Most of the letter was given over to that kind of standard Pyongyang-speak. But the document also contained significant new wording. It called for ““government-to-government’’ dialogue, a code phrase for the kind of far-reaching political talks that Pyongyang had last endorsed in the early 1990s. In those days, negotiations between the Koreas looked set to produce a Pyongyang-Seoul summit–until North Korean strongman Kim Il Sung died suddenly in 1994. After the Great Leader’s passing, Pyongyang backtracked. Last week’s letter was the first signal that his shadowy son and political heir, Kim Jong Il, was now ready to entertain North-South dialogue. Seoul ““positively evaluates’’ the proposal, said South Korean spokesman Park Ji Won, who called the letter ““proof that North Korea is changing.''

Change can’t come fast enough. Another winter of famine is ravaging North Korea, but that has not made even today’s weakened version of the last Stalinist regime easy to deal with. Above all, Washington harbors growing suspicions that Pyongyang is cheating on a hard-won disarmament deal negotiated in 1994. At the time, North Korea agreed to stop developing nuclear weapons in return for a peaceful nuclear-energy program financed by the United States, Japan and South Korea. But now the Clinton administration demands that North Korea allow inspectors access to an underground facility that analysts suspect may be a nuclear-weapons lab in development–and Pyongyang, of course, is raising one obstacle after another.

The confrontational rhetoric has been building. Last week the Pentagon dubbed North Korea the ““most significant near-term danger’’ to East Asian security. In Senate testimony, CIA director George Tenet warned that events in North Korea had grown ““more volatile and unpredictable.’’ That raised further alarms among Pyongyang’s neighbors. In Tokyo, Foreign Minister Masahiko Komura told NEWSWEEK that North Korea can expect no economic aid from his country until it stops developing missiles that threaten Japan–and until it gives reassurances that its nuclear-weapons program is indeed dead. ““There is suspicion’’ that Pyongyang has broken its deals, Komura said (box). ““And it has to be eliminated.''

The North at least appears to be backing down. Last month, a South Korean official told NEWSWEEK, Pyongyang withdrew its demand that Washington pay $300 million to inspect the suspected nuclear site at Kumchangri. Instead, the official said, the North offered two ““visits’’ to the site in exchange for 400,000 tons of U.S. grain to be delivered through the U.N. World Food Program. The deal was discussed in recent U.S.-North Korean talks and could be completed soon, the South Korean official said.

In Washington, the Clinton administration was holding the line. A senior American official denied that the United States has offered the North food aid or any other rewards for good behavior. ““It may be that in North Korean minds these things are linked,’’ the official said. ““But we continue to reject linkage.’’ All the same, the prospect of food aid remains a major weapon in the U.S. diplomatic arsenal–and aid officials in Rome confirmed that the United States has stepped up food contributions to the North in recent months.

Pyongyang is playing its usual patient, difficult game. The regime has been edging toward closer ties with Washington for years. All along, it has tried to extract maximum U.S. aid–while driving a wedge between Washington and the North’s blood enemies in the South. But over the last few months, the game has changed dramatically. While the U.S. side has talked tougher, the South Koreans under Kim Dae Jung have opened a major peace offensive. Despite the North’s provocations, Kim has stuck stolidly to what he calls his ““sunshine policy’’ of improved North-South relations.

While his predecessors bristled at Washington’s contacts with Pyongyang, Kim has embraced them. When former U.S. Defense Secretary William Perry visited Seoul in December, assigned by Congress to review the Clinton administration’s Korea policy, Kim urged him to pursue a ““package deal’’: negotiators would take up the North’s missiles and nuclear intentions along with the issues of food aid, trade and diplomatic relations. In the actual negotiations involving the two Koreas, Washington and Beijing have essentially followed that framework–and the enticements clearly have attracted Pyongyang’s attention.

If North Korea eventually permits U.S. inspections of its suspected nuclear site, Washington and its allies will focus next on halting the North’s missile program. Since the fall of the Soviet Union, its major arms supplier, Pyongyang has worked hard to build up its own ability to project force. Its medium-range Rodong missile–a version of the Soviet Scud–can reach parts of Japan. In August, the North test-launched a more advanced rocket, the three-stage Taepodong 1, sending it over Japan and into the Pacific. The U.S. State Department now suspects that a more sophisticated Taepodong 2 could be test-fired within a year–a weapon capable of hitting the western United States.

Last week’s letter from the North offered a more peaceful future (although it contained the usual hopeless conditions, such as that the South lift its ban against the Communist Party). If all goes well, Seoul and Pyongyang may enter their first serious dialogue in nearly a decade. The North already has opened its border to the South as never before, permitting a relative flood of friendly exchanges. More than 3,000 southerners visited the North last year for academic, religious or cultural purposes. And South Korea sent musical troupes to North Korea.

In addition, South Korean conglomerates are poised to pour into the northern hinterland. The biggest of them all, Hyundai, has the grandest plans. Since the company began running tours to North Korea’s Mount Kumgang three months ago, some 27,000 southerners have scaled its icy slopes. Those numbers alone are astounding: before the first Hyundai cruise ships showed up in November, only 2,400 southerners had entered North Korea in the 10 years before tourists and southerners flocked to the North last year.

That’s just the beginning for Hyundai’s 85-year-old boss, Chung Ju Yung. Last week he drove across the demilitarized zone for his third trip to the North since mid-1998. Hyundai recently agreed to pay $940 million over the next six years for the exclusive right to make Mount Kumgang a tourist wonderland. Now, Hyundai is polishing up plans for mountain lodges and a floating hotel at the nearest seaport, plus golf links, ski runs and a convention center.

Could Pyongyang still blow it? Count the ways: the North could test-fire a missile over Japan, or filter more armed troublemakers into the South, or hold out for more nuclear ransom from Washington–all of which it has done in recent months. A long five years ago, the Korean nuclear-power deal ““set out a path for improved relations between North Korea and the United States,’’ said the senior U.S. official. ““We have made it clear to North Korea that that path now has major impediments in it.’’ Yes, there are signs once more that North Korea may be ready to remove some of those impediments. In a January visit to Seoul, U.S. Defense Secretary William Cohen dismissed talk of a ““crisis’’ on the Korean Peninsula. He urged broader U.S.-North Korean contacts and suggested that all parties to the process will need a lot of patience. He got that last part right.