South Korean military conducted hour-long live-fire artillery drills from Yeonpyong Island today amid threats from North Korea that it will retaliate on a massive scale.
The island had been shelled by North Korea last month, killing two civilians and two marines.
On Monday morning, South Korea sent navy warships with missile capabilities and fighter jets to roam the area in case North Korea attacks again.
But the North's military later said "the world should properly know who is the true champion of peace," adding that it was not worth reacting to the drill.
Experts in Seoul say North indeed got what it wanted; international attention and cash.
In a diplomatic breakthrough just minutes before the South began the drill, New Mexico Governor Bill Richardson said North Korea agreed to a series of actions including allowing United Nations nuclear inspectors to return.
They also agreed to negotiate the sale of 12,000 fuel rods and ship them out of the country, presumably to South Korea.
That amount is enough to make about six to eight nuclear weapons. Richardson had arrived in Pyongyang on last Thursday as a US envoy to defuse the tensions.
On the surface, North Korea has been using the dispute in the maritime border as an excuse to carry out aggressive actions.
Their goal is to bring the South and the United States into negotiations in hopes that they win concessions for promising good behavior and gestures to denuclearize.
North Korea analysts in Seoul also believe that its ailing leader Kim Jong-il is in need to groom his son and heir, Kim Jong-Un, into a strong ruler by creating a crisis mood among his people.
In the west sea, South Korea recognizes a northern boundary drawn after the Korean War in 1953.
North Korea began to insist in 1999 that the border should be further south.
There are five small islands within that area where thousands of South Koreans reside, protected by the military forces.
South Korean navy officials have been conducting drills every month for the past 37 years, according to a high-level official from the Ministry of Defense.
Seoul insists that these drills are not to intimidate the North and stressed that the live-fire is pointing towards the southeast direction, facing opposite from North Korean territory.
"The ongoing live-fire exercise on Yeonpyong Island is an exercise taking place within our territory and within our waters. Moreover, this exercise is a standard and legitimate defensive exercise. Therefore, our understanding is that the exercise taking place is a matter of our national sovereignty," said Kim Young-sun, spokesman for the Foreign Ministry.
Today's drills were observed by representatives of the United Nations Military Armistice Commission and U.S. military forces.
Residents on the Yeonpyong Island, often victims of small-scale skirmishes that had occurred in the past, have been ordered along with officials and journalists to stay inside underground bunkers.
The military distributed gas masks and food to last for at least two days.
In Seoul, politicians and citizens are divided as to whether these drills were necessary at this point of time.
A small group of peace activists gathered in front of the Defense Ministry holding signs that said "No! War. Yes! Peace" and chanted slogans calling on the military to stop triggering a clash between the two Koreas.
The tensions on the Korean peninsula have worried neighboring nations.
Russia had called for a United Nations Security Council to address both sides to back down but the member nations failed to agree on a statement.
U.S. Ambassador Susan Rice said "the gaps that remain are unlikely to be bridged" citing differences among the members.