SEOUL (Reuters) - North Korea increased regional tension just ahead of a trip to Asia this week by U.S. President Barack Obama by sparking a small-scale naval skirmish with the South on Tuesday.
Here are some of the implications of the fight, which appears to be a measured and limited attempt by the North to step up its bargaining leverage:
* The North is likely looking to rattle the region and grab attention ahead of the Obama visit, but did not want to make a move that could escalate into a serious conflict.
* The skirmish is not likely to spill out into a greater conflict with serious implications for regional economies. Market players will see this incident as a reminder of the threat posed by the North, but it is unlikely to cause an immediate shift in investment decisions.
* The North wants to strengthen its bargaining position ahead of a visit to Pyongyang by Stephen Bosworth, the U.S. special envoy, which South Korean media say is likely within the next few weeks.
* North Korea does not yet appear to have decided if it will return to dormant six-country nuclear talks, where it may bargain away parts of its arms programme in exchange for much needed aid and better international standing.
* Regional powers may try to force North Korea’s hand by letting the country stew a little more in its economic malaise, exacerbated by U.N. sanctions, to punish it for its May nuclear test. The sanctions have cut its cash flow of overseas arms sales and hampered Pyongyang’s plans to rebuild the state’s broken economy by 2012.
* Pyongyang may try to force the hand of regional powers with further provocative moves that could include short-range missile launches, ballistic missile tests, restarting the reactor at its Yongbyon nuclear plant or even another nuclear test.
Editing by David Fox