by Xian Wan, BBC News Southeast Asia Desk, for the BBC's Biodun Iginla

 YEONPYEONG ISLAND, South Korea – North Korea warned Friday that U.S.-South Korean plans for military maneuvers put the peninsula on the brink of war, and appeared to launch its own artillery drills within sight of an island it showered with a deadly barrage this week.

The fresh artillery blasts were especially defiant because they came as the U.S. commander in South Korea, Gen. Walter Sharp, toured the South Korean island to survey damage from Tuesday's hail of North Korean artillery fire that killed four people.

None of the latest rounds hit the South's territory, and U.S. military officials said Sharp did not even hear the concussions, though residents on other parts of the island panicked and ran back to the air raid shelters where they huddled earlier in the week as white smoke rose from North Korean territory.

Tensions have soared between the Koreas since the North's strike Tuesday destroyed large parts of this island, killing two civilians as well as two marines in a major escalation of their sporadic skirmishes along the sea border.

The attack — eight months after a torpedo sank a South Korean warship further west, killing 46 sailors — has also laid bare weaknesses in South Korea's defense 60 years after the Korean War. The skirmish forced South Korea's beleaguered defense minister to resign Thursday, and President Lee Myung-bak on Friday named a former chairman of the Joint Chiefs of Staff to the post.

The heightened animosity between the Koreas is taking place as the North undergoes a delicate transition of power from leader Kim Jong Il to his young, inexperienced son Kim Jong Un, who is in his late 20s and is expected to eventually succeed his ailing father.

Washington and Seoul have pressed China to use its influence on Pyongyang to ease tensions amid worries of all-out war, and a dispatch from Chinese state media on Friday — saying Beijing's foreign minister had met with the North Korean ambassador — appeared to be an effort to trumpet China's role as a responsible actor and placate the U.S. and the South.

The U.S., meanwhile, is preparing to send a nuclear-powered aircraft carrier to South Korean waters for joint military drills in the Yellow Sea starting Sunday.

The North, which sees the drills as a major military provocation, unleashed its anger over the planned exercises in a dispatch earlier Friday.

"The situation on the Korean peninsula is inching closer to the brink of war," the report in the North's officialKorean Central News Agency said.

A North Korean official boasted that Pyongyang's military "precisely aimed and hit the enemy artillery base" as punishment for South Korean military drills — a reference to Tuesday's attack — and warned of another "shower of dreadful fire," KCNA reported in a separate dispatch.

China also expressed concern over any war games in waters within its exclusive economic zone, though the statement on the Foreign Ministry website didn't mention the drills starting Sunday. That zone includes areas south of Yeonpyeong cited for possible maneuvers, though the exact location of the drills is not known.

China strongly protested an earlier round of drills in the region but has been largely mute over the upcoming exercises. Beijing could be withholding direct criticism to avoid roiling ties with South Korea and the U.S. and to register its displeasure with ally North Korea.

The North Korean government does not recognize the maritime border drawn by the U.N. in 1953, and considers the waters around Yeonpyeong Island its territory.

Yeonpyeong Island, home to South Korean military bases as well as a civilian population of about 1,300 people, lies only 7 miles (11 kilometers) from North Korean shores and is not far from the spot where the South Korean warship sank in an explosion in March.

Gen. Sharp said during his visit to the island that Tuesday's attack was a clear violation of an armistice signed in 1953 at the end of the three-year Korean War.

"We at United Nations Command will investigate this completely and call on North Korea to stop any future attacks," he said Friday.

Washington keeps more than 28,000 troops in South Korea to protect its ally from aggression — a legacy of the Korean War that is a sore point for North Korea, which cites the U.S. presence as the main reason behind its need for nuclear weapons.

Dressed in a heavy camouflage jacket, army fatigues and a black beret, Sharp walked down a heavily damaged street strewn with debris from buildings. Around him were charred bicycles and shattered bottles of soju, Korean rice liquor.

AP photographers at an observation point on the northwest side of Yeonpyeong heard explosions and saw at least one flash of light on the North Korean mainland.

There were no immediate reports of damage. Only a few dozen residents remain on Yeonpyeong, with most of the population of 1,300 fleeing in the hours and days after the attack as authorities urged them to evacuate.

Many houses were blackened, half-collapsed or flattened, the streets littered with shattered windows, bent metal and other charred wreckage. Several stray dogs barked as they sat near destroyed houses. A group of South Korean marines carrying M-16 rifles patrolled along a seawall as the sun rose from the ocean.

On Thursday, the South's president ordered reinforcements for the 4,000 troops on Yeonpyeong and four other Yellow Sea islands, as well as top-level weaponry and upgraded rules of engagement.

