SEOUL, April 23 (AFP) - North Korea seized South Korean-owned assets at a mountain resort Friday, warning that the two countries were on the brink of war over the sinking of a warship on their disputed border.
The communist state also declared that highly symbolic cross-border tours to the scenic Mount Kumgang resort had been halted for good, accusing South Korean President Lee Myung-Bak of pursuing "confrontation" with the North.
The action comes amid high tension over the sinking of a South Korean warship last month that left 46 sailors dead.
"The situation has reached such extreme phase that it is at the crossroads of a war or peace, much less thinking of the resumption of the tour," a North Korean state agency said.
"It is quite natural that we can no longer show generosity and tolerance to the south side under this situation."
North Korea last week expelled staff and sealed five buildings owned by the Seoul government at the Kumgang resort in protest at Seoul's refusal to restart cross-border tours.
It said Friday it was seizing the five buildings while freezing "all the remaining real estates" at the resort and expelling all their management personnel.
The move came hard on the heels of a report by the South's Yonhap news agency Thursday which quoted a senior military source as saying it was suspected that North Korean submarines attacked the ship with a heavy torpedo.
Pyongyang, which has denied responsibility, accused Seoul of linking it to the blast "deliberately", describing Lee as a "traitor".
"The puppet group went (to) the lengths of crying out for the total severance of the North-South relations and trumpeting about 'not ruling out a war' while deliberately linking the sinking of its warship to the DPRK (North Korea)," it said.
A 1,200-tonne corvette, the Cheonan, broke in two and sank on March 26 near the disputed maritime border with the North in the Yellow Sea.
South Korea has so far refrained from directly accusing North Korea over the sinking although Defence Minister Kim Tae-Young has raised the possibility that a mine or torpedo may have sunk the corvette.
Lee on Wednesday vowed a "resolute" response to the Cheonan disaster, calling the worst peacetime loss of life for South Korea's navy a "wake-up call" and describing the North as the world's "most belligerent" state.
Ties between the two Koreas appeared to have entered a new phase of reconciliation after an historic inter-Korean summit in 2000 but have spiralled downwards since Lee's government took power in 2008.
Lee took a tougher stance toward Pyongyang, while the North's nuclear weapons development sparked international condemnation and sanctions.
A high-ranking North Korean defector on Thursday said it was "obvious" the communist regime's leader Kim Jong-Il was behind the sinking, accusing him of wanting to create chaos on the Korean peninsula.
Hwang Jang-Yop, the architect of the communist regime's ideology of "juche," or self-reliance, was once secretary of the ruling Workers' Party and a tutor to Kim.
South Korean police tightened security for the 87-year-old this week after two North Korean military officers were arrested for plotting to assassinate him.
Meanwhile, salvage teams lifted the remaining half of the broken warship from the seabed Friday in another crucial step in the investigation to determine the cause of the deadly disaster.
The bow of the Cheonan was hauled to the surface by a giant floating crane after the stern section was salvaged last week, and detailed inspections of the wreck are expected on Saturday.
The disputed Yellow Sea border was the scene of deadly naval clashes between the North and South in 1999 and 2002 and of a firefight last November that left a North Korean patrol boat in flames. (By Lim Chang-Won/ AFP)