How to resolve the Korean crisis

The sudden flare up of violence on the Korean peninsula is extremely worrying. South Korea is now on its highest peacetime alert. This is one of the most dangerous situations since the 1953 Korean War armistice (there is still no peace treaty).

We don't know for sure why North Korea decided suddenly to attack the island of Yeonpyeong on November 23 2010, in the disputed boundary waters to the west of the Korean peninsula. Certainly there had been no direct provocation to the North.

There may be some sort of domestic power struggle underway. North Korea's Kim Jong-il is in poor health and he is believed to be grooming his son Kim Jong-un to replace him. Perhaps the North Korean military - the most powerful bloc in that failing state - is running with its own agenda.

Alternatively perhaps Kim Jong-un is trying to show his toughness by goading the South and so prove to his citizens - and the military - that he is as ruthless as his father and late grandfather (Kim il Sung).

This attack is the third dramatic military development this year. In March a South Korean warship was sunk in these waters. It is assumed that the attack was done by North Korea (which denies doing so). 46 South Korean sailors were killed.

Last weekend an American scientist on a visit to North Korea found the nuclear facilities more advanced than the international community had suspected. North Korea still does not have a complete nuclear capacity - but it is making progress towards that goal.

Now there is this unprovoked attack on South Korea, in which a further two people were killed.

Meanwhile the South Koreans are being urged by other governments to avoid escalating the violence.

In fairness, the South Koreans could well claim that they are being pushed beyond a reasonable point: two military incidents have so far this year caused the death of at least 48 military personnel.

How much more restraint should they be expected to show? If they don't respond, what is to stop North Korea from continuing to push the envelope? Where and when will the next attack come? Does the lack of a South Korean response show weakness to the North Koreans?

Standing back from this immediate attack, there is the broader issue of how the international community is to respond to this type of development (Iran's nuclear ambitions pose a similar dilemma).

There are basically four options, divided into two categories.

The immediate options are the stick and carrot used by successive US Governments. Clinton and Obama, when confronted by North Korea's nuclear ambitions, tried the "carrot": such as foreign aid and offering to provide civilian nuclear power under international supervision. North Korea has not taken up the carrot.

Bush tried the "stick": increased sanctions and increased threats. North Korea ignored the stick as well.

The longer term options are more dramatic - a limited strike or détente.

On the one hand, there could be a limited attack on the North Korean nuclear facilities. An exasperated United States - which still has 30,000 troops in the South and so under threat of North Korean violence - could simply say that it is tired of being messed around by the unpredictable regime. It could then carry out a limited bombing strike (which could be done with conventional weaponry). (In Iran's case, Israel would attack Iran - in much the same way as it bombed the Osirak reactor in Iraq in June 1981 and stopped Iraq's nuclear ambitions).

The other longer term option is simply to recognize that the North Korean nuclear programme has now gone too far and so a limited attack would not be sufficient. Therefore the US and South Korea (and the rest of the world) would have to get used to living with a nuclear armed North Korea - in much the same way as we got used to living with a nuclear-armed Soviet Union and China.

Neither of the longer term options is particularly pleasant. A limited strike might not be enough to destroy both North Korea's nuclear facilities and its nuclear ambitions. In other words, as soon as the attack was over, the North Koreans would start all over again.

But if the world were to pursue détente, what message would then be sent to other potentially nuclear countries? South Korea - now with an economy about the size of Australia's - could decide to start its own programme.

Given the US's current range of problems, South Korea could never be sure that the Americans could be relied upon if there were another North Korea invasion (as in 1950). Besides the "carrot" approach hasn't work and so South Korea has to think about the unthinkable.

Therefore it might decide that the best defence was nuclear self-reliance. It could then follow the North Korean path: resign from the Nuclear Non-Proliferation Treaty (NPT) and begin its own programme. There is no penalty for withdrawing from the NPT (as North Korea has shown).

Other countries could then follow South Korea's example. Therefore the long-term implications of North Korea's military policies are a lot more complicated than the threat of a war on the peninsula.

Ironically, given the Chinese involvement in the Korean War (1950-3), the best hope for some form of settlement now comes from China. In 1950, with a fresh communist leadership ready to show its determination to stand up to the US, China backed North Korea. Now it is not so sure.

China is "communist" in name rather than fact. It does not want any violence on the Korean peninsula. Such violence might scare off potential foreign investors on the Chinese mainland. Besides, violence might lead to an influx of North Koreans fleeing over the Yalu River into China. China does not welcome refugees.

China's immediate reaction to the shelling of Yeonpyeong has been to call for an examination of the facts. It was not an automatic rush to the defence of North Korea.

Having come so close (again) to the brink of conflict, perhaps North Korea - under Chinese pressure - might be more amenable to the Six-Party negotiations that could offer some hope for peace. The six states are the two Koreas, China, US, Russia and Japan - all of which have a lot to lose and nothing to gain from a resumed Korean conflict.

Ironically - as a symbol of the new 21st century power architecture - the US is now looking to China to set the lead on North Korea. Now that China is becoming more engaged in global economic and political affairs, this will be one of its first major tests in diplomacy.

The Americans have failed - let's see if the Chinese can do any better.