At the same time, however, there are significant bright spots. North Koreans are more connected than ever before. Shortly before leaving on my first trip to Pyongyang in 2005 to guide a group of Western journalists, my host made clear what gift he expected to receive: "Please bring an MP3 player." When I gave it to him, he asked, "What did you put on it for me?" (These days, even a barbarian-handler in North Korea wants the latest high-tech media platform more than booze or cigarettes.) The change has only accelerated since then. Thanks to the Egyptian firm Orascom, the regime has allowed cell phones to sweep the country -- more than one in 50 adults, some 300,000 people, now owns one. (North Korea's previous cell phone network was mysteriously shut down in 2004.)

New media and information platforms have emerged. Elites in Pyongyang flaunt their MP3 players and a digital dictionary/mapping device became available last fall. DVDs and video CDs are flooding in from China and being sold at kiosks, with taboo South Korean dramas and American movies trading briskly under the table. USB memory sticks are being smuggled in and out with interviews and images of life in North Korea that appear in publications like Rimjingang. Even though low-tech short wave radios remain the most cost-effective way of reaching the average North Korean, there has also been a proliferation in the methods of exchanging information.

Technology is clearly a catalyst for change in North Korea, but it is also a double-edged sword that can harm both the regime and the world. No project better illustrates this dilemma than the Pyongyang University of Science and Technology, which opened quietly after many delays in October. Only 160 students are currently enrolled, but by next year, the master plan calls for 2,000 North Koreans to be taught by 250 foreign faculty members. One of the main obstacles to building the school, which was funded largely by South Korean evangelical Christians, was export restrictions on dual-use technology items such as high-performance computers. Given that the North is the prime suspect in several cyber attacks on the South, this concern is legitimate, but university officials counter that given Beijing's failure to enforce the trade restrictions, the bans have been rendered meaningless.

A less controversial and more far-reaching project to open North Korea has been the Kaesong Industrial Complex, which opened in December 2004. More than 100 South Korean companies currently operate factories there, making everything from cosmetics to shoes. On my two visits there, it was moving to see over 40,000 North Koreans working for hundreds of South Koreans. The complex is fenced off as if it were a quarantine zone, with checkpoints to allow authorized workers and visitors in. But I saw a glimpse of a more hopeful future: Could fully integrating the two economies, if not unification itself, be far behind? (One woman is rumored to have defected after falling in love with her southern boss -- to date he is the only South Korean to be detained and released by the North).

Despite Pyongyang's constant saber rattling and the deterioration in North-South relations, neither side is threatening to shut down the jointly run industrial park. Located just north of the Demilitarized Zone and close to a northern population center, the complex has actually expanded since Lee took office in 2008 (one South Korean Unification Ministry official described Kaesong to me as a "Trojan Horse" designed to spread capitalism to the North). Given that one in 200 North Korean workers is employed there and most of their wages go to the government, shutting it down would hit the North Korean economy hard and kill a $2 to $3 million-a-month cash cow for the government. Ultimately, the industrial complex both props up the regime and intertwines it with South Korea. Even after two northern attacks, the issue of whether to close the site is not even being publicly debated in Seoul -- it seems that nobody wants to kill the only remaining cooperation project.

Meanwhile, Beijing has stepped up efforts to make North Korea -- in the words of the South Korean media -- the "fourth northeast province" to meet China's insatiable demand for natural resources. Bilateral official trade and investment is estimated to have broken the $3 billion mark last year -- more than double that between the two Koreas (though still a far cry from the $140 billion in trade between China and South Korea). Over the past decade, dozens of Chinese companies have invested in North Korean iron and coal mines as well as factories, including a much-publicized "friendship glass factory" in Nampo. During his unprecedented two unofficial visits to China in 2010, Kim Jong-Il is said to have responded favorably to Beijing's entreaties. However, even if Pyongyang follows through on its pledges, economic reform and opening will be a very Chinese affair. This is a source of considerable angst for leaders in Seoul, who fear they are "losing North Korea."

The outcome of two long-rumored projects will speak volumes about Pyongyang's intentions. Beijing is believed to have signed a 50-year lease on port facilities that would give the landlocked provinces of Heilongjiang and Jilin much quicker access to the East Sea and beyond. For the past decade, however, the two sides have failed to move forward with a project to pave the road that connects the Chinese border with the port (my contacts at the border tell me the North Koreans got cold feet). Meanwhile, on North Korea's western border, there have been similar rumors of a planned industrial park next to Dandong, China, but the former Chinese head of the project, Yang Bin, was thrown in jail in 2002 for tax evasion, and no alternative plan has emerged. If either project moves forward, we will know that the North has become more serious about economic opening, at least with China.

Can North Korea's iron fist embrace the invisible hand? The chances of sweeping reforms are extremely slim, but market forces and technologies have been unleashed that will be almost impossible to stamp out. Unless we are ready to start a second Korean War, nurturing those forces remains the best way to induce change from within North Korea. Washington, Seoul, and other governments could be doing far more to make information and information platforms more accessible. For starters, they could sponsor North Koreans to study abroad, and instead of propaganda flyers, airdrop radios, VCDs, old MP3 players, and flash drives filled with South Korean news shows and dramas (even Hawaiians are hooked; see the hilarious "Ajumma, Are You Krazy?"). The North must be confronted and engaged simultaneously. Last summer, Pyongyang opened a Twitter account. Time will tell if it will one day be used to announce the overthrow of the regime.

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