Bill Clinton insisted that Washington had been “faithful” to its ally, but some South Koreans weren’t so sure. “My impression is that two out of three parties here won, and the other lost,” said Dr. Kil Jeong Woo, a leading South Korean expert on the North. “The Americans got their man back, and the North Koreans seem to have got [what] they wanted,” he said. “The third party, the one that lost, is South Korea.”

The Clinton administration could at least congratulate itself for smoothly resolving the helicopter standoff. When Thomas Hubbard, a deputy assistant secretary of state, arrived in Pyongyang, he already knew North Korea’s tough terms. According to a senior administration official, a North Korean general passed them to Maj. Gen. Ray Smith, a Marine officer in charge of planning at U.S. headquarters. When the North Koreans proved intransigent on Hubbard’s first day of talks, the Americans resorted to a ploy. Talking over a phoneline they assumed to be tapped, Sandy Berger, Clinton’s deputy national-security adviser, complained to Hubbard about North Korea’s “unacceptable treatment of a presidential envoy.” The next day, North Korea closed the deal.

One top U.S. policymaker said the agreement employs “creative ambiguity” on the ticklish question of direct negotiations over military issues, which the Americans still do not want. “We agreed to disagree,” the official said. But the administration opened the door to bilateral military talks with Pyongyang, and now the North Koreans will try to push their way through.

Washington’s resolution of its latest hostage crisis may not be enough to salvage an agreement that ended the previous confrontation with North Korea. Last October, after rumblings of war, Pyongyang promised to freeze and eventually dismantle its menacing nuclear program. In return, Washington agreed to round up $4 billion in aid to build new reactors that produce less weapons-grade plutonium than Pyongyang’s current models. Congressional Republicans have promised to take a long, hard look at the deal. Bob Dole, their leader in the Senate, said last week that “North Korea’s shameful handling of Bobby Hall casts doubt over the entire premise of the Clinton administration’s policy – that there is a North Korean government willing and able to deal responsibly with the United States.”

There was indeed speculation about disarray in the North Korean government when Hall wasn’t handed over by Christmas. Some analysts thought military hard-liners were holding out against moderates at the Foreign Ministry. There were also rumors that North Korean leader Kim Jong Il was sick or too weak politically to grasp the reins held so firmly by his late father, Kim Il Sung.

No well-informed outsider claims to know what is going on in the Politburo of the former Hermit Kingdom. But the talk about hard-liners battling moderates may be oversimplified. “There aren’t factions in the Western sense,” says Peter Hayes of the Nautilus Institute in California, an expert on North Korea. “There are different “lines,’ but they are all unleashed from the top.” Hayes believes “Kim Jong Il or his trusted immediate lieutenants” are in firm control. Their main objective, he says, is economic development, which requires a cut in the all-consuming military budget. One way to do that might be to negotiate directly with the United States for a reduction in military tensions. When Hall and Hilemon literally dropped into their laps, the North Koreans had the bargaining chip they needed. If Washington can now exploit the opening without alienating the South, it might be able to negotiate a reduction in conventional forces. And North Korea’s army poses a more immediate threat to peace on the peninsula than any nuclear program.