G2 Bulletin reports that a secret deal between Washington and Beijing calls for China not to veto a new U.N. resolution authorizing force on Iraq in return for a pledge from Washington not to attack North Korea.

Though China knows the U.S. is not going to launch a pre-emptive strike against North Korea without provocation and the U.S. knows China is not going to veto the U.N. resolution, G2 Bulletin's source say this agreement is a way for Beijing to let the West know that Pyongyang is part of its geo-strategic orbit by acting as its protectorate as well as assuming a higher profile internationally.

"Could it be North Korea is not so much a 'rogue' state, as U.S. diplomats describe it, as it is a strategic ally of China?" asks G2 Bulletin.

North Korea's Kim Jong-il visited both Moscow and Beijing in the last half of 2002, the report points out. Jiang Zemin and Vladimir Putin both visited Kim in Pyongyang last year, too.

"China and North Korea negotiated expanded trade agreements - very one-sided agreements because North Korea has nothing China needs," reports G2 Bulletin. "Meanwhile, Russia and North Korea prepared the new Friendship and Cooperation Treaty, and North Korea got greater access to Russian weaponry. In the context of those meetings and those agreements, North Korea hardly looks like a rogue state at all. It looks more like a significant component of a growing Russian-Chinese alliance."

U.S. officials are concerned that North Korea could export plutonium from its nuclear weapons program, as well as weapon-design data, to Iran and other Middle East nations willing to pay for it. In the worst-case scenario, the Koreans move forward with the production of nuclear bombs and then stockpile enough to have a surplus for sale to the highest bidders.

What can be done about this? Precious little, say G2 Bulletin intelligence sources.

"North Korea is already thought to have the ability of hitting U.S. West Coast targets with nuclear missiles," the report says. "Recently, a North Korean warhead from a test-fire was reportedly found in Alaska. Should the U.S launch a pre-emptive strike on North Korea's nuclear facilities, it would have no defense against a limited nuclear attack. The U.S. has no missile defense system."

In addition, North Korea also threatens to launch a conventional invasion of South Korea, a war that could cost the U.S. tens of thousands, if not hundreds of thousands, of casualties.

"It seems China, and Russia, don't have much to lose in backing North Korea's bellicose stand against the U.S." concludes G2 Bulletin. "Not much to lose and, perhaps, plenty to gain."