Bringing North Korea in from the cold offers the best hope for regional peace

Will 2012 offer a continuation of the dangerously sulky stand-off between North Korea and the rest of the world, might the Great Successor Kim Jong-un be tempted into a fiery confrontation to show he is really in command, or might he share the benefits of his Swiss education by opening the country's doors and windows to fresh air and economic benefits from the outside world?

Then again, is Kim really in charge in spite of the profession of loyalty by the military? Can the military refrain from throwing their weight around to test the new leader? Is Jang Song-thaek, the young Kim's uncle by marriage to his father's sister and freshly dressed in a general's uniform, a new kingpin?

Who really knows? But I do lament the failure of diplomacy and imagination by all of the major players that have brought the world to this perilous place.

The extreme poverty of North Korea makes any solution more difficult. When I began the Asia and Pacific Annual Review in 1979, our writers thought North Korea, blessed with better natural resources when the peninsula was split, had a stronger economy than the South. Not any more: South Korea is a US$1.5trillion economy, with per capita income of US$30,000, in 44th position in world rankings, according to the CIA Factbook; North Korea is worth US$40billion with per capita income of US$1,800, 194th in the world.

Bare statistics do not tell the misery of the North Koreans under the Kim dynasty.

The Kims carried economic mismanagement and totalitarianism to new depths. Their success makes the chances of economic or political reform remote unless it comes from deep within Korea, meaning from inside the ruling clique, the Kim family or the military. By the standards of North Korea, Stalin's Soviet Union was open, and China is positively fun-loving and tolerant of dissent.

In North Korea's wretched circumstances, Kim Jong-il played brilliantly, albeit with no sense of responsibility. Given concessions on economic assistance or nuclear negotiations, he devoured them greedily; faced with sanctions, he upped the ante and made money by proliferating nuclear technology.