At the end of the war in 1953, both North and South Korea lay in ruins. Millions of civilians and soldiers on both sides had been killed or wounded. Most homes and factories had been destroyed, and both Korean nations ranked among the poorest countries in the world. Despite their poverty, both sides continued to arm themselves heavily, while at the same time coping with the devastation left by the war.
This had a negative effect on both Koreas. In the North, an estimated one-quarter of all government spending went to the military. In the South, the military assumed a great deal of power in 1961, when General Park Chung-hee overthrew the government. During this period, small-scale, but bloody, clashes frequently erupted along the 38th parallel, by then known as the Demilitarized Zone (DMZ), which separated the two countries.
Other continuing signs of hostility included an attempt to assassinate President Park in 1968. North Korean hostility also extended to the United States when North Korea captured an American intelligence-gathering ship, the Pueblo, off its coast and shot down an American spy plane.
Despite the hostility between the two Koreas, however, most Koreans on both sides of the dividing line wanted their country to reunite. Events in the early 1970's made such a prospect look possible. In 1972 U. S. president Richard Nixon met Chairman Mao Zedong in China and spoke of detente with the Soviet Union. In the face of these power realignments, both North and South Korea saw themselves possibly being abandoned by their big-power allies. As a consequence, they opened direct talks with each other for the first time. These talks stalled within a year, however, in part because South Korea refused to discuss the removal of American troops protecting against invasion by North Korea.
The failure of this reunification initiative signaled a renewal of hostility. North Korea, which had long wanted American troops removed from South Korea, was emboldened when the United States was forced to withdraw from Vietnam in 1975. Soon afterward, North Koreans murdered several American soldiers at the DMZ. In response, the United States renewed its commitment to South Korea. It suggested that if hostilities were renewed, it might use nuclear weapons against the North.
In 1979 South Korean president Park was assassinated. When another general, Chun Doo-hwan, took power in South Korea in 1980, North Korea demonstrated its hostility to the South by attempting to assassinate him while he was on a state trip to Myanmar (Burma) in 1983. North Korea also blew up two South Korean airliners in attempts to demoralize the South, especially after Seoul was selected to host the 1988 Olympic Games.
These developments failed to bring about either reunification or the removal of American troops from South Korea. In fact, by the end of the 1980's, it looked as if time were on the side of the South. South Korea's economic growth, which had taken off rapidly in the mid-1960's and had averaged a more than 10 percent annual rate of growth, quickly outdistanced its northern rival.
North Korea, by contrast, remained relatively poor as its largely self-sufficient economy was unable to generate significant growth. Further damage was done when China, which by then had become a semicapitalist society, no longer was willing to conduct trade with North Korea, except at prevailing world market prices. China increasingly looked to South Korea as a more lucrative trading partner. A similar transformation came in the early 1990's, after the Soviet Union collapsed, and Russia was also no longer willing to subsidize its former North Korean ally. As a result, the North Korean economy began to shrink.