The confrontation between North and South Korea over the sinking of a South Korean warship in March intensified this week after Seoul, backed by Washington, announced a series of retaliatory measures on Monday.

In response to a large South Korean naval exercise yesterday, North Korea announced that it would cut off a naval hotline and nullify a 2004 accord between the two Koreas designed to prevent clashes in the disputed border area of the Yellow Sea. Pyongyang warned that it would respond to any incursions into its territorial waters with “prompt physical strikes”.

The Cheonan, a South Korean corvette, sank on March 26, killing 46 sailors. Last week, the findings of a South Korean-led investigation claimed that a North Korean torpedo had hit the warship. Pyongyang has denied any involvement in the incident and accused Seoul of fabricating evidence.

The South Korean naval manoeuvres yesterday involved 10 warships, including a 3,500-tonne destroyer, in anti-submarine drills. While reportedly held well south of the disputed zone, the exercise has only heightened the tensions. The South Korean and American navies are planning two major joint exercises in July.

The dispute over the sea border stems from the end of the Korean War in 1953, when the US-led United Nations Command unilaterally drew the Northern Limit Line, which has never been accepted by North Korea. Pyongyang declared its own demarcation in 1999, leading to deadly clashes in the disputed area in 1999 and 2002. The breakdown of mechanisms designed to prevent such incidents raises the danger of further conflict.

The Obama administration has added more fuel to the confrontation by unequivocally backing South Korean President Lee Myung-bak. In Seoul on Wednesday as part of her Asian tour, US Secretary of State Hillary Clinton denounced the Cheonan sinking as “an unacceptable provocation by North Korea” and called for a “strong but measured response”. The US has supported South Korea’s actions, which include a call for punitive measures against North Korea in the UN Security Council.

Washington is exploiting the incident to try to drive a wedge between China and its longstanding ally North Korea. Speaking in Seoul after meeting with Lee, Clinton declared: “We believe it’s in everyone’s interests, including China, to make a persuasive case for North Korea to change direction.” She publicly urged Beijing to study the findings of the South Korean government report into the sinking.

The US secretary of state had just left China after three days of discussions over a range of issues. According to the New York Times: “Mrs Clinton pushed hard to change China’s aloof posture on the Korean standoff. She spent many hours in meetings with Chinese leaders, going over the fine points of the South Korean report and brandishing other evidence of the North’s involvement.”

To date, however, China has neither accepted South Korea’s allegations nor backed North Korea’s denials. American officials on Wednesday claimed that China might support a formal UN rebuke to North Korea. However, Chinese Foreign Ministry spokesman Ma Zhaoxu later declared that China’s position had not changed. “The issue is highly complicated,” he said. “China does not have firsthand information. We are looking at the information from all sides in a prudent manner.”

China is engaged in an increasingly difficult balancing act. Despite its support for UN sanctions against North Korea over its nuclear tests, China is reluctant to abandon its ally or exacerbate the country’s already deep economic and political crisis. Beijing is concerned that a collapse of the North Korean regime could send a flood of refugees into China and end its role as a key buffer on China’s borders.

At the same time, China has burgeoning economic ties with South Korea. As the Financial Times explained: “South Korean companies are now an integral part of the supply chain for China’s manufacturing powerhouse. Samsung has 16 factories in China, while Hyundai has a booming business making cars for the Chinese market in a joint venture with Beijing municipality’s own carmaker. There was one weekly flight between China and South Korea 20 years ago: now there are 642.”

Chinese Premier Wen Jibao is due in Seoul today for a trilateral summit with Japan and South Korea where he will certainly come under pressure to back punitive action against North Korea. For his part, Japanese Prime Minister Yukio Hatoyama has used the naval incident to justify his own backdown on a promise during last year’s election to renegotiate an agreement with the US and to shift a US military base out of Okinawa.

South Korean President Lee is determined to use the issue to boost his party’s chances in next month’s local elections and his own low poll ratings. Lee, who belongs to the right-wing Grand National Party (GNP), has been critical of the so-called Sunshine Policy of his two immediate predecessors to open up the North to foreign investment. On Monday, he announced an end to most trade and investment with North Korea.

Seeking to counter the GNP’s campaign, South Korean opposition parties have accused the government of using the Cheonan sinking for political purposes and have challenged the findings of its inquiry. The Democratic Party has called for a separate parliamentary investigation into the incident. Democratic Party spokesman Woo Sang-ho declared last week that the results of the government probe “are not sufficient to resolve all suspicions”.

While exploiting the sinking for party political purposes, President Lee is treading cautiously. Rising tensions on the Korean Peninsula, compounded by economic turmoil in Europe, have triggered falls in the South Korean currency and share markets. Lee was careful to exclude the Kaesong industrial park just over the border in North Korea from his retaliatory economic measures. The complex, which is jointly operated by the two Koreas, has around 120 South Korean factories employing 45,000 North Korean workers. Despite threats to shut down the Kaesong complex, North Korea has not yet done so.

However, the situation on the Korean Peninsula remains precariously balanced. While neither side appears to want a full-blown confrontation, military forces are on high alert. As the US-based thinktank Stratfor concluded: “With tensions high, both sides acting in accordance with their national definition of disputed boundaries and with loosened rules of engagement, the prospect of a skirmish sparking a wider escalation is a serious concern.”

WSWS