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Inter-Korean Relations: Past, Present and Future (Panel 2)

Speakers: Hazel Smith, U.S. Institute of Peace, Kurt M. Campbell, Chairman, the Asia Group, Han Yong Sup, and Ahn Young Sop
Presider: Victor D. Cha
June 13, 2002
Council on Foreign Relations


The Political, Economic, and Security Dynamic (Panel 2)

Victor Cha [VC]: … the political, economic and security dynamic.  And we have three speakers, Hazel Smith from the U.S. Institute of Peace, Kurt Campbell from CSIS, and Han Yong Sup from NDU, and then Ahn Young Sop from Myong Ji University, and we will go in the order that you see on your program.  I'll dispense with any introductory comments just so that we can get started.  Each speaker will have about ten minutes, and we will begin with Hazel.

Hazel Smith [HS]:  I want to thank CSIS and the Council on Foreign Relations and everybody else who's been involved with this, for inviting me to speak to this distinguished audience.  And, I will move on rapidly, given the short time available.  I want to, in this session, think about the, one of the underlying assumptions of the engagement policy.  Only one of them, of course, that external economic intervention can help to bring economic reconstruction, and perhaps, in the long run, political stability in the Korean Peninsula.  Economic reconstruction in North Korea.  And I want to concentrate particularly on the economic issues, in the time, but of course, I fully realize that the Sunshine or engagement policy is as much linked with a policy of deterrence as much as economic and relationships.  So I want to look at what foreign trade, aid and investment has brought to North Korea, to the DPRK.  But also look at the problems brought by the methods of operations of the foreign economic activism of the DPRK, and particularly, probably the most important, the South Korean economic factors.  And I want to consider the possibilities...can you hear me now?  I can shout.  I am capable of shouting.  And I want to consider the possibilities of external economic operators learning from past mistakes, that have inadvertently consolidated political and social atrophy in the DPRK, and make some suggestions as to how to provide some ways forward, out of the situation which we're in at the moment, to help transform social relations in the DPRK in a more positive direction.  If that all sounds very ambitious, so be it, but I haven't got time to go into the background as to why I'm going to be ambitious. So economic engagement is part of the Sunshine Policy.  Economic engagement as we all know, meaning in fact, one way economic assistance, from South Korea to the North.  We've got nothing really much in terms of reciprocity.  South Korean aid to the North, as we all know, has included food aid, which has managed to keep people alive; fertilizer aid which has supported the recovery in grain harvests which took place last year, along with the agricultural inputs that have gone in through some South Korean engineers… the very important support for KATO(?), and the limited but important investment in tourism through the Congasan(?) project.  Information technology in some of the light industry, and of course the economic engagement aspects of Sunshine Policy have acted as a catalyst to help encourage other states, like European Union states, for instance, to provide economic and humanitarian support.  More humanitarian support than economic support, but at least, there's some economic support to North Korea.  The results have been that there's, starvation has been more or less averted, at least since 1997 or '98.  Not just because of the South Korean efforts, because of the world-wide effort to provide humanitarian assistance, and again, I would, as a non-American, commend the Bush Administration for its continuance of food aid this year despite the fact that political issues are not resolved by a long shot between the United States and North Korea.  The South Korean aid, as I mentioned, has helped provide for an increase in grain harvests which took place last year, although the sore insufficient food in aggregate terms to feed the whole country, has had more intangible results including the building of confidence between the DPRK government and other partners, not full confidence, but much more confidence than there was before the beginning of the Sunshine Policy. And also, something which not, which is not often commented on, provided an element of transparency in DPRK economic interactions, particularly in the agricultural sector, under the U.N., whose activities have been organized more or less under the U.N. DP plan of 1998, which brought donors, NGOs and U.N. organizations together to plan, with the DPRK government to plan other cultural support.  The other thing that's happened in terms of the results of economic inter-reaction is that where South Korea has operated within multi-lateral formats, KATO(?), I don't know so much about how their internal operations have worked, but certainly within World Food Program, UNDP, where accounting and auditing have met international standards, that the practices of economic engagement have helped to train DPRK official in good practice in international financial and economic inter-reactions and in terms of introducing standard operating procedures in international financial transactions, etcetera. Again, some of the things have not often publicized, but which have been positive effects of the small amount of, relatively small amount for the donor's concern, but large for the DPRK concern of economic inter-reaction with DPRK.  There's also been some negative aspects of this inter-reaction from partners, including South Korea, but also others, and this has been negative aspects which have consolidated some of the less positive developments in the socio-economic changes that were already taking place in the DPRK, not political changes, and which have taken place since 1997 or '98, and which include a process of marketization.  