: The South Korean economy, the major resource needed to fend off North Korean aggression, has nearly recovered from declines in production brought on by the Asian economic crises of the last few years. This has meant more money for upgrading defense capabilities like precision aircraft bombs and missiles and electronic warfare gear.

July 20; North Korea again announced that it had the right to launch missiles "for scientific purposes" and would not be dissuaded by South Korean and Japanese protests.

July 15: It appears that North Korea is not about to launch a new missile test, either because of technical problems or in reaction to Japanese and South Korean threats to suspend aid if the test goes ahead. North Korea did publicly announce its right to launch another missile. South Korean intelligence officials insist that the launch is still imminent.

July 10^th, India reported it had seized a North Korean ship that was carrying missile building equipment to Pakistan.

The North Koreans admit that they are preparing to test a new missile in late August from their Musudan-Ri launching site in the northeast part of the country. South Korean reports indicate that the launch pad is 50 percent higher than for the previous launch. This might mean a new, and longer range missile, such as the Taepodong-2, is to be used. This missile could have a range of up to 6,000 kilometers, bringing parts of Hawaii and Alaska within range. North Korea has also rented time on a Thai communications satellite for tracking a missile test, meaning that such a test would likely occur soon. The last such test was in August of 1998. Japan and South Korea have both threatened to stop foreign aid if the missile test goes forward.

During the first week of July it was reported that North Korea was building a missile launching complex 20 kilometers from the Chinese border. Built into the side of a mountain facing China, it would be difficult, both tactically and politically, for U.S. forces to attack. There appear to be ten launch pads for the long range Taepodong I and Taepodong II missiles. The complex appears to be 70 percent complete. At the same time, North Korea is moving ahead with preparations for another test launch of its Taepodong missiles, which has been publicly announced as an attempt to launch a satellite.

The 14 member US inspection team arrived in North Korea on 18 May to visit the suspected underground nuclear site at Kumchang-ri. Experts noted the symbolism of the visit is more important than any chance they might find anything (since North Korea has had more than adequate time to conceal any evidence). The inspection team said they had "good cooperation" from North Korean officials. After four days of inspections they said the site was unfinished with vast empty tunnels. North Korea refuted US statements and said food aid was linked to on-going talks and inspection of the Kumchang-ri site. North Korea announced a 15% increasing in spending to increase it power generation capacity. North Korea said it would strengthen its armed forces in the face of continuing US aggression against weaker nations. US Special Envoy William Perry completed a four day visit to North Korea on 27 May in which he delivered a joint message from the US, Japan, and South Korea outlining a "carrot and stick" policy to encourage the cessation of its nuclear and missile development programs. He said North Korea promised to abide by its agreement to keep its nuclear arms program frozen and wanted to maintain dialogue with the US. North Korea threatened to pull out of the accord under which it froze its nuclear arms program on 31 May saying it no longer had faith in it. Japan's Jiji Press said North Korea is seeking cooperation with China to hunt for Pak Ok-Kyong, deputy director of North Korea's atomic energy research institute, who went missing in April with his wife and child.

The US deployed a squadron of 12 F-15Es to South Korea on 19 May to cover for the missing aircraft carrier redeployed for strikes on Serbia. South Korea announced it would purchase three Russian Kilo-class submarines for $1 billion as a means of helping Russia retire its $1.75 billion debt to it. South Korea replaced hard line Unification Minister Kang In-Duk with former presidential advisor for foreign affairs Lim Dong-Won in a move seen as strengthening its drive for unification with North Korea. Former South Korean Defense Minister Cheon Yong-Taek was named as the new Intelligence Chief replacing Lee Jong-Chan.

On June 8^th, a naval standoff began when North Korean fishing boats, escorted by North Korean warships, advanced into South Korean waters and were confronted by South Korean warships. After four days of watching each other, South Korean ships tried gently ramming the North Korean ships to get them back into their own waters. The North Koreans kept coming back. On June 15^th the North Koreans opened fire and one of their warships was sunk and five others damaged. Thereafter, the North Korean ships did not come south.