Kim Jong-il inspires pity as much as dread. China sent fans on North Korea’s behalf to the football World Cup; Robert Mugabe favoured the hermit kingdom with a “Noah’s ark” of Zimbabwean wildlife. Yet the recent escalation of tensions on the Korean peninsula is causing real damage, and not just to Pyongyang.

The North is surely hurting. Since Seoul cut off virtually all non-humanitarian trade in May, in retaliation for the sinking of the Cheonan, life in the hardscrabble economy has almost certainly grown harder. Aerial photos of plumeless smokestacks suggest factories lie idle. Inter-Korean trade amounted to $1.7bn last year, just 0.2 per cent of the South’s total, but a third of the North’s. Recent efforts to make debt repayments to the Czech Republic in ginseng betray a chronic shortage of hard currency.

The South is suffering too. Last year markets barely blinked after the North’s weapons tests; this year, the won is trumped only by the Vietnamese dong as the region’s worst-performing currency. At just nine times next year’s earnings, the Kospi is cheaper than all other Asian stock market benchmarks bar Pakistan. Net flows into equities this year are running below last year’s rate. Yet president Lee Myung-bak is in no mood to waver, having distanced himself from previous regimes’ “sunshine policy” of paternalistic appeasement. Disarm, then we talk.