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IS THE U.S. DISPUTE WITH NORTH KOREA OVER

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Is the U.S. dispute with North Korea over nuclear weapons really worth risking a second Korean War?

That is the blunt question facing the Clinton administration as North Korea stubbornly refuses to allow international inspection of a nuclear plant and the administration pushes for U. N. economic sanctions that North Korea has warned it would consider an act of war.Although some dismiss the North Korean warnings as bluster, senior administration policy makers and outside analysts alike caution that the country's aging leader, Kim Il-sung, is erratic enough to make military conflict a serious possibility.

"The president is headed for a Rubicon on this issue," said Peter A. Wilson, a former State Department strategist who has been keeping tabs on the U.S.-North Korean dispute. And the decision on whether to cross, he said, may not be very far off.

By any measure, the stakes are substantial - far greater than in Haiti, Bosnia or any of the world's other current hot spots.

Intelligence reports suggest that North Korea seems poised to launch a major push in its nuclear weapons program, despite the threat of sanctions.

CIA officials said that North Korea already may have one or two nuclear weapons in stock and could well have five more bombs by the end of the year and 30 to 40 within two years. Moreover, Pyongyang is rapidly developing intermediate-range missiles that could easily carry such warheads to Japan.

Both U.S. and foreign analysts warn that if North Korea acquires a nuclear arsenal, it could turn the strategic balance in Asia upside-down and set off a regional race for nuclear weapons involving South Korea, Taiwan and Japan, which now are nuclear-free.

North Korea also could provide a source of nuclear weapons for rogue states such as Iran and Libya, which already are buying missiles and other conventional weapons from North Korea. Upping the ante to include nuclear weapons could seriously threaten the West.

But if the risks of inaction are great, the consequences of action are grave as well. Although most military analysts are confident that - 41 years after the first Korean War ended in stalemate - the United States and South Korea ultimately would win decisively if the North invaded South Korea, the victory would come only at the cost of enormous casualties.

With 1.1 million North Korean troops now massed near the border, current estimates are that allied troops could suffer as many as 18,000 casualties in the first few days of a war. The United States now has 37,000 troops in South Korea and South Korea has 650,000.

And unless the North Koreans decided to bypass Seoul for tactical reasons, South Korea's prosperous capital city most likely would end up in ruins. "It's not a pretty picture," said Robert W. Gaskin, a former Pentagon strategist who follows the issue closely.