Every day, the United States burns through 20.7 million barrels of oil. China, the world's second largest consumer, uses about 6.9 million barrels a day. Although the United States is the third leading oil producer in the world (behind Saudi Arabia and Russia), its appetite is so enormous that it overwhelms the country's production capacity. Its known reserves, about 21 billion barrels, would supply only enough to keep the country running at full speed for about three years.

So when STANFORD gathered five faculty members to talk about the implications of U.S. dependency on foreign oil, we expected grave declarations of alarm. But their concern did not square with the growing chorus of citizens and elected officials about why reducing this dependency is so important.

On the next five pages, faculty from political science, economics, law and engineering explain why the debate about energy security is missing the point, and what they think needs to be done.

STANFORD: How would you frame the issue of dependency on foreign oil? What should we be concerned about?

David Victor: The problem is not dependence per se. In fact, dependence on a world market produces enormous benefits, such as lower prices. Nor is the problem that energy's essential role in the economy means that dependence must be avoided. The real problem is that energy - oil, especially - doesn't operate according to normal market principles. Something like 75 percent of the reserves of oil and gas are controlled by companies that are either wholly owned or in effect controlled by governments, and there's enormous variation in how those companies perform. Some of them are just a disaster, like [Mexico's state-owned oil company] Pemex, and others can work at world standards, like Saudi Aramco or Brazils Petrobrás. Some of these governments, such as Venezuela, use oil revenues for political purposes that undermine U.S. influence. High prices do not automatically generate new supply or conservation, partly because suppliers can drop prices to undercut commercial investment in alternatives. Second, we have what has become known as "the resource curse." There'sa lot of evidence that the presence of huge windfalls in poorly governed places makes governance even worse. Revenue that accrues to oil-exporting governments is particularly prone to being misspent, often in ways that work against U.S. interests.

Scott Sagan: I agree that calling the problem "energy dependence" and therefore seeking energy independence is the wrong way to think about this problem. Talking about energy independence feeds the xenophobic impulse that occurs all too easily in American politics. And it suggests to other countries that they should seek independence rather than a more cooperative approach. I see very negative consequences politically in the signal that attitude sends. Think about the current nuclear crisis with Iran. Iran claims that it needs independent uranium enrichment capabilities to have "energy sovereignty." Such uranium enrichment production could be used, however, for civilian nuclear power or for making a bomb, creating enormous nuclear weapons proliferation problems. We're feeding into that kind of thinking when we use the same language about independence when referring to oil. And it produces uncooperative effects elsewhere. The Chinese, for example, cut a deal with Sudan as a means of creating energy security for themselves. It inhibits efforts of the international community to encourage that government to behave responsibly.

John Weyant: There is a distinction between dependence, meaning how much of the oil the United States consumes is imported, and vulnerability, meaning how at risk our economy and our social order are to oil-supply disruptions. That vulnerability is defined by how much of the total supply of oil in the world market comes from unreliable sources. So you have to look at oil supply on a global scale, not just in the United States. It's the instability of the supply that affects price.

Victor: I like John's term "vulnerability," and it leads us to various kinds of actions to reduce our vulnerability to the market rather than trying to make us completely independent. One of them has been around since the '70s - building and coordinating strategic stockpiles so that they are supplied into a single world market. Traditionally that could be done by the major Western countries because they were the major oil consumers. One of the big challenges for policy makers today is how to get India and China to think about the operation of this world market in the same market-based way that we think about it, and to get them to build up those stockpiles and coordinate them with our own. There's some evidence that that kind of coordination can reduce our vulnerability.

Weyant: There's this fallacy among the public that if we don't import so much oil, other oil-exporting countries are going to be hurt and we will be unaffected if oil supplies are cut off. But these countries are sometimes major trading partners of allies, and asking those allies to take a hit on our behalf just leads to other economic problems. If the economies in China and Europe and Japan, who are all major trading partners, go down, it affects how much they can buy from us. It's another reason we can't be xenophobic and just look inward on an issue like this. You get these international trade flows outside the energy sector that could be pretty devastating.

STANFORD: Last summer we saw crude oil prices hit $70 a barrel and gas prices went well above $3 per gallon nationwide. That momentarily changed consumer behavior, and reduced demand. Are high prices a good thing?

Michael May: The key factor in normalizing market conditions is assuring the market that high prices are here to stay. Major oil companies like Exxon and bp have been putting their money to other uses than exploration. They have been buying back shares and increasing returns to stockholders because that's the way Wall Street drives them. That might change if prices stayed high. It probably won't be $70 a barrel, but even $50 a barrel as a base price is almost twice the historic average. The extent to which investors become convinced that that's going to be the future average will have some bearing as to how much money they spend on exploration. Toyota and General Motors and others can make hybrids or much more efficient cars, but it takes billons of dollars of investment, and if the price of gasoline goes down, they have less incentive. When gas is cheap, driving an SUV is not such a big deal.

