South Korea’s navy staged anti-submarine drills in tense waters bordering North Korea amid signs that China, under pressure from regional powers, is reviewing ties with the isolated communist state.
In another escalation of the blistering war of words, North Korea accused the South of driving 10 years of developing ties into the ground and said it would scrap agreements between the two sides’ militaries that guaranteed safety of cross-border exchange.
The move could push the North a step closer to severing a border link which provides access to a joint industrial complex in the North Korean city of Kaesong.
“We will completely repeal the military guarantee measures that our army is to enforce related to North-South cooperation exchange,” the North’s army chief of staff said in a notice served to the South and carried by its official KCNA news agency.
The South Korean naval exercise is aimed at better detecting intrusions by North Korean submarines after investigators, including experts from the United States and Sweden, accused the North of firing a torpedo that sank one of its warship, killing 46.
The drills, which also come after the South’s military upgraded its alert level, are likely to further anger Pyongyang, which has already cut most ties with Seoul after it sanctioned the hermit state for sinking the Cheonan corvette in March.
The North has threatened to shut the last road link with the South if Seoul resumes loudspeaker propaganda broadcasts across their heavily armed border. It has warned of war if the South goes ahead with sanctions announced this week.
Mounting antagonism between the two Koreas has unnerved investors, worried their bitter rivalry could spill over into conflict.
Most analysts say that neither side is ready to go to war but warn that there could be more skirmishes, especially along their disputed sea border off the west coast.
Traders said the issue continues to hang over the market though it is no longer driving prices down as it did early in the week. The won looked set to end a five-day losing streak as investors saw its recent downturn as overdone.
Washington is looking for ways to avoid the issue collapsing into conflict, with Secretary of State Hillary Clinton pressing Beijing to coax its North Korean ally into changing course.
Clinton, who was in Seoul for talks yesterday, urged the North to stop threatening its neighbours, saying Washington would review measures to hold Pyongyang’s leaders accountable for the sinking of the Cheonan.
Clinton also called on China, which almost single-handedly props up the North Korean government and its destitute economy, to join efforts to pressure the North to change its ways.
US officials travelling with Clinton said China may be ready to discuss how the United Nations should respond to the sinking of the Cheonan, and had shown indications that it was rethinking its ties with Pyongyang.
South Korea will ask the UN Security Council as early as next week to take up the issue, its Yonhap news agency said.
Beijing has so far not endorsed the findings of the South Korean investigation, which concluded last week that there was overwhelming evidence the North torpedoed the ship.
But South Korean officials anticipate some form of progress in China’s response when Premier Wen Jiabao visits Seoul on Friday (tomorrow) for a summit with President Lee Myung-bak.
The two will travel to the South Korean resort island of Jeju on Saturday for a regional summit that also involves Japanese Prime Minister Yukio Hatoyama, where the issue is likely to overshadow discussions on boosting trade.
The threat to cut off border links could mean the beginning of the end for the Kaesong industrial project, where more than 100 South Korean firms use cheap local labour and rent to make consumer goods and has been one of a few legitimate sources of income for the North, worth tens of millions of dollars a year.
North Korea’s Supreme People’s Assembly is scheduled to meet on June 7, two months after the rubberstamp parliament passed constitutional amendments that strengthened leader Kim Jong-il’s powers. Experts say a major announcement is likely.