Tensions ease in Northeast Asia. Pragmatism is winning out over confrontation between former foes, such as the two Koreas -- a development that favors West's interests

The hard line of confrontation between communist and noncommunist states in Northeast Asia is blurring. Complex and subtle relationships are emerging between former enemies, and these are helping to promote dialogue where, just a few years ago, there was none.

No one in Seoul was surprised last month, when North Korea summarily canceled all negotiations with South Korea to protest the joint United States-South Korean military maneuvers that began yesterday. And almost everybody expects the talks to get going again when the annual ``Team Spirit'' exercises finish in late April.

The calm anticipation of North Korea's action (it did the same thing last year) highlights the fact that, in many ways, pragmatism is eating away at ideological differences in the region.

Diplomats agree that, on balance, changes in diplomatic relations have reduced tensions and are broadly favorable to Western interests. In addition to the dialogue between North and South Korea, over the past two years South Korea has quietly forged close commercial ties with China. And the Soviet Union has become far more active in the Korean peninsula, as it has throughout Asia since Mikhail Gorbachev came to power, reversing many years of Soviet neglect of the region.

Moscow has beefed up its ties with North Korea. Trade has increased, and the Soviets have supplied the North with more advanced weapons. But the Soviet Union is also subtly improving its ties with South Korea.

Soviet sports teams now visit South Korea after a suspension following the Soviet downing of a Korean civilian airliner in 1983, killing all 269 aboard. Many say this is a clear sign that the Soviets plan to attend the 1988 Seoul Olympics, despite strong objections from North Korea.

``The Soviets have dealt themselves back into the game so that they won't be excluded in any deal on the peninsula,'' says a Western diplomat.

The changes in regional relations stem from a number of unrelated developments. One is China's growing pragmatism, which has led it to see South Korea as a natural trade partner. Bilateral trade between China and South Korea increased dramatically last year, and has been estimated at well in excess of $1 billion. Last year also saw the first South Korean investment in China.

South Korean leaders were dismayed in September, when Chinese diplomats walked out on South Korean Prime Minister Lho Shin Yong's address at the United Nations, following the North Korean delegation out the door. But some saw the walkout differently.

``The Chinese are able to have close commercial ties with South Korea precisely because they are politically correct with the North,'' one diplomat said.

Another factor is the new Soviet leadership. Mr. Gorbachev has improved the atmosphere of ties with China, and that has partially neutralized Peking's objections to closer ties between Moscow and the North Korean capital of Pyongyang -- traditionally an anathema to a Chinese government worried about its northeast frontier.

Likewise, improved ties with the Soviet Union may help Pyongyang swallow its disappointment over the East bloc's intention to go to the Seoul Olympics, an event that will vastly elevate South Korea's international stature.

A North Korean suggestion that Seoul agree to co-host the Olympics or face a boycott failed to win any support at a November meeting of communist sports ministers in Hanoi.

North Korea and the Soviet Union have recently exchanged a number of high-level visitors after a hiatus of many years. In the process, North Korean President Kim Il Sung has won virtual Soviet endorsement for the transfer of power to his son, Kim Jong Il. He has also picked up some MIG-23 jets, and surface-to-air missiles may follow.

In exchange, the Soviet Union has for the first time sent its Navy to call at North Korean ports, and Soviet bombers and reconnaissance planes now fly daily over North Korean air space.

US military officials are unhappy about increased Soviet military involvement in the North, but they admit that the Soviets have not yet seriously affected the military balance. North Korea has done that by itself, by mechanizing its forces and moving them close to the front line.

North Korea prepared carefully for last month's suspension of talks, apparently hoping to reap maximum propaganda rewards.

A series of New Year's statements from Pyongyang dangled the possibility of an unprecedented summit meeting between the Presidents of the two Koreas, while warning that military exercises in the South would be tantamount to the South unilaterally breaking off contact.

The suspension of talks will scratch three sets of scheduled meetings -- one to promote economic cooperation, one to arrange family reunions, and one of parliamentary representatives from both sides (with no clear purpose agreed on yet).

The talks, which have been going stop-and-start for nearly two years, have produced few results. Yet the very fact that North and South are talking at all is a dramatic breakthrough. No one expects this latest interruption to dampen either side's desire to keep the dialogue alive.

The North is reacting to a number of difficult challenges. Kim Il Sung is hoping to consolidate the first-ever father-to-son leadership succession in a communist state, a tough job at best. The economy of its major adversary, South Korea, has vastly outdistanced it, and the trend is bound to continue while the South becomes more internationally prominent. At the same time, the US security commitment to South Korea is stronger than ever.

In response, diplomats say, the North is seeking ways to break out of its diplomatic and economic isolation. China tried to use its closer ties with the West to bring about three-way talks among North and South Korea and the US, but it failed, which encouraged Pyongyang to look elsewhere, including toward Moscow. Talking with South Korea may stem from the same logic. As one diplomat puts it, those talks are a ``fantastic propaganda game'' that Pyongyang hopes eventually will open bridges to Japan or the US.

The talks may also be the beginning of a process of preparing North Korean citizens for accepting the reality of a prosperous South that is far different from the impoverished caricature that appears in North Korean internal propaganda.

All of this talking, seeking diplomatic solutions (even if they are not found readily), and developing of trade and cultural ties on and beyond the Korean peninsula, has encouraged many observers.

Even so, a diplomat says, ``the situation on the Korean peninsula is still a lot like living in a room soaked full of gasoline.''