Victor: The reason some of these companies are buying back the shares is not just because of Wall Street but because they don't have a lot of truly attractive opportunities for investing in new production. Most of the oil reserves are either legally off limits for the Western oil companies or international oil companies generally, or they're de facto off limits because they're in places where it's so hard to do business. Although the public is seized by the high price of energy, the major energy companies are seized by concerns that prices are going to decline sharply. If there is a recession, which would dampen demand for energy, or the capacity to produce oil around the world improves, then prices will decline. It has happened in the past. That fear really retards a lot of investment because these investments have a very long capital lifetime, and you need to protect them against low prices over an incredibly long time horizon.

Michael McFaul: It's very important to understand that oil companies owned and operated by governments are not necessarily profit-maximization entities. Take Gazprom, the gas company of Russia. It is closely aligned with state interests, so profit isn't its only motivation. It will use its money for strategic purposes as defined by Vladimir Putin, not as defined by the shareholders of Gazprom. For instance, early in 2006, Gazprom cut off gas supplies to Ukraine, mostly for geopolitical reasons. Why is Hezbollah so well armed? Because of Iran, which uses oil revenue for strategic purposes; it is not used for investing in a company or investing in the market per se. This is part of the problem of the "resource curse" David referred to. If oil is discovered in a country before democratic institutions are in place, the probability of that country becoming democratic is very low. In countries where the state does not rely on the taxation of its citizens for its revenues, it doesn't have to listen to what its citizens want to do with that money. So instead of building roads or schools or doing things that taxpayers would demand of them, they use their money in ways that threaten the security of other countries, and, ultimately, their own.

Victor: It's important that we not overstate the extent to which users of energy are going to respond automatically to high prices, and the personal vehicle is a great example. Fuel accounts for about 20 percent of the total cost of operating a vehicle. Traditionally it's only been 10 or 15 percent, but we are much wealthier today than we were three decades ago when we had the [first OPEC oil embargo]. I think that helps explain a lot of the sluggishness in response in the marketplace. People are buying smaller, more fuel-efficient cars, but that trend will only go so far because there are other factors that determine what kinds of vehicles people purchase. In the United States and most advanced industrialized countries, most oil is used for transportation, where oil products have no rival. It is hard to switch. In most of the rest of the world, oil gets used for a variety of other purposes, including generating electricity. Those markets are probably going to be more responsive to the high price of oil because they're going to have opportunities to switch to other fuels. The United States used a lot of oil to generate electricity in the early 1970s and when that first oil shock came along, essentially all of that disappeared from our market. That's part of the reason why the U.S. energy system responded fairly quickly to the first oil shock, and why changes in behavior are harder to discern in the current crisis. There is no easy substitute for gasoline.

May: If we generally agree that high oil prices, on the whole, are a good thing because they cause investment in more production and more efficient uses of oil, then it would follow that the rapid growth in consumption in China is also a good thing and we should welcome it, right?

Victor: I disagree with that. In effect what we have right now is a "tax" that's been applied to the oil market due to the various dysfunctions of the way it operates and to unexpectedly high demand in the United States and China. The revenue from that tax is accruing to the producers, and if we think about how to get out of the mess here, then what we want to do is in effect apply a tax to the oil products. If we raise the price of these products to reflect the real total cost of our vulnerability to the world oil market, those companies have an incentive to go off and look for alternatives.

May: So you're saying the same thing: that high oil prices, whether from this tax or otherwise, are a good thing.

Weyant: It depends significantly on who is collecting the tax.

McFaul: Yes, the fundamental question is how the money is being spent. If I had high confidence that the money was going to reinvestment, then I could agree that high prices are good, but that's not what is happening. The Soviet Union's most dangerous adventures in the Third World correlated with the high oil prices in the 1970s. You can see the direct effect. And when the prices came down, the Soviet Union collapsed. The same is true with Iran today. They are being very aggressive in the region - in Iraq, in Lebanon, in Afghanistan - trying to become the Middle East hegemon. This would not be happening if they didn't have all these clients - Hezbollah, Hamas, their friends in Iraq - that they can support with millions of dollars. Going back a few decades, where did Osama bin Laden come from? Where did support for the Taliban come from? It came from this tax that David is talking about. If we're talking about security issues and oil, this is much more serious than supply disruption to the United States.

Victor: I agree with Mike 100 percent. If you look at where the revenues are going from Iran, Venezuela and so on, there's a long list of folks who are doing things that are contrary to our interests with the money that ultimately is coming out of the pockets of American consumers. Dealing with that is job one.

STANFORD: So how would you counsel American policy makers? What needs to happen to reduce our vulnerability over the long term?

