Council on Foreign Relations

U.S.-R.O.K. Relations

by
Don Oberdorfer

I. The Situation in Korea

As late as the first week of November, U.S. Treasury officials as well as officials of Republic of Korea (ROK) President Kim Young Sam's Blue House were saying that the Korean economy was fundamentally sound and therefore it would not be seriously affected by the financial debacle that had spread through Southeast Asia since the summer. Days after confident pronouncements, Seoul's currency and stock markets collapsed. By the end of the year, the "Economic Miracle on the Han," which the World Bank had proclaimed a model of development, and the rapidly developing country that had joined the Organization for Economic Cooperation and Development (OECD)--the rich nation's club--in 1996 was forced to seek an International Monetary Fund (IMF) bailout carrying stringent restrictions and compulsory reforms of its failing economic system.

The election of Kim Dae Jung, also unexpected, was probably affected by the economic collapse, which tended to discredit the incumbent administration and politicians associated with it in the minds of the public. "D.J.," as Kim Dae Jung is popularly known in Seoul, had run for president unsuccessfully three times since 1971 and spent a majority of those 26 years in prison, under house arrest, or in exile for his political beliefs. It was the first time that the Korean people had elected a complete outsider as president. That the election was held without intimidation or military intervention and that he took office without incident speaks well of the maturity of Korean democracy.

Kim Dae Jung has made it clear that his number-one priority is bringing the ROK economy back to health, a project expected to involve extensive restructuring, very serious unemployment, and likely economic and social dislocations. Estimates from economists suggest it will take several years at the minimum. In this he will need the cooperation and assistance of the United States as well as the IMF, in which Washington has the single most important voice. Only the last-minute intervention of Washington last November, within hours before ROK institutions ran out of foreign currency, saved South Korea from defaulting on its debts. The sharply increased dependence on the United States in economic matters provides the basis for cementing U.S.-ROK ties in the new era if handled constructively and well--and the danger of a damaging breach in the relationship if handled badly.

I have known most of South Korea's senior political leaders since I began actively reporting on Korean affairs in 1972, a quarter century ago. Of them all, Kim Dae Jung has had the clearest and best-articulated ideas about where he wanted to lead his country, and especially about North-South relations. He has taken a forward-looking attitude engaging the North, for which he has often been accused of being a communist or communist sympathizer. Formally, he long ago adopted a "Three Stage Unification Proposal," which begins with two independent governments cooperating with each other and goes through a phase of one government, two systems to a final phase of unification. Less formally, he has consistently favored negotiations and engagement rather than confrontation with the North. Since his first presidential race in 1971, he has also advocated four-power guarantees of Korean peace accords.

Kim set out his current policies toward the North in broad brush strokes in his Inaugural Address on February 25. The three cardinal principles he announced then were:

"We will never tolerate armed provocation of any kind."

"We do not have any intention of undermining or absorbing North Korea"

"We will actively pursue reconciliation and cooperation between the South and the North beginning with those areas that can be made available to us."

He also proposed, as a central idea of his new administration, to return to the 1991 accords negotiated by North and South during the Roh Tae Woo presidency and to begin to implement them. Lim Dong Won, a progressive-minded former general who is Kim's Blue House national security adviser, was a key negotiator of those accords. As a first step, Kim proposed an exchange of special envoys from North and South to promote the implementation of the 1991 accords. Lim seems highly likely to be the envoy, if the proposal is accepted.

In other statements, Kim said he does not approve of personal or unofficial contacts between North and South. A Korean official very close to Kim told me that he had been given "hints" from the North during the postelection transition period that it would welcome a "personal" envoy to deal secretly with Pyongyang, but that Kim had rejected the idea, insisting that any contacts be official even though not necessarily publicized.

Kim's declaration that he does not intend to undermine or absorb North Korea represents a major advance from the policy articulated by previous governments. While Roh Tae Woo in July 1988 and Kim Young Sam at various times since stated a desired to live with North Korea, nobody before Kim Dae Jung has gone quite so far in formally declaring an intention to coexist with the North over time. The statement is highly significant and should establish the basis for a U.S. position backing Kim's peaceful coexistence policy.

Kim's third principle, the active pursuit of reconciliation and cooperation, is the practical and energetic side of his Northern policy, and is already being implemented. The new minister of unification, Kang In Duk, a lifelong expert on North Korea (KCIA's chief Pyongyang watcher from 1971 to 1978 and recently director of his own North Korean research institute), who was a surprise addition to Kim's cabinet, explained to me that owing to the financial crisis, the government is limited in its spending on North Korean projects. Its basic philosophy in these circumstances is to lift restrictions on North-South interaction that had been imposed by earlier governments, thereby enabling private groups and market forces in the South to act and encouraging people-to-people contacts.

