” U.S. Secretary of State Hillary Rodham Clinton said on Wednesday the world must respond to the “unacceptable provocation” represented by the sinking of a South Korean warship blamed on Pyongyang, as the regime shelled out more blistering rhetoric against Seoul and Washington.

Tension on the divided Korean peninsula has risen dramatically since international investigators said last week that a torpedo fired by a North Korean submarine tore apart and sank the South Korean warship Cheonan on March 26, killing 46 sailors.

Relations are at their lowest point in a decade, when South Korea began reaching out to the North with unconditional aid as part of reconciliation efforts. South Korean President Lee Myung—bak has taken a harder line against Pyongyang since taking office in 2008 amid delays in the North’s promised denuclearization and has suspended aid.

South Korea, backed by the U.S., Japan and other allies, began implementing a package of punitive measures against the North on Tuesday ” ranging from slashing trade, resuming propaganda warfare and barring the North’s cargo ships. Those were seen as among the strongest it could implement short of military action.

“This was an unacceptable provocation by North Korea, and the international community has a responsibility and a duty to respond,” Ms. Clinton told reporters in Seoul, the final leg of a three—nation Asian tour.

South Korea’s measures “are absolutely appropriate and they have the full support of the United States.”

Later on Wednesday, North Korea again called the investigation results a “fabrication” and accused President Barack Obama’s administration of being behind a plot to pinpoint the North as the culprit to bolster its military presence in the region.

“As a matter of fact, the Obama administration is straining the situation in a bid to beef up its forces in the region and tighten its military domination,” the official Korean Central News Agency said in a commentary. It did not mention Ms. Clinton’s trip.

North Korea, which has vowed to retaliate against any punishment for the ship sinking, has declared it is cutting relations with South Korea, starting “all—out counterattacks” against the South’s psychological warfare operations and barring South Korean ships and airliners from passing through its territory.

On Wednesday, the North cut off some cross—border communication links and expelled eight South Korean government officials from a joint factory park in the North Korean border city of Kaesong.

The North’s military also issued a statement warning it would “totally ban” the passage of South Korean personnel and vehicles to Kaesong if Seoul does not stop psychological warfare operations. It also said it would “blow up” any propaganda loudspeakers South Korea installs at the border.

“We will never tolerate the slightest provocations of our enemies, and will answer to that with all—out war,” Maj. Gen. Pak Chan Su, a Korean War veteran, said in Pyongyang, according to footage from APTN. “This is the firm standpoint of our People’s Army.”

Ordinary citizens also had harsh words for the South.

“The South Korean puppet authorities are raving like a mad man, linking the sinking of the Cheonan with us but the truth will be revealed,” said Ri Gyong Dok, a Pyongyang resident. “We value inter—Korean relations, but the puppet authorities challenging and scheming for a war” this cannot be tolerated.”

South Korea’s military said there were no signs of unusual activity by North Korean troops. The North and South have technically remained at war since the 1950—53 Korean War ended with an armistice rather than a peace treaty.

Despite the harsh rhetoric and threats, North Korea still allowed South Korean workers to cross the border to enter the Kaesong complex on Wednesday. Another border crossing on the eastern side of the peninsula remained open, according to South Korea’s Unification Ministry.

The North’s statement on Tuesday saying it would sever ties did not refer to the 800 South Korean company managers and workers at Kaesong. Seoul excluded the complex” the last remaining major inter—Korean reconciliation project” from its retaliatory measures.

The North’s threat to cut off access to the factory zone is seen as worrisome as it could potentially strand some of the South Koreans, who mostly commute to the facility, about an hour’s drive from Seoul.

South Korea wants to bring North Korea before the U.N. Security Council over the sinking, and has U.S. support. The U.S. has said evidence of the North’s culpability in the sinking is overwhelming, but key North Korean ally China has said it is still weighing evidence and has done little but urge calm on all sides.

“I believe that the Chinese understand the seriousness of this issue and are willing to listen to the concerns expressed by both South Korea and the United States,” said Ms. Clinton, who visited China before coming to Seoul. “We expect to be working with China as we move forward in fashioning a response.”

The U.S. and South Korea are planning two major military exercises off the Korean peninsula in a display of force intended to deter future aggression by North Korea, the White House said. The U.S. has 28,500 troops in South Korea.

For Pyongyang, a strengthened U.S.—South Korea alliance following the sinking “must feel like a noose tightening around its neck,” said Lee Sang—man, a professor at Chung—Ang University in Seoul and an expert on the North.

Prf. Lee, however, said the ongoing tension will eventually be defused through resumed talks between the Koreas. He pointed to 1994, when former President Jimmy Carter visited Pyongyang and helped restore calm amid a crisis that erupted after North Korea said it would withdraw from the Nuclear Nonproliferation Treaty.

“Just when it felt like a war was about to break out, the two Koreas started talking again,” he said.

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