Six decades since nuclear weapons first flew towards the peninsula, slung under a B29, they continue to cast a malevolent shadow.

Even as victorious North Korean troops surged into Seoul on June 30, 1950, nine B29 bombers armed with nuclear bombs began the long flight across the Pacific Ocean from San Francisco to Guam.

Harry Truman, President of the United States, had signed a directive authorising a nuclear task force to stand by to use the bombs if communist forces took control of all Korea. It began badly: one aircraft crashed as it took off from the Fairfield-Suisan base, killing a dozen people and scattering radioactive material across the area. The long-term fallout has proved even more lethal.

South Korea commemorated the 61st anniversary of that war last week. Before it ground to a stalemate in July 1953, 1,37,899 of its soldiers had been killed in action, along with 2,15,000 North Koreans, 1,83,108 Chinese, 33,686 Americans, and thousands more from 15 other countries; 2.5 million civilians were butchered by the war and its grim handmaidens, hunger and disease.

Every day, the Korean peninsula lives with the fear that it could see new carnage. “The miracle on the Han river,” South Koreans call their fairy-tale economic success. For long, among Asia's poorest countries, their war-torn land is now the 15th largest economy in the world.

South Koreans hoped the miracle would heal history's wounds. In 1998, Kim Dae-jung, South Korea's former President, initiated a dramatic reconciliation process called the “Sunshine Policy.” He injected billions of dollars into North Korea's economy — as well as several million, credible accounts have it, into the personal accounts of the country's ruler, Kim Jong-il.

Kim Dae-jung won the Nobel Peace Prize for his efforts but storm clouds gathered not long after the ink dried on the citation. In 1999, naval clashes left at least 30 North Korean sailors dead. Then, in the wake of 9/11, the U.S. declared North Korea part of the “axis of evil.” North Korea responded by calling off talks, and adopting increasingly confrontational tactics.

Four years later, North Korea tested its nuclear weapons. The country conducted a second nuclear test in 2009, and accelerated work on long-range ballistic missiles.

Last year, North Korean forces torpedoed a South Korean corvette, killing 46 sailors, and then shelled the island of Yeonpyeong, killing four and injuring 19 — sparking off the worst military crisis on the peninsula since 1953. Furious, South Korea threatened retaliation — but neither it, nor its regional allies, nor the world's great powers, have proved able to act.

North Korean forces have long held a gun to South Korea's heart: the Seoul national capital area, the hub of the country's economy and home to almost half the country's 50 million citizens, is just 50 kilometres from the border. The North's conventional weapons, which include over 10,000 artillery and rocket pieces, could devastate Seoul, killing hundreds of thousands.

In addition, the country is believed to maintain an arsenal of over 600 Hwasong-5 short-range missiles with ranges of around 300 km, clones of the Soviet-manufactured Scud-B it obtained from Egypt in 1976. North Korea also has some 200 Rodong missiles, the model for Iran's Shahab-3 and Pakistan's Ghauri missiles, which can hit targets up to 1,200 km away.

Tonchang-ri, a new super-secret long-range missile test site, has seen a surge of activity. In January, U.S. Defence Secretary Robert Gates publicly said North Korea could threaten the U.S. itself inside of five years. Experts are divided on just how close North Korea is to having a nuclear device light enough to be mounted on its missiles — but no one can take the risk it might already have one.

Put together, North Korea's capabilities allow it to pursue the kinds of low-level aggression seen last year — secure in the knowledge that its ability to target Seoul with conventional weapons, and threaten its allies with missiles, will deter large-scale retaliation.

Even though Kim Jong-il and his dysfunctional regime are often cast as insane, there is method in their apparent madness. In 1991, the collapse of the Soviet Union saw North Korea lose its principal source of patronage. Following the death, in 1994, of Kim Il-Sung, the founding patriarch of the country and its ruling dynasty, 3.5 million people died in a famine called “the march of tribulations.”

Kim Dae-jung's government saw this as an opportunity: North Korea's economic need, it believed, could provide an opening to unify the two states. But North Korea's ruling élite understood that the massive asymmetry of economic power between the two states meant Seoul would have control of any new dispensation. In effect, the Sunshine Policy was an invitation to commit suicide.

Pyongyang thus milked the Sunshine Policy, but simultaneously forged a strategy to extort the cash needed to sustain the regime. It was an uncomplicated enterprise, which would have been comprehensible to any big-city organised crime cartel.

Kim Jong-il's son and heir-apparent, Kim Jong-un, is now pushing an ambitious 10-year plan intended to raise the country's GDP from an estimated $40 billion to $360-400 billion. Pyongyang hopes, among other things, to build a ship construction zone at Wonsan, pharmaceutical plants in Nampho and offshore special economic zones. Taepung International Investment Group, owned by millionaire Korean-Chinese businessman Park Chol-Su, has control of the projects.

For the plan to succeed, North Korea needs capital. South Korea and the U.S. are willing to make cash available, but only if the North gives up its nuclear weapons and fissile material stockpiles. Kim Jong-il's regime fears, though, that the deal would end in its own destruction — its suspicions underlined by the experience of Libyan ruler Muammar Qadhafi, who shut down his weapons of mass destruction programmes in return for an end to western sanctions, only to find himself without a bargaining chip to protect his regime from destruction.

Put simply, North Korea is likely to continue using the threat of terror as a bargaining chip, hoping to extort what rents it can secure in return for keeping the peace.

It isn't as high-risk a gamble as it might seem.

South Korean President Lee Myung-bak has taken a hard line position. “It is inconceivable that we will allow future attacks to go unpunished,” a senior South Korean government official told The Hindu. South Korea has put some muscle behind the talk, deploying its arsenal of 221 Lockheed Martin-manufactured MGM140 tactical missiles, which will allow it to target the North's artillery.

But few believe South Korea can actually destroy the North's weapons fast enough to prevent unacceptable losses. South Korea's 2010 Defence White Paper focuses on means to deter an all-out war with the North — but does not lay out any doctrinal response to the kind of low-grade warfare waged by North Korea.

“Even though South Korea would without doubt win an all-out war,” says Andrei Lankov, a leading strategic expert at Seoul's Kookmin university, “the victory would be ruinous.”

How might events then play out? Great powers China and the U.S. have an interest in reining in North Korea. South Korea is among their most valued economic partners. Beijing does not want a regional crisis that would draw more U.S. forces into the region — nor the U.S. the costs of doing so. Neither side wants to strengthen elements in South Korea which are calling on the country to develop an independent nuclear deterrent.

But mutual suspicions also make it hard for them to act in unison. President Barack Obama's pursuit of a ballistic missile defence shield, which would protect the U.S. and its allies from a nuclear attack, are seen in Beijing as undermining China's nuclear deterrent. China has thus begun expanding its arsenal — fuelling concern among its neighbours and the U.S. North Korea thus forms a bargaining chip in larger contestation.

Even if Beijing does run out of patience with its irksome ally, though, there may not be a great deal it can do. “It could cut off oil, or shut down trade,” Dr. Lankov argues, “but these moves would plunge the country into chaos, and potentially precipitate even more confrontational North Korean behaviour.

“People talk about Chinese leverage”, he says, “but the truth is it has a hammer — not a lever.”

Even though no one wants a crisis in the Korean peninsula, therefore, each side is locked into a strategic impasse which will continue to threaten the world's most economically dynamic region.

In 1954, Mr. Truman warned that “we are being hurried forward, in our mastery of the atom, toward yet unforeseeable peaks of destructive power.” He was right: those nuclear peaks still cast a malevolent shadow over the Korean peninsula's geo-strategic landscape.

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