“Maybe it’s a present where he sends me a beautiful vase as opposed to a missile test,” Trump said. “I may get a nice present from him. You don’t know. You never know.”

A new satellite image of a factory where North Korea makes military equipment for launching long-range missiles shows a new structure.

Trump jokes about ‘beautiful vase’ from Kim, is ‘working on’ gift for Melania

In New York, UN spokesman Stephane Dujarric was asked whether Secretary-General Antonio Guterres had a message for Kim on Christmas Eve regarding a “Christmas gift.”

“Our message is to the leadership of the Democratic People’s Republic of Korea to work for peace and stability on the Korean peninsula and to resume working‑level talks with the United States. Diplomatic engagement is the only pathway to sustainable peace and complete denuclearisation and verifiable denuclearisation of the Korean peninsula,” Dujarric said.

Pyongyang’s Christmas promise comes as North Korean leader Kim Jong-un’s pledge to bring economic prosperity to the country shows no sign of being realised. Analysts say Pyongyang has only a handful of options next year.

North Korea’s strategy in 2020, they say, will look more like it did in 2017 than it has since Kim began meeting with US President Donald Trump in 2018.

US eyes meeting with Japan and South Korea amid tensions with North Korea

Experts are expecting a disruptive year ahead: 2017 was punctuated by exchanges of insults and sabre-rattling, with Trump memorably saying that if North Korea did not stop threatening the US, it would “be met with fire and fury like the world has never seen”.

Pyongyang’s provocation continued to escalate in 2017. It conducted its latest nuclear test, this one demonstrating an atomic yield about six times that of the nuclear bomb that was dropped on Hiroshima in 1945. Also in 2017, Pyongyang seemed intent on developing its capacity to deliver such a weapon, conducting 17 missile tests, including the Hwasong-15 – what Pyongyang called its intercontinental ballistic missile – which could reach the US mainland.

Perhaps because of this, tensions eased in 2018. Kim announced that he wanted to move away from the byungjin policy of developing both nuclear weapons and the North Korean economy simultaneously, in favour of focusing on the economy alone.

Summits fail to change circumstances

The meeting of Kim and Trump in Singapore that June seemed a genuine opportunity: If Pyongyang ended its nuclear weapons programme and missile launches, the US would support the end of sanctions and help North Korea build its economy. 

But after Kim’s second meeting with Trump collapsed in Hanoi this February, and a regime of international sanctions – cutting off Pyongyang’s export income by banning sales of North Korean seafood, iron and iron ore – remained in place, no signs of prosperity were forthcoming. A third meeting with Trump at the demilitarised zone between North and South Korea this June also failed to change circumstances.

On Sunday, North Korea hinted that it would return and stick to its traditional diplomatic approach of brinkmanship to further pressure officials in the US and South Korea.

According to North Korea’s KCNA news agency, Kim told a meeting of the Central Military Commission of his governing Workers’ Party, that he sought “to bolster the overall armed forces of the country … militarily and politically”.

Kim also prioritised “decisive improvement of the overall national defence and core matters for the sustained and accelerated development of military capability,” KCNA reported.

North Korea’s hostile behaviour may reflect Kim’s frustrations, according to Mark Tokola, a former deputy chief of mission at the US embassy in South Korea.

“Officials in Seoul believe that Kim Jong-un is disappointed that his nuclear programme is not likely to make a breakthrough. They think Kim is not sure what to do about that,” said Tokola, recently returned from a trip to South Korea.

“Sanctions seem to be working, according to South Korean colleagues in Seoul. It’s having a big effect on North Korea,” Tokola, now vice-president of the Korea Economic Institute of America, added.

North Korea’s economic struggles are set to worsen next year, as North Korean workers overseas – whose earnings provided a steady source of foreign currency – were required to return home by Sunday.

The UN Security Council resolution originally approved in 2017 required the repatriation of all North Koreans working overseas by Sunday to prevent Pyongyang from using earnings from the workers to finance its nuclear weapons programme.

