By JEAN H. LEE, Associated Press Writer Jean H. Lee, Associated Press Writer
SEOUL, South Korea – South Korea's president slashed trade to impoverished North Korea and pledged to haul Pyongyang before the U.N. Security Council, vowing Monday to make Pyongyang "pay a price" for a torpedo attack that killed 46 sailors.
President Barack Obama offered his full support for South Korea's moves, and U.S. Secretary of State Hillary Rodham Clinton conferred with China — a veto-wielding permanent seat holder on the Security Council — on the next step in what she called a "highly precarious" security situation.
The March 26 sinking of the Cheonan in the Yellow Sea off the west coast was one of South Korea's worst military disaster since the 1950-53 Korean War. A torpedo fired from a North Korean submarine tore the ship in two, an international team of investigators concluded last week.
President Lee Myung-bak called the attack the latest in a series of provocations from the North, and aimed to strike Pyongyang financially by cutting trade with the country in desperate need for hard currency.
South Korea has been North Korea's No. 2 trading partner, behind China, and the measure will cost Pyongyang about $200 million a year, said Lim Eul-chul, a North Korea expert at South Korea's Kyungnam University.
The move deals a direct and painful blow to the cash-hungry North, the state-run Korea Development Institute said.
"We have always tolerated North Korea's brutality, time and again. We did so because we have always had a genuine longing for peace on the Korean peninsula," he said in a solemn speech to the nation from the halls of the country's War Memorial.
"But now things are different. North Korea will pay a price corresponding to its provocative acts," he said, calling it a "critical turning point" on the tense Korean peninsula, still technically in a state of war because the fighting ended in a truce, not a peace treaty.
Clinton said North Korea's neighbors — including Pyongyang ally China, which has refrained from criticizing its neighbor — understand the seriousness of the matter. She would not say whether such action would include new international sanctions against the North.
"We are working hard to avoid an escalation of belligerence and provocation," Clinton said.
Pyongyang also disputes the maritime border unilaterally drawn by U.N. forces at the close of the war, and the Koreas have fought three bloody skirmishes there, most recently in November. The Cheonan went down not far from the Koreas' sea border.
Defense Minister Kim Tae-young said the U.S. and South Korea would hold anti-submarine military exercises in the waters. The U.S. has 28,500 troops in South Korea, a major sore point for the North.
In Washington, an Obama administration official said military commanders were coordinating closely with South Korea on how the U.S. can help if North Korea continues its threatening behavior. The official, who spoke on the condition of anonymity because the discussions are continuing, said that would likely include U.S. assistance with military training exercises.
South Korea's military will also resume blaring anti-North Korean propaganda back over the border — a sensitive practice suspended in 2004 amid warming ties, officials said.
Lee called the sinking of the Cheonan yet another example of "incessant" provocation by communist North Korea, accused in a 1983 attack on a presidential delegation that killed 21 people and the bombing of an airliner in 1987 that claimed 115 lives.
North Korea routinely denies involvement in the attacks, and has steadfastly denied responsibility for the Cheonan sinking. Naval spokesman Col. Pak In Ho warned last week in comments to broadcaster APTN that any move to retaliate or punish Pyongyang would draw "all-out war."
Pyongyang regularly issues belligerent warnings of war if provoked by the South or the U.S.
On Monday, the powerful National Defense Commission criticized Lee's speech as a "clumsy farce," according to the official Korean Central News Agency.
"This is an open breach of the inter-Korean military agreement, a grave military provocation and a serious incident driving the inter-Korean relations to the worst phase," a news anchor said on North Korean state TV.
One 23-year-old university student in Seoul said she feared war.
"I'm genuinely scared that this will escalate into a full-on war," Do Yoon-hee said as she watched a replay of the president's address on her cell phone. "I don't feel that these countermeasures keep us safer."
Businessman Park Joo-shin, however, doubted fighting would break out again on the Korean peninsula.
"An all-out war would be suicidal for Pyongyang," he said.
The truce prohibits South Korea from waging a unilateral military attack, so Seoul sought Friday to strike at Pyongyang's faltering economy.
Seoul carried out $1.68 billion in trade with North Korea in 2009, about 33 percent of Pyongyang's total trade, according to the Korea Trade-Investment Promotion Agency. China is North Korea's biggest trading partner, with commerce totaling $2.68 billion last year — about 53 percent of the North's total, KOTRA said.
Imports of sand and other goods will be halted, and North Korean cargo ships will be denied permission to pass through South Korean waters, Unification Minister Hyun In-taek said.
The biggest source of trade — a joint factory park in the North Korean border town of Kaesong where some 110 South Korean firms employ about 42,000 North Koreans — will remain open, Hyun said.
The suspension of imports will deal a "direct blow" to North Korea, the state-run Korea Development Institute said.
Lim predicted, however, that the North would make up the loss by finding Chinese partners.
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Associated Press writers Hyung-jin Kim, Sangwon Yoon and Kelly Olsen in Seoul and Matthew Lee in Beijing contributed to this report.
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