Regarding food assistance, for example, the Kim government is authorizing the supply of 50,000 tons of grain to North Korea this spring, substantially less than the 150,000 tons that the previous government provided in its initial grant. Kang said much more would be provided were it not for the economic downturn and IMF budgetary restrictions. At the same time, however, he said the government will empower private humanitarian and church groups in the South to give as much as they wish and to travel to North Korea to arrange and implement their gifts. In the past the government generally insisted that private aid be channeled and controlled by the Korean National Red Cross and had a restrictive policy on private travel. An official of the Unification Ministry announced this week that private humanitarian activities in the South, such as charity concerts and fund-raising bazaars, will now be encouraged rather than closely controlled as in the past.

Similarly, the Kim government is in the process of lifting restrictions on South Korean economic activity in the North. The limitation on investments by private firms is being raised from $5 million to $10 million, and some are questioning why the limit exists at all. In the past the government "advised" several top companies not to invest, or to do so only in situations thoroughly vetted by officials as part of deals with the North. The Kim government is seeking to work with North Korea on the opening of land routes and sea routes between North and South for business purposes, since the high cost of transportation through China has been a serious economic impediment. Kim announced that his principle will be to separate economics from politics, a reversal of previous policy.

Of particular importance to business, Kim declared in his Inaugural Address that his government will not oppose North Korean cooperation and interaction with the United States and Japan "as exchanges and cooperation between the South and the North get underway."

Another action being planned is joint development of tourism with North Korea, including linking the two Koreas as travel destinations for foreign tourists. According to a report from Germany, where North Korea maintains extensive contacts, Pyongyang has decided to accept South Korean tourists beginning this fall, although they are likely to be limited to specific regions and initially only to members of families separated by the division of the country.

In another significant move, Kim's transition team announced a plan to decontrol North Korean propaganda in the South, beginning with relaxation of the ban on listening to North Korean radio, then ending the restrictions on North Korean television and eventually permitting North Korean written propaganda. In the past, South Korean citizens could be jailed for such activities under anticommunist statutes.

In general, Kim appears to be sponsoring a series of relatively small but significant steps, with little that is flashy enough in itself to bring the ire of South Korean conservatives. While saying he is ready for a summit meeting with Kim Jong Il if North Korea wishes, he is not pushing for a North-South summit. He has said both privately and publicly that he will not chase after North Korea in high-profile fashion and is prepared to be patient. "I think North Korea may change its attitude. But if not, I'll wait. I'll not be impatient. Timing is not North Korea's but ours I think," Kim told the BBC on the day before his inauguration. He said in the same interview that, if all goes well, he expects to achieve the first-stage unification in about ten years, suggesting that the current policy turn is intended to have a lengthy run.

Nonetheless, the reactions from Pyongyang are likely to be crucial to the acceptability over time of Kim's Northern policy. Kim's political position is shaky. Even with his conservative coalition partner, Kim Jong Pil, Kim at the present time can command only a minority in the National Assembly. Kim Dae Jung's political base is the relatively deprived Cholla provinces in the southwest, which has long generated suspicion and antipathy among many people in other regions. A realignment of South Korean politics is likely this spring, but it is unclear to what extent it will benefit President Kim and his party.

If North Korea spurns his initiatives and especially if there is another major incident such as the submarine incursion of September 1996, Kim's Northern policy will be endangered by reactions in the South. Regardless of the shift in declared government policy, many South Koreans are opposed to or uncomfortable with the notion of coexistence with North Korea over time, and wish to bring it down to unify the country. More pervasive is the belief that any benefits provided to the North should bring Northern concessions in return. Thus Pyongyang remains in many respects the key to the peninsular future, even in the short run.

The North Korean reaction to Kim Dae Jung has so far been muted. Several statements have been made criticizing his initial declarations as "silly" or "disappointing," but these were far milder than the usual rhetoric about the South. Visitors to the North said that in official meetings, North Korean officials have been notably circumspect about the new government. This suggests that Pyongyang is in a "wait and see" posture. Unification Minister Kang, who is among the most experienced of Pyongyang watchers, told me it may be clearer in "a month or so" how North Korea has decided to respond.