South Korean media estimate that about 100,000 North Koreans were working in roughly 40 countries this year – 80 per cent in China and Russia. These workers have provided the North Korean regime with US$300 million annually.

As sanctions continue to bite, “Kim is running out of options other than making a military provocation”, according to a senior South Korean diplomat in Seoul who spoke on condition of anonymity because of the sensitivity of the issue.

“We are trying our best to avoid the ‘Fire and Fury 2.0’,” the diplomat added, noting that Kim was likely to resume elevating tensions in the Korean peninsula – and return the state of diplomacy there to 2017 levels.

Indeed, it would be difficult to avoid escalation of those tensions, Harry Kazianis, senior director of Korean studies at the Centre for the National Interest, a Washington-based think tank, said.

“Forget negotiations. I think North Korea has sadly decided that a show of strength is what is needed to push America into concessions.

“North Korea, in order to try and get America back to the bargaining table from a position of strength, may [want] to show the world that its missile programme can without question hit America,” Kazianis said.

To Bruce Klingner, a former Korea deputy chief for the Central Intelligence Agency, 2020 could well see Kim resume provocations. “Pyongyang may move incrementally up the escalation ladder to garner concessions prior to returning to diplomatic talks. Options include medium- and intermediate-range missile launches or a space launch vehicle before crossing Trump’s red line of nuclear and ICBM tests,” Klingner said.

North Korea says new tests at rocket site will help it counter US threats

“The regime could also restore its mothballed nuclear test site, unveil a new missile system or submarine, or conduct low-level military provocations in the West Sea near South Korea,” Klingner, now a senior research fellow at the Heritage Foundation’s Asian Studies Centre, added.

Soo Kim, a former CIA analyst now with the Rand Corporation, said that if next year sees similar incidents, the tensions would spill over to greater northeast Asia.

“Kim has a range of provocation tools at his disposal – from missile tests to military provocations against Seoul. We would be remiss to rule out or dismiss any of these options. This shows all the more how dangerous the situation has become for the US, ROK and the greater northeast Asia region,” Soo Kim said.

“I do think that it would be in Kim’s interest to continue his hostile rhetoric and behaviour toward the US,” she said, noting it would transmit his dissatisfaction to the US, while advancing Pyongyang's nuclear and missile technology.

As Seoul loses faith in Trump’s approach on North Korea, China is poised to step in

Even more likely than military confrontation, analysts said, Kim would probably seek out more economic aid from China in 2020.

“I am sure at some point Kim was banking on more support from China as well as Russia in his new path,” Kazianis said.

Kim has repeatedly stressed his intention to develop various “tourist zones”, including the city of Samjiyon and Wonsan-Kalma region. The two areas have been prioritised in Kim’s plan to rebuild North Korea – with an eye to attracting more Chinese tourists.

Tourism seems to be the only sector left for North Korea to earn foreign revenue without violating UN sanctions. Zhang Baohui, director of the Centre for Asian Pacific Studies at Lingnan University in Hong Kong, said international sanctions would “inevitably deepen” Pyongyang’s economic reliance on China.

“There is simply no other option for the regime,” Zhang said. “More tourists to North Korea could provide [Pyongyang] its much-needed foreign currencies. China may also export energy and fuel, within the UN’s allowed limits, to North Korea at subsidised prices.”

He also said it was in China’s interest to improve its relations with North Korea as it finds itself in a cold war with the US. “The bipolar rivalry makes everything a zero-sum game” Zhang said, adding that Beijing would support Pyongyang “to keep North Korea as a useful ally”.

Kristine Lee, an associate fellow with an Asia-Pacific focus at the Centre for a New American Security, also said that China might use its economic leverage to seek greater influence on the Korean peninsula next year.

