The South Korean military held two exercises using live ammunition in late December as a show of force and resolve in response to North Korea’s shelling of Yeonpyeong island in November. Tensions have been high on the peninsula, and numerous commentators and policymakers have openly worried about the possibility that war could erupt at any moment. Bill Richardson, former governor of New Mexico and a frequent visitor to North Korea, called the peninsula a “tinderbox.” Many respected scholars and commentators openly worried about the possibility of war, speaking of the need for resolve and a tough stance towards the North, or breathing a sigh of relief that “North Korea blinked” and backed down.

However, despite dueling artillery barrages and the sinking of a warship, pledges of “enormous retaliation,” in-your-face joint military exercises and urgent calls for talks, the risk of all-out war on the Korean peninsula is less than it has been at anytime in the past four decades. North Korea didn’t blink, because it had no intention of actually starting a major war. Rather than signifying a new round of escalating tension between North and South Korea, the events of the past year point to something else—a new cold war between the two sides.

In fact, one of my pet peeves is the analogies we use to describe the situation between South and North Korea. We often call the situation a “powder keg” or a “tinderbox,” implying a very unstable situation in which one small spark could lead to a huge explosion. But the evidence actually leads to the opposite conclusion: we have gone sixty years without a major war, despite numerous “sparks” such as the skirmishing and shows of force that occurred over the past month. If one believes the situation is a tinderbox, the only explanation for six decades without a major war is that we have been extraordinarily lucky.

I prefer the opposite explanation: deterrence is quite stable because both sides know the costs of a major war, and both sides—rhetoric and muscle-flexing aside—keep smaller incidents in their proper perspective.

How can this be, when North Korea threatens to use massive retaliation and mentions its nuclear weapons in its rhetoric, and when the South Korean leadership and military is determined to "respond relentlessly" to meet any North Korean provocation?

Local skirmishing has stayed local for sixty years. The key issue is whether a local fight could escalate into all-out war, such as North Korea shelling Seoul with artillery or missiles. Such a decision would clearly have to be taken at the top of the North Korean leadership. Especially when tensions are high, both militaries are on high alert and local commanders particularly careful with their actions. Without a clear directive from the top, it is not likely that a commander one hundred kilometers away from the military exercises would make a decision on his own to start shooting at Seoul. For their part, North Korean leaders have not made such a decision in sixty years, knowing that any major attack on Seoul would cause a massive response from the South Korean and U.S. forces and would carry the war into Pyongyang and beyond. After the fighting, North Korea would cease to exist.

Thus, while both North and South Korean leaders talk in grim tones about war, both sides have kept the actual fighting to localized areas, and I have seen no indication that this time the North Korean leadership plans to expand the fighting into a general war.

If my analysis is correct, the most dangerous situation would be that of a “cornered tiger”: a situation in which the North Korean regime believes that its own existence is threatened. Faced with that situation, leaders could decide that a last-gasp attack on the South is better than passively accepting fate.

In fact, the New Cold War on the peninsula works for the domestic politics of every country: in the United States, President Obama can sound tough and resolute on an issue where both Democrats and Republicans agree that North Korea is at fault.

In South Korea, both President Lee Myung-bak and the military faced both criticism and embarrassment for not being better prepared to deal with contingencies such as the shelling at Yeonpyeong. Hawkish rhetoric and symbolic military actions not only confirm for his supporters that his tough approach has always been the correct approach, but also is a means for President Lee to call for all South Koreans to “rally around the flag” and support him in the face of an external threat.

The Cold War also works for North Korean domestic politics. The latest incidents have quite likely raised the morale of the North Korean military. The incidents have also probably solidified support within the ruling regime for a hard-line stance, as well: In the current tense environment, I doubt that any member of the cabinet or party in North Korea is advocating giving concessions and engaging with the South or the United States. Thus, North Korean leaders are most likely interpreting the events of the past few months as justifying their own provocative actions.

Given this analysis, we are left with a decidedly unsexy policy option: the standard Cold War strategy of deterrence, patience and hope for internal change in North Korea.

Eventually events on the Korean peninsula will stop repeating themselves, and one of the most likely changes will be some type of collapse in the North. We should begin preparing now for that eventuality, no matter how far it lies in the future.