North Korea announced on 25 May it was cutting all ties with South Korea in retaliation for Seoul imposing sanctions on Pyongyang after torpedoing
one of the South's warships. North Korea also said that Pyongyang would expel all South Koreans from a joint-industrial zone in Kaesong, near
the border.

The announcement, leaves relations at their worst point for years. It came as a monitoring group in Seoul reported that the North Korean leader, Kim
Jong-il, last week ordered his military to prepare for war in case the South attacks. Military officials in Seoul were unable to confirm the report, and
said they had detected no unusual troop movements.

The North's statement followed and announcement by South Korea's president, LeeMyong-bak, that Seoulwould suspend trade, banNorthern ships
from its waters and take Pyongyang to the UN security council. This, he
announced that Seoul would re-designate the North as its "main enemy"
a termit dropped six years ago, when relations were thawing.

Citing the Committee for the Peaceful Reunification of Korea, KCNA said

Pyongyang would engage in no dialogue or contact while Lee was in
power; he is due to leave office in 2013. Relations on the divided peninsula deteriorated sharply after he became president last year, ending
his predecessor's "sunshine policy" of free-flowing
aid to the North.

KCNA described the retaliation as a response to Seoul's "smear campaign" the accusation, based on a report by an international team, that a Northern
torpedo caused the sinking in March of the Cheonan, which killed 46 people. Pyongyang denies any involvement.

Despite rising alarm at the tit-for-tat developments, analysts believe neither sidewantsmilitary action, fearing the cost would prove too great. But they
warn there is a risk of skirmishes, and that these could get out of hand.

Several analysts have suggested that the North's proposal to send a team to investigate the sinking a suggestion the South rejected may have been intended as an opportunity for talks as well as propaganda.
Experts said the announcement appeared to mean Southern NGOs would no longer be able to work in theNorth, spelling an end to low-level economic
and, in some cases, government links.

It also spells an end to hopes of reviving cross-border reunions between families split by the border at the end of the 1950-53 war.
The South's military resumed propaganda radio broadcasts across the border this morning after a six-year hiatus, with programmes airing news,
westernmusic and comparisons of the political and economic situations on the two parts of the peninsula.
The psychological warfare will enrage the North, which has warned it will fire at any propaganda facilities in the demilitarised zone

North Korea Statement
The following are key points from the text of the report issued by the North's KCNA news agency. The Committee for the Peaceful Reunification of
Korea, accordingly, formally declares that from now on itwill put into force the resolute measures to totally freeze the inter-Korean relations, totally
abrogate the agreement on non-aggression between the north and the south and completely halt the inter-Korean cooperation.

In this connection, the following measures will be taken at the first phase:
All relations with the puppet authorities will be severed.There will be neither dialogue nor contact between the authorities during (South Korean President)
Lee Myung Bak's tenure of office.

The work of the Panmunjom Red Cross liaison representatives
will be completely suspended. All communication links between the north and
the south will be cut off. The ConsultativeOffice forNorth-South Economic
Cooperation in the Kaesong Industrial Zone will be frozen and dismantled and all the personnel concerned of the south side will be expelled without
delay. We will start all-out counterattack against the puppet group's 'psychological warfare against the north.'

The passage of south Korean ships and airliners through the territorial waters and air of our side will be totally banned.
All the issues arising in the inter-Korean relations will be handled under a wartime law.


Regards,

Engr. Shoaib Awan