What is Really Going on in North Korea?

North Korean leader Kim Jong Un smiles as he is surrounded by commanding officers of the combined units of the Korean People's ArmyReuters

North Koreans are well-rehearsed in marking the date of 'eternal leader' Kim Il-Sung's birth.

The April 15 anniversary is often punctuated with demonstrations of military might and geopolitical bluster in the preceding days, while April 15 itself has often seen military parades and massive displays of public dancing.

As the date approaches once again, the military aggression from the North has been ramped up. The United States is in the middle of its annual joint military exercise with South Korea. The operations will run until April 18 and have not been accompanied by any notable American diplomatic or economic pressure.

However, the North has been particularly provocative with its own military exercises in the run up to the anniversary. An excessive barrage of short-range missiles were tested on March 22. This was swiftly followed by two unannounced medium-range rocket tests four days later. Before March ended, North Korea had fired 500 artillery rounds into disputed waters in one day. South Korea responded by firing 300 rounds.

The North has also said it will conduct a new kind of nuclear test, which analysts have interpreted to mean a uranium-based missile, as opposed to plutonium. And of course, the North Korean drones that turned up (crashed) south of the border in April.

For its part, South Korea launched a new medium-range ballistic missile test on March 23, capable of hitting most of the North.

However, the markets have remained stoic in the face of this seeming escalation. On a recent visit to Seoul, Nomura's geopolitical guru Alastair Newton said he found more interest in the prospect of reunification than fear over a further breakdown between the neighbours.

Moreover, in an interview with CNN, Jane's Defence Weekly's Asia Pacific editor James Hardy said that "this time of year is provocation season".

"It's all good stuff because it allows the North Koreans to do something provocative and slightly annoying which might embarrass South Koreans, but it's not provocative enough to create a proper military response."

South Korean President Park Guen-hye announced in January that she wanted to lay the ground for a reunification project, followed up by the establishment of a bilateral cooperation programme with Germany to discuss the issue.

Indeed, while many have snubbed the prospect of reunification as having too many costs for the South, the President said that a slow and managed integration could be a "bonanza" or a "jackpot."

It is hard to see where the basis for such optimism comes from. Nomura's geopolitical guru Alastair Newton reported on his most recent visit Seoul that the likelihood of reunification remains a distant prospect. Instead, he argues that a "paradigm shifting crisis of one sort or another", to be a more likely event.

Whichever path the divided peninsula follows, more will become clear in the coming week.