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* N.Korea doesn't recognize line unilaterally drawn up after Korean War
* Shellings increased since 2010 along with colder ties between Koreas
* S. Korea says North sells fishing licenses to Chinese boats in its waters
* Naval chases around the islands are almost a daily ocurrence
By James Pearson and Ju-min Park
YEONPYEONG, South Korea, June 17 (Reuters) - On a clear day, residents of Yeonpyeong Island can see North Korea, 10 kms (six miles) away. They can also sometimes watch South Korean warships chase North Korean and Chinese fishing boats. These waters in the Yellow Sea are among the world's richest for blue crab.
Lately, however, North Korea has been making life riskier for residents of this fishing community. On May 22, they were ordered into bomb shelters after the North fired artillery shells around the island, without hitting anything. Earlier that week, the South Korean navy fired 10 warning shots at North Korean ships after they crossed the maritime boundary between the two sides.
The line was drawn up unilaterally by the U.S.-led United Nations command after the 1950-53 Korean War. That conflict ended in an armed truce that has continued until now, leaving the two Koreas in a technical state of war.
Tensions are especially high along the string of five South Korean islands that define the maritime frontier, known as the "Northern Limit Line" (NLL). Lately, the area has seen a sharp increase in artillery exchanges between the two Koreas.
North Korea doesn't recognise the NLL. The line is not recognised internationally, either. North Korea warships and fishing boats routinely sail over the line, which commands strategic sea lanes into the industrial heartland of both Koreas. This has led to a spate of sea battles and artillery exchanges over the last 15 years.
The movements of foreign media are restricted on the militarily sensitive islands. A recent Reuters visit found the chase scenes between the South Korean navy and Chinese fishing boats are practically a daily occurrence. The North Korean military has been making money for years selling Chinese ships the rights to fish in the area, the South Korean coast guard and local officials on the island say.
The disputed maritime frontier, the economic and strategic importance of the area, and a history of violent confrontations have made these otherwise sleepy islands one of the world's most dangerous flashpoints - one that could drag in the United States and China as parties to the armistice.
"The West Sea boundary is the weakest link in the chain that holds the two Koreas from outright conflict, and the regular appearance of a third party-- Chinese fishermen-- adds a destabilising element into an already volatile mix," said John Delury, assistant professor at Yonsei University in Seoul.
Delury added that "the dangers of entangling the U.S. and China are also very real, at a time when they already have enough maritime disputes to worry about in the East and South China Seas."
A FRAUGHT HISTORY
The Korean War ended roughly where it started - near the 38th parallel. The armistice of Aug. 30, 1953, stipulated that both sides withdraw their forces two kilometres from there to form a Demilitarized Zone (DMZ). It remains the world's most heavily-fortified frontier.
Extending the line out to the Yellow Sea was far more problematic due to the jagged coastline and a sprawl of islands and islets, and the two sides failed to agree on one. So a month after the armistice was signed, United Nations Commander Mark Clark, a U.S. four-star general, drew a line in the sea to keep southern warships from straying too far north and to reduce the likelihood of sea clashes.
The South Koreans have always regarded the NLL as a seaward extension of the DMZ and a de facto boundary between North and South Korea. "The NLL, however, has no legal basis in international law," according to a CIA document declassified in 1974.
A U.S. embassy spokeswoman in Seoul did not directly address the question of the line's international legality when asked for comment. "For 60 years, the Northern Limit Line has served as a practical measure to separate military forces in the Yellow Sea and to reduce tensions and the risks of military confrontation," she said.
North Korea, however, has long declared a 12-nautical mile territorial sea limit in the area - one that includes the five islands. In recent years, it has been more forceful about that claim.
In June 1999 and June 2002, clashes between North and South Korean warships erupted at the start of the crab fishing season. A South Korean patrol boat sank and a North Korean boat was heavily damaged in the 2002 incident.
After that, the two sides began talking about joint fishing areas in a "West Coast Peace Zone", which was eventually agreed at an inter-Korean summit in October 2007. The pact unravelled, however, in a fire storm of protest by conservative lawmakers in the South and was never implemented. The election of a conservative government in the South the following year and North Korea's leadership succession have marked a steady worsening of ties.
In one of the worst incidents since the Korean War, North Korea lobbed 170 shells at Yeonpyeong Island in November 2010, about half of them landing on civilian and military targets. Two civilians and two South Korean soldiers were killed. Only days before, North Korea revealed to a visiting American scholar a vast new uranium enrichment facility.
Over the next three years, North Korea embarked on a series of long-range missile and nuclear tests. On March 30 of this year, Pyongyang publicly announced it would not rule out "a new form of nuclear test." Analysts speculated that could mean a nuclear warhead capable of being carried by a ballistic missile.
