North Korea threatens South over propaganda balloons By Jack Kim and David Chance SEOUL (Reuters) - Impoverished North Korea threatened on Friday to open fire on South Korea if it allows activists to go ahead with plans to drop anti-North leaflets on its territory, its most strident warning against its long-time foe in months. North Korea, which is still technically at war with the South after their 1950-53 conflict ended in merely a truce, often uses shrill rhetoric denouncing its rich, capitalist neighbor and threatening all-out war. A looming presidential election in the South and plans to deploy longer-range missiles by the government in Seoul have angered the North and prompted an escalation of belligerent commentaries from Pyongyang. "We had similar threats last year and they did not stop us before and this is not going to stop us this time," said Pak Sang-hak, a North Korean exile who defected to the South 12 years ago. He is the leader of a coalition of groups of North Korean exiles and human rights activists who plan to launch giant balloons containing 200,000 leaflets criticizing North Korea's government for the second year running. Some of the leaflets, printed on plastic bags, will contain $1 bills. As well as the dollars, the bags themselves are said to be prized by North Koreans, many of whom often lack daily necessities. South Korea's defense minister told parliament that its military would retaliate in the event of any attack. South Korea's military has come under pressure after it failed to detect a North Korean soldier walking across the world's most heavily armed border until he knocked on the doors of soldiers' barracks. "If (a North Korean strike) were to happen, there would be a perfect response against the source of the attack," Kim Kwan-jin told a parliamentary committee. North Korea shelled a South Korean island almost two years ago, causing civilian deaths. It was also widely blamed for sinking a South Korean navy ship, although it denied responsibility. North Korea said that if the leaflets were dropped on Monday, a "merciless military strike by the Western Front will be put into practice without warning," according to state news agency KCNA. It said it would target a tourist area at the border city of Paju a few miles from the demilitarized zone that separates the two countries, the most specific threat in months. "The KPA (Korean People's Army) never makes any empty talk," KCNA quoted military commanders as saying. Reporting by David Chance and Jack Kim; Editing by Nick Macfie