NEW YORK — North Korea has ramped up its rhetoric once again.

Yesterday, it promised a "physical response" if South Korea and the United States went ahead with planned military exercises this weekend. Today, North Korea went a step further, saying it would use "nuclear deterrent" and launch a "retaliatory sacred war" in response to the exercises in the Sea of Japan.

The exercises themselves are a reaction to the North's alleged sinking of the South Korean warship, the Cheonan, in March. The North vehemently denies the allegations and calls the military exercises "unpardonable" provocation for again being wrongly blamed.

Of course, North Korea routinely threatens war. This time may be no different.

But ever since stories of North Korean leader Kim Jong Il’s imminent demise after a stroke began circulating last year, Korea watchers have been reading into the regime’s every move.

A botched currency “reform” earlier this year, which led to suicides and bankrupted what passes for the middle class in the country, prompted the executions of several old Kim loyalists — widely viewed as scapegoats by outside analysts.

More importantly, it led Kim’s regime to issue an unprecedented apology, setting analysts to work weighing various theories, some of whom see a power struggle developing among the ruling elite, and all of which seem to suggest the regime may be on its last legs.

New Yorker writer Barbara Demick put it this week, “being a totalitarian regime means never having to say you're sorry.”

The U.S. heightened sanctions against North Korea go into effect on Sunday, and will target luxury goods purchases by the secretive elite that serve as the dictatorial state’s jailors. But don’t expect much to come of the move, which represents about the least the U.S. could do in retaliation for an act of war against its ally in the South.

What’s a few less magnums of champagne to a totalitarian regime that feels it can, with impunity, thumb its nose at the world after sinking — in South Korean waters — a South Korean warship, killing all 46 sailors?

Harrowing Scenarios

Chaos and mayhem behind Kim’s iron curtain has always been outside the reach of the international community — even years of international food and energy donations have failed to convince the regime to lessen its repression.

Surveillance satellites and the accounts of defectors who make it across the Yalu and Tumen rivers to China indicate that a network of gulags in the north of the country is going strong. Work almost certainly continues on the country’s plutonium and uranium based nuclear arsenal, and international aid agencies fear rural residents — thanks in part to the botched currency devaluation — may be nearing a level of destitution not seen since 1997, when famine killed up to 3 million people.

Now, however, it’s the events happening outside the North’s borders that have South Korean and American officials on edge. The attack on the Cheonan in March, coupled with the uncertain signals coming out of Pyongyang, may have been a game-changer. This week, Secretary of State Hillary Clinton and Defense Secretary Bill Gates both visited South Korea and reports suggest the two sides agreed that any future such attack would have to bring a direct military response.

"If the United States and South Korea do nothing should there be a further attack, the message they send is that the North's nuclear weapons give them the ability to act with impunity in the region,” said Ian Bremmer, president of the Eurasia Group, a political risk consultancy. “And China, meanwhile, genuinely feels it has lost whatever leverage it had on Pyongyang."

Off the Leash?

Alone among nations, China has held some sway over North Korea ever since riding to the communist regime’s rescue in during the 1950-53 Korean War. Of late, having friends like the North Koreans has proved no great deal for Beijing, who supply most of North Korea’s energy and the lion’s share of its trade — in spite of the fact that Beijing has twice in the past five years agreed to U.N. resolutions imposing sanction on the North (both times — 2006 and 2009 — after nuclear tests).

If China would like to see the North’s regime go, it also shares fears with South Korea of the unpredictable consequences of a sudden regime collapse. What a nuclear-armed military might do to forestall the end of the dictatorship is one scary question. At very least, millions of indigent refugees would flood over the borders, and officials in both countries know they would inherit the burden of feeding the rest of the North’s 23 million people.

All of this has shocked South Korean officials, who have generally been less hawkish than the U.S. with regard to the North. Ties have deteriorated over the past few years — and after the South publicly accused the North of sinking the Cheonan, all diplomatic ties (and most humanitarian aid) were ended.

While the South’s shared fear of sudden collapse is as acute as China’s, Seoul has another reason to be wary. Some 11,000 artillery tubes are emplaced just over the demilitarized zone by the North, all aimed at the 10 million people of Seoul. U.S. military officials have said that, short of using a tactical nuclear weapon to destroy these weapons, virtually nothing could stop the complete destruction of the South Korean capital within hours of the commencement of another war.

One way or another, the Korean peninsula has entered into a new and dangerous phase. President Obama’s choice to be the next director of national intelligence, James Clapper, said as much at his Senate confirmation hearings on Tuesday, though he noted the conflict has experienced peaks and valleys of tension ever since the Korean war armistice ended fighting.

It’s tempting to look back and regard this as just a cyclical spike in tensions. But the North may indeed feel its nuclear weapons change everything. The U.S. and the South have every reason to avoid allowing an “impunity precedent” to take root. And with China unsure who’s up and who’s down in Pyongyang, the scope for miscalculation is tremendous.

Editor's note: This article was updated to reflect the fact that U.S. heightened sanctions against North Korea go into effect on Sunday, July 25.

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