March 28 (Bloomberg) -- South Korea’s navy was searching for 46 crew members missing after an explosion sank a patrol boat near the nation’s disputed border with North Korea.
Rescuers were working near Baengnyeong Island, about 210 kilometers (130 miles) northwest of Seoul, an official at the Joint Chiefs of Staff in the South Korean capital said yesterday. It remains unclear why the 1,200-ton Cheonan sank, the official said, declining to be named because of government policy. Some 58 people have been rescued, with 13 treated for injuries.
U.S. stocks pared gains March 26 on concern the incident may have resulted from military activity involving North Korea, under international pressure to end its nuclear program. U.S. and South Korean officials said they were unaware of North Korean involvement, while the Seoul-based YTN news channel said the ship may have struck a mine on March 26, citing an unidentified official at the Korean president’s office.
“North Korea can’t afford to worsen its relations with neighbors right now with such large-scale provocations,” said Kim Yong Hyun, a professor of North Korean studies at Dongguk University in Seoul. “Kim Jong Il wouldn’t want to go down the path that would get it further away from getting economic and political support.”
North Korea’s state-run Korean Central News Agency hasn’t issued any statement or report regarding the incident and the YTN news channel said there was little chance that the North was involved. South Korea’s Defense Minister Kim Tae Young flew to the island to oversee the rescue operation.
Flock of Birds
The ship began sinking at about 9 p.m. on March 26 after an explosion blew a hole in its stern, South Korean officials said. Naval forces fired a warning shot toward the north, targeting radar images that may have been a flock of birds, a Defense Ministry official said in response to earlier reports it had fired at an unidentified ship.
U.S. Navy vessels including the USNS Salvor rescue and salvage ship are standing by to help in the event South Korea requests assistance, said Lt. Anthony Falvo, a spokesman for the U.S. Seventh Fleet, based in Japan. The American ships were wrapping up a joint training exercise nearby with South Korea.
“Should our forces be requested to provide assistance, that would be one of our main units,” Falvo said in a telephone interview.
One of the survivors from the Cheonan, Staff Sergeant Shin Eun-chong, 24, told relatives he was on night duty when he heard a boom behind him and the ship split apart, the Associated Press reported. He said the ship began tilting and he lost his glasses as he hit the deck, AP said.
Survivor Reports
Marines on deck were shouting for help amid yells and screams, the AP said, citing a witness who spoke on cable news channel YTN. The explosion occurred at the rear of the vessel and caused the engine and all power to shut down, the AP said, citing the Joint Chiefs. Waves and high winds complicated the rescue, the news service said.
North Korea showed no signs of abnormal activity, South Korean President Lee Myung Bak’s office said on its Web site. Lee told security officials to consider “all possibilities” in studying the cause of the incident, his office said. The U.S. was unaware of any North Korean involvement, said P.J. Crowley, a State Department spokesman.
Kim Jong Il’s regime is under pressure to return to international talks on its nuclear weapons ambitions. Shortages worsened after a botched currency revaluation late last year and tougher UN sanctions banning arms trading following its second nuclear test in May 2009.
Maritime Border
North Korea doesn’t recognize the maritime border drawn by the United Nations as an extension into the Yellow Sea of the Demilitarized Zone between the two Koreas. This dispute caused skirmishes in 1999 and 2002, and the countries remain technically at war since their 1950-53 conflict ended in a cease-fire, which was never replaced by a peace treaty.
In January, North Korea fired artillery in the area during military exercises, prompting warning shots by South Korea. In November, the two exchanged fire after a North Korean vessel ventured across the border.
U.S. stocks trimmed gains and Treasuries rose as concern that tensions between North and South Korea were escalating triggered a flight from risky assets. The Standard & Poor’s 500 Index fell as much as 0.4 percent yesterday on concerns that Korean tensions were rising, then closed little changed. June futures on South Korea’s Kospi 200 Index and the iShares MSCI South Korea Index Fund both slid 0.6 percent.
“This is really all about that variable we call the geopolitical; it’s about Korea,” said Peter Kenny, a managing director in institutional sales at Knight Equity Markets LP in Jersey City, New Jersey. “It’s taken some of the euphoria out of the market.”
--With assistance from Sangim Han in Seoul, Anthony Capaccio in Washington, and Michael P. Regan and Elizabeth Stanton in New York. Editors: Ann Hughey, Dick Schumacher.
To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net; To contact the reporter on this story: Viola Gienger in Washington at vgienger@bloomberg.net
To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net; Dick Schumacher at dschumacher@bloomberg.net
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