South Korea has vowed to punish North Korea for sinking a warship despite the hardline regime’s threat to sever all ties, as US Secretary of State Hillary Clinton arrived in Seoul.

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Further upping the stakes in a standoff that has fuelled regional tensions, the North’s military said it would block access to a jointly run industrial estate if the South resumes cross-border propaganda broadcasts.

The confrontation began when a multinational investigation concluded last week that a North Korean submarine had torpedoed one of Seoul’s corvettes, the Cheonan, on March 26, with the loss of 46 lives.

The South announced a package of reprisals on Monday, including a halt to most trade.

It is also mounting a diplomatic drive to punish the North through the United Nations Security Council.

“North Korea should have apologised for its attack on the Cheonan and punished those responsible, but again it has taken a threatening step that undermines inter-Korean relations,” said unification ministry spokesman Chun Hae-Sung.

Threat of ‘all-out war’

“The government will deal with such North Korean threats sternly and unwaveringly and will carry out the (reprisal) measures announced on May 24.”

In Canberra, Foreign Minister Stephen Smith said Australia was concerned about the lack of peace and security on the Korean Peninsula and wanted the United Nations to intervene.

“We think the international community through the Security Council has to show its condemnation of North Korea’s conduct, of its belligerent attitude, and of its constant destabilisation of the Korean Peninsula,” he told ABC Radio on Wednesday.

The investigators’ report sparked widespread international condemnation of the communist North, with the notable exception of its ally China.

The North says the South faked evidence of its involvement in the sinking in an attempt to fuel confrontation for domestic political reasons.

It threatens “all-out war” against any punitive moves.

‘All contact severed’

The regime announced late Tuesday that it was breaking all links in protest at Seoul’s claims, and banning South Korean ships and planes from its territorial waters and airspace.

The North said relations would remain severed while conservative President Lee Myung-Bak remains in power in Seoul.

Lee, who steps down in 2013, has enraged the North by linking aid to dismantling Pyongyang’s nuclear program.

“There is no need to show any mercy or patience for such confrontation maniacs, sycophants and traitors and wicked warmongers as the Lee Myung-Bak group,” a statement said.

The North notified the South early on Wednesday that it had shut down two communications lines, but not one used to approve access to Kaesong, where 42,000 North Koreans work in 110 South Korean-funded factories.

But later in the day, its military threatened to block access to the industrial park if the loudspeaker broadcasts go ahead.

Planes avoiding NKorea

The military also repeated a threat to open fire at the speakers.

The South has decided to resume the broadcasts after a lapse of six years as part of its reprisals and has begun installing loudspeakers along the heavily fortified frontier.

“If the south side sets up even loudspeakers in the frontline area to resume the broadcasting… the KPA (North Korean army) will take military steps to blow up one by one the moment they appear by firing sighting shots,” the North’s official news agency said.

The transport ministry in Seoul said it had already instructed South Korean airlines on Monday to avoid the North’s airspace as tensions rose.

The United States said North’s decision to cut all ties was strange.

“South Korea is one of the most dynamic economies in the world…. North Korea is unable to care for its citizens,” said State Department spokesman Philip Crowley.

US support for SKorea

“I can’t imagine a step that is less in the long-term interest of the North Korean people than cutting off further ties with South Korea.”

The US has backed Seoul’s punitive measures and says it will soon hold anti-submarine and other naval exercises with Seoul.

US Defence Secretary Robert Gates and Japanese Defence Minister Toshimi Kitazawa vowed “unified support” for South Korea during a Washington meeting on Tuesday.

Clinton arrived in Seoul on Wednesday from Beijing, where she had pressed China to get tougher on North Korea during two days of talks.

China – which could veto any UN move for new sanctions – has not blamed the North for the sinking but merely called for restraint by all sides.

Clinton was to hold talks on Wednesday with President Lee Myung-Bak and Foreign Minister Yu Myung-Hwan before holding a press conference and departing for home.