North Korea prepares for ‘all-out war’ as China urges calm after nuclear threats

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North Korean leader Kim Jong-un told front-line troops the military is ready for “all-out war” against its enemies as the hermit nation nullified the 1953 armistice that ended the Korean War.

The North also closed liaison channels with South Korea and the United States.

China, meanwhile, is appealing for calm and urging both sides to avoid escalating the already-tense situation in the Korean peninsula.

China’s appeal comes after the United Nations Security Council unanimously approved tougher sanctions on North Korea for a forbidden nuclear test, hours after the totalitarian state threatened a preemptive atomic strike on the U.S. and other “aggressors.”

The UN body Thursday voted 15-0, with no debate, to adopt a resolution drafted by the U.S. and China in the aftermath of the Feb. 12 underground blast.

“Our warnings were not heeded,” said Russian Ambassador Vitaly Churkin, who holds the council’s rotating presidency. “Now the choice is for the DPRK to make,” he said, referring to the country by its official title, the Democratic People’s Republic of Korea. “Now other interested parties must behave responsibly,” he added.

The new sanctions target “illicit activity” by North Korean diplomats, bulk transfers of cash, and banks and companies funnelling funds or materials to support the country’s ballistic missile and nuclear weapons programs. Previous measures have failed to deter the impoverished regime from pursuing its atomic weapon ambitions.

“An extremely dangerous situation is prevailing on the Korean Peninsula where a nuclear war may break out right now,” the Committee for the Peaceful Reunification of Korea, North Korea’s propaganda arm, said in a KCNA statement.

Susan Rice, the U.S. ambassador to the UN, yesterday said that if North Korea conducts another nuclear test, the Security Council would “take further significant measures.”

The tightened sanctions may lead to provocation from North Korea, Bank of Korea senior deputy governor Park Won Shik said at an emergency meeting in Seoul today.

AP Photo/KCNA via KNSNorth Korean leader Kim Jong-Un, centre, looking at the South's territory from an observation post at the military unit on Jangjae islet Thursday.

“Our financial markets, stocks, bonds, and currency may see some impact, although we don’t see any unusual moves so far,” Park said. “We will closely watch the markets and work together with the government for market stability if needed.”

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The Korean won fell 0.3% to 1089.90 per dollar as of 10:57 a.m. in Seoul, while the benchmark Kospi index was little changed at 2005.49.

North Korea regularly issues nuclear warnings, although it has yet to demonstrate the ability to put a nuclear device on a ballistic missile.

“We take all North Korean threats seriously enough to ensure that we have the correct defence posture to deal with any contingencies that might arise,” Glyn Davies, the U.S. special representative for North Korea policy, said yesterday after testifying to the Senate Foreign Relations Committee.

“It will be long journey,” to remove North Korea’s nuclear threat, China’s UN Ambassador, Li Baodong, said after the council vote. The top priority for the international community now is to defuse tensions, “bring down the heat” and focus on a diplomatic solution to the North Korea’s nuclear weapons program, he said. China is North Korea’s closest ally and biggest trading partner.

As a result, China “remains central to altering North Korea’s cost calculus,” Davies said. “Both geography and history have endowed the People’s Republic of China with a unique — if increasingly challenging — diplomatic, economic, and military relationship” with North Korea.

Implementation by China has “been the Achilles heel” of past council resolutions against Kim’s regime, Michael Green, senior vice-president for Asia at the Center for Strategic and International Studies in Washington, wrote on the blog shadow.foreignpolicy.com.

“The Obama administration should keep at China to implement the new sanctions in terms of specific actions,” Green wrote.

China’s support for the sanctions may reflect its mounting frustration with North Korea after the Feb. 12 nuclear test held in defiance of both the UN and the Chinese government.

A hint of official Chinese frustration toward the regime headed by 30-year-old Kim emerged in a Feb. 27 opinion article in the Financial Times by Deng Yuwen, deputy editor of Study Times, the journal of the Central Party School of China’s Communist Party.

“China should consider abandoning North Korea,” Deng wrote. A nuclear-armed North Korea might put China on the losing side of any confrontation on the Korean peninsula, and North Korea’s ruling elite simply won’t let the regime reform, he added. “Beijing should give up on Pyongyang and press for the reunification of the Korean peninsula,” he wrote.

AP Photo/Ahn Young-joonSouth Korean armoured vehicles move during an exercise near the demilitarized zone of Panmunjom in Jeokseong, South Korea, Friday.