North Korea Shells South in Fiercest Attack in Decades

North Korea on Tuesday fired dozens of artillery shells at a South Korean island, killing two soldiers and setting houses ablaze, in one of the heaviest attacks on its neighbor since the Korean War ended in 1953.

The attack, with South Korea returning fire came as the reclusive state has been pressing regional powers to return to negotiations about its nuclear weapons program, and it follows revelations at the weekend that Pyongyang is fast developing another source of material to make atomic bombs.

It also follows moves by iron leader Kim Jong-Il to make his youngest son heir apparent to the family dynasty.

Experts say that for decades the Korean leadership has played a carefully calibrated game of provocations to win concessions from the international community and impress his own military. The risk is that the leadership transition has upset this balance and that events spin out of control.

South Korean President Lee Myung-bak, who has pursued a hard line with the reclusive North since taking office nearly three years ago, said a response had to be firm following the attack on Yeonpyeong island, just 120 km (75 miles) west of Seoul.

The two Koreas are still technically at war — the Korean War ended only with a truce — and tension rose sharply early this year after Seoul accused the North of torpedoing one of its navy vessels, killing 46 sailors.

“Houses and mountains are on fire and people are evacuating. You can’t see very well because of plumes of smoke,” a witness on the island told YTN Television before the shelling ended after about an hour.

News of the attack rattled global markets, already unsettled by Ireland’s debt woes and shifting to less risky assets.

North Korea said its wealthy neighbor started the fight. “Despite our repeated warnings, South Korea fired dozens of shells from 1 p.m. … and we’ve taken strong military action immediately,” its KCNA news agency said in a brief statement.

South Korea has been conducting military exercises this week but it was not clear whether there had been any drills near the island that could have triggered the incident.

Russian Foreign Minister Sergei Lavrov said the latest rise in tension represented a “colossal danger.”

China, the impoverished North’s only powerful ally, was careful to avoid taking sides, calling on both Koreas to “do more to contribute to peace. China hopes that the relevant parties will do more to contribute to peace and stability in the region … it is imperative now to resume the six-party talks,” a spokesman for the Chinese Foreign Ministry, Hong Lei, told reporters.

Those talks on North Korea’s nuclear weapons program — involving the two Koreas, China, Japan, Russia and the United States — have long been on ice.

However, the reclusive North has recently been pushing to resume the talks, which previously it has used to win massive aid in return for promises to end its weapons program.

AT LEAST 200 SHELLS
YTN said at least 200 North Korean shells hit Yeonpyeong, which lies off the west coast of the divided peninsula near a disputed maritime border. Most landed on a military base there.

South Korea’s military said two soldiers were killed in the attack, 17 were wounded and three civilians were also hurt. South Korean military returned the fire and sent a jet fighter to the area.

YTN showed pictures of plumes of smoke pouring from the island and quoted a witness as saying fires were burning out of control.

WON TUMBLES
News of the exchange of fire sent the won tumbling in offshore markets with the 1-month won down about four percent at one stage in NDF trading. U.S. 10-year Treasury futures rose and the Japanese yen fell.

The South Korean central bank, after an emergency meeting, said it planned to cooperate with the government to take measures to stabilize markets if necessary. Many traders expect South Korea’s financial markets to fall further when trading opens on Wednesday. The attack comes just as a U.S. envoy is in Beijing on a tour of the region and is expected to ask China to use its influence to help tame North Korea.

Washington has branded the North a danger to the region and expressed concern Pyongyang would sell nuclear weapons technology to other states. It has said it was ready to return to talks but wants to see more commitment to denuclearization by the North beforehand.

The White House condemned the attack, telling the North to halt its “belligerent action” and saying it was committed to defend the South.

It has about 28,000 troops in South Korea, their combined forces facing an estimated one million North Korean soldiers who make up one of the world’s biggest standing armies.

“UNBELIEVABLE”
“It’s unbelievable,” said Zhu Feng, professor of international relations at Peking University. “Today’s news proves that North Korea, under unprovoked conditions, shot these South Korean islands. It’s reckless provocation. They want to make a big bang and force the negotiations back into their favor. It’s the oldest trick.”

The North depends heavily on China for economic and diplomatic support and its leader, Kim Jong-Il, has visited China twice this year, in part to gain backing for the anointment of his son as heir.

Those ties have become a sore point with Washington after reports that North Korea appears to have made big steps towards enriching uranium, possibly using technology that passed through or even originated in China.

China has urged returning to the nuclear disarmament negotiations but has also fended off calls from the U.S. and its regional allies to use its vital food and energy aid to North Korea as a lever.

(Reporting by Seoul bureau and Michael Martina in Beijing; Writing by Jonathan Thatcher, editing by John Chalmers)