Sagan: The vulnerabilities we have today should provide an incentive to make some critical investments and to change our thinking, but we're not really doing that. I was quite surprised at how much I agreed with one aspect of the second Bush inaugural address. [He said] let's start talking about our addiction to oil and all the problems associated with that, but I've been completely disappointed with the lack of follow-through. And part of the problem is this notion of energy independence. We need diversity in our research and development spending across the board, on a variety of technologies. We're going to produce energy security to a large degree by finding cooperative solutions that are efficient and secure for many countries working together. We need to see our national security as being very dependent on others and that's not entirely a bad thing.

Victor: There is one cluster of technology that's going to be exceptionally important - electric vehicles. The all-electric vehicle has been kind of a disaster. We tried to do that in California without much success at all. The new set of pluggable hybrid vehicles, which you plug in at night and charge up, are more promising. If such technologies make it feasible to reduce some of the transportation dependence on oil, then markets will be forced to become more "normal" and more responsive. Electric cars and other technologies can help to keep prices lower and ultimately help make the transition completely away from oil over a period of 30 or 50 years.

Weyant: We only think about energy as a nation when prices are high, and so there's a short attention span on the issue. That makes it really hard to sustain a policy that would be rational over the long term. If we're going to have a big R&D program, for example, you need to invest in technologies and sustain the investment over a long time horizon. If you couple this short attention span with our aversion to taxes, at least historically, you end up with policies that are almost designed from the outset to fail. The political tide is turning a little bit so a well-designed tax might be possible. Maybe you don't raise taxes now but you assure that the price of a [hybrid] car won't go below a certain level and that'll help create a little more confidence with the marketplace. If you just focus on research and development without getting the economic incentives right, you come up with all kinds of great gizmos that no one will actually make or use.

McFaul: We've been talking mostly about how to manipulate the market to change people's behavior and I think that's quite right. I can't tell you how many people I saw come out of a Palo Alto theater after seeing Al Gore's movie [An Inconvenient Truth] and jump into their gas-guzzling machines. I would like to tax those machines; use economic tools to change people's behavior in a way the movie didn't. This has to become a public policy issue. It's not right now. Think about the way the market for cigarettes worked in this country 50 years ago, and think of how it is structured now. We have not just taxes but regulation - they can't be advertised on television - and a national campaign trying to educate people about the health concerns. We need a similar effort on this issue.

Sagan: When you watch the Super Bowl you don't see advertisements for cigarettes, but you do for Hummers. There's no attempt at all to educate people about the relationship between these longer-term problems and what you do individually. And that takes decades.

Victor: One of the acid tests for whether the nation is pursuing a coherent energy policy is our policy on ethanol. Ethanol is important because it is a partial substitute for oil-based gasoline. In this country, almost all of the ethanol that is delivered to the marketplace is made from corn, which is economically inefficient. But we do that because the corn grows in the heartland, such as Iowa - an important state electorally. There have been lots of proposals to, for example, erase the tariff on imported ethanol. Brazil produces ethanol from sugar cane and it's much cheaper and more efficient. But the farm lobby always intervenes and these proposals languish, with the result that the U.S. ethanol industry never faces the rigors of world competition. So long as energy is bouncing around lower on the list of priorities, it will be difficult to have a coherent policy.

Weyant: It would be far better if people were willing to bite the bullet and say this is a problem and it's not going to be painless to solve it, but if we play our cards right it's not going to reduce our standard of living much. Convincing the public is really one thing that might be worth some more effort. It's a cacophony to them.

STANFORD: What is your greatest hope and your worst fear with regard to demand for oil?

Victor: My greatest hope is that inside the Chinese government and inside the Indian government people know that this independence view of the world energy market is completely wrongheaded. Maybe that will create an opportunity for the United States and India and China along with other major oil consumers to collectively manage this issue, and the consequences of doing that will spill over onto other areas of cooperation. My greatest fear, in addition to the things we've already discussed, is that the United States will use the oil issue to beat up on the Chinese and the Indians, and that our relationship with those countries, which is already fragile, will make it harder to work together on other things that also matter.

May: My greatest hope is that the United States, China, India and other major countries work together towards a more hopeful future, including improving the global environment, providing a counterbalance to mischief in the Middle East, and promoting a transition to modernization and away from extremism. My greatest fear is that the little termites who are nibbling at what is currently a somewhat sensible Chinese policy will have their way, either because the country's economy slows down - which it will inevitably - or for some other reason, and we'll wind up fighting each other or destroying each other's capabilities.

McFaul: My greatest sense of optimism comes from this discussion, and about what my colleagues in this discussion said about China, because from the surface it looks like there's a much more pernicious policy of China going its own way. I've learned today that in fact there are very reasonable voices within the Chinese government, and I hope that there will be in my own government. My greatest fear is that there will continue to be politicians who control oil revenues who do things that do not serve international security, and I'm speaking not only of Iran. My nightmarish scenario is that 10 years from now Iran, Iraq and, God forbid, Saudi Arabia are controlled by hostile governments that want to use the revenues that we pay them for their oil to harm us. I give that a low probability, but in terms of things that worry me about our security, it's the instability of those oil-exporting regimes.

