North Korea is trying to blackmail the United States. I've said this from the beginning of the crisis. Pyongyang is threatening the U.S. with the spectre of a resurgent nuclear weapons program in order to secure free food and oil.

North Korea desperately needs both. The estimated number of dead due to malnutrition runs into the millions. As many as 300,000 refugees have fled to China, and an estimated 62 percent of North Korea's children will suffer from debilitating malnutrition this year. North Korea's agricultural system is inadequate to meet the country's needs, what little money North Korea gets (mostly through arms trade) goes to the military and the elite, and President Kim Jong Il runs what may be the singularly most repressive regime in the world.

The U.S. is in an awkward position.

First, we are rightly horrified by the death and devastation wracking North Korea, but we also realize that to simply hand over humanitarian aid with no concessions from Pyongyang does nothing to end North Korean use of the nuclear threat, nor does it permanently relieve the humanitarian problems.

Second, if we bend to any demands for aid in exchange for a nuclear stand down, there is no reason to believe that we won't face the same threat from Kim again in 2, 3 or 4 years.

Third, we can't realistically pursue regime change through military force. If we even try to build up sufficient forces in the region, there is too great a threat that Kim will launch a pre-emptive strike against South Korea, killing many (possibly a million or more) civilians. And if Kim does already have one or two nukes, North Korea has missiles capable of hitting Japan.

Fourth, if we allow Kim's regime to collapse, we are not in a position right now to control the situation. If North Korea already has nukes, who knows where they might wind up, who knows who could emerge from the power grab, who knows what anarchy might be loosed, exacerbating the humanitarian crisis and the untenable situation would make the prospects for building a free and stable North Korea daunting.

In other words, our military and diplomatic options are limited at best. And I don't think they would be any better if George W. Bush had not referred to North Korea as part of the "axis of evil." Even if he hadn't used that phrase, North Korea would still be in the same crisis, still ruled by a totalitarian, and still threatening to play its nuclear card, because it's the only card Pyongyang has.

But I do think there is a way out for the U.S., and it's an option that I have to believe is obvious enough that the State Department is at least considering it — any concessions by the United States must be tied not only to disarmament and weapons inspections, but to North Korea reforming its economy.

North Korea wants aid, one-on-one negotiations with the U.S., and it wants a non-aggression pact from the United States. Fine, but here's what North Korea must do to get both aid and a pact.

• Allow weapons inspectors back into North Korea before further talks take place. The goal here isn't disarmament, yet, but to inventory exactly where North Korea is with its program.
• The U.S. agrees to bilateral talks. This is a face-saving concession to North Korea, but Pyongyang must agree to letting other countries in the region (China, Japan, Russia and South Korea) monitor the talks.
• The U.S. will then present a food and oil plan that will offer graduated aid in exchange for concrete and specific reforms in North Korea's economic and legal system. The progress of aid and reforms will be tied together, and will be negotiable, but the general substance of the aid-for-reforms package will be non-negotiable. It will be a take it or leave it offer. The package may even include a requirement that North Korea apply for membership in the World Trade Organization (which North Korea has no realistic chance of joining any time soon, but the WTO could provide oversight for the reform effort).

Forcing economic and judicial reform on North Korea will go a long way toward alleviating the country's humanitarian needs, much further than simply handing over aid with no strings attached.

Forcing North Korea toward a market economy and an independent judiciary will have another beneficial result — it will pave the way for political reform and eventual liberalization and democracy. The program can bring about change without a bloody revolution. This is the path already taken by Chile, Taiwan and South Korea, and it is the path both China and Singapore seem to be following. As Fareed Zakaria points out The Future of Freedom, strong democracies need to be built on vibrant, free-market economies that are bolstered and protected by the rule of law and strong, independent institutions.

The United States has a historic opportunity. North Korea is at its most unstable state, and the United States has never been stronger. North Korea doesn't know what those crazy neocons in the White House might do next. Kim's regime is scared and desperate. While they are in such a state, like a mamma bear caught in a corner, they are most dangerous, but a little honey can go a long way toward coaxing important concessions from Pyongyang.

If our goal is long-term peace and stability and greater freedom the world over, we will use this opportunity to cajole North Korea to open its economy, and eventual its nation.