Seoul's local newspapers reported last week that the South Korean government has drawn up a contingency plan to administer the North in the event of regime collapse, a coup or a popular uprising in North Korea.

The North's National Defense Commission on Friday threatened a "sacred retaliatory battle" against South Korea, calling the alleged plan a move to overthrow Pyongyang. It was the first time for the country's top decision-making body, led by Kim, issued a statement since it was founded in 1998.

In a show of its readiness to translate the threat into real military action, the North conducted a joint drill by the army, navy and air force under direct guidance of Kim, who rules the country in the capacity of the top military commander, the North's state-run media said Sunday.

It also marked the first time for the North to disclose Kim's inspection of a military exercise since he became supreme commander of the People's Armed Forces in December 1992, South Korean officials said.

In line with the military move, Pyongyang's Foreign Ministry said Monday that North Korea will not return to international nuclear talks unless its security is guaranteed and a "hat of sanctions" against it is removed.

Seoul's "administrative contingency plan" envisions the South's role in stabilizing the North in case of an emergency, to Seoul's largest newspaper Chosun Ilbo and another newspaper Munhwa Ilbo, reported.

"Under the plan, an administrative headquarters to liberate the North" will be formed in the North and headed by Seoul's unification minister to bring the northern half of the peninsula "under emergency rule," the reports said.

The plan, code-named Rehabilitation, also calls for the South to take the lead in rebuilding the North's ruined economy, under President Lee Myung-bak's much-touted plan to triple the North's per capita income to $3,000 within the next 10 years.

The news reports said the plan addresses five possibilities: the death of Kim; a coup or severe power struggle; a public uprising; a huge outflow of refugees; and tougher sanctions or military attacks from outside.

In a furious response, the North said the plan aimed to "topple our republic," vowing to stage "a sacred nationwide retaliatory battle to blow up the stronghold of the South Korean authorities."

"A holy war for retaliation will be embarked upon to sweep away the base of South Korean authorities who have led and supported this plan, including the presidential house," the NDC statement said.

During his first inspection tour of the joint exercise by the army, navy and air force, Kim Jong Il urged the military to bolster its capabilities so as to be become "invincible revolutionary armed forces."

"With the order for the start of the maneuvers, flying corps, warships and ground artillery pieces of various kinds showered a merciless barrage at the 'enemy group' in close coordination, thus shattering the 'enemy camp' to pieces and turning it into a sea of flame," the North's official Korean Central News Agency reported.

The exercise demonstrated the North's "merciless striking power" against anyone trying to infringe on its territory, it said.

The contingency plan was made apparently in the belief that the future of the North is increasingly uncertain due to Kim Jong Il's rumored poor health and the North's deepening economic troubles under international sanctions.

Kim is thought to have suffered a stroke in August 2008, and to have long been plagued by chronic illness such as diabetes and heart disease. His health is the subject of intense interest because the 68-year-old has not formally named someone to succeed him.

Given the nature of the North's decades-long one-man dictatorship, the abrupt death of Kim without an indisputable successor could lead to a power struggle and sudden regime collapse, South Korean analysts and officials say.

The Seoul government said Monday it was deeply regretful that the North made such threats on the basis of "unconfirmed media reports."

"The North's response indicated an anger of Kim Jong Il and his military over the South's contingency plan," an intelligence source said. "The South should not rule out the possibility of a real action from the North."

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