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Pyongyang lashes out at US war games offshore. Clinton announces ever-stricter sanctions, as the UN balks at naming the north in Cheonan incident. President Lee loses his bid to convert Sejong City into a knowledge hub. The Bank of Korea raises interest rates. And an activist hurls a cement block at the Japanese ambassador.
Top News: North Korea threatened in a statement to use “nuclear deterrence” in order to defend itself from a joint military exercise launched by South Korea and the United States, saying that the two countries are pushing the situation to “the brink of war.”
Seoul and Washington kicked off the four-day drill despite the threats and warnings from North Korea in the seas east of the Korean peninsula. The massive exercise, which includes a nuclear-powered U.S. aircraft carrier, 20 ships, 200 aircrafts and 8,000 servicemen, was planned after South Korea concluded that North Korea sank one of its ships killing 46 sailors in March. The allies have emphasized that the drill is strictly defensive, but it is widely seen as a message to Pyongyang.
The large-scale exercise comes after a visit from U.S. Secretary of State Hillary Clinton to South Korea in which she announced that Washington would slap North Korea with additional sanctions that will further expand the scope of the existing freeze on Pyongyang’s international assets and travel restrictions already in place.
The measure is expected to add pressure to North Korea by further choking its access to hard currency. Pyongyang is already suffering from U.N. sanctions that were put in place as a punitive measure after the North conducted a banned missile test.
The U.N.’s Security Council issued a statement that condemns the act of sinking the South Korean naval ship, a matter the United States, South Korea and Japan have strongly been pushing for, but failed to directly attribute the attack to North Korea. The statement cited international investigation results that concluded a North Korean torpedo caused the sinking but also noted Pyongyang denied any involvement in the attack.
The United Nations Command made an official invitation to North Korea’s military to take part in a joint investigation into the sinking of the ship. North Korea has not responded to the offer, but both sides agreed to hold further talks July 29.
President Lee Myung-bak’s controversial plan to build an industrial, education and science hub was shot down by the National Assembly. Instead, the government will proceed with the original plan to build a second administrative capital Sejong City.
The Sejong City bill had become the center of a dispute with the opposition parties after President Lee announced his intention to revamp the plans created by his predecessor, the late President Roh Moo-Hyun, who intended to develop Sejong for government offices to decentralize power from Seoul.
The related bills were killed with a vote of 164 to 105. As a result, 35 government agencies, including the Prime Minister’s Office and the Ministry of Finance, will be relocated to the province of Chungcheong, located towards the center of the peninsula, by 2014, according to the Public Administration Ministry.
Money: The Bank of Korea raised its key interest rate to 2.25 percent surprising most of those in the market who had speculated the central bank would wait until next month to make such a move.
The bank had maintained a rate of two percent for the past 17 months since February of 2009 to battle the economic crisis but made the move indicating that it is moving towards an exit strategy. South Korea had also been urged by the International Monetary Fund (IMF) to raise its interest rates as a measure to keep inflation under control.
LG Chem will be the exclusive battery supplier to U.S. automaker Ford’s all-electric vehicle Focus that is scheduled to go into production in 2011. The battery cells will be manufactured in South Korea and assembled by an LG Chem subsidiary in the U.S., but the cells will later be produced at a new site in Holland, Michigan. LG Chem currently supplies its lithium-ion batteries to seven automakers and two out of three of the major electric-car auto manufacturers in the States.
South Korea’s information technology exports hit a new high by volume in the first half of this year, jumping to a near $72.9 billion from the previous peak $70.2 billion set in the second half of 2007. The exports were driven by strong demand for semiconductors and display panels, according to the Ministry of Knowledge and Economy.
Elsewhere: The police arrested a 50-year-old civic activist for throwing a block of concrete at the Japanese ambassador to South Korea during a Korea-Japan joint forum. The ambassador, Toshinori Shigeie, was delivering a speech when the activist started yelling that Korea was divided because of Japan and suddenly threw a block of concrete the size of a mobile that he had prepared ahead of time.
South Korea’s Foreign Minister Yu Myung-hwan phoned Ambassador Shigeie to apologize and said the attack was completely unacceptable expressing his feelings of regret.
The activist said he works to promote the sovereignty of a group of disputed islets in the East Sea called Dokdo in Korea and Takeshima in Japan. The territory has long been a source of controversy and center of heated nationalistic movements in both countries.