to Pyongyang.
North Korea, in turn, has used this cash to feed its modernizing military.
Like lax antidrug enforcement, letting these cash payoffs continue is not
only cynical, it is dangerous.

The U.S. is culpable as well. It is helping North Korea construct two large
power reactors. Each of these plants is capable of making over 50 bombs
worth of near weapons-grade plutonium in the first 15 months of operation.
Then U.S. President Bill Clinton promised these reactors in 1994 to
persuade North Korea to comply with the Nuclear Nonproliferation Treaty
(NPT). Earlier this year, North Korea withdrew from the treaty and was
condemned by the IAEA's Board of Governors for violating it. Yet,
construction of the reactors and the sharing of nuclear technology -- all
useful to train the next generation of North Korean bomb makers -- continues.

Washington's diplomats, anxious to cut another deal with Pyongyang, want to
retain the option of completing these plants. The result is growing
suspicion abroad that Washington is so frightened of Pyongyang's growing
nuclear capabilities that it is less interested in enforcing the NPT than
in finding a way to pay off Pyongyang again.

Pyongyang's nuclear cheating should disqualify it from possessing nuclear
reactors. The White House, however, has yet to announce publicly that it is
unwilling to waive the U.S. Atomic Energy Act, which forbids America from
giving nuclear goods to NPT violators. Encouraged by this silence, South
Korea and Japan continue to build the reactors hoping that Washington might
still ship the U.S. parts and technology needed to finish them.

What else helps Pyongyang modernize its military power base?
Counterfeiting, skimming from gambling operations in Japan, and selling
ballistic missiles and related technology to whomever will buy them.
Together, these rackets earn its military hundreds of millions of dollars a
year. Improved law enforcement in the region, with assistance from the U.S.
Treasury, could help curb this trade as would passage of proposed and
pending measures in Japan.

These steps, of course, will not eliminate the North Korean nuclear threat.
Nor can they entirely preclude Pyongyang from making additional fissile
material for nuclear weapons or selling its nuclear capabilities. But they
should alert other would-be bomb makers -- who have already misread the
U.S. silence and are now chomping at the bit -- that there is a price for
violating the NPT and no reward for going nuclear.

These steps also do not rule out the possibility of diplomacy and
negotiations. But they will take certain things off the table --
nonaggression pacts and reactors -- that should not be there. At the same
time, acting on these measures now should make it easier to insist, as the
U.S. must, that North Korea be deprived of any new benefits until it proves
to the IAEA and the world that it is entirely out of the bomb-making
business. Finally, if Pyongyang continues to misbehave, implementing these
measures should put the U.S. and its allies in a much better position to
garner broader support to do more -- something paying tribute or attacking
militarily now would all but rule out.