WASHINGTON (Reuters) - When U.S. diplomats filed into North Korea's grim embassy in Beijing last month they found an unlikely surprise: Starbucks.
Their hosts, led by North Korean's chief nuclear negotiator Kim Kye-gwan, had ordered U.S.-style coffee for talks both sides hoped would lead to new negotiations on Pyongyang's nuclear program and to resumed U.S. food shipments to one of the most feared and secretive countries in the world.
There were more surprises to come.
Five days later, the United States and North Korea simultaneously unveiled a unique and potentially far-reaching agreement, dubbed the "Leap Day" deal because it was announced on February 29 - that chronological oddity that occurs only every fourth year.
North Korea promised a moratorium on nuclear and long-range missile tests, and to open itself to new international inspections.
Negotiators had also crafted a new standard for North Korean food aid - one that would give U.S. aid workers unprecedented access to the closed-off country and set new monitoring benchmarks to ensure that help reaches North Koreans suffering from malnutrition, and is not diverted into military hands.
While caution reigned in Washington, some saw the agreement as a hopeful portent just weeks into the tenure of North Korea's young new leader, Kim Jong-un.
Then on March 16, North Korea surprised yet again. It announced plans for a new satellite launch in April using ballistic missile technology the United States says is banned by United Nations sanctions. The United States warned the launch could scrap both the nuclear and food agreements.
And now, officials in Washington are struggling to assess whether the Leap Day dance marked real progress or just another tantalizing tango with a rogue regime determined not to drop out of the nuclear club.
"In the North Korean experience, confrontation and collision and aggression and friction with the United States always brings us back"Â to the negotiating table, said Michael Green, a North Asia expert at Washington's Center for Strategic and International Studies and former senior White House official.
"They always get something in the end, even if it's not large amounts of food aid - but legitimacy."
CHANGING THE AXIS
U.S. diplomats who steered the Obama administration's two-year outreach to Pyongyang described a halting slog with a coolly persistent North Korean negotiating team, fighting word by word over the ground rules for new talks on one of Asia's most dangerous nuclear standoffs.
U.S. President Barack Obama took office in 2009 promising more engagement with North Korea, arguing that his predecessor's efforts to isolate the country as part of the "axis of evil" along with the world's other nuclear renegade, Iran, had only spurred Pyongyang to double down on its atomic ambitions.
President George W. Bush, whose tenure was mostly marked by confrontation with North Korea, had taken it off the official U.S. terrorism blacklist in 2008. Bush hoped to bolster fragile progress made since 2006, including North Korea disabling the core facilities at its Yongbyon nuclear complex and blowing up its concrete cooling tower in a public relations spectacular for the international media.
With that backdrop, Obama entered the White House.
Stephen Bosworth, the Obama administration's first special envoy for North Korea, recalled a sense of cautious optimism - tempered by Pyongyang's unpredictable history over more than two decades of nuclear hide-and-seek.
"There was a view in the new administration that we could simply pick up from where the Bush administration had left off and that all the heavy lifting was really done," Bosworth told Reuters. "As it turned out, of course, that may have been our understanding, but it was not the North Korean understanding."
Just four months after Obama took office, North Korea launched a missile over the Sea of Japan in violation of U.N. sanctions, prompting sharp condemnation from the U.N. Security Council and sending the relationship back off the rails.
In short order, Pyongyang scrapped the so-called "six party talks" under way since 2003 with the United States, South Korea, China, Russia and Japan; conducted a second test of an atomic bomb; and embarked on more than a year of hostile chest-thumping that culminated in the sinking of a South Korean warship and the shelling of a South Korean island, the first such attack since the end of the 1950-53 Korean war.
"In terms of unpredictable consequences, I think it was probably the tensest time in years," Bosworth said. "Both sides were pretty hot."
TELEGRAPHING A CRISIS
Behind its heavily guarded borders, North Korea was also having problems.
Leader Kim Jong-il, who steered his impoverished country into a crippling famine in the 1990s that killed an estimated 1 million people, was facing new food shortages thanks to poor harvests, bad weather and the effects of sanctions.
The United Nations in a March 2011 report said that more than 6 million North Koreans urgently needed food aid and experts said that a third of North Korea's children under five were malnourished. Pyongyang began signaling aid groups, international organizations and donor nations that it urgently needed help.
In the United States, the North's appeal arrived via "the New York channel" - terse communications through North Korea's U.N. mission - and resulted in a joint State Department-U.S. Agency for International Development (USAID) assessment mission, the first high-level U.S. delegation to the country since 2009.
"Our field team did have pretty good opportunity to look around the country for seven days or so," said one senior U.S. official involved with trip. "They did not find a famine, but they found evidence of very deep chronic malnutrition, malnutrition that has been almost countrywide."
Despite decades of public animosity, the United States has historically been a major donor of humanitarian food aid to North Korea, channeled primarily through the U.N. World Food Program and individual U.S. non-governmental agencies.
But critics have accused the North of diverting some aid to feed its million-strong army, and the issue of food donations is politically volatile. The last U.S. food aid project for North Korea, a pledge of up to 500,000 tons in 2008, collapsed in March 2009 amid a dispute over monitoring.
The U.S. team returned to Washington with a North Korean request for 330,000 tons of food and slowly nailed down what officials believed could mark a new structure for aid programs.
"We remained pretty clear that we needed the terms that we had laid out earlier: that it was important for the United States to be able to demonstrate that this program was going to be well-managed and well-monitored," the U.S. official said.
"In the end, I think we got everything we needed to make it work."
