Five days later, Pyongyang released Min, only after branding her a “special agent” dispatched by Seoul “to foil the Mount Kumgang tour project.” In fact, she’s the latest pawn in a diplomatic standoff that now threatens to destabilize Northeast Asia. On June 15, the two Koreas squared off in the bloodiest border clash since the Korean War–a fierce naval shootout in which Pyongyang lost one torpedo boat and as many as 30 sailors. Days later, intelligence reports suggested that the North is preparing to test launch a new long-range missile. According to Kim Joung Won, a political scientist at Sejong University in Seoul, Pyongyang nabbed Min “to save face after their disastrous [naval] defeat.”

The North’s provocations are taxing the patience of South Korean President Kim Dae Jung. His peace initiative, known as the sunshine policy, aims to reduce tension by broadening contacts between the two Koreas. Over the last year, Kim has encouraged Hyundai and other companies to invest in the North, sent relief grain and fertilizer to mitigate an ongoing famine and offered to hold a summit meeting with North Korean strongman Kim Jong Il. Yet Pyongyang has answered every overture by provoking clashes at the border or detaining a tourist. After an emergency cabinet meeting, Kim halted Hyundai’s cruises. A presidential aide said “the amount of sunshine will be greatly reduced.”

Hyundai executives won Min’s release in heated negotiations with Northern officials. “She was just trying to be friendly with the northerners,” says a Hyundai manager familiar with Min’s case. “Obviously she didn’t have any political motive.” Pyongyang, meanwhile, seemed to be shooting itself in the foot. The Hyundai cruises earn the cash-strapped North about $13 million a month; now, Seoul won’t allow them to resume until Pyongyang can guarantee the safety of tourists.

Pyongyang’s tactics could kill the most significant inter-Korean contact since the Korean War. Last week the U.S. State Department announced that on June 17 Pyongyang also detained a Korean-American businesswoman and charged her with breaking North Korean law. It’s still unclear whether she is part of a political game. Before Min’s release, Pyongyang said she had admitted to attempting a “defection operation” and asked for forgiveness. But on the boat home, Min said she had done nothing wrong. Doctors say Min, who is recovering from her trauma in a South Korean hospital, should be fine in a few days. The same can’t be said for North-South relations.