Here's a piece in the Economist looking at what can or should be done in the face of an increasingly unstable North Korea:

[T]he Cheonan incident also comes at a time when influential voices in America, China and South Korea are starting to worry that none of the countries involved has a contingency plan to cope with an even more momentous event—such as a sudden collapse of the regime. Some outspoken Chinese scholars are raising that previously taboo idea in public, albeit with caveats. Zhu Feng, professor of the School of International Studies at Peking University, told a symposium in Seoul in April that, though Mr Kim appears in control for now, a combination of his poor health, soaring inflation and a succession crisis could finish off the regime. He stressed that the risks of such an eventuality were too great to ignore and that countries needed to prepare an “emergency plan”.

The governments themselves do not, at least publicly, rate the possibility of collapse very high. South Korean officials play it down, arguing that sometimes North Korea acts illogically for no apparent reason. The North Koreans, says Wi Sung-lac, the foreign ministry’s main representative in the six-party process, “sometimes build with one hand, demolish with the other. The currency-exchange reform and its aftermath have disillusioned people. But in talking about the nature of this regime, disillusion does not make much difference.”

China’s president, Hu Jintao, speaks of passing on the two countries’ friendship “from generation to generation”—which sounds a bit as if he were extending the hand of friendship to Mr Kim’s eventual heir. Meanwhile China continues to invest in mines in North Korea and a potentially valuable docking facility in Rajin-Sonbong that gives it its first access to the Sea of Japan. As Ms Glaser of the CSIS puts it, China still sees North Korea more as a strategic asset than a liability.

If China is wrong, however, and a meltdown does occur, the risks are enormous. North Korea’s GDP per head is about 6% that of South Korea’s, which is far lower than East Germany’s was compared with West Germany when the Berlin Wall collapsed. This means that unifying the two countries could be treacherous, with costs that the South Korean central bank has put as high as $900 billion over four decades. There could be arguments over which special forces—China’s or America’s—would secure the north’s nuclear weapons. And if a desperate North Korea started shooting missiles at its enemies in the region, how would America and China react?

It is for reasons like this that people are beginning to believe that it would be good for the countries involved to have talks at some level—albeit secret ones. Planning in advance should help to avoid potentially catastrophic misunderstandings. The outside world’s knowledge of the regime in Pyongyang is minimal and China may not want to offend an old ally. But sooner or later, Mr Kim will go, and that will mark a moment of immense tension in a country where his personality cult is about the only thing the people have left.

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