Unlike earlier aid programs, which saw mostly basic grains shipped to North Korea, the new focus sought to provide help to those left most vulnerable by Pyongyang's disastrous economic policies and crippled harvests: infants, children, pregnant and nursing mothers and the chronically ill.
The program would also have opened North Korea to more foreign aid workers - U.S. aid groups were hoping to see international staffing triple to about 45 from just 15 in 2008-9 - and new nutritional monitoring methods including physical measurements to ensure that aid recipients were getting fed.
"This would be a big leap forward in what we have been able to do," said Jim White, vice president of operations for Mercy Corps, which has extensive experience in North Korea and was one of the aid groups preparing to implement the new U.S. program.
EXPANDING THE CONVERSATION
U.S. officials were emphatic that humanitarian aid was not "linked" to the nuclear question. But the contact over food had sparked a larger conversation over security disputes.
After the South Korean and North Korean foreign ministers met on the sidelines of a regional conference in July, the United States invited North Korea's Kim Kye-gwan to New York for a round of talks. The United States had laid out the "pre-steps," including a nuclear moratorium, it saw as necessary to resuming full dialogue. The North Koreans were pushing for food.
"We had been talking about so-called pre-steps for months before, by ourselves and with the South and with the Chinese. These were not unknown to the North Koreans," said Bosworth, who led the U.S. delegation at the talks.
"I got a sense that they needed the food aid, or thought they needed it. And that they viewed the food as manifest indication of U.S. seriousness."
The New York meeting, and another in Geneva in October where Bosworth was succeeded by veteran U.S. negotiator Glyn Davies, made incremental progress in talks that included an alarming new element of North Korea's nuclear arsenal. In 2010, it had revealed a uranium enrichment program, giving it a second path to make an atomic bomb along with its existing plutonium program.
"They were proving to be tractable as we laid out for them what it was that we would need to see," a second U.S. official said.
There was also progress on the food track, with U.S. officials returning to Beijing in December to discuss how food would be transferred, monitoring requirements and international staffing levels. As those talks wound up on December 16, U.S. officials hoped a broader deal was in reach.
Two days later, longtime North Korean leader Kim Jong-il was dead, felled by a suspected heart attack. North Korea was plunged into official mourning as his young and untested son Kim Jong-un moved uncertainly to the fore.
"After the death was announced, we found ourselves in a very different dynamic," the second official said. "It was one of those things where you kind of knew that all immediate plans would go awry."
THE SAME HORSE?
But this was still North Korea. What ended up being the most surprising was how little had changed.
The two countries resumed contact in New York, and the United States quickly touched base with key allies and other players including Russia and China. Washington stressed that it still needed to see concrete moves by North Korea to demonstrate it was sincere about denuclearization.
North Korea wanted more food than the United States was willing to provide, and more of it in grain rather than nutritional supplements like corn-soy gruel, which U.S. officials say are far less attractive targets for diversion to military mess halls or black markets.
"We kept signaling them back and forth. They were at times quite adamant that there was no immediate prospect of getting back to the table," the second official said. "And then came the signal that they were prepared."
Davies returned to Beijing and, after sips of Starbucks coffee and two more rounds of negotiation with North Korea's Kim Kye-gwan, hammered out the Leap Day deal. North Korea pledged to suspend major elements of its atomic weapons program and allow international inspectors back in, and the U.S. agreed to provide 240,000 tons of new food aid in a program aid groups estimated would cost $200 million to $250 million.
Secretary of State Hillary Clinton called the deal "a modest step forward" and officials underscored their caution.
But critics quickly accused the Obama administration of trading new food aid for hollow North Korean nuclear assurances - a past mistake that former Defense Secretary Robert Gates once summed up as "buying the same horse twice."
"Sending more food will just keep the Kim regime's inner circle well-fed," said Representative Ed Royce, a California Republican who has been vocal on the North Korea issue. "Nothing in the historical record would indicate that this family dynasty would honor any commitment that would be meaningful for us."
The argument appeared to be settled by North Korea's announcement that it planned to launch a weather satellite with banned missile technology between April 12-16.
U.S. officials struggled to understand why Pyongyang would edge close to a deal and then rip it to pieces within days.
Some North Korea watchers said the satellite move had been expected and should have been ruled out in writing in the Leap Day deal given the North's long insistence on its sovereign right to space exploration.
Pyongyang's missile launch is timed to mark the centenary of the birth of its founder, Kim Il-sung.
"Greater caution was required than was exercised," said Douglas Paal, a former U.S. diplomat and North Asia expert at the Carnegie Endowment for International Peace.
But U.S. officials insist there was no ambiguity.
"We made absolutely clear to the North Koreans during the negotiations that we would consider anything that moved using ballistic missile technology to be covered," State Department spokeswoman Victoria Nuland said.
Aid groups have urged the Obama administration not to scrap the food aid, saying the United States has acknowledged that North Korea has humanitarian needs and must therefore step in to help even if the nuclear deal falls apart.
"Millions of hungry children and mothers in North Korea are caught in the crosshairs," Mercy Corps' White said.
But the U.S. position is toughening again, and Washington and Pyongyang have retreated into the all-too-familiar realm of warnings and dire rhetoric.
Obama, on a visit to South Korea this week, warned the North that the days of "rewards for provocations" were over.
"You can continue down the road you are on, but we know where that leads," Obama said. "It leads to more of the same: more broken dreams, more isolation, ever more distance between the people of North Korea and the dignity and the opportunity that they deserve."
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