President Barack Obama's new administration confronts a complex tangle in East Asia -- a tangle exacerbated by interlinked economies, economic decline and a paranoid tyrant working an extortion racket. Sorting through the tangle will require very smart diplomacy -- diplomacy that includes pursuing Bush administration initiatives and accepting the utility of missile defense.

The tangle's thorniest clump remains North Korea, that starving, Stalinist and heavily armed hereditary tyranny run by Kim Jong-Il, the paranoid tyrant and racketeer.

Kim presides over a criminal state and an economic disaster. Exporting missile technology to thugocracies like Iran earns Kim some hard cash. Rumors circulate that North Korean embassies occasionally sell heroin in order to pay their bills. Counterfeiting U.S. currency is another source of income that keeps Kim in caviar.

North Korea's major export, however, is the threat of war magnified by potential nuclear holocaust. It's an international version of an alley bully's extortion game. Pay me off, the punk waving the pistol says, or I'll burn down your store. The analogy, however, only goes so far. North Korea's Kim waves a nuclear weapon, and if he uses it, he kills himself.

Linked economies in a global recession already vex the Obama administration. The destruction of productive global hubs like Tokyo and Seoul would produce a depression. One of the largest employers in the Texas county I call home is headquartered in Seoul. An attack on Seoul is thus an attack on the Texas economy. Kim's extortion gambit targets this economic, political and technological linkage.

The Bush administration put in place a long-term diplomatic "python" strategy designed to squeeze the nuke from Kim while avoiding thermonuclear immolation and economic havoc. The "six nation" forum, consisting of the United States, Japan, Russia, China, and South and North Korea, has produced mixed results.

The North Koreans did destroy part of a key nuclear facility. The December 2008 six-nation meeting, however, broke up when North Korea refused to sign a nuclear verification protocol -- an act interpreted by many as a decision by Kim to wait and see if the Obama administration would drop this essential requirement. The Bush administration always backed its carrots with the implicit stick of military reprisal.

North Korea's threat to shoot down South Korean civilian airliners and its plan to test a new long-range missile (couched as a satellite launch) follow the extortion script. The bellicose threats and display of weaponry are a probe of the Obama administration's commitment to allies and its willingness to protect American interests.

North Korea has actually handed the Obama administration an opportunity to stand strong. U.S. and South Korea forces have quietly continued to conduct annual military exercises, which send the important signal that the United States is prepared to back up South Korea in the event of a North Korean attack. That's good.

Japan, however, has exhibited the most spine. After North Korea announced a new missile test, Japan's defense ministry began deploying Aegis destroyers equipped with U.S.-made anti-missile missiles (anti-ballistic missiles) in the Sea of Japan. A spokesman for Japan's Maritime Self-Defense Force said that its defense guidelines permit the interception of any missile (even one allegedly carrying a communications satellite) if it "appears likely" to land in Japanese territory, including territorial waters.

The Japanese remember the 1998 North Korean missile test that "bracketed" their country. They are tired of the extortion racket, which is why they have invested in missile defense. The Obama administration should applaud Japan's decision to demonstrate its defensive capabilities. Of course, this amounts to an acknowledgement by Obama that missile defense makes sense diplomatically and militarily.

The Obama administration needs to continue the six-nation talks. Bush's "python" strategy required the steady cooperation of China. Beijing may be angling for economic assurances that economic protectionists in the United States will resist. China has no interest in a war on the Korean Peninsula. South Korea and the United States are two of China's major trading partners. However, China also wants to make certain the United States doesn't erect trade barriers. President Obama says, "Buy American." China says, "Keep shelf space for Chinese goods." Access to the U.S. market is vital to China. Chinese help in squeezing North Korea is vital.