He also sacked Defense Minister Kim Tae-young amid intense criticism that Yeonpyeong was unprepared for the attack and that the return fire came too slowly. Lee named former Joint Chiefs of Staff chairman Kim Kwan-jin to the post, the president's office announced Friday.

Despite the criticisms, South Korea assured a meeting of the European Olympic Committees on Friday that it would be able to ensure security at the 2018 Winter Games if it's picked. The chair of the Pyeongchang 2018 bid committee presented their case Friday in Belgrade.

Lee, dressed in a black suit, visited a military hospital in Seongnam near Seoul Friday to pay his respects to the two marines killed in the North Korean attack.

Lee laid a white chrysanthemum, a traditional symbol of grief, on an altar, burned incense and bowed before framed photos of the two young men. Consoling sobbing family members, he vowed to build a stronger defense.

"I will make sure that this precious sacrifice will lay the foundation for the strong security of the Republic of Korea," he wrote in a condolence book, according to his office.

___

The Russian default

Nov 25th 2010 | From The Economist print edition

How the IMF was stumped by Russia

No Precedent, No Plan: Inside Russia’s 1998 Default. By Martin Gilman. MIT Press; 416 pages; $29.95 and £22.95. Buy from Amazon.com, Amazon.co.uk

BEFORE the global economic crisis, the IMF’s slide into irrelevance seemed assured. Now it is back at the front line of gargantuan bail-out packages, wrangling over government spending and tax reform, and attempts to stop sovereign defaults further disturbing the jittery global financial system. Few would doubt that the fund faces a thankless task in countries such as Pakistan and Greece. But its missions are also intensely political and their success fundamentally unpredictable. Just how much so readers will learn from Martin Gilman’s account of Russia’s fitful, often stumbling economic reforms in the short decade between the collapse of the Soviet Union and the country’s default on its domestic debt in 1998. Especially unpredictable too are the chances of troubled economies getting back onto an even keel.

As the IMF’s senior representative in Russia, based in Moscow during the 1990s, Mr Gilman is well-placed to offer an unusually detailed account of what really went on as the IMF tried to work with the Russian authorities to help it move from post-Soviet chaos to a functioning market economy. Few observers fully appreciated just how dysfunctional the Russian state was at the time. The Russian establishment, or whichever faction had the upper hand in the endless internecine manoeuvrings he describes, grossly overestimated the extent to which it could effect changes in policy. And of course there was corruption. Mr Gilman’s view is that there was less outright pilferage than is commonly believed, though American food aid and bilateral trade credits were two areas where corruption was endemic. The biggest problems, he says, were poorly conceived projects and wasteful expenditure. The IMF repeatedly erred in believing the claims of Russian politicians about what they could achieve. In the end, the fund had only a marginal effect on the course of events, though Mr Gilman stops short of admitting it was out of its depth.

The results were often farcical. In the mid-1990s, Russian targets for tax collection were repeatedly thwarted by a tendency first to overestimate the government’s capacity to raise revenues and then, when faced with chronic shortfalls, to resort to apparently attractive shortcuts that promised quick fixes to problems that required institutions to be built up slowly. But there is a particularly otherworldly feeling to the tale of the Russian government setting up an agency to galvanise tax collection, apparently without realising that its acronym, VChK, was identical to that of a much-hated early Bolshevik secret police force, making it an easy target for political opponents.

Given just how heavily the cards appear to have been stacked against Russia in Mr Gilman’s account, it is not surprising that the wayward progress of its economic transformation in the 1990s culminated in its 1998 default. Mr Gilman cautions that Russia’s fundamental institutional problems, including the absence of much rule of law, still need to be properly addressed. Meanwhile, though, the economy is growing; inflation has been tamed; and the poverty rate was halved in the ten years to 2009, helped by an eightfold increase in the oil price. Mr Gilman disagrees with those who interpret this period as a “temporary aberration fuelled by high energy prices”, pointing out that Russia has, in the past decade, also made some good policy choices, including reforming its tax code and passing prudent budget laws.

Russia’s particular circumstances after communism’s collapse make it unique. Still, those trying to reform other highly indebted economies on the brink of default will find plenty to chew over in Mr Gilman’s account of the toxic interaction between domestic politics and otherwise soundly conceived economic policies. But they will be disappointed if they seek to understand how governments can deal with the justifiable frustration that people feel, and seek to express, during times of economic turmoil. Mr Gilman’s portrait of Russia in the 1990s details every twist and turn of policy in sometimes excruciating detail. But the Russian people—and any sense of what it felt like to live through the tumultuous times he describes—are largely absent from this book.