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Sunday, December 19, 2010

NKOREA MILITARY RAISES ALERT

Seoul to go ahead with drills despite threats of war






YEONPYEONG

South Korea (Reuters) – South Korea will go ahead with live firing drills from a disputed island on Monday, local media said, despite threats of attack by Pyongyang and pressure from Russia and China to cancel the exercise.

The drills were delayed from the weekend by bad weather, giving time for an emergency U.N. Security Council meeting to try to calm tensions. But it ended without agreement after more than eight hours of talks, with the five big powers split on whether to publicly blame NorthKorea for the crisis.

"The drill will start as soon as the fog clears," a marine officer on Yeonpyeong told Reuters as he ducked into a bunker.

Yonhap news agency quoted the Defense Ministry as saying the exercise will start after 1 p.m. (0400 GMT) and last less than two hours. Heavy fog was still blanketing the island in freezing temperatures but was forecast to clear in the afternoon.
South Korean marines patrol on Yeonpyeong Island
On November 23, the last time Seoul conducted live firing drills from Yeonpyeong close to the disputed maritime border off the west coast of the peninsula, Pyongyang shelled the island, killing two civilians and two marines in the worst attack on South Korean territory since the Korean war ended in 1953.

North Korea warned last week that it would strike even harder if the latest drills went ahead. China and Russia have cautioned Seoul against holding the exercise, while the United States has backed South Korea's right to hold the drills.

The tension hit Korean markets when they opened on Monday, with the won falling more than one percent to a four-week low against the dollar and stocks also down one percent in early trade, underperforming most Asian markets.

"Growing geopolitical tensions due to the drills and persistent worries about the euro zone put heavy pressure on the won," said an analyst at a local futures firm.

Sunday's announcement that Seoul would impose a levy on the foreign debt of banks from late 2011 also weighed on markets. The move was Seoul's latest attempt to discourage too much speculative hot money flowing into South Korean assets, a reminder that local markets are bullish despite the tensions.

"The fact that foreign investors are continuing to buy comes as a reassuring sign," said Kwak Joon-bo, analyst at Samsung Securities. "Unless North Korea takes actions that are akin to its artillery shelling of the island, the market will be relatively calm."

FEARS OF ESCALATION

Both sides have said they will use force to defend what they say is their territory off the west coast, raising international concern that the standoff could quickly spiral out of control.

Yonhap quoted military officials as saying shells fired in the drill would land more than 10 km from the maritime border. But Pyongyang disputes the border and said last week that it would be a suicidal provocation for Seoul to hold the exercise.

South Korean officials said the North had been making military preparations similar to those observed ahead of last month's deadly clash, removing covers from coastal artillery and forward-deploying some artillery batteries.

Seoul defends the drills as routine and says it has been holding them on a monthly basis for years. China and Russia say holding the exercise now will only worsen tensions.

"Let me reiterate very strong concern of the Russian Federation that within hours there may be a serious aggravation of tension, a serious conflict for that matter," said Russia's U.N. Ambassador, Vitaly Churkin. "It's better to refrain from doing this exercise at this point in time."

Russia had called Sunday's emergency Security Council meeting to try to prevent an escalation on the Korean peninsula, but major powers failed to agree on a draft statement due to differences over whether to lay the blame on Pyongyang.

"The gaps that remain are unlikely to be bridged," said Susan Rice, the U.S. ambassador to the U.N.

Other council diplomats, however, said it was possible the council could return to the issue as early as Monday.

Western diplomats said China and Russia were pushing for an ambiguous statement that would not have blamed North Korea for the crisis, but would have called on both sides to exercise restraint. Rice said the "vast majority" of council members did not want an ambiguous statement.

"It is important that we keep in mind that this tense situation springs from one source and one source alone -- the consistently provocative behavior of North Korea," Rice said in the written text of a statement she read to the council.

U.S. diplomatic troubleshooter Bill Richardson, visiting Pyongyang to try to ease tensions, said the situation was "a tinderbox" but urged the North to show restraint and allow the drills to go ahead.

"I am urging them extreme restraint ... Let's cool things down. No response. Let the exercises take place," he said.

Seoul appears determined to go ahead with the drills, anxious to avoid a repeat of domestic criticism in November for its perceived weak response to the shelling of Yeonpyeong.

The South has said if it is attacked in the same manner as last month, it would hit back hard with air power and bombing.

Analysts were skeptical the North would carry through with its threats. The North will most probably respond by holding a live-fire drill on its side of the tensely guarded sea border if the South goes ahead with its exercise, they said.

Concern mounted on the island among the few residents who remained.

"I see they have to do what they have to do, but the people here want peace and quiet," Dan Choon-nam said after a tearful church service on Sunday. "We want things to be back to how they were."

(Additional reporting by Jack Kim, Yoo Choonsik and Jeremy Laurence in Seoul, Louis Charbonneau at the United Nations and Chris Buckley in Beijing; Writing by Andrew Marshall; Editing by Nick Macfie)

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