PANMUNJOM, South Korea (Reuters) - In a tiny mess hall set amid pine trees and rose bushes on the heavily fortified Korean border, a lunch of steak and asparagus is served. Outside, birdsong competes with the drone of North Korean loudspeakers blaring propaganda.

“This is the best restaurant in the DMZ,” says Major General Mats Engman, who heads the Swedish delegation to the Neutral Nations Supervisory Commission (NNSC), set up after the 1950-53 Korean War to uphold a fragile armistice in place of a peace treaty.

Originally a four-nation commission including representatives on the North Korean side from Poland and the former Czechoslovakia, only the Swedes and Swiss remain, based in 1950s-era huts just metres from North Korea.

The camp is staffed by five Swedish and five Swiss officers, a fraction of the 200 based there in the mid-1950s.

The NNSC holds weekly meetings in a light blue hut straddling the border inside the Demilitarized Zone (DMZ), the world’s most heavily defended frontier, sharing with the North Koreans the minutes of its proceedings in a wooden mail box.

“Since May 1995, they’ve never emptied that pigeon hole,” said Swiss Major General Urs Gerber.

“Their argument is they can’t take mail from an organization which doesn’t exist,” said Gerber, who this week presided over the group’s 3,500th meeting.

The NNSC empties the mail box every few months to stop it overflowing.

North Korea, which has long sought a peace treaty with the United States, has said the armistice is “long defunct” and, with it, the NNSC has been “forgotten in history”.

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Isolated North Korea and the rich, democratic South are still technically at war after the 1950-53 conflict ended in the armistice, not a treaty. China and North Korea fought side-by-side against a U.S.-backed South Korea, which joined forces under the U.N. flag.

U.S. troops now in South Korea are under the command of a U.S. general who also heads the United Nations Command - the only active U.N. fighting force in the world.

‘GHOST ORGANIZATION’

North Korea stopped recognizing the NNSC in 1995 when it expelled the Polish delegation after the Soviet Union collapsed. Two years earlier it had kicked out its Czechoslovakian delegation after the country split into Slovakia and the Czech Republic.

“They call us a ghost organization,” said Gerber.

The only independent military body on the Korean peninsula, the NNSC has reinvented its post-Cold War self as an impartial observer to the annual U.S.-South Korea military exercises that the North complains are preparation for attack and the U.S.-South Korean side says are defensive.

Through regular inspections, Swiss and Swedish officers make sure those exercises don’t infringe the armistice.

The NNSC also operates an education program, traveling to South Korean frontline units to lecture on the armistice that ended hostilities in 1953. And it is that document, not the Swedish, Swiss or U.S. capitals, from which the NNSC takes its orders.

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“Only a peace treaty or war would end our operation here,” said Gerber.

‘POPS IN THE FOREST’

A bright red Swiss Club houses a pool table and is decorated with cow bells, while its Swedish counterpart has a fireplace and Viking helmet.

In the early 1970s, before enemy soldiers were locked in a face-to-face stand-off at Panmunjom, North Korean generals would occasionally visit for a quiet drink at the Swiss Club bar.

“It’s like a resort here,” said Engman, a Swedish air force general. “It’s nice and quiet. The air is fresh”.

Wary of the complacency the holiday camp atmosphere can breed, NNSC staff remain on high alert to the dangers beyond the camp’s perimeter fence. No independent body exists to make sure Pyongyang upholds its side of the armistice.

The sound of a pop from the thick North Korean woods can be heard some nights, as a deer or wild boar treads on a landmine.

This year, the biggest disturbance has been North Korean propaganda broadcasts, turned on in response to South Korean speakers after Pyongyang tested its fourth nuclear device in January in defiance of U.N. resolutions.

“It’s an irritation,” Engman said. “It’s not on the level that we can’t sleep. But some nights you have to use ear plugs.”