Some of initial portents are encouraging. Pyongyang announced on February 15 that it will set up an "address information center" to help North Koreans find divided family members in the South and overseas. This appears to be a preparatory step toward accepting one of the most popular proposals of all recent South Korean governments including Kim's--the exchange of letters and visits by separated family members. This has taken place only in extremely limited numbers since the end of the Korean War 45 years ago. On February 19 North Korea sent letters to about 70 leaders in the South, including president-elect Kim, expressing a desire for dialogue between the two halves of the divided country. This has been done on some past occasions, and the terms of the proposed dialogue were unclear.

A potentially important step is North Korea's tentative indication that it may be ready to resume high-level military contacts at Panmunjom. Letters recently exchanged by U.S. and North Korean officers and lower-level meetings in the truce village are aimed at resumption of general officers' meetings, broken off by the North in 1991 after a South Korean general was named senior U.N. representative to the Military Armistice Commission. Under the plan now being discussed, four general-level officers on each side would participate in regular sessions, with the U.N. side being composed of South Korean, U.S., and British generals along with one other from an unspecified U.N. member country. North Korea has shown interest in the plan but has not yet accepted it.

North Korea's economic crisis continues to grow, a fact that is the backdrop for all that South Korea, or others, might do regarding the issues flowing from the division of the peninsula. That is the subject of other reports rather than this paper.

II. Possibilities for Policy

Without the United States, the ROK would not exist. The United States was responsible for the division on the Korean peninsula in 1945 and the creation of the Republic of Korea in 1948. It was also responsible for saving South Korea from being conquered by the North after the 1950 invasion, when President Truman's decision brought about U.S. and international intervention under the banner of the United Nations. To a considerable degree, the United States provided the basis for the economic rise of South Korea through initial aid arrangements, economic advice, and access to the U.S. market. The United States has provided a political as well as economic model to which a succession of ROK governments have given rhetorical adherence, even though the South Korean path has diverged from that of the United States on many occasions as Seoul's position matured and its governing authorities exhibited the traditional Korean resistance to being dominated by outside powers. Like many other offspring, the U.S. creation, which emerged from its own historical and cultural context, soon developed a mind of its own.

Many complications and even confrontations have developed with Washington since the founding of the ROK 50 years ago, from Korean War disagreements about war aims to differences over strategy and tactics in dealing with the North Korean nuclear weapons program. The coming of the Kim Dae Jung government and the developments in the economic and political fields provide a new opportunity to make the U.S.-ROK alliance work effectively. Given the facts on the ground and the views in Congress and the American body politic, there is little likelihood of pursuing an effective U.S. policy in Korea without at least the acquiescence of the South Korean government. The chances of success will be greatly enhanced if the two governments will work hand-in-hand.

Given the circumstances described above, the following policy suggestions seem to me in order:

First, the ROK should now take the lead in North-South policy, with the United States in a supporting role.

The United States had no choice but to take the lead on nuclear issues: it is a nuclear weapons power, as Seoul is not; it uniquely possessed satellite intelligence, which was the principal means of assessing the North Korean program, while Seoul had no such capability; it had important worldwide nonproliferation interests and responsibilities, which Seoul did not.

The issues that dominate current policymaking, however, principally involve the status and future of the North and its potential relationships with the South. These are peninsular issues that, while of great concern to the United States and other major powers, are of the greatest concern and significance to Koreans themselves. The United States, China, Japan, and Russia have neither the foresight nor the responsibility to dictate the future arrangements on the Korean peninsula. I would argue they do not have the right to do so. The ultimate rapprochement or rearrangement in the peninsula that was divided by the United States and the Soviet Union in 1945, and that has been a source of conflict and confrontation ever since, is an issue that belongs first and foremost to Koreans. They will have to live with the consequences after the outside powers have turned to other issues.

This does not mean that the United States and the other powers will or should disengage from Korean issues while the peninsular parties grapple with each other. Washington has major interests in the peninsula, as do the other major powers. Among the U.S. interests is the avoidance of war or destabilizing violence or any sort; the continued independence and stability of the ROK; and the continued quiescence of the Democratic People's Republic of Korea (DPRK) nuclear weapons program. Especially in their current straitened circumstances, South Koreans expect the United States to provide strong support.

