A mounting inter-Korean spat over propaganda balloons, amid domestic political developments deemed provocative in both countries, is raising the risk for low-level military confrontation while threatening South Korea’s efforts to begin its COVID-19 economic recovery. Over the past several days, despite the 20th anniversary of the first inter-Korean summit, North Korea has demolished the inter-Korean liaison office in Kaesong, threatened to scrap a 2018 bilateral military agreement aimed at easing inter-Korean tensions, stopped the daily calls between the two governments, and issued several warnings against South Korea's inaction to stop activists and defectors from sending propaganda-laden balloons into North Korea. Kim Yo Jong, North Korean leader Kim Jong Un's half-sister, issued a statement June 13 warning that she had granted the military the "right to [take] the next action against the enemy."

• On June 4, South Korea's Unification Ministry said the government was working on a plan for legislation to ban activists from sending propaganda balloons into North Korea.
• On June 5, North Korea's United Front Department (UFD) threatened to shutter the inter-Korean liaison office in Kaesong, a day after Kim Yo Jong warned that South Korea would "pay a dear price" if they didn't take action to stop cross-border propaganda balloons.
• On June 9, North Korea's liaison office and military refused to answer daily calls from the South after warning they would shut such contacts.

North Korea has long complained about South Korean propaganda balloons, but the recent victory of a high-profile North Korean in South Korea's parliamentary elections has intensified Pyongyang's response. In April, Thae Yong Ho, the former North Korean Deputy Ambassador to the United Kingdom, became the first defector to win a constituency seat in South Korea's National Assembly. U.S.-South Korea tensions over defense cost-sharing also provide Pyongyang with an opportunity to further strain Seoul's ties with Washington, something that could benefit North Korea's strategic position. 

• In October 2014, during one of Kim Jong Un's "disappearances," North Korea used anti-aircraft guns to shoot at propaganda balloons, triggering an exchange of fire from South Korea.
• During the 2008-2013 administration of South Korean President Lee Myong-bak, the government largely supported civic groups' balloon-launching campaigns.
• In 2017, South Korea's Unification Ministry announced the government was looking at measures to control balloon launches as part of President Moon Jae In's peace initiative, but to little avail. 
• Thae Yong Ho defected in 2016, and was elected to the National Assembly in April 2020. Another high-profile defector, Ji Seong-ho, is also a member of the National Assembly, but won a proportional representation seat. Both are members of the conservative opposition United Future Party. 

North Korea's military response may include firing anti-aircraft guns at propaganda balloons, as it did in 2014, as well as stepping up training and artillery drills along the Demilitarized Zone and Northern Limit Line (NLL). Pyongyang has already warned it will remilitarize areas that were cleared of forces as part of inter-Korean military agreements, likely including Kaesong and the Mount Kumgang resort area. Such actions would mark a rapid escalation of tensions between Seoul and Pyongyang, though large-scale hostilities still remain unlikely. The perception of instability on the peninsula, however, would risk further impeding South Korea’s economic recovery from the COVID-19 crisis by heightening both foreign concerns and domestic political instability.