|Tensions between the two Koreas have risen dramatically after the sinking of the Cheonan [EPA]
Relations between North and South Korea have plunged to their lowest levels in years following the sinking of the South Korean warship, the Cheonan, on March 26, which killed 46 South Korean sailors.
Here Al Jazeera looks at some of the key issues at stake.
Will there be war?
Most analysts agree that neither side will move to deliberately start a war – the implications in terms of lives and economic impact are simply too great.
|South Korea has said the North will pay the price for sinking the Cheonan [AFP]
North Korea has reportedly put its forces on combat alert, but despite the bellicose rhetoric Pyongyang has said it would only go to war in response to an attack from the South.
South Korea meanwhile has said it will not retaliate militarily for the sinking of the Cheonan, and will instead take its case to the UN Security Council.
However, the South has also warned that it will not tolerate further provocations and reserves the right to defend itself. North Korea has said much the same.
The big worry then is that another incident takes place, throwing fuel onto one of the world's most volatile potential flashpoints.
At a time of elevated tensions, another North-South spat - even a relatively minor diplomatic affront - could easily spiral into something far more serious.
What are the risks?
With hundreds of thousands of military personnel based along either side of the heavily-fortified Korean border, the potential for confrontation is huge.
|North and South Korea never signed a peace treaty ending the Korean War [AFP]
North and South Korea never signed a peace treaty ending the 1950-53 Korean War, meaning the two countries remain officially at war.
As a result both sides retain large standing armies ready to resume fighting at a moment's notice.
One of the many potential flashpoints could be South Korea's decision to restart propaganda loudspeakers strung out along the frontier.
North Korea has threatened to shoot at the equipment, but that could also lead to South Korean personnel being killed or wounded.
At the same time North Korea has said it is cutting all communications links with the South, including possibly the military-to-military hotlines that were set up to prevent the kind of misunderstandings that could trigger an unintended war.
What prompted the attack on the Cheonan?
North Korea has been increasingly angry at the South since the accession of Lee Myung-bak to the South Korean presidency in 2008.
|South Korea has recovered the remains of a torpedo it says sank the Cheonan [AFP]
Lee's suspension of unconditional aid to the North deepened its economic problems, while international sanctions imposed after last year's nuclear test have added to the squeeze on its finances.
In addition officials in Seoul have said the attack on the Cheonan may have been in retaliation for the North's humiliation during a brief naval skirmish near the same area of the Yellow Sea last November.
Pyongyang also has a history of raising regional tensions in an effort to distract attention from domestic troubles.
A recent effort to revalue the country's currency was reportedly so badly handled that it sparked almost unheard of protests against the government.
At the same time analysts say Kim Jong-il, the North Korean leader, is trying to assert his family's authority over the country to ensure the leadership succession goes to his youngest son.
Will North Korea use its nuclear weapons?
Most of what is "known" about the form and size of North Korea's nuclear weapons arsenal, is at best an educated guess.
|North Korea has a large army but its equipment is outdated and poorly maintained [EPA]
North Korea claims to possess what it calls a nuclear deterrent, but whether its nuclear devices are in the form of useable weapons remains far from clear.
Even if they were in "weaponised" form, a nuclear attack would almost certainly invite devastating retaliation, and most observers agree that the North Korean leadership would only consider such a scenario if the very future of the North Korean state was seen to be under threat.
Nonetheless North Korea has made a speciality of playing its cards very close to its chest and trying to interpret the North's next move is a process fraught with risk.
What role is China playing?
China is the closest North Korea has to an ally.
|China is North Korea's closest ally but it is not clear how much influence it has [AFP]
Chinese forces fought alongside North Korea in the Korean War and, whilst ideologically much has changed between the two, today Beijing is the North's principal economic backer providing much needed aid.
But the latest standoff has put China in a delicate position, since Beijing is also eager to avoid damaging important economic relations with South Korea.
Beijing has held back from supporting the findings of an international panel which blamed North Korea for sinking the Cheonan, and has instead called for both sides to exercise calm and restraint.
"Frankly China is caught in the middle of all this and they are in the situation of having to prioritise one Korea over the other," John Park, director of the Korea working group at the Washington DC-based United States Institute of peace, told Al Jazeera.
"And history has shown that when China does that it usually leads to a period of instability."
What is the position of the US?
The US has about 28,000 troops stationed in South Korea and has given its full support to Seoul following the attack on the Cheonan.
However, Washington has said it is also working hard to prevent the rising tensions on the peninsula escalating out of hand.
Doing that will require support from regional players like Japan and China.
Hillary Clinton, the US secretary of state, visited China this week and pressed Beijing to use what influence it has over North Korea.
During her visit she said stability on the Korean peninsula was the "shared responsibility" of Beijing and Washington.