Looks like North Korea wasn’t bluffing about cutting off one of their only channels to hard currency and global trade.  This morning, a high-ranking official of the DPRK announced that all 51,000 workers at the Kaesong industrial complex would leave, shutting down the last link of cooperation between North and South:

North Korea said Monday it will recall 51,000 North Korean workers and suspend operations at a factory complex it has jointly run with South Korea, moving closer to severing its last economic link with its rival as tensions escalate.

The statement from Kim Yang Gon, secretary of a key decision-making body, the Central Committee of the Workers’ Party of Korea, did not say what would happen to the 475 South Korean managers still at the Kaesong industrial complex. …

“The zone is now in the grip of a serious crisis,” Kim said, according to state media. He said it “has been reduced to a theater of confrontation with fellow countrymen and military provocation, quite contrary to its original nature and mission.”

“It is a tragedy that the industrial zone which should serve purposes of national reconciliation, unity, peace and reunification has been reduced to a theater of confrontation between compatriots and war against the North,” Kim said in remarks carried by the Korean Central News Agency.

South Korea’s finance minister, Hyun Oh-seok, said Monday that it is “quite ridiculous” for North Korea to be closing the border at Kaesong. “North Korea has nothing to gain from this kind of things,” he said at a news briefing.

That’s why this may be a canary-in-the-coal-mine moment.  Pyongyang’s other forms of sabre-rattling usually meant that the DPRK had grown desperate for hard currency, fuel, and food aid.  Except for one brief three-day period in 2009, the regime has left Kaesong out of the propaganda fight and kept its access to legitimate hard currency open.  Now, except for trade with China, clandestine arms sales, and counterfeiting operations, the DPRK has left itself with no options except Western aid or total military victory. That position cannot be rational unless Pyongyang really wants a war, or thinks it can win a nuclear-war bluff.

That prospect has Japan feeling more and more nervous, especially after a specific threat from Pyongyang:

Though it remains a highly unlikely scenario, Japanese officials have long feared that if North Korea ever decides to play its nuclear card it has not only the means but several potential motives for launching an attack on Tokyo or major U.S. military installations on Japan’s main island. And while a conventional missile attack is far more likely, Tokyo is taking North Korea’s nuclear rhetoric seriously.

On Monday, amid reports North Korea is preparing a missile launch or another nuclear test, Japanese officials said they have stepped up measures to ensure the nation’s safety. Japanese media reported over the weekend that the defense minister has put destroyers with missile interception systems on alert to shoot down any missile or missile debris that appears to be headed for Japanese territory. …

North Korea, meanwhile, issued a new threat against Japan.

“We once again warn Japan against blindly toeing the U.S. policy,” said an editorial Monday in the Rodong Sinmun, the official newspaper of its ruling party. “It will have to pay a dear price for its imprudent behavior.”

Even this might be a strategy to keep Japan out of a war with South Korea, and perhaps deny the US access to our assets in case war breaks out on the peninsula:

Also, a threat against Japan could be used to drive a wedge between Tokyo and Washington. Pyongyang could, for example, fire one or more Rodong missiles toward Tokyo but have them fall short to frighten Japan’s leaders into making concessions, stay out of a conflict on the peninsula or oppose moves by the U.S. forces in Japan to assist the South Koreans, lest Tokyo suffer a real attack.

“Given North Korea’s past adventurism, this scenario is within the range of its rational choices,” Michishita wrote.

This brings us back to China, whose military recently shifted to the Korean border.  CNN points out that while the DPRK and the PRC have been BFFs for decades, China’s economic engagement with the world — especially the US, Japan, and South Korea — may have them rethinking their support for the Kim dynasty.  The new top man in Beijing just said publicly that no country “should be allowed to throw a region and even the whole world into chaos for selfish gain,” a remark that lacks any of the usual niceties of Asian subtlety.  That has the US detecting a shift in China’s attitude toward the DPRK that we’d like to exploit, and should have Pyongyang hitting reverse:

At some point, China will be forced to ask itself this question: Does it prefer having a loose cannon in Pyongyang who might provoke a war on purpose or by accident, thus guaranteeing US and Japanese interference on its doorstep for the next several decades, or a reunification that rids itself of Mao’s loose ends and gets the US and Japan off its back porch for good? They may never have asked themselves that question but for Lil’ Kim’s provocations, but now they have no way to avoid the decision.