Despite the angry rhetoric coming from North Korean officials and media, North Korea is not mobilizing for war. That's mainly because North Korea has not got the resources to mobilize for much of anything. Shortages of food, fuel and just about everything else, continue, and get worse. Inside North Korea, Communist Party members are being told that the party line is that the sinking of the Cheonan was fabricated by South Korea and the United States, to make North Korea look bad. Some South Koreans have latched onto this and are blaming the United States for sinking the Cheonan, and the South Korean government for fabricating a cover up. But these pro-North Korean groups are having a harder time attracting and keeping members, because so much more damning evidence of the truth is getting out of North Korea. Not just from refugees and Chinese who do business there, but from things like Google Earth, that clearly show the luxury housing of the tiny ruling class, and the poverty of everyone else (as well as the prison camps.)
North Korean military officials are enthusiastic about war, having absorbed their own propaganda that the South Korean and American military are ineffective and that a war would bring quick victory for the north. But government officials, especially those running the economy, see war as disastrous, and likely to end communist rule (and any semblance of order) in the north.
The defiant attitude of the north, and its potential to unleash a missile and rocket bombardment on South Korean urban areas, makes it impossible to punish North Korea, or bring to justice those responsible for sinking the South Korean ship and killing 46 sailors. China and Russia, while quietly admitting that North Korea was responsible, refuse to openly condemn the unpredictable North Koreans.
North Korea has been issuing new identity cards, that work with a new, computerized data system. The new cards make it easier to find out who has fled the country. While this was supposed to result in discouraging running to China or South Korea, it has more often turned into another opportunity for the security forces to get rich. When the secret police find a family with a "missing" relative, they will accept a bribe to move on and check on another family. Generally, the police state up north is growing weaker, as more of its security personnel are corrupted. Several anti-corruption campaigns have had limited impact. As more luxury goods leak in from China, there's more neat stuff corrupt officials can buy, in addition to more food and sex (setting up a mistress is a favorite way to spend some of your bribes.)
June 5, 2010: South Korea announced that it would not go to war with North Korea over the Cheonan incident, but that there would be consequences for North Korea.
June 4, 2010: South Korea has formerly asked the UN to investigate the sinking of the Cheonan. Russia and China have indicated that they will block any action (via their veto on the security council.) North Korea responded by threatening war, as it has done hundreds of times in the last sixty years. The threat has lost its shock value.
June 2, 2010: While the U.S. and South Korea have cut all aid to North Korea, the UN is going ahead with $170 million in health and education programs in North Korea. These programs are allowed in North Korea because the government takes credit for them, and obtains a lot of foreign currency (by charging the UN disproportionate fees for goods and services obtained inside North Korea). These are, in effect, bribes, to allow UN aid organizations to operate inside the north..
June 1, 2010: South Korea and the U.S. are going to hold more military exercises together, and increase efforts to monitor North Korean forces, and especially to improve anti-submarine capabilities. This last item is difficult. A slow moving mini-sub, of the type that sank the Cheonan, is very difficult to find when it is operating in shallow coastal waters. Thus, most of the U.S.-South Korea naval exercises will take place in deep water, putting any North Korean subs tempted to sink another warship, at greater risk of detection and destruction. That is one change that no one likes to speak about. Both the U.S. and South Korea have told their troops to take no chances, and to sink any suspicious subs, or surface ships, that approach. This would probably not trigger a larger North Korean attack across the DMZ, because such an attack would, ultimately, be suicidal for the tiny ruling class up north. There's a lot of bluff coming from the north. But, at the same time, the leadership up there have long been out of contact with reality, and prone to aggressive and murderous actions. The sinking of the Cheonan was just another of these terrorist acts. It's been going on for over sixty years, and is a hard habit to break.
May 29, 2010: China has quietly informed South Korea that it will not openly censure North Korea for sinking the Cheonan, but will chastise the northern leadership in private. Most importantly, China will tell the northerners that they can no longer depend on automatic Chinese support if there is another war with the south. If true, this is a serious punishment, since North Korea always relied on Chinese backup. Without it, North Korea is likely to lose any all-out war with the better armed south.
May 28, 2010: South Korea has canceled leaves (vacation time) for military personnel and put units on the DMZ on a higher degree of alert.
May 27, 2010: A new UN report on North Korean gunrunning accuses the north of supplying Myanmar (Burma) with nuclear weapons technology. Meanwhile, North Korea warned the south, and anyone else, that ships entering North Korean waters (including those that both the north and south claim) can expect to be attacked.
May 24, 2010: South Korea's official reprisals against the north, for the sinking of the Cheonan, consist mostly of cutting diplomatic and economic ties, including all aid programs. The north responded by cancelling previous non-binding ("feel good") agreements, like the one where both nations pledged not to attack each other. The cuts in trade hurt a lot, because North Korea foreign trade has been declining for the last two years (because of their economic collapse) anyway. But it's believed most of this foreign trade, which provided access to foreign currency (and the ability to buy foreign goods) only benefitted the ruling class and security forces (who need foreign currency to buy cell phone jammers and the like.)
May 21, 2010: A female refugee from North Korea was arrested and charged with being a North Korean spy. The south as been finding more of these agents, especially since arriving refugees have been subjected to greater scrutiny.
May 20, 2010: South Korea has officially accused North Korea of sinking the Cheonan, and is now seeking punishment of the north for this act of aggression.
May 18, 2010: South Korea froze all aid programs for the north.