Now that a new government in Seoul has its own constructive ideas about relations with the North, the United States should shift from the leadership role to a strong supporting role on peninsular issues. Washington can provide advice, international activism, and coordinated U.S. actions to back up Seoul's policies toward the North. It can do so most effectively if those in authority in Seoul and Washington have had a meeting of minds in advance about the directions and limits of those policies. Should South Korean actions--or North Korean actions--seem to approach a danger zone that threatens the U.S. interests set forth above, Washington should promptly consult Seoul and be prepared to act if necessary. As a former senior U.S. official said in one of the early Working Group meetings, Washington cannot be expected automatically to agree to do everything Seoul wants, but it should hesitate to take actions that Seoul opposes. In these new circumstances South Korea should be in the lead on peninsular issues so long as its government continues to be capable of shouldering this responsibility.

Ambassador Bosworth has been expressing this point in rather direct and symbolic terms in talks with Koreans in Seoul. "We are both in the front seat of the car, and it is probably time for you to take the wheel for a while," he has been saying. He adds, "We'll be sitting right beside you."

The implications of this are that in current circumstances, the United States should not try to do too much on its own in relation to the DPRK, and should not do anything without substantial and serious discussion and, if possible, coordination with the ROK The North-South relationship, far more than the U.S.-North Korean relationship, is crucial. U.S. policy should reflect this reality.

Second, the way to work effectively with Seoul on North Korean issues is to work effectively with Seoul on South Korean issues.

It is difficult for a foreigner to appreciate fully the spiritual and psychological blow that South Koreans have suffered with the sudden onset of the financial crisis. Until late last year, they had been the eleventh-largest economy in the world with a per capita income of more than $10,000 per year, and considered one of the most dramatic economic success stories of the second half of the 20th century. Suddenly this world has come crashing down on them. Because of the sharply devalued won, the LG Economic Research Institute estimated that in 1998 Korea's GNP in dollar terms will fall to seventeenth place, behind Russia, Mexico, India, and the Netherlands, among others, and its per capita GNP to $6,600. The statistics are compelling but they do not fully reflect that change in the atmosphere in Seoul from self-confidence to apprehension, as layoffs and bankruptcy grow substantially. Koreans realize they are in for very difficult times for several years.

In these circumstances, U.S. actions and even words or gestures of support for the ROK government and people are of great importance and potentially of great benefit to the relationship. The public initially felt antagonism toward the United States, which was held to some extent to blame for the financial collapse and was assumed to be the guiding hand behind the strictures of the I.M.F. For the time, that seems to have faded among most of the public, given the constructive leadership statements of Kim Dae Jung, but it could return as privation grows.

U.S. policymakers should give serious consideration to words and deeds that demonstrate support for the ROK in its time of need. Kim's state visit to Washington is an ideal venue for this, although whatever can be done immediately will be of great benefit. For example, restoring the ROK to eligibility under OPIC, something that I understand was terminated years ago because of its economic progress, is the kind of action that would make an important political difference, whether or not it made much economic difference.

The Defense Department has taken steps to convert dollar support of U.S. forces under burden sharing to a greater degree of won-based support that is easier for Seoul to pay. I understand the Pentagon has arranged to return to the ROK some advance payments made for military activities. Such actions can help a great deal to advance the U.S.-ROK alliance in a time of stress in South Korea. They could be publicized better than they have been in Seoul.

Third, the United States and South Korea should continue on track with the existing joint efforts to deal with North Korea.

Kim Dae Jung has expressed support for the KEDO process and declared that South Korea will keep its commitments to provide the bulk of the funds for the light-water reactors. This will not be easy, given political opposition to the project from some quarters in Seoul and the economic problems of the country. Kim would be helped considerably if, as now under consideration in Washington, the United States would make a financial contribution of several hundred million dollars to pay for safety features of the project. While this would be a small percentage of the total cost of more than $5 billion, the gesture would be politically important in both Seoul and Tokyo, the other major donor.

Kim has also expressed continued support for the four-party talks taking place in Geneva, though he continues to believe that two-party talks of South and North Korea are of the greatest benefit. This has long been the expressed U.S. view, although with little tangible accomplishment while North-South dialogue has been largely sterile or in abeyance. Expressing the position of the Kim government, the ROK delegate to the four-party talks, Deputy Foreign Minister Song Yong Shik, said recently that political and economic aspects of confidence building between the two Koreas should be left mainly to the inter-Korean dialogue, while military-related issues should be taken up largely in the four-party framework. The United States should accept this desire of the ROK to the extent it is possible, in keeping with the principle that South Korea should take the lead.

In the humanitarian field, the United States should continue its support for food and medical supplies through the U.N. programs, but it should be flexible with Seoul about how that government supplies humanitarian support. As mentioned earlier, much of the Kim government's effort is going to be through encouragement of private donations. The government is under severe economic constraints for efforts of its own. Washington should be more interested in the aid than in its form, and not exert pressure on Seoul to put its assistance through the United Nations channel.