“[China is] seeking to retain its iron grip on Pyongyang, to ensure that it does not move – both diplomatically and economically – away from Beijing and toward the United States and South Korea. Unlike the US, China has fewer restrictions on its ability to expand its economic clout over North Korea.”

North Korean trade with China dives 48 per cent amid sanctions

According to a report from the Korea Trade-Investment Promotion Agency in July, the North Korea’s trade reliance on China reached a record high last year: China accounted for 95.8 per cent of North Korea’s total foreign trade in 2018 – with China accounting for 80.2 per cent of North Korea’s exports and 97.2 per cent of its imports.

Earlier this year, China and North Korea opened a border bridge, connecting the Chinese city of Jian with North Korea’s Manpo, a potential boost to the North’s economy.

And seafood products from North Korea – supposedly subject to the most recent sanctions – can be easily found across the border in the northeast Chinese city of Hunchun.

Washington’s main option: maintaining sanctions

For its part, Washington may leave pre-emptive military strikes as an option to solve “the North Korea problem” next year.

General Mark Milley, chairman of the Joint Chiefs of Staff, said on Friday that the US military was “prepared for whatever” in response to North Korea’s provocations.

“Korea is one of those places in the world where we’ve always maintained high levels of readiness,” Miller said, suggesting that Washington still considered a surgical strike an option.

The idea of a US strike on North Korean military facilities was revived earlier this month when General Charles Brown Jnr, commander of Pacific Air Forces – the air component command of the United States Indo-Pacific Command – said that the US military could quickly “dust off” the plans and capabilities it used in 2017 when it prepared for a pre-emptive strike.

“We’re going through all the complete options,” he said. “My job is to write this military advice, and then our leadership will determine which levers they want to pull.”

But analysts said military action remained unnecessary and that there were still diplomatic methods to press Kim’s regime.

“The US should remain vigilant and resolute against any North Korean attack; it should not return to the ‘fire and fury’ rhetoric of threatening a preventive strike,” Klingner said.

Washington has several ways to pressure Pyongyang, Klingner added: among them, resuming full-scale joint US-South Korea military exercises and penalising any Chinese institutions it charges with money laundering for Pyongyang.

US judge orders Chinese banks to release records of North Korea payments

Washington this year has already used legal and financial means to press Beijing to fully comply with the UN sanctions regime on North Korea. In one case, a federal judge has ordered three Chinese banks to hand over records involving transactions with North Korea to US investigators examining possible violations of international sanctions.

Tokola said that the US was monitoring whether China and Russia were fully supporting the UN sanctions regime. “When we were in Beijing and Shanghai, we made that point,” he said.

Whether Beijing makes sure North Korean workers in China have returned to their home country, Tokola said, would be a “test” to see if China was sincere about abiding by UN sanctions.

The US special envoy for North Korea, Stephen Biegun, visited Beijing last week, as China and Russia proposed lifting some UN sanctions on North Korea. The US State Department said Biegun’s primary mission was to “discuss the need to maintain international unity on North Korea”.

If anything, strengthening the sanctions regime – also against foreign businesses, entities, and persons with connections to the North Korea regime – could be the primary US option next year, Soo Kim said.

US and China vow to keep communicating on North Korea nuclear issue

“This means getting tougher on Chinese businesses and persons who conduct transactions with North Koreans or North Korean-owed businesses. It also means working closely with the international community to present a unified effort against not only the North Koreans, but foreign entities who knowingly condone, overlook, or abet the DPRK’s illicit activities.”

Meanwhile, Lee said, Washington would try to keep the diplomatic window propped up.

“It is fundamentally in the US’ interest to maintain engagement with North Korea, so I anticipate that US negotiators will do everything in their power to keep those lines of communication open.

One last step Washington should take, Lee said: “Find ways to creatively leverage and evolve its alliances with South Korea and Japan to address the dual challenges that North Korea and China pose to US interests in Northeast Asia.”

Additional reporting by Associated Press