Sagan: The hope is that this current crisis will provide the right set of incentives to encourage investment in a diverse set of energy R&D programs across the board, and will encourage cooperation between countries in energy research and development. That would help educate and change the culture of the United States away from a gas-guzzling, governor-in-the-Hummer culture. The fear is that this will become yet one more excuse to move to a more xenophobic policy that discourages cooperative international policies.

Weyant: Remember David Stockman, the erstwhile head of the Office of Management and Budget? I ran into him in Washington and he literally said to me, "Don't worry about oil security and disruptions or any of that stuff. We've got battleships to take care of this problem." That shocked me to no end, and my response was "Do you really want to be in that position, where that's your only option?" Your whole response is "We're best in the battleship field and you shouldn't mess with us?" This type of attitude is what worries me the most.

Sagan: We were earlier talking about the resource curse, and this strikes me as an example of the hegemon's curse. To not take the necessary steps on economic policies or energy policies because you think you've got a military backup solution. If our military strength causes us to be passive or uncooperative on the economic or energy front, it will have a boomerang effect that will really hurt us.

A proposal to assess the societal and security implications of the female deficit in China, a study of the impact of higher education's rapid expansion in large developing economies, and incentives for provision of health care services for one billion people in rural China were among the new projects funded by Stanford's Presidential Fund for Innovation in International Studies (PFIIS) in mid-February. Planning grants for an international health and society initiative in the Indian subcontinent and psychosocial treatment for children orphaned by the tsunami in Indonesia were also awarded.

"These projects show great potential to advance human knowledge, help devise sustainable solutions, and build a better, more secure future for millions around the world," said Stanford President John Hennessy. "In launching The Stanford Challenge, we committed to marshal university resources to address some of the 21st century's great challenges in human health, international peace and security, and the environment."

The $3 million, intellectual venture capital fund was established by the Office of the President and the Stanford International Initiative in 2005 to encourage new cross-campus, interdisciplinary research and teaching among all seven schools at Stanford on three overarching global challenges: pursuing peace and security, improving governance, and advancing human well-being. The first $1 million was awarded in February 2006 to eight interdisciplinary faculty teams examining such issues as the HIV/AIDS treatment revolution in sub-Saharan Africa, why Latin America has been left behind in recent gains by developing countries, and food security and the environment.

"It's impressive to see the committed, collaborative, and innovative ways Stanford faculty are joining together in new interdisciplinary research and teaching to generate new understanding of the linkages among complex problems and train a new generation of leaders to address them effectively," said Freeman Spogli Institute Director Coit D. Blacker, chair of the International Initiative Executive Committee.

New projects qualifying for funding and their principal investigators are:

• Female Deficit and Social Stability in China: Implications for International Security. Melissa Brown, anthropological sciences; Marcus Feldman, biological sciences, and Matthew Sommer, history. As the number of surplus, marriage-age men in China approaches 47 million in 2050, this project will study factors that predict men's inability to marry before 30, the availability of social welfare to men and their families, their contribution to the floating population of rural-to- urban migrants, the labor-related migration of unmarried women, and the impact of this migration for domestic stability and international security.
• Potential Economic and Social Impacts of Rapid Higher Education Expansion in the World's Largest Developing Economies. Martin Carnoy, education; Amos Nur, geophysics; and Krishna Saraswat, electrical engineering. The development of higher education systems in Brazil, Russia, India, and China (BRIC) will have a major impact on their ability to transition to large, developed, knowledge-based economies. Is the way nation states expand and reform higher education in response to global pressures an important indicator of societal capacity to achieve sustained economic growth? This project will examine differing approaches of BRIC governments to higher-education growth and reform, and ask whether these reflect differing levels of state capacity to expand the knowledge base for economic and social development and whether differing approaches result in significant changes in formation of analytical skills in university graduates, particularly scientists and engineers.
• Health Care for One Billion: Experimenting with Incentives for the Supply of Health Care in Rural China. Scott Atlas, radiology; Scott Rozelle, the Walter H. Shorenstein Asia-Pacific Research Center, FSI. This project examines the effects of existing health policies and institutions in rural areas of China - including rural health insurance, privatization of rural clinics, and investment in township hospitals - and introduces a new experiment to study and realign incentives to address a serious flaw in China's health care system, the practice in which doctors both prescribe and derive significant profits from drugs.

