North Korea's nuclear brinkmanship of the last several weeks has created tremendous uncertainty in its already rocky relationship with South Korea. North and South Korea, who have been foes since the Korean War ended in 1953 with no peace treaty, began 2002 with continuing tensions over the Bush Administration's tougher policy towards Pyongyang. Washington has been South Korea's top ally since the Korean War, and the North has lingering resentment about the tens of thousands of U.S. troops stationed protectively in the South.

Pyongyang was deeply angered when President Bush took office in 2001 and ordered a review of U.S. ties with the North, which had warmed under the Clinton Administration. It halted a series of reconciliation projects with the South, started after the Pyongyang summit in 2000 between North Korea's Kim Jong-il and South Korean President Kim Dae-jung.

Contact only resumed in April of this year when the South sent presidential envoy Lim Dong-won to Pyongyang.

The two countries resumed holding reunions for families separated by the Cold War divisions on the Korean Peninsula, continued work on transportation routes to link the Koreas and persisted with several tourism and economic ventures to bring badly needed hard currency to the impoverished North.

That all changed again in October, when U.S. Assistant Secretary of State James Kelly went to Pyongyang to confront North Korean officials with evidence that it had a secret uranium enrichment program in violation of several international accords, including a 1994 non-proliferation pact with the United States.

Tensions quickly escalated. Washington and its allies announced an embargo on fuel aid shipments to the North. The North has responded by moving to reopen old nuclear facilities, which experts are warning could produce weapons grade plutonium.

On December 22, North Korea began to remove U.N. monitoring devices from its Yongbyon nuclear complex, moved fresh fuel rods to the site, unsealed a plant to reprocess nuclear fuel and kicked out U.N. inspectors.

The growing crisis has created political confusion in South Korea, where a new president, Roh Moo-hyun, was elected on December 19 on a pledge to continue the current policy of engaging North Korea. Mr. Roh has since indicated that may not be possible with the North's potential nuclear threat.

"That is perhaps the thing that is most perplexing about the timing of the North Korean move to restart its reactor," said Scott Snyder, who represents the Asia Foundation in Seoul. "We just saw a victory by the ruling party candidate who had pledged to maintain a policy of openness and dialogue with North Korea. And the North, through its actions, even before the new administration has a chance to put together a foreign policy team, is creating circumstances that are going to make the possibility of sustaining that policy probably impossible because of the negative South Korean public opinion related to North Korea's aggressive behavior, which is defying all international norms."

Political analysts have differing explanations of North Korea's motivations. Some say it wants to negotiate with Washington from a position of strength. Others believe the current U.S. military buildup to prepare to force Iraq to give up its weapons of mass destruction has influenced Pyongyang.

Hideshi Takesada, a professor at Japan's National Institute for Defense Studies, said North Korea is engaging in brinksmanship while the world is focusing on the U.S.-Iraq confrontation.

He says the North does not want war, but hopes to reduce U.S. influence on the peninsula. He believes that North Korea thinks it can bargain by promising to halt its recent nuclear activities if President-elect Roh pledged to reduce the U.S. troop presence in the South.

So far, Mr. Roh has given no indication he would be willing to negotiate this point and, in fact, has stressed the need to work more closely with the United States to peacefully resolve this latest crisis with North Korea.

But despite the current nuclear standoff, South Korea has continued to engage the North where it can, namely joint economic projects that financially benefit Pyongyang.

On December 30, the two nations signed a long awaited maritime accord, which is expected to cut the costs of inter Korean trade. Next month, construction is slated to start on a $9 billion industrial park in Kaesong, North Korea, financed by a South Korean entrepreneur. The two nations are also continuing with their money losing tourism projects to the North.

"If the nuclear crisis drags on, South Koreans will lose patience with the softer engagement approach to the North, which has been the hallmark of Kim Dae-jung's presidency for the last five years," predicts Balbina Hwang, an analyst with Washington's conservative policy institute, tje Heritage Foundation.

"Kim Dae-jung's Sunshine policy was abysmally unpopular. So I think what that means is that South Korean people are no longer going to be satisfied with just handing over North Koreans money without seeing some real, substantive results," Ms. Hwang continued. "And if North Korea does continue to act belligerently, then South Koreans may become less tolerant."

But for the time being, many South Koreans say they hope that North Korea's moves towards reactivating its nuclear facilities will not lead to the end of the reconciliation process on the divided Korean Peninsula.

Many see the nuclear crisis as an issue between Washington and Pyongyang, and do not believe South Korea is a target for the North's nuclear weapons.

So while the year 2002 has showed some limited signs of improving North and South ties, the events of the last weeks of the year have cast a foreboding shadow on the future. How both sides manage these issues that are now front and center will undoubtedly be a major focus for 2003.