I think it is important to keep in mind that survival of the Kim Family Regime is the vital national interest and guides everything but there are also some subordinate interests and objectives at play and they seem somewhat contradictory (which is what gives the appearance that the regime is irrational to those of us in the West).
The nuclear program is deemed key to its survival on multiple levels, from security (deterrence from a pre-emptive attack) to economic (nuclear and missile proliferation bring hard currency) to diplomatic (blackmail diplomacy to gain political and economic concessions) to political (internal domestic politics supporting both Juche ideology and Military First Politics).
(Just to note we should remember that Juche is described in summary this way: “man rules all things, man decides all things” and is based on these precepts: In ideology Juche (autonomy); in politics, self-reliance; in economics, independence; and in National Security: self-defense.)
Underlying all of the above is a desire that I think must be in the DNA of the Kim family and that is to be recognized as a player on the world stage (but not as a responsible member of the international community) and that has evolved to be recognized as a nuclear power because with that recognition its internal legitimacy is solidified and enhanced and its diplomatic and negotiating position will change from one in which it is negotiating from a position of weakness (surrounded at the negotiating table by the five powers) to one of strength and even as an equal to other nations that possess nuclear weapons.
But what we are all asking is what are the goals that the Kim Family Regime hopes to obtain by precipitating the current crisis and what is the likely outcome?
I think the end game may be as I have mentioned before, they will test a missile timed to "bring an end to the ROK/US provocative exercises" so that it can establish a propaganda narrative that says that the ROK/US Alliance has so feared the military power and the fact the north is a nuclear capable nation that it had to deploy its most advanced weapons in an attempt to be able to counter the north, yet in the end the north did not back down in the face of such a demonstration of strength and in fact it is the recognition of its strength that cause the Alliance to back down and end its exercises. This obviously has important domestic political considerations.
A "kinetic provocation" is also possible (e.g., a military confrontation). While there is fear of miscalculation, I think the decisive ROK response at the time and place of the provocation rather than a strategic response later will prevent escalation. A strategic response against deeper targets will be interpreted as a threat to the regime and that is when things become dangerous. We should recall the hundreds of incidents on the DMZ that have not escalated as well as the naval battles in the are of the Northwest Islands in which the ROK Navy has sunk north Korean ships and the decisive engagements by the ROK Navy did not lead to escalation because the north Korean military cannot stand toe to toe with the ROK military in a conventional fight let alone a conventional or nuclear fight with the ROK/US Alliance.
In addition, and perhaps more importantly is the objective to return to negotiations as a recognized nuclear power. The crisis has engendered so much press coverage and is in fact in many ways de-sensitizing people to the north 's nuclear capability. I mean that in a way people are at least sub-consciously referring to the north as a nuclear power. And of course this is key for future negotiations when even though it seems absurd to us, the regime will call for arms limitations and reduction talks and not de-nuclearization.
While of course the above is pure speculation on my part I think it can be justified on a historical basis. I do think that the late Hwang Jong Yop's explanations to us on the importance of the nuclear program and why the north has not attack support this analysis. No one outside the regime knows more about the inner workings of the regime than he did and even though he defected in 1997 and could not and did not have any real insights into Kim Jong-un as a leader I think the evidence so far shows that Kim is following the Kim Family Regime playbook and has adopted all the same positions, perhaps with some tactical variations, e.g., the trial of "image First Politics" in his first year of rule.
There is one thing to keep in mind however. The ROK/US Alliance has not been played for a fool. The actions of the Alliance have sent a powerful message to the regime. One of the key conditions for regime survival and attainment of its strategic objective of unification of the Peninsula under regime control in order to guarantee regime survival is to split the ROK/US Alliance. One of the important thing the ROK/US Alliance has done is to attack this part of the regime strategy and has demonstrated that the Alliance is strong and has resolve and that there is no daylight between the ROK and US (except for the differences over the ROK nuclear program and impertinent remarks of some spokesmen who said that the US deployments were to restrain the ROK - these are patently unhelpful remarks when should be trying to attack the north's strategy). However, the shows of force do influence Regime decision making in the most important way - the north knows that if it launches a large scale conventional or nuclear attack that the US will support the defense of the ROK with overwhelming firepower.
Paradoxically this should be helpful to our diplomats when we do return to the negotiating table. (And I think we should because "jaw-jaw is better than war-war") However, when we negotiate now we can do so from our own position of Alliance strength and despite the north having a nuclear capability the Alliance has shown that it can and will counter it and has made clear that the north cannot be successful in a war both conventional and nuclear. I think we should talk but we should also fully enforce all sanctions and in fact have a comprehensive policy and strategy to deal with north Korea on a global basis - e.g., attack all its illicit activities (not the US directly in every case but through and with nation states and their law enforcement mechanisms to go after each and every illicit activity the north is conducting). We should implement a comprehensive PSYOP program to target the north Korean people and the second tier leadership and most importantly we should be working with the ROK to support the long term strategic end state of unification of the Korean Peninsula.
We have an opportunity in the future, to borrow from President Kennedy not we do not have to negotiate out of fear but we do not have to fear to negotiate. We can do it on our terms, to achieve our and Alliance objectives, continue to manage these recurring crises until someone inside north Korea decides to make a change - either a change to become a responsible member of the international community or to change the regime.