The good news about North Korea is that it is ready to resume diplomatic contacts with Japan and the United States. At the ASEAN Regional Forum in Brunei this week, Pyongyang’s foreign minister, Mr. Paek Nam Sun, expressed a willingness to mend fences with Tokyo and Washington in talks with Foreign Minister Yoriko Kawaguchi and Secretary of State Colin Powell.

The first sign of a thaw had emerged in late July when North Korea expressed regret over the June 29 North-South naval battle in the Yellow Sea that killed five South Koreans. In hindsight, that gesture of reconciliation set the stage for a series of North Korean offers to reopen dialogue with South Korea as well as Japan and the U.S.

On Friday, the two Koreas began three days of working-level talks at the Mount Kumgang scenic spot to pave the way for a ministerial meeting. Meanwhile, Japanese and North Korean diplomats are expected to meet in Pyongyang later this month to restart normalization talks. Also in the works, again in the North Korean capital, is a bilateral meeting of Red Cross officials. And, next Wednesday, the nuclear plant project in North Korea — a three-way deal involving the U.S., South Korea and Japan — will take a step forward when concrete-laying begins.

What is North Korea up to? The reasonable guess is that it is trying to avoid further international isolation and repair its rickety economy. It appears that the hardline policy of U.S. President George W. Bush — who has branded North Korea as part of an “axis of evil,” along with Iran and Iraq — is pushing it toward detente.

The question, as always, is whether Pyongyang is willing to take specific confidence-building measures. The ball remains in North Korea’s court. To get it rolling, Pyongyang must deal positively with pending issues. These include, for Japan, the fate of “missing” Japanese suspected of being abducted by North Korean agents, beginning in the 1970s; for South Korea, reconstruction of an inter-Korean railroad and a visit to Seoul by North Korean leader Kim Jong Il.

Secretary of State Powell, who met informally with Foreign Minister Paek on the sidelines of the ARF session, described the 15-minute chat as a “good meeting,” saying recent North Korean statements will be studied after he returns home. North Korea must yet clear high hurdles, including nonproliferation of weapons of mass destruction; compliance with the 1994 Agreed Framework requiring Pyongyang to give up its nuclear weapons program in exchange for commercial light-water reactors; reduction of conventional weapons; and cooperation in humanitarian relief.

It may be premature, to say the least, to conclude that North Korea is finally beginning to change. However, reported economic changes in the communist state, such as steep price and wage increases, abolition of the food-rationing system and currency integration, are worth noting. Does all this mean that the Stalinist dictatorship is moving toward something like a “socialist market economy”? Russian Foreign Minister Igor Ivanov, who recently visited Pyongyang, was quoted as saying the country “is trying to change the character of its economy.”

The Stalinist state created a “free market” for farmers in the late 1990s to cope with the crop failures that made it difficult to maintain the rationing system. Travelers report that private buses — more expensive but faster than public transportation — are running in local cities. In early 2001, Mr. Kim called for a “new thinking” approach to economic reconstruction. Enterprises are reportedly operated on a profit-and-loss basis to motivate managers and boost morale.

The fact remains, though, that the centrally planned economy is on the verge of collapse. Bringing it more in line with reality, or the market, while preserving the socialist brand, must be the only sensible way of averting an implosion. For Japan and other countries involved, the realistic response should be to engage with North Korea more positively to help it steer through the difficult transition that lies ahead.

The European Union is promoting human rights diplomacy as part of its engagement policy. The EU also attaches importance to the education and training of North Korean specialists and bureaucrats. Japan ought to have a different role to play, given the history and geography of the two nations. But it shares a common objective with the EU and others: taking in North Korea as a respectable member of the international community.

The challenge for Japan, South Korea and the U.S. is to pursue an integrated long-term policy of engagement that serves that objective. In the long run, only that kind of policy can lead to enduring peace and stability in East Asia.

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