THE ISLAND WAR ZONE
The cliff tops of Yeonpyeong Island offer an unrivalled vantage point to watch the cat-and-mouse games between the Koreas on the high seas. During the Reuters visit, two South Korean navy patrol boats and a corvette, horns and sirens blaring, pushed a group of Chinese fishing boats back over the NLL. The fishing boats are often accompanied by North Korean naval escort vessels, island residents say.
Artillery emplacements and long-range Hyunmoo-1 cruise missiles, capable of striking the North Korean capital of Pyongyang are stationed atop the cliffs. Near one unguarded cruise missile, a reporter found boxes containing U.S. made parts for an early warning system that listens for the sound of artillery. Tanks, dug into deep sandbag-lined bunkers, face the North Korean coast.
On the beaches below, rows of anti-landing spikes and barbed wire fences frame small coves. Debris from fishing boats and ships lie between machine gun emplacements. Signs warn the public not to approach objects that look like mines.
Around 9,500 residents live on four of the islands. A fifth island has only a military garrison on it.
One resident of Baengnyeong Island, the largest of the five, described their home as akin to "a powder keg brimming with weapons, arms, explosives and mines."
AN EAR FOR ARTILLERY
The sound of artillery has become so familiar to residents of the islands that local school children grow up learning to pinpoint whether it is the North or South Korean military that's conducting firing drills. For Choi Sung-il, now head of the Yeonpyeong Island Residents' Association, the distant rumble of cannons used to be something of a comfort.
"When I was little, the sound of artillery was like a lullaby to me," he said. "But since the 2010 bombing, every time I hear the sounds of gunfire or artillery during military exercises, I start to feel jittery."
Recently, residents have discovered crashed North Korean surveillance drones on the islands, bearing digital photos of South Korean military positions. On Yeonpyeong, Reuters saw South Korean sailors armed with a portable anti-aircraft missile system tracking a small, remote-controlled plane in what military officials confirmed was a counter-drone drill.
Residents say they have seen more South Korean marines on the island since the shelling in 2010. They also say the military has been buying up more and more land on the island.
Shin Soon-ja, 72, owns a grape farm within the grounds of a large South Korean marine base on Yeonpyeong. "Before the shelling (in 2010), I didn't go to the bomb shelters," she said, turning the earth on a bed of garlic with her hands. "I feel disappointed with the North Koreans. Kim Jong Un is vicious," she said, referring to Pyongyang's young leader, the third generation of his family to rule the totalitarian state.
Kim Jong Un raised eyebrows in 2012 when he visited North Korean islands on the northern side of the NLL, the first North Korean leader to do so.
According to a report on the visit by the North's Korean Central Television, Kim issued stark orders to soldiers defending the northern islands. If a South Korean shell lands in their waters, he was quoted as saying, the northern soldiers "should launch a fatal counter-attack immediately, and not confine it to a local war of the southwestern front, but develop it into a sacred war for national reunification."
Im Byung-chul, 68, cultivates corn, red peppers and potatoes in a field on Yeonpyeong Island that he's been farming for over 25 years. For Im, the line of Chinese fishing boats he can see in the waters beyond his farm is more of a barometer of safety, than a threat.
"Look, there are lots of Chinese boats, about 11. When there are some significant events or issues in North Korea, I don't see any Chinese boats. I think I must be safe from artillery if the Chinese boats are there."
Local South Korean coast guard officials said Chinese fishermen pay upwards of $11,000 a month to fish in the waters to the North Korean forces that guard the NLL and North Korea's west coast. "This is how the North Korean 4th Army Corps makes a living," said the official, who requested anonymity.
Asked about this, South Korean Foreign Ministry spokesman Noh Kwang-il said it was illegal for Chinese fishermen to work in those waters. "In that regard, so far we have requested China via multiple diplomatic channels to prevent illegal fishing activities. And the Chinese side has been expressing its understanding."
China's Foreign Ministry would only say that Beijing views the NLL as a dispute between the two Koreas. "As a close neighbour of the Korean peninsula, China has all along supported the resolution of the relevant dispute via dialogue and consultations between North and South Korea," the ministry said in a statement.
Despite the ever-present danger of artillery shells landing in their midst, residents of the islands hold out a quixotic hope: attracting adventure tourists.
"As we can see the North with the naked eye, what we are asking the government is to make this place as a security tourism spot," said Choi Sung-il, the Yeonpyeong Island Residents' Association chief.
"We keep proposing the government to make some infrastructure so people and students can have experiences related to the security when they come to Yeonpyeong."
Plans so far have fallen "short of expectation", he said.
(Editing by Bill Tarrant)