Fourth, the United States should resist the temptation to break important new ground with North Korea without active coordination and, if possible, participation by the ROK

In this respect, I heard doubts in several quarters in Seoul about the concept of a "road map" for U.S.-DPRK relations, unless it is a joint "road map" that also includes the ROK

The successful Vietnam road map concerned a largely bilateral U.S.-Vietnam relationship and was aimed principally at convincing a recalcitrant American body politic and public to permit steps that Vietnam was eager to help arrange. The Korean situation is much more complicated, and the determination of the North Korean government to accommodate the United State is much less intense. A step-by-step improvement in relations with North Korea that was not closely coordinated with Seoul could well counter South Korea's efforts, although in general terms the Kim government has said it does not object to improvement of North Korea's relationships with Washington and Tokyo. I expect to have further talks about the road map idea in my final day or two in Seoul.

Fifth, the United States and the ROK should improve policy coordination, which has often been ragged or deficient in the past.

A political equivalent of the successful and long-standing Security Consultative Meetings (SCM), held annually between U.S. and ROK defense ministers, should be considered, though perhaps at the undersecretary or assistant secretary level rather than at the secretary level. What was billed as an annual meeting of deputy secretaries of state was started in the first Clinton administration but appears to have languished. Similarly, a regular series of economic meetings would be important and could be highly effective in current circumstances.

If a U.S. special coordinator or special envoy for Korea is named, as has been often discussed since Bob Gallucci had the job in the nuclear crisis, the establishment of a regular series of coordinating sessions between Washington and Seoul should be one of his priority tasks.

Policy coordination, of course, is a two-way street. During the nuclear crisis, U.S. policymakers often discovered, to their dismay, that the authorities in Seoul were threatening to kick the traces in unexpected and seemingly inexplicable fashion. In recent weeks Kim Dae Jung's proposal for six-party involvement in the Korean issue (including Japan and Russia as well as the current four parties) was a complete surprise to the State Department, which had not been informed in advance and initially did not know what Kim had in mind. (Evidently, it is broader involvement of regional powers down the road, well after the current negotiations.)

Sixth, the United States and the ROK should explore the possibility of reciprocal cutbacks in South and North Korean military alignments and perhaps military manpower as a key element of positive change on the peninsula.

The military balance has changed substantially on the peninsula in recent years, and especially since the 1994 nuclear crisis, which brought the United States close to war with North Korea. The ROK and U.S. forces have continued to be stronger, with more modern equipment wielding much greater combat power. On the other side, as Defense Intelligence Agency Director Lt. Gen. Patrick Hughes testified to Congress on January 28, "North Korea's overall military readiness continues to erode in line with its worsening economic situation."

It continues to be true, as Hughes also testified, that North Korean forces still[ pose a very serious threat that must be checked with deterrence by U.S. and ROK forces. Deterrence must continue, but now there is a possibility, it is seems to me, to explore ways to reduce the threat.

In current circumstances South Korea is hard pressed to support its massive military expenses, which amounted to about 80 percent of all government dollar expenses before the financial crash and is a huge item in the total government local currency budget. Major cuts in military procurement have already been ordered, and more cuts in defense costs are anticipated. North Korea, for its part, is believed to spend more than one-fourth of its entire GNP on the military--a central cause of its economic disaster.

The change in the balance of forces and in the economic circumstances of both South and North, it seems to me, provides a new opportunity to explore mutual force reductions, going beyond the tentative confidence-building measures (joint notification of exercises, for example) that have long been under discussion to no avail and are on the U.S. agenda now in the four-party talks.

It seems unlikely that, considering the political situation in Seoul, Kim Dae Jung could risk a substantial unilateral cutback in deployments or personnel unless he was assured of reciprocal and verifiable action by the North. Yet such mutual cutbacks would do so much for the two governments economically, and would do even more to diminish the tension and change the political situation in the peninsula and among interested parties elsewhere, that they should be seriously explored, including the question of whether South Korea should take the first step. Obviously, the United States has a major security interest in the Korean deployments and must be involved in any consideration of reductions. I persist, against all obstacles, in believing cutbacks should be considered, because I believe there is a new opportunity and that they would make sense.

The above report is based on four days of discussions in Seoul. I will have three more days of discussions before returning home in time for the March 25 Working Group meeting, by which date I may be able to supplement this report with further information and impressions. Thus this is labeled a preliminary report.--D.O.