At the end of 2010, the Korean Peninsula stood on the brink of an abyss of military conflict. North Korea threatened a “nuclear war disaster” if Seoul proceeded with its scheduled live-fire military exercise in the West Sea. But, the exercise went off as planned, North Korea did nothing, and the region breathed a sigh of relief.

President Lee Myung-bak can take credit for the display of South Korean resolve that forced Pyongyang to behave itself. The Lee administration was clearly ready, indeed eager, to react more sternly to another deadly North Korean provocation.

While South Korea and its U.S. ally can take pride in staunching North Korean aggression, the calm may be short-lived. Like a crafty magician who draws attention to one hand while slipping the coin into his pocket with the other, Kim Jong-il may be planning other provocative acts in 2011, but away from the Northern Limit Line (NLL).

South Korea must therefore prepare for a range of possible North Korean attacks. And that’s a challenge. As the ancient Chinese strategist Sun Tzu noted, if your opponent “sends reinforcements everywhere, he will everywhere be weak.”

North Korea, as always, wants to retain the initiative and control the pace of the game. By incrementally ratcheting up tensions, Kim forces the U.S. and others into a reactive posture. And by creating a parallel crisis to divert attention from a negotiating impasse brought on by its own intransigence, Pyongyang hopes to raise the stakes before striking an eventual deal. That way the regime is able to extract maximum benefits while providing minimal concessions.

Yet, despite its history of engaging in high-risk, belligerent rhetoric and actions, Pyongyang has always calibrated its tactics to avoid going beyond its opponents’ redlines. Historically, after escalating tensions, Pyongyang has made conciliatory gestures, offering a return to the status quo ante. North Korea then cynically presents its “restraint” in not fulfilling its threats as evidence of its reasonableness and its willingness to negotiate.

Even as the regime threatened war in December, its officials met with New Mexico Gov. Bill Richardson. Pyongyang used Richardson’s visit to send a message that it was willing to allow International Atomic Energy Agency inspectors to return to the Yongbyon nuclear facility. Doing so also diverted attention from Pyongyang’s disclosure of a uranium enrichment facility, yet another violation of U.N. resolutions.

By alternating provocations with diplomatic outreach, Pyongyang seeks to leverage Washington and Seoul away from their pressure policies, such as U.N. sanctions against North Korea.

Currently however, neither the Obama nor Lee administrations show any sign of easing the pressure. This will impel Pyongyang to undertake more escalatory behavior in 2011 in the hope of coercing Washington and Seoul to soften their approach. As a result, North Korea and its opponents remain locked in an endless loop of cyclical crises.

Pyongyang appears to have abandoned previously self-imposed constraints on its behavior, making the situation even more dangerous. Although this new brazenness could relate to the ongoing North Korean leadership succession, it may also reflect growing desperation brought on by deteriorating economic and political conditions.

North Korea’s willingness to engage in ever escalating provocative acts will keep the Korean Peninsula a tinderbox during the coming year. A miscalculation by either side could spark a destructive conflagration.

But that is not to say that inter-Korean or U.S.-North Korean dialogue may not resume in 2011. Even as North Korea prepares for the next round of provocations, we can also expect it to expand efforts toward engagement.

Perceptions that North Korea has turned the page on its belligerent behavior would increase pressure on the Lee Myung-bak and Obama administrations to return to negotiations with North Korea. Pyongyang’s New Year’s message calling for improved inter-Korean relations and a subsequent offer of unconditional meetings with Seoul were seized upon by some analysts as “evidence” of a shift in the regime’s policy.

Neither Seoul nor Washington ever ruled out engagement, but North Korea’s provocations during the past two years have dashed hopes that it would be successful. The Obama administration has now adopted a page from the North Korean playbook and insists on tangible steps by Pyongyang before returning to the six-party talks.

What could North Korea do to improve the potential for re-engaging Seoul and Washington? Well, not conducting any more acts of war on its neighbor would be an obvious first step. Beyond that, Pyongyang should announce it will return to compliance with the armistice and all inter-Korean agreements that it abrogated last year.

The regime could also invite back IAEA inspectors, return to the Non-Proliferation Treaty, resume dismantling its nuclear weapons facilities, and abide by existing confidence-building measures designed to reduce the potential for military conflicts along the Northern Limit Line.

While it is easy to be optimistic at the beginning of a new year, it is also prudent to be wary when it comes to North Korea.

Bruce Klingner is senior research fellow for Northeast Asia at the Heritage Foundation.