“IT’S not a mere threat,” Kim Jong Un, North Korea’s dictator, announced to the world in his new-year address, “but a reality that I have a nuclear button on the desk in my office. All of the mainland United States is within the range of our nuclear strike.” That is a terrifying thought to most Americans—and one made no less terrifying by Donald Trump’s tweet in response: “I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!”

The Punch-and-Judy posturing would be comical if it did not itself heighten the risk of conflict. In a febrile atmosphere, two thin-skinned leaders might easily misconstrue the other’s intentions, even if neither intended war. Or either might feel face is at stake (Mr Trump, after all, vowed that the North would not be allowed to develop nuclear weapons that could hit America).

Mr Trump might also believe that a military strike would have limited consequences. Some of his advisers appear to think so, and this is a truly dangerous idea. America has little or no good human intelligence inside North Korea, so a surgical pre-emptive strike would probably fail in its objective, whether that was to knock out the North’s nukes or the Kim regime itself. Such a strike would risk starting a nuclear war that would kill millions, and a conventional one that would devastate South Korea. If ever there was a time for cool heads to prevail, it is now.

The good news, for now, is that Mr Kim appears to view his nuclear capability as a deterrent, not a tool for aggression. “In no way would the United States dare to ignite a war against me and our country,” he rasped in a tobacco-inflected voice in his speech. As for Mr Trump, the link between his words and deeds is always tenuous, and he would not be the first American president to make threats he did not carry through.

Yet the dangers are there. Mr Kim appears confident, if not cocky. As well as a series of increasingly successful missile launches last year, in September the North set off a presumed hydrogen bomb underground with a good 15 times the destructive force of the one America dropped on Hiroshima.

The confidence Mr Kim expressed in his speech about his military capabilities seemed at times to extend to the economy. The “great historic achievement” of building nuclear weapons, he said, has now “opened up bright prospects for the building of a prosperous country”. Mr Kim has long promoted a strategy of byungjin—pursuing military and economic development at the same time. Arguably, this has worked until now, with annual economic growth reckoned to be around 4%. Yet Mr Kim warned of “difficult living conditions” this year.

Economic trouble seems all too likely, thanks partly to tightened sanctions which the UN Security Council passed, at American urging, on December 22nd. To date, a decade’s worth of sanctions imposed on North Korea have done nothing to curb its nuclear programme. Above all, sanctions have not worked because China, more concerned about the prospect of instability next door than the North’s nuclear activities, has got around them. Four-fifths of all North Korea’s trade is with China.

Alarmed that the risk of conflict has risen, China may now be changing its calculations. The latest UN resolution renders most North Korean exports illegal, including the workers it sends abroad. That looks likely to cut scarce hard-currency earnings sharply. As for imports, shipments of crude oil have been capped, while the quota for refined oil products has been slashed. China seems to be enforcing the sanctions much more tightly than before. Andrei Lankov of Kookmin University in Seoul describes them as a full-scale economic blockade. To add to Mr Kim’s isolation, several countries are expelling North Korean diplomats or restricting the size of North Korean embassies, which act chiefly as moneymaking enterprises for the regime.

The bleaker economic outlook may have something to do with the most striking part of Mr Kim’s speech—an overture towards South Korea, with which it has had no formal communication for nearly two years. Responding to an invitation to send North Korean athletes to the Winter Olympics in the South next month, Mr Kim called for “urgent” dialogue. Moon Jae-in, South Korea’s president, welcomed the idea, no doubt guessing that the North will not disrupt the games with missile antics if its athletes are competing. More broadly, Mr Moon has long argued that dialogue would help ease tensions on the peninsula.

As for Mr Kim, he may hope for South Korean support for sanctions to be rolled back. His regime used to earn crucial foreign currency from the Kaesong industrial zone on the border with the South, where South Korean companies made use of North Korean labour. But Mr Moon’s predecessor pulled out of Kaesong in early 2016. Many South Koreans argue for its reopening. That would displease America.

Wedge of tomorrow

Indeed, some Americans see Mr Kim’s overture as an attempt to drive a wedge between South Korea and its protector. It probably is, but it will not work. South Korea’s president may not get along with Mr Trump, but he is no fool. He understands that the Kim regime is the real problem, and that South Korea needs American military support to deter it. His government backs UN sanctions, in recent weeks seizing two Chinese-linked ships suspected of illegally supplying North Korea with oil.

The story in 2018 may be that sanctions bite harder: Mr Lankov thinks a return of famine in parts of the countryside is possible. But do not imagine this will bring Mr Kim to heel. He will not be too troubled if his people starve. And even if China enforces the sanctions strictly enough to endanger Mr Kim’s regime, that is unlikely to change his calculus on nuclear weapons. With his back to the wall, nukes become more important to Mr Kim, not less. Expect this year to be as nerve-racking as 2017, if not more.