Two planning grants were also awarded, as follows:

• Stanford International Health and Society Initiative: Proposal to Plan for an Initial Program in the Indian Subcontinent. Vinod K. Bhutani, pediatrics; Nihar Nayak, obstetrics and gynecology. This project seeks to improve unacceptably high maternal and childhood morbidity and mortality rates in the Indian subcontinent by devising innovative strategies to bridge existing social and access barriers in the micro- and macro- health environment. Includes leadership training and cooperative work on practice and policy strategies with experts from Stanford and the subcontinent.
• Psychosocial Treatment of Children Orphaned by the Asian Tsunami in Indonesia. Hugh Solvason, psychiatry; Donald Barr, sociology. This project's goal is to develop and implement changes to reduce the sense of dislocation, anxiety, and behavioral problems among tsunami orphans at the As-Syafi`iyah Orphanage in Jakarta. By arranging the children into more cohesive groups that can operate like "families" rather than their current state of random associations typically found in orphanages, the project will create a new and ordered social system. In addition, Solvason and Barr plan to develop a system of counseling interventions for the most severely symptomatic children (supervised by Stanford Psychiatry faculty). Translated measures of depression, anxiety, and PTSD will be used to assess the success of the intervention.

The projects will produce new field research, conferences, research papers, books, symposia, and courses for Stanford students.

A third round of project awards will be made in February 2008. A formal request for proposals will be issued in the fall of 2007, with proposals due by December 14, 2007. Priority is given to teams of faculty who do not typically work together, represent multiple disciplines, and address issues that fall broadly within the three primary research areas of the International Initiative. Projects are to be based on collaborative research and teaching involving faculty from two or more disciplines, and where possible, from two or more of Stanford's seven schools.

For additional information, contact Catharine Kristian, ckristian@stanford.edu.

To read the seismic signal sent from an abandoned coal mine in the mountains of North Korea's coast, you must first recognize that it represents four major failures, two grave dangers, and one big opportunity.

The apparent explosion of a nuclear device, coming after two decades of trying to stop North Korea from achieving this goal, is a manifest failure of policy on four fronts -- a failure of U.S. nuclear non-proliferation policy, a failure of international diplomacy, a failure of Chinese leadership and a failure of South Korea's strategy of engaging the North.

Having failed so completely, the world now faces two grave dangers. The first is the very real threat of war on the Korean Peninsula, triggered by a series of escalatory actions in the wake of the bomb test. The second is the danger that North Korea will proliferate its nuclear technology, materials or know-how to others -- not the least to another nuclear hopeful, Iran.

But there remains a lone and tenuous opportunity. Having removed all ambiguity about its nuclear ambitions, North Korea may finally have created a common sense of threat that will galvanize the kind of concerted international action that so far has been absent.

THE FOUR FAILURES

Non-proliferation failure

The United States has spent two decades trying to stop North Korea from going nuclear, a turbulent period of crisis and negotiation that even went to the brink of war. At least three administrations confronted this problem and none, certainly not the Bush administration, can escape blame.

North Korea agreed to sign the Nuclear Non-Proliferation Treaty (NPT) in 1985, but it stalled before signing an agreement with the International Atomic Energy Agency (IAEA) in 1992 to place its nuclear facilities under international safeguards and inspections. During that time the North Koreans reprocessed some spent fuel from their reactor into plutonium - an amount that American intelligence believes was enough for building one or two warheads.

North Korea's resistance to full inspections, while it kept pulling spent fuel rods out of its reactor, provoked a crisis in 1994 and led the Clinton administration to ready military forces to strike the North's nuclear facilities. In a last-minute deal, North Korea froze its reactor and reprocessing facilities, effectively halting plutonium production under IAEA supervision. In exchange, the United States, Japan, South Korea and others agreed to construct two light-water reactors for North Korea and to supply fuel oil until the reactors came online.

The deal was troubled from the start. Neither party was satisfied with the compromise or the way it was to be implemented. By the late 1990s, the North had begun a secret effort to acquire uranium-enrichment technology from Pakistan and, in 1998, tested a long-range ballistic missile. Despite this, the plutonium freeze remained in place. But it did not survive the Bush administration.

The Bush administration came into office challenging the value of the agreement and froze contacts with the North. After receiving intelligence showing moves to build enrichment facilities, it confronted North Korean officials at an acrimonious meeting in Pyongyang in October 2002.

The United States halted fuel shipments a month later, and, in early 2003, the North Koreans expelled IAEA inspectors and withdrew from the Non-Proliferation Treaty. They proceeded to reprocess the fuel rods they had stored for a decade, producing enough plutonium, intelligence estimates say, for four to six nuclear warheads. In February 2005, the North Koreans announced they had manufactured nuclear weapons. Last week, they apparently made good on that declaration.

Blame aside, North Korea's emergence as the world's ninth nuclear power may be the most serious failure in non-proliferation history. Unlike India and Pakistan, which remained outside the system of international treaties, North Korea acted in defiance of those controls. Who might be next?

Diplomatic failure

Unlike Iraq, the attempt to stop North Korea's nuclear program has relied on the tools of diplomacy, accompanied by economic incentives and coercive sanctions.

But serious questions have been raised from the start about the sincerity and methods of the diplomatic efforts, particularly on the part of the United States and North Korea. The Bush administration has insisted -- and the president continues to make this argument -- that direct talks with North Korea do not work. Pyongyang has tried to frame everything as an issue with Washington, undermining talks that involved others, including South Korea.

