SEOUL, June 16 (Reuters) - North Korea has repeated its threat to take military action if the U.N. Security Council punishes it for what it says is a fabricated accusation by South Korea that it attacked and sank a navy ship, killing 46 sailors.
The sinking of the South Korean corvette Cheonan in March was the deadliest incident between the rival Koreas in decades.
Following are some questions about how serious the crisis is, whether it could escalate to an armed confrontation and how the North could react to the outcome of debate at the U.N.
WILL THERE BE WAR?
Many analysts doubt there will be war, as long as South Korea holds its fire. North Korea’s obsolete conventional armed forces and military equipment mean quick and certain defeat if it wages full-scale war and Pyongyang is well aware of its limits.
South Korea has made it clear it will not retaliate despite investigations that found a torpedo fired by a North Korean submarine sank the corvette Cheonan in March.
It knows the investment community will take fright if it does attack. President Lee Myung-bak’s government has taken the case to the Security Council, rather than take the law into its own hands.
IS EVERYTHING SAFE AND SOUND?
No. As the level of rhetoric rises, there is always a risk of skirmishes which could in turn develop into wider conflict.
Lee raised the stakes by saying in a national address the South would exercise its right to defend itself if the North provoked it again. North Korea has said much the same.
Both have carefully avoided sounding like the aggressor, promising to fight only if the other strikes first.
But South Korea said it would resume loudspeaker broadcasts against the North at their armed border. Pyongyang says it will shoot at the equipment.
South Korea’s defence minister has repeatedly said it would defend itself if the North begins shooting by quickly returning fire with overwhelming intensity.
Another risk could be the build-up of U.S. military forces on the peninsula that will be seen by the North as a sign of imminent invasion, something that leaders in Pyongyang are said to be genuinely afraid of.
The United States, which has about 28,000 troops stationed on the peninsula, threw its full support behind South Korea but said it was working hard to stop the escalation getting out of hand.
WHAT WILL THE SECURITY COUNCIL DO?
South Korea, not a member of the Security Council, and the United States, its key ally who is a permanent member, want the strongest action taken against the North that hits where it will hurt the destitute state’s leaders.
But China, another permanent member and the North’s major backer, will likely veto a resolution, possibly on grounds that the ship incident, unlike Pyongyang’s nuclear tests, is a localised issue that is better addressed by the two rivals and not by the international community.
The alternative is a strongly worded statement by the Security Council that condemns the North’s actions and calls for its pledge not to repeat provocative actions. Such a statement will be non-binding and will not involve prescriptions for sanctions such as a trade embargo.
As the North’s chief U.N. representative said on Tuesday, Pyongyang is also likely to protest against such a statement.
WHAT ARE THE RISKS TO INVESTORS?
Market players have tended to think that confrontation between the two Koreas will not escalate into armed conflict because they believe Seoul will not risk the damage to its own economy and its powerful neighbours in North Asia, who together account for about a sixth of the world’s economic output.
In South Korea, even a nuclear test does little to rattle financial markets, as market players are more concerned with direct armed confrontation and have become largely inured to the North’s rhetoric.
But the latest report of Kim Jong-il calling for war readiness has unnerved financial markets.
Some analysts say historic trends suggest any market losses will remain brief, as long as the two Koreas stop short of all-out war.
