North Korean artillery shells rained down on the small South Korean island of Yeonpyeong on Tuesday, killing four people and destroying dozens of houses. "The situation on the Korean peninsula is inching closer to the brink of war due to the reckless plan of those trigger-happy elements to stage again war exercises targeted against the (North)," the North's official KCNA news agency said.
The aggressive language is typical of North Korean state-owned media, but the heightened tension was enough to depress the won as much as 2.2 percent. The stock market closed 1.3 percent down, in line with the wider region. The United States is sending in an aircraft carrier group led by the nuclear-powered USS George Washington to the Yellow Sea for military exercises with South Korea starting on Sunday.
Planned before this week's attack, the four-day manoeuvres are a show of strength which, besides enraging North Korea, have unsettled China, its neighbour and only real ally. "We oppose any military act by any party conducted in China's exclusive economic zone without approval," China's Foreign Ministry said in an online response to a question regarding China's position on the George Washington participating in joint naval exercises.
The exclusive economic zone is a maritime zone up to 200 nautical miles from a country's coast. Washington is pressing China to use its influence to rein in Pyongyang to help ease tension in the world's fastest-growing economic region.
GOVERNMENT CRITICISED South Korea's presidential Blue House appointed Kim Kwan-jin, 61, former chairman of the joint chiefs of staff, to replace Kim Tae-young, who had tried to resign the defence portfolio in May following criticism of the government's response to a torpedo attack on a South Korean warship blamed on the North.
"(We) think nominee Kim, well-respected for professionalism and conviction, is the right person for the post in order to restore trust from people and boost morale in the entire military," presidential secretary Hong Sang-pyo told a news briefing.
There was brief panic in the capital Seoul in the afternoon when television reported sounds of artillery fire near Yeonpyeong. But the military said the artillery fire was distant and no shells landed in South Korea. "Investors are growing more jittery ahead of the joint military exercise," said Kim Hyoung-ryoul, a market analyst at NH Investment & Securities. "The key concern is, whether North Korea will again take unforeseen, rash actions."
Reclusive and unpredictable North Korea has defied international efforts to halt its nuclear ambitions. But Tuesday's artillery barrage was a major ramping-up of tension between to two Koreas, who remain technically still at war. South Korean troops fired back 13 minutes later, causing unknown damage. Members of Lee's own party and opposition lawmakers accused the military of responding too slowly.
Hundreds of former South Korean soldiers held a protest rally in the border town of Paju on Friday, accusing the government of being too weak. A small anti-North Korea protest was held in Seoul. "The lazy government's policies towards North Korea are too soft," said Kim Byeong-su, president of the association of ex-marines, in Paju. "It needs to take revenge on a bunch of mad dogs.