Bush's stance lends credibility to those who charge the administration seeks "regime change," not a compromise that it believes will lend legitimacy to Kim Jong Il. The North Koreans now appear to have used the talks to buy time and build bombs.

Diplomacy has, at American insistence, consisted of six-party talks, held under Chinese auspices and including both Koreas, Japan and Russia. In truth, little real negotiating went on at these gatherings, at least until the last full round of talks in September 2005. In contrast to the thousands of hours of negotiations between Americans and North Koreans that led to the 1994 deal, there have been only tens of hours of actual give and take.

It is intriguing that the September agreement on a statement of principles for denuclearization came only after the State Department's chief negotiator was finally allowed to talk to his North Korean counterpart at length. Even then, their agreement evaporated almost immediately as they dueled publicly over the deal's meaning. American financial sanctions against North Korean currency counterfeiting further clouded the atmosphere, and direct contacts ground to a halt.

China's failure

The North Korean nuclear crisis is also a failure of China's bid for regional, if not global leadership. North Korea is an ally of China, a relationship that goes back more than half a century to the Korean War, when Chinese "volunteers" poured across the border to prevent an American victory. Their relationship has become more difficult since China embarked on market reforms while North Korea clung to its peculiar brand of Stalinism.

China has been torn between its loyalty to Pyongyang, its desire to maintain a stable balance of power in the region and its fear that the North's nuclear ambitions could provoke conflict on its borders. By becoming host for the six-party talks, Beijing stepped into an unusual leadership role.

The Bush administration was eager to move the burden of the North Korean problem onto the Chinese. Some administration hard-liners argued that China had the power to trigger the collapse of Kim Jung Il's regime by cutting off energy and food supplies.

Time and again, Beijing dragged the North Koreans back to the negotiating table, while also pushing Washington to engage Pyongyang in the talks. But Chinese irritation over American inflexibility has now been trumped by North Korea's defiance. Chinese policy-makers now wonder how they can punish the North without creating chaos, or war.

Failure of engagement

The final failure lies on the doorstep of South Korea's 10-year-long policy of engagement. The "sunshine policy" asserted that the North could be induced to give up its nuclear option by opening up the isolated communist state and promoting the forces of Chinese-style reform.

After a historic summit meeting in 2000, South Korean aid and trade, even tourists, flowed into the North. South Koreans lost their fear of a former foe, seeing it more as an impoverished lost brother than a mortal threat. Tensions with their American allies rose because of a gap in the North's perceived threat. The United States wondered why its troops should continue to defend South Korea.

Now South Koreans must confront the possibility that the North may have used engagement only to buy time.

THE TWO DANGERS

Threat of war

With eyes on Iraq and the Middle East, the Korean Peninsula has been far from the center of American attention. American forces based in South Korea and Japan have been dispatched to Iraq.

Yet the demilitarized zone that separates the two Koreas remains the most militarized frontier on the planet, with hundreds of thousands of well-armed soldiers poised against each other. Clashes along that frontier used to be commonplace and there are signs of a renewal of tensions. The danger of unintended escalation cannot be dismissed.

What might happen if a U.S. naval vessel, moving to inspect a North Korean freighter - as the U.N. resolution may authorize - is fired on or even captured, as the USS Pueblo was in 1968? It is a frightening scenario already worrying some at the Pentagon and the State Department.

Risk of proliferation

More than anything else, American policy-makers fear that North Korea, emboldened by its nuclear success and perhaps desperate for funds amid economic sanctions, might sell its nuclear expertise to Iran and others, including terrorist groups.

For Pyongyang, an alliance with Iran is a logical response to American and global pressure. The North Koreans have sold ballistic missiles to Tehran since the 1980s and rumors of nuclear cooperation persist.

An American effort to interdict the movement of ships and planes to Iran -- with possible U.N. backing - is probable. But the most likely transit is across the long and loosely controlled land border with China. The amount of plutonium needed to make a warhead is the size of a grapefruit and hard to detect - creating yet another nightmare scenario.

THE OPPORTUNITY

In this otherwise bleak landscape, there is an opportunity. For the first time, there is a chance of a consensus among the key players -- China, Japan, South Korea, Russia and the United States. The passage of a U.N. resolution is a small step in that direction. But the real test will come next, as the nations must cooperate to put pressure on North Korea, while coolly navigating the perils of war and making sure to leave open a diplomatic exit.

There is a slim chance of such concerted action, and a limited window for achieving it. Not everyone sees the dangers the same way. Signs of rethinking errors of the past are no more evident in Beijing and Seoul than they are in Washington or Tokyo. Ultimately, however, if they are to seize this moment of opportunity, all parties must face up to the fact that the policies of the past have failed.

GWS (Gi-Wook Shin): Dr. Hecker, could you please briefly explain the technical dimensions of what has happened? North Korea is claiming great success, but there are some questions about whether this presumed nuclear test was really successful or meaningful.

