But with Pyongyang's announcement today that it has developed nuclear weapons and is dropping out of six-party talks with Japan, South Korea, Russia, China, and the United States, the crisis now returns to center stage.
Until today, the six parties appeared on course to hold a fourth round of talks aimed at having Pyongyang end its nuclear program. The past three rounds of multilateral talks, which began in 2003, yielded few results.
But significant hopes had been pinned on the fourth round, with the United States hinting it might be prepared to consider a deal that would reward North Korea if it began to gradually dismantle its program. In the past, Washington had insisted that North Korea comprehensively and verifiably dismantle its nuclear program before receiving any concessions.
"There were indications that at least different aspects of this package, including a security guarantee, including diplomatic relations, including economic aid, would be put on the table," explains Patrick Koellner, senior researcher at the Institute for Asian Affairs in Hamburg, Germany. "So, in a way, if you will, the contours of a deal were getting clearer and clearer."
Now, any hope of a deal appears to be dead. The statement by the North Korean Foreign Ministry -- for the first time -- unequivocally states that Pyongyang has "manufactured nuclear weapons" for self-defense.
North Korean state television announced it this way: "We had already taken the resolute action of pulling out of the NPT (Nuclear Non-Proliferation Treaty) and have manufactured nuclear [weapons] for self-defense to cope with the Bush administration's ever-growing undisguised policy to isolate and stifle the DPRK (Democratic People’s Republic of Korea)."
Previously, American officials said they had been told by North Korea that the country had produced a weapon and Pyongyang had also dropped hints, but nothing as definitive as today's announcement.
Today's developments are a particular blow to China, which remains North Korea’s closest partner and had worked hard over the past two years to convince North Korea to soften its position.
Aidan Foster-Carter, a leading Korea analyst based at Britain's Leeds University, says there is a chance China may reassess its policy.
"It'll be very interesting to see how China reacts," Foster-Carter says. "I've always thought that one of the many risks that North Korea and [North Korean leader] Kim Jong-Il face with the games that they play and the lines that they take, is that one day China will get fed up with them. And the balance whereby on the whole North Korea is a good thing, it's a buffer state, you would rather it were there, stable if awkward, rather than have it collapse with refugees, loose nukes and God knows what. If North Korea behaves badly enough, that balance of calculation by China could fail. Beijing is already cultivating South Korea as the best Korean bet for the longer term, obviously."
South Korea and Russia, which along with Beijing hoped to encourage Pyongyang to compromise, have also been put on the spot by the North Korean announcement, according to Foster-Carter.
"I've described China, Russia and South Korea -- perhaps a little unkindly -- as forming a kind of post-Cold War 'Axis of Carrot.' You give and you induce the North Koreans endlessly and seemingly there are never any sticks," he says. "It kind of looks like stick time, now, or you look a little foolish if you don't have some reaction to this."
Lastly, the United States itself may find itself in a bind. In the case of Iran, which denies it is pursuing a nuclear-weapons program, U.S. Secretary of State Condoleezza Rice this week threatened to refer Tehran to the United Nations Security Council.
With North Korea openly defying the international community, Washington will have a hard time holding Pyongyang to a different standard. The big question is how Russia, and especially China -- both of which are permanent members of the Security Council -- will respond.
"North Korea has said that it won't be willing to return to the negotiating table," says Koellner. So, if that's true and North Korea doesn't change its stance, then that means that the six-party talks are dead. And that would lead to the question of what happens next. Will the North Korean nuclear issue be forwarded to the UN, to the Security Council? Here, the big question is whether China would veto such a step or whether it would accept such a step but then would veto economic sanctions, which would be the next logical step. So, the big question is, how will China deal with this, because obviously this announcement today is a big slap in the face not only of the U.S. but also, of course, China."
What motivated Pyongyang to break off negotiations and officially declare its nuclear status is unclear. But one possibility is that North Korea may have been caught red-handed selling nuclear materials abroad.
Last year, when Libya made its surprise announcement that it was ending its covert nuclear program and handed over a large batch of uranium hexafluoride to the United States, Washington identified Pakistan as the probable source.
But "The New York Times" quotes unnamed officials this week as saying an investigation by the International Atomic Energy Agency shows there is strong evidence that the uranium actually came from North Korea.