USS Pueblo, seized off North Korean coast and still listed by US as commissioned navy vessel, to be unveiled at war museum

The only US navy ship being held by a foreign government is expected to go on display this week as the centrepiece of a North Korean war museum.

With a fresh coat of paint and a new home along the Pothong river, the USS Pueblo – a spy ship seized off North Korea's east coast in the late 1960s – will be unveiled at a renovated war museum to mark what Pyongyang calls Victory Day, the anniversary of the signing of the armistice that ended hostilities in the Korean war 60 years ago on Saturday.

The ship is North Korea's greatest cold war prize, a potent symbol of how the country has stood up to the great power of the United States, once in an all-out ground war and now with its push to develop nuclear weapons and sophisticated missiles.

Many of the crew who served on the vessel, who spent 11 months in captivity in North Korea, want to bring the Pueblo home. Throughout its history, they argue, the navy's motto has been "don't give up the ship".

The Pueblo is still listed as a commissioned navy vessel, the only one being held by a foreign nation. But the US has made little effort to get it back. At times outsiders were not even sure where North Korea was keeping the ship or what it planned to do with it.

The Pueblo incident is a painful reminder of miscalculation and confusion, as well as the unresolved hostilities that continue to keep the two countries in what seems to be a permanent state of distrust and preparation for another clash despite the truce that ended the 1950-53 war.

Already more than 40 years old and only lightly armed so that it would not look conspicuous or threatening as it carried out its intelligence missions, the USS Pueblo was attacked and easily captured on 23 January 1968. Surrounded by half a dozen enemy ships with MiG fighter jets providing air cover, the crew was unable to put up much of a fight.

They scrambled to destroy intelligence materials but soon discovered they were not well prepared for even that. A shredder aboard the Pueblo quickly became jammed with the piles of papers anxious crew members shoved into it. They tried burning the documents in waste baskets, but smoke quickly filled the cabins. And there were not enough weighted bags to toss all the secret material overboard.

One US sailor was killed when the ship was strafed by machine gunfire and boarded. The remaining 82, including three injured, were taken prisoner. The North Koreans sailed the Pueblo to the port of Wonsan, where for the survivors the real ordeal began.

"I got shot up in the original capture, so we were taken by bus and then train for an all-night journey to Pyongyang in North Korea, and then they put us in a place we called the barn," said Robert Chicca, a marine corps sergeant who served as a Korean linguist on the Pueblo. "We had fried turnips for breakfast, turnip soup for lunch, and fried turnips for dinner … There was never enough to eat, and personally I lost about 60 pounds over there."

Although the ship was conducting intelligence operations, crew members say most of them had little useful information for the North Koreans. They say they were beaten severely during interrogations.

"The Koreans basically told us, they put stuff in front of us, they said you were here, you were spying, you will be shot as spies," said Earl Phares, who was cleaning up after the noon meal in the galley when the attack began. "Everybody got the same amount of beatings in the beginning."

North Korea said the ship had entered its territorial waters, though the US maintained that it was in international waters 15 miles off the nearest land. The incident quickly escalated. The US, already deeply embroiled in the Vietnam war, sent several aircraft carriers to the Sea of Japan and demanded the captives be released.

North Korea responded by putting members of the crew before cameras to confess publicly. The crew members planted defiant codes into forced letters of confession and extended their middle fingers in images sent around the world. That led to further beatings when the North Koreans figured out the gesture's meaning.

On 21 December 1968, Major General Gilbert H Woodward, the chief US negotiator, signed a statement acknowledging that the Pueblo had "illegally intruded into the territorial waters of North Korea" and apologising for "the grave acts committed by the US ship against" North Korea. Before and after, he read into the record a statement disavowing the confession.

The hostages were released across the demilitarised zone that divides the two Koreas two days before Christmas, 335 days after their capture.

The navy considered a court martial for the ship's captain, Commander Lloyd M "Pete" Bucher, for letting the Pueblo fall into enemy hands without firing a shot and for failing to destroy much of the ship's classified material. But he was never brought to trial. John H Chafee, secretary of the navy at the time, said Bucher and the other crew members had "suffered enough".

To this day members of the Pueblo crew say Bucher made the right decision, though years later his second-in-command publicly questioned Bucher's decisions not to fight. "It would have been nice to take out some of the guys, some of them, and maybe go down fighting, but it would have been total suicide," said Phares. "We never thought anything would happen, and we weren't supposed to create an international incident."

In 2002 the former US ambassador to South Korea Donald P Gregg said a North Korean foreign ministry official had hinted at a deal to return the Pueblo. But when he later visited Pyongyang, he said he was told the climate had changed and a return was no longer an option.

In January the next year, the Colorado senator Ben Nighthorse Campbell reintroduced a resolution in Congress asking North Korea to return the ship. There has been no progress since, however – at least none that has been made public.

"The ship was named after Pueblo, Colorado, and they would have loved to have the ship back," Chicca said. "It's very disappointing to have it still there, and still being used as anti-American propaganda."

The planned display of the ship by North Korea hangs over the heads of the crew members who have long campaigned for its return. "I'll never give up, but I don't think it's ever coming back," Phares said. "It's just unfortunate that we got put in that situation, and that the top brass blamed us, or blamed Bucher, for everything."