SH (Siegried Hecker): At this point, as I understand it, the North Koreans have conducted what they call a nuclear test.

South Korea has said seismic signals appear to indicate a 0.5 kiloton, or sub-kiloton, explosion. From reports I have seen, the Australians and the French believe the blast was about 1 kiloton. Thus, three countries have given assessments on the power of the underground explosion, ranging between 0.5 kilotons and 1 kiloton, or 500 and 1000 tons. This likely indicates a nuclear explosion of a relatively low yield, compared to what one would typically expect. Although the Russian defense minister has apparently commented that the explosion was between 5 and 15 kilotons, I have not heard any other nation estimate in this range.

By comparison, the Nagasaki bomb was approximately 20 kilotons, and the initial tests of the five major nuclear powers were all quite large, on this order. Also, when both India and Pakistan tested multiple devices in 1998, some of these tests were of a substantial yield, at least 20 kilotons. But each country also tested three devices that were said to result in explosions of less than a kiloton. Whether these devices did not work or were experimental in nature is still unknown. So, a test on the order of that conducted by North Korea is not unheard of, but it is apparent that the North Korean device produced an explosion considerably smaller than most countries' first nuclear tests.

Regarding the technical dimensions of this event, I would offer two provisos: first, we must give scientists more time to analyze the seismic signals, and second, we must allow more time for analysis of how those seismic signals translate to the yield of the device. This latter task involves a thorough understanding of relevant geology - scientists make models to predict this, but there is always some uncertainty.

GWS: Given the relatively low yield of the test, is it possible that what North Korea has "tested" is not a nuclear device but very powerful conventional weaponry?

SH: It is most likely that this was indeed a nuclear device. There are two plausible explanations for why this test resulted in a relatively low yield. One possibility is that the North Koreans attempted to test a relatively simple nuclear device that was meant to be large, but it did not work quite right. There are two reasons the test of such a device might not have gone as planned. First, the detonators might not have exploded at exactly the right time or the explosive might not have been of the right quality, thus producing a lower yield. Second, if the timing of the "initiator" (additional neutrons that are introduced) was not quite right, this could also decrease the expected yield of the device.

Another possibility is that North Korea was actually trying to test a smaller, much more sophisticated nuclear device, one with a lot of instrumentation to monitor implosion. North Korea could have learned a great deal from such a test, but I would be surprised if the country had really designed the device to be that small.

GWS: This test marks the failure of the disparate policy approaches of South Korea and the United States - neither nation was successful in arresting DPRK nuclear development. But just how advanced North Korea's nuclear program is remains unclear. In the Korean media, there has been debate over whether North Korea's nuclear test was a success or a failure. What do you think?

SH: I would not say that the test failed. It is simply too early to judge, and we do not know exactly what North Korea had hoped to achieve. If North Korea wanted to use this test as a demonstration, then perhaps it was not very successful. It may be the case that the test did not work as well as anticipated if the device in question was a simple nuclear device. If North Korea was testing an advanced designed that was very well instrumented and monitored, it may have learned a great deal from this test.

It is important to wait to see an accurate yield for this test and then to look at the range of possibilities for why it might have been executed. From a scientific perspective, it is important not to overreact and not to go beyond what is actually known.

GWS: You said previously that when India and Pakistan tested nuclear devices in 1998, they both set off multiple explosions. Is it correct that North Korea has set off a single explosion?

SH: From what we have learned so far, it appears that North Korea has tested one device. This is what the North Koreans announced they would do. Scientists will have to carefully analyze the seismic signals to be sure, however, as for example, when India tested, it set off two devices simultaneously. We have not yet seen all the seismic evidence.

GWS: If North Korea were to use such a "low yield" device as a weapon in a major metropolis like Seoul, what kind of impact would it have?

SH: A 1 kiloton bomb in a major metropolis, though a relatively "low-yield" nuclear device, would still be devastating and catastrophic. Many thousands would experience instant death, and due to radioactivity, there would also be many delayed deaths. A device of this size would not wipe out the entire city, as was largely the case in Hiroshima and Nagasaki, but it would cause major, significant damage.

GWS: Based on the scale of the explosion, was this device something that even terrorists could assemble?

SH: One kiloton in terrorist hands would indeed be catastrophic. I am very concerned that North Korea's nuclear material might fall into terrorist hands.

GWS: The possible marriage of this demonstrated nuclear capability and North Korean missiles is extremely dangerous. With reference to the North's nuclear and missile capabilities, is testing useful for making smaller nuclear devices - devices small enough to be placed on a missile?

SH: If North Korea is intent on making a nuclear warhead, this test could be a step in that direction. Making smaller nuclear devices by nature means making more complex nuclear devices. For much of the Cold War, this was a major goal for both the Soviets and the Americans. For North Korea, at this point we cannot say that the test was successful in terms of this aim of miniaturization, though again, North Korean scientists may have learned a lot in this regard. It is extremely difficult to say how soon North Korea could achieve miniaturization with the limited information we have about this test.

