N. Korea Scud exports raise more questions than answers

The discovery of clandestine exports of North Korean Scud missiles does more than deal a heavy blow to an impoverished state desperate to make money by any means.

It brings the reclusive nation closer to collapse, reviving fears of fallout among neighbours South Korea and Japan and throwing a spotlight on differences between the United States and its Asian allies.

"This discovery means that any nation negotiating with North Korea will have to take quite a tough stance, particularly since we have no idea truly how large their nuclear programme might be," said Masahiko Asada, professor of International Law at Kyoto University in Japan.

South Korea and Japan have diverged from the US approach since North Korea's stunning admission in October that it was pursuing a nuclear weapons programme, with both willing to engage their unpredictable, secretive and poverty-stricken neighbour.

The United States has shown scant desire to talk to Pyongyang, preferring to apply pressure on the communist state to abandon its uranium enrichment programme by quiet diplomacy, halting fuel aid and reducing much-needed food assistance.

The news that Spanish warships had intercepted a North Korean ship in the Arabian sea carrying at least 12 hidden Scud missiles to an unknown destination, but possibly to Yemen, will not be welcome in Seoul or Tokyo, not to mention Pyongyang.

But no one should be shocked. "This is no surprise at all," said Takashi Inoguchi, political science professor at the University of Tokyo.

"Whether it makes sense, whether their logic is consistent doesn't matter. Getting money, keeping the country going is more important."

"This demonstrates how desperate they are for hard currency," said Ralph Cossa, president of Pacific Forum CSIS.

And the United States has succeeded in demonstrating to the world that North Korea may indeed deserve a place on President George W. Bush's axis of evil list along with Iran and Iraq.

It may also have created a tangle for its allies in South Korea and Japan who don't want to see North Korea imploding on their doorstep.

But one burning question may be more important than the Scuds themselves.

"Who was the customer?" said Marcus Noland, a North Korea expert at the Institute of International Economics in Washington.

The destination of the missiles is crucial since evidence that Pyongyang, the world's leading exporter of ballistic missile technology, was proliferating such weapons to unstable states could affect Japanese and South Korean policy.

Pyongyang could have loaded the missiles openly aboard a North Korea-flagged vessel and shipped them quite legally, for example, to Egypt.

North Korea is not a member of the Missile Control Technology Regime that controls exports and it is unclear under what authority the ship was stopped.

What is alarming is the Scuds were hidden under thousands of bags of cement and presumably destined for a suspect customer.

"Obviously they were selling to someone they shouldn't have," said Cossa. "That's the issue. Not whether North Korea can continue to export but they have to follow the rules of law in doing it."

Digging up the Scuds was a matter of time. The ship had been tracked since it left the North Korean port of Nam Po, and North Korea's exports of missiles across the Middle East are well known whether in exchange for oil or cash.

But the find is a blow to Pyongyang, which is believed by US intelligence sources to earn about $540-560 million a year from missile exports, plus $50 million from conventional arms. The total almost equals total annual legitimate exports.

"It's a big deal," said Noland. The seizure on the high seas makes clear to buyer and seller that North Korean missile sales are under tight surveillance.

Buyers such as Syria, Yemen, Pakistan and Iran have already come under US pressure to halt orders. This time Pyongyang probably won't lose out because it will already have been paid, but it puts in jeopardy future sales.

"This may be a gesture to the North Koreans that they are watching... It discourages both demand and supply," said Noland.

And that brings North Korea closer to economic disaster and political collapse - the scenario that sends shivers down the spines of South Korean and Japanese politicians.

Japan wants talks that could lead towards normalisation. "The US could just destroy North Korea if they are prepared to take the risk and absorb the casualties," said Inoguchi.

"But for Japan the collapse of North Korea would be terrible because 90 per cent of the burden falls on Japan," said Inoguchi.

Seoul, too, fears the costs of collapse and reunification even though many South Koreans are giving serious thought to electing a new president next week who would sideline his predecessor's "Sunshine policy" of peaceful engagement.

"South Korea would find it very difficult to absorb the North if it collapses," said Inoguchi. "This is not like West Germany."

But in the end the discovery may help, not hinder. "This could be a good thing. It could help to remind the South Koreans that this (proliferation) is a problem," said Noland.

"That it's not just the United States being weird and cranky in their view of North Korea, but the things the North Koreans can do can cause problems beyond the Korean peninsula," he said.

"This may temper the tendency in South Korea to adopt a parochial perspective."