CAMBRIDGE – What is going on in North Korea? On November 23, its army fired nearly 200 artillery rounds onto the South Korean island of Yeonpyeong, near the two countries’ disputed maritime border, killing four – including two civilians – and demolishing scores of houses and other structures.

The presence of civilians, many of whom had to be evacuated, made North Korea’s attack even more provocative than its sinking in March of the South Korean warship Cheonan, which killed 46 sailors.

And, just a few weeks before the shelling of Yeonpyeong, North Korea showed a delegation of American scientists a new and previously undisclosed uranium-enrichment plant, which will increase the regime’s capacity to make nuclear weapons.

North Korea’s nuclear weapons program has been a matter of concern for two decades. Pyongyang violated its obligations under the Nuclear Non-Proliferation Treaty by secretly reprocessing enough plutonium to produce two nuclear weapons in the early 1990’s.

After it withdrew from a restraining agreement negotiated by the Clinton administration in 1994, it expelled International Atomic Energy Agency inspectors and began reprocessing spent fuel that could produce another six bombs’ worth of plutonium.

Now, with its new enrichment plant, North Korea’s access to fissile materials will greatly increase. Its leaders have a reputation for selling dangerous items such as missiles, narcotics, and counterfeit currency, and many worry that they might transfer nuclear materials to other countries or to terrorist groups.

The recent WikiLeaks disclosures of classified American diplomatic documents, for example, suggest that North Korea has been helping Iran with its advanced missile program.

George W. Bush’s administration initially hoped that it could solve the North Korean nuclear problem through regime change. The idea was that isolation and sanctions would topple Kim Jong-il’s dictatorship.

But the regime proved resistant, and the Bush administration finally agreed to enter into six-party talks with China, Russia, Japan, and the two Koreas.

In September 2005, it fleetingly appeared that the talks had led North Korea to agree to forgo its nuclear program in exchange for security guarantees and removal of sanctions. But the agreement soon collapsed, and North Korea refused to return to the talks until the United States stopped shutting down bank accounts suspected of counterfeiting and laundering money for Kim’s regime.

Then, with diplomacy stalled, North Korea launched a series of missiles into the Sea of Japan. All five permanent members of the United Nations Security Council agreed on a resolution condemning North Korea’s actions, and China warned North Korea to moderate its behavior.

Instead, in 2006, North Korea detonated a nuclear device, and did so again in 2009.

Ostensibly, North Korea is a weak country with a disastrous economic system. Starting from similar levels a half-century ago, South Korea has grown to become one of the world’s most prosperous economies, with nearly 50 million people enjoying a per capita income of $30,000 (at purchasing price parity).

North Korea has half the population and per capita income of less than $2,000. In the 1990’s, North Korea suffered extreme famine, which probably killed 1-2 million people, and even today North Korea depends on China for food and fuel.

How, then, can North Korea manage to defy its neighbor?

For one thing, North Korea has "the power of weakness.” In certain situations, weakness – and the threat that a partner will collapse – can be a source of bargaining power. A bankrupt debtor who owes $1,000 has little power, but if it owes $1 billion, it may have considerable bargaining power – witness the fate of institutions judged "too big to fail” in the 2008 financial crisis.

As the Financial Times observed, "North Korea’s Kim Jong-il is probably the only world leader who can make Beijing look powerless. Diplomats say Kim brazenly plays on Chinese fears.

If the Chinese do not pump aid into his crumbling economy, he argues, they will face refugees pouring across the border and possible unrest.”

China does not want a nuclear or belligerent North Korea, but it is even more concerned about a failed state collapsing on its border. China has tried to persuade Kim’s regime to follow its market-oriented example, but Kim is afraid that an economic opening would lead to a political opening and loss of dictatorial control.

So, while China is trying to moderate the current crisis, its influence is limited.
The other source of North Korea’s power is its audacity in playing a weak hand. Yes, a full-scale military invasion would meet with a devastating defeat by superior South Korean and US military forces, whose current naval exercises in the Yellow Sea are designed to remind North Korea of this disparity.

But, with 15,000 artillery tubes embedded in the Demilitarized Zone, just 30 miles north of Seoul, North Korea knows that firing just a few shells could wreak havoc on the South Korean stock market and economy, while it has less to lose in comparison.

By flaunting its willingness to take greater risks, the North hopes to further enhance its bargaining power.
Most observers attribute the recent provocations to the anticipated succession of power in Pyongyang.

Kim Jong-il had years to prepare as an understudy to his father, Kim Il-sung , but many reports suggest that he is nearing  the end of his life. This autumn, he promoted his hitherto little-seen son, Kim Jong-un, to the rank of general, and introduced him at a Communist Party conference.

Demonstration of military success in "protecting” the regime may indeed be designed to strengthen the 28-year-old general’s claim to power. If so, the risky behavior we have seen recently is part of the process of solidifying a unique political system: a hereditary Communist monarchy.

Joseph S. Nye, a former Assistant US Secretary of Defense, is a professor at Harvard and the author of The Future of Power, forthcoming in February.