Miniaturization is a very big step, and it cannot be accomplished without nuclear testing. This could have been one of the most important reasons that North Korea undertook this test. It must be noted that their missiles are the other part of this equation, and there is not great confidence in the reliability of these missiles, especially those that performed poorly during the July test.

GWS: North Korea has certainly made a political statement with its nuclear test, but from a technical perspective, do you expect additional testing? What is your assessment of North Korea's technical capabilities, in light of your recent visits to the nation?

SH: At this point, North Korea could want another test for two technical reasons. First, if this was a simple device, they will want to fix the problem and demonstrate an explosion of a higher yield. If this was a more advanced design, they may have learned a lot but would still desire another test in order to gain an appropriate level of confidence in the device.

In January 2004, I visited the Yongbyon nuclear reactor and in August 2005, I visited Pyongyang. On the basis of those visits, I would estimate that North Korea has enough plutonium for 6 to 8 nuclear devices, though there is some degree of uncertainty in that estimate. Overall, I estimate the North has 40-50 kilograms of weapons-grade plutonium, and generally 6-8 kilograms are required for each weapon. I also estimate that North Korea could gain one additional weapon per year, given the current rate of reprocessing.

In terms of skilled people and facilities, North Korea has very good capabilities, up to the point of and including reprocessing plutonium. However, to go from reprocessing plutonium to building the device itself takes a whole new set of engineering and physics skills.

GWS: Given North Korea's limited amount of weapons-grade material, its government would presumably want to conserve as much as possible, right?

SH: Yes, and this is probably one of the reasons North Korea did not set off multiple explosions like India and Pakistan did. North Korea has very limited material, and therefore it will want to be judicious. With this conservation imperative, North Korea will want to fully assess what has been learned from this first test before it attempts a second test.

GWS: From a technical perspective, is it difficult to say how long it may be until North Korea conducts a second test?

SH: Yes, it is very difficult to say, because it depends on factors related to this test about which we are still uncertain. If North Korea was satisfied with this test and all preparations have already been made, a second test could take place within a few days. Yet if the findings from this test surprised North Korea, the device may have to be rebuilt, and that could take weeks or months. One thing we know for sure is that they do not have a lot of weapons-grade material, and they will have to carefully judge how to use it.

GWS: You have said that a major danger from the North Korean nuclear program is the possibility of plutonium transfer. How serious is this possibility? Are you also concerned about transfer of nuclear technology?

SH: Well, a test does mean that there is now less material that could possibly be transferred.

I feel strongly that the principal danger from the North Korean program is the plutonium itself, and the possibility it would find its way to a third party, perhaps into terrorist hands or into the hands of other nations. The reason I believe this is the biggest danger is that North Korea could be restrained by its neighbors from ever actually using a nuclear device, but a third party, especially a non-state actor, may not be "restrainable."

The nuclear test will not have an impact on how marketable the plutonium is. Yet, for the export of nuclear technical know-how, a successful test could make a big difference in the appeal of North Korean technology, especially to a nation like Iran.

GWS: The current nuclear crisis erupted in October 2002, when U.S. officials confronted North Korea about its possession of a uranium enrichment, or HEU, program. North Korea has thus far denied having such a program. I understand this type of program is much more difficult to detect. Would a uranium-based device require testing?

SH: North Korea has stated that it does not have an HEU program. My own opinion is they have some type of enrichment program, owing to Pakistani President Musharraf's statements that his nation provided Pyongyang with some of the required technology and equipment. We simply do not know how far North Korea has progressed in this program.

The HEU program is very difficult to detect - there are fewer signatures than for a nuclear reactor and this type of program is easier to conceal, given the smaller size of the facilities required. However, if we assume statements made by A.Q. Khan and President Musharraf are accurate, it may be some time before North Korea can produce significant quantities of HEU.

Once North Korea has accomplished this, a uranium bomb will be easier to make, and North Korean scientists will have more confidence in this type of device without testing.

GWS: All indications are that North Korea will be further isolated after this test. Will this increased isolation impact the country's continued nuclear development?

SH: At this point, from what I saw at Yongbyon, current North Korean operations do not depend on external help or supplies. Thus, isolation makes little difference in this regard. For the uranium program, technical isolation would probably cause a slowdown, because North Korea would benefit from additional technical purchases from the outside world. But the uranium program does not appear to be a centerpiece of North Korea's nuclear efforts.

GWS: After this nuclear test, is the situation more dangerous?

SH: I believe the major threat came around 2003 when North Korea reprocessed a major amount of plutonium, thus crossing the threshold to become a major threat. I have always taken the North Korean threat very seriously, and I believe all the governments and peoples involved should take it very seriously as well. First and foremost, the imperative should be to make sure that nuclear materials stay in North Korea and are not transferred to third parties.

Transcript prepared by Kristin Burke, Shorenstein APARC Research Associate