HOWZAT

In the past 10 months, since the collapse of six-nation talks in Beijing on North Korea’s nuclear weapons, the US and its allies have also tightened the screws on Kim’s clandestine fundraising, which generated some $500m a year for the regime.

Robert Joseph, the US undersecretary for arms control, has disclosed that 11 North Korean “entities” — trading companies or banks — plus six from Iran and one from Syria were singled out for action under an executive order numbered 13382 and signed by Bush.

For the first time, the US Secret Service and the FBI released details of North Korean involvement in forging $100 notes and in selling counterfeit Viagra, cigarettes and amphetamines in collaboration with Chinese gangsters.

The investigators homed in on a North Korean trading company and two banks in Macau. The firm, which had offices next to a casino and a “sauna”, was run by North Koreans with diplomatic passports, who promptly vanished.

The two banks, Seng Heng bank and Banco Delta Asia, denied any wrongdoing. But the Macau authorities stepped in after a run on Banco Delta Asia and froze some $20m in North Korean accounts.

()Last week the North Koreans demanded the money as a precondition for talks but the Americans brushed off their protest.

Kim told Hu Jintao, the Chinese president in January that his government was being strangled, diplomats in the Chinese capital said. “He has warned the Chinese leaders his regime could collapse and he knows that is the last thing we want,” said a Chinese source close to the foreign ministry.

The risk being assessed between Washington and Tokyo this weekend is how far Kim can be pushed against the wall before he undertakes something more lethal than last week’s display of force.

The “Dear Leader” has turned North Korea into a military-dominated state to preserve his own inherited role at the apex of a Stalinist personality cult. Although he appears erratic, and North Korea’s rhetoric is extreme, most diplomats who have met him think Kim is highly calculating.

“He is a very tough Korean nationalist and he knows exactly how to play the power game — very hard,” said Professor Shi Yinhong, an expert in Beijing.

But the costly failure of Kim’s intercontinental missile, the Taepodong 2, after just 42 seconds of flight last Wednesday, was a blow to his prestige and to the force of his deterrent. Six other short and medium-range missiles splashed into the Sea of Japan without making any serious military point.

The United States and its allies are now preoccupied by what Kim might do with the trump card in his arsenal — his stockpile of plutonium for nuclear bombs.

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