Testing the waters

While Americans were enjoying fireworks on the Fourth of July, North Korea had its own ideas about what to explode. The reclusive Communist state decided to test seven missiles, including one intercontinental ballistic missile that could reach Alaska. Two days later, the North Koreans looked like they were preparing to launch more.

Though the Taepodong 2 failed 42 seconds after launching, dropping into the Sea of Japan, criticism of the provocative display soared. North Koreans have "defied the international community," said National Security Adviser Stephen Hadley. Usually conciliatory South Korea said the North should bear "full responsibility" for the launches and demanded that Pyongyang return to six-party talks on nuclear disarmament. Japan went beyond words to action, imposing economic sanctions on North Korea.

By July 6 North Korea was threatening more missile launches "to strengthen self-defense deterrent," one of its foreign ministry spokesmen said. "If anyone intends to dispute or add pressure about this, we will have to take stronger physical actions in other forms."

So why did North Korean dictator Kim Jong Il decide to launch missiles now, violating a moratorium on such tests? Chuck Downs, a former Pentagon official and author of Over the Line: North Korea's Negotiating Strategy, argues that Kim's power has eroded over the last few months, in part because of a U.S. effort to undermine North Korea's illicit sources of income that supply the regime with $500 million to $1 billion a year.

In September last year, the United States warned its financial institutions not to do business with a Macau bank laundering North Korean funds. That led to a run on those banks doing any business with Pyongyang, and "sent a chill through the international banking system," Downs said, along with painful losses for North Korea.

North Korea has a well-oiled system for drug smuggling and counterfeiting tobacco products and U.S. dollars. Kim has since used the Macau move as an excuse not to engage properly in six-party talks.

The talks themselves have also yielded little for Kim: The United States has refused to negotiate one-on-one with North Korea, and the other five parties have complained during the sessions about North Korea's intractable behavior. Right now, Kim has to keep his Pyongyang elite satisfied, as well as smother ongoing minor rebellions in his military, Downs said.

The launches, however, flopped on the diplomatic and technological fronts. When Pyongyang last launched a Taepodong in 1998, it was "a better demo of three-stage rocketry," Downs said. "I don't think [Kim] expected the Taepodong to fail." The botched launch raises questions now about whether Kim's scientists have become worse missile designers in the last eight years.

But Downs expects more bluster, and perhaps a Taepodong success if North Korea scrambles now to correct its mistakes. "After the next three months of back and forth on this issue, he is going to announce that North Korea has greater capability," Downs said. He classifies North Korea less as a security threat than a security irritant. But, "a country that has bad intentions is still a threat when they have bad technology."