Even by the standards of Pyongyang, it's an incongruous sight: in the centre of North Korea's showpiece capital floats a commissioned vessel of the United States Navy. The USS Pueblo, a naval intelligence vessel captured by the North in 1968, lies moored on the banks of the Daedong River. According to the US Navy, the 800-tonne vessel remains a commissioned ship, unlawfully taken in international waters in breach of international laws. North Korea sees it differently. 'It was a severe punishment for the US aggressors who violated the sovereignty of our country,' a videotape on the Pueblo incident states. That tape - which one frequent Pyongyang visitor said 'leaves no propaganda cliche unused' - plays daily in the wardroom of the vessel, which now functions as a tourist attraction, a trophy and a symbol of the anti-American struggle that started in 1866. In that year, a US merchant steamer, the General Sherman, was destroyed with all hands when it attempted to force trade with the 'Hermit Kingdom'. By no coincidence, the Pueblo is moored on the very spot where the Sherman foundered. But while the only remains of the Sherman are a cannon and a cable - displayed in Pyongyang museums - the Pueblo is fully intact. On January 11, 1968, the Pueblo cast off from Sasebo, Japan. Her cover story was that she was undertaking an oceanographic survey. In fact, the vessel, with 83 men on board, was ordered to gather electronic intelligence in the wintry seas of the North Eastern Pacific. However, as her mission was considered low risk - the Pueblo would be operating in international waters, albeit off North Korea - she was armed with nothing heavier than .50 calibre machine guns. Her top speed was only 12.7 knots and, critically, she was not covered by the US air and naval might available in the Sea of Japan. She was sailing into troubled waters. Pyongyang had already warned against activities by 'espionage' boats. On January 23, four North Korean torpedo boats and two submarine chasers moved towards the US ship, while MiGs shot by overhead. When North Korean sailors attempted to board, the Pueblo's skipper, Commander Lloyd 'Pete' Bucher, took evasive action and radioed US forces in Japan for assistance. None would be forthcoming. The North Koreans opened fire, hitting the Pueblo's bridge and arms locker. The resultant damage is visible today, circled by red ink. A US seaman, Duane Hodges, was killed. Others were wounded. Bucher, realising his helplessness against superior forces, struck his flag, as his crew made frantic efforts to destroy classified material. They were unsuccessful. The ship was taken intact and no listening devices or cipher machines were destroyed. According to Ryu Ok-hui, a guide from Pyongyang's Victorious Fatherland Liberation War Museum, the North Korean sailors who stormed the bridge, none of whom spoke English, asked about the number of crew aboard by drawing a picture of a 'Yankee with a big nose' and adding a question mark after it. The Pueblo was taken to the North Korean east coast port of Wonsan. Her crew were marched off to captivity. For 11 months, they suffered beatings and psychological torture. Their spirits remained unbroken, however. Discovering that North Koreans were unfamiliar with the 'one finger salute', the sailors flashed what they called the 'Hawaiian good luck sign' in photographs taken of them in captivity. Meanwhile, US attempts to intimidate Pyongyang with the dispatch of a naval taskforce proved futile. 'We were trying to figure out a way to retaliate,' Donald Gregg, then a CIA officer based in Japan, said in a 2003 interview. 'We couldn't figure out anything that would not have gotten the crew's throat cut and probably started a second Korean war. So we swallowed our pride.' The Johnson administration, already bogged down in Vietnam - 1968 was the year of the landmark Tet Offensive - signed a humiliating agreement that admitted spying and got the crew back, but left the ship. Or as the video says: 'The US government knelt down before the Korean people.' A copy of that agreement is now framed aboard the Pueblo. On December 23, the crew walked across the 'Bridge of No Return' into South Korea. 'They were 'running downhill!'' the video exclaims. 'The people of the world unanimously said the myth of might of the US was shattered.' Washington subsequently retracted its admission. Back in the US, Bucher received an official reprimand for allowing his command, loaded with classified equipment, to fall into enemy hands. His crew, who considered him a 'giant' for his courage in captivity, stood by him. Bucher died in 2004, a bitter man after what he considered the US Navy's failure to support the Pueblo in its hour of need. But the unlucky ship's story didn't quite finish there. As there's no waterway crossing the Korean peninsula from east to west, analysts were astonished when, in 1999, the Pueblo appeared in Pyongyang. Under the noses of the US and South Korean navies, North Korea had disguised the Pueblo and sailed her around the peninsula, up the Daedong and into Pyongyang. Among ex-crew members, the incident remains sensitive; contacted in the US by e-mail, none was willing to discuss the matter at length. The reply of one, when told this reporter would be visiting the vessel, was succinct: 'Smuggle in some plastic explosive and blow the a******s up!' However, Pyongyang, which most analysts believe seeks improved relations with Washington, has considered returning the vessel. Re-enter Mr Gregg, the ex-CIA man who had since gone on to become a National Security Council member and US ambassador to South Korea from 1989-1993, and who now heads the Korea Society in New York. Mr Gregg had met Bucher and some crew members, who told him they would dearly love to see their ship returned. He later received similar messages from the town of Pueblo, after which the ship was named. In an April 2002 trip to Pyongyang, the ex-ambassador suggested that Pyongyang return the vessel as a move towards more amicable relations, Mr Gregg said. In a 'cryptic note' he received a tentatively positive reply from Deputy Foreign Minister Kim Gye-kwon. The administration of US President George W. Bush did not respond, Mr Gregg said. Even so, Mr Gregg travelled to Pyongyang in a private capacity in November of that year to pursue the issue. But by then, Washington had confronted Pyongyang with what the administration said was evidence of a secret nuclear arms programme. 'The atmosphere had soured, and Kim Gye-kwon told me that the Pueblo deal was off the table,' said Mr Gregg. On a trip this year, he was told that a visit to North Korea by a 'cabinet-level' official - of a rank appropriate to meet Kim Jong-il - might resolve the issue. Mr Gregg added that he felt the North Koreans respected chief US nuclear negotiator Christopher Hill. But with US-North Korea relations glacial, no visit has yet transpired. In Pyongyang, Ms Ryu is adamant no deal will be signed. 'Gregg came here and asked when we would return the Pueblo,' she said. 'We said: 'Never!'' And so the Pueblo lies in this broad river, her grey paint reflecting the autumnal Korean sunshine. Her propellers are still, her listening equipment silent, and her crew, groups of tourists who come to gape at this rusting testament to American impotence.