Marketization, a key element being that the price that price in DPRK is now more or less constructed by the relationship between supply and demand.  No longer by what they government says ought to be prices.  And marketization's included a process that's been referred to earlier, of dollarization, emiseration, as well, and fragmentation.  And the U.S. dollar acts as the medium of exchange to source of value in the accounting device for most of the economy, even though of course not that most of the people do not have access to the U.S. dollar, but nevertheless, that the dollar, the use of the dollar has transformed, and is transforming the way that DPRK economic structure is developing.  And as an all-market, it's not a free market economy, there no free labor market, I'm not making this suggestion, but as an all market economy, some are getting, others are remaining poor, and the DPRK sense it's very poor, emiseration of the majority.  For instance, in terms of food, very few households’ food is secure, only if you're lucky enough to live on a productive cooperative farm, which are not the majority, or if you're lucky enough to have access to hard currency, and then you can, are in a position that you can buy food, are you going to be food-secure the year.  There's only a limited safety net available now, for the count is, this comes from the counties and the provinces, not from the state.  And fragmentation has occurred in that there's new social cleavages.  It's not just that, it's not  more, if it ever was, on that, it's either the party or the military that's getting rich and everybody isn't, else isn't, it's that sections of the party, sections of the security apparatus, sections of the work force that have got access to hard currency, are become better off and others are not.  For instance, the old party elites in North Hyangyung(?), who were the most powerful parts of the party do not have access to hard currency in a major way, apart from three area like Chung-Jin(?), and so are not as well off.  As the senior parts in business, people from Kyung-Yang(?) who do have access to hard currency.  So to go back to what economic operators are doing in their relationship to marketization, of course there is, as yet, no domestic regulatory framework being built in the DPRK which can absorb this move to marketization because they haven't had a policy, of a full policy development which would allow or, and admit, that this is taking place.  So there's more actual institution building in the area of external trade, than there is in the area of domestic trade.  Actually, there's more institution building to be provocative in the area of DPRK's knowledge, or familiarization with human rights practices in terms of their dialogue with the EU, and they're sending people off for training in Britain and in Stockholm, than there is in the development of their domestic trade regulatory practices.  This means of course there's enormous room for the growth of corruption.  There's no explicit rules for who's allowed to have dollars and who isn't, there's no explicit rules for the sorts of things that would be acceptable in the market economy, or not, and there's no explicit difference between this and say putting $10,000 in somebody's back pocket because they've allowed them to go into a particular area.  So there's enormous room for growth in corruption, room for growth in, the DPRK's a money laundering center, and more importantly, for what I want to say here, a danger of these corrupt practices that have developing around this unregulated domestic marketization as becoming the normal way for capitalism or a liberal capitalism to operate within the DPRK.  And this is where the contribution of foreign economic operators comes in, and by economic operators, I mean business as aid organizations and governments, and the record is being patchy, in terms of the encouragement of good practice in the discouragement of bad practice.   The major most lateral aid organizations and some of the NGOs and probably some business insist on proper accounting, auditing, business plans, contracts, proper labor practices, and try to evaluate contract implementation.  This is what the whole monitoring debate on aid is about, frankly, and there's been a lot of progress on this.  But some do not.  And practices I think that we ought to be questioning, because they're no good for North Korea, and they're no good for any eventual unified or integrated Korean Peninsula, are cash transfers of millions of dollars.  For instance, gift giving as an entry fee.  Little accountability and transparency, and transparency in terms of government subsidized business projects in the North.  Non-use of the local banking system.  It does exist…and it could be used.  And NGOs which pride themselves on, for instance, on having, not have written agreements with DPRK government, and don't coordinate with other agencies.  I mean, this is really not very good practice at all, and other things.  For instance, and if anybody from KATO hears I'd welcome their comments on this, the sorts of labor contracts that are being drawn up by some of the organizations.  So what can we do?  Well economic engagement should certainly continue, but its modalities should be changed.  Foreign private and public investment, of course, should be based on profitability, which would go where returns can be made, but of course these returns won't benefit the poorest in the DPRK, I've just said the majority, because, but in the long run, this should happen, and this should be commercial criteria for economic investment, because it's good for the changes in the economy and the policy in the long run. But in the meantime, before we get to that stage, and I'm missing a whole lot of arguments there which, because of the time, I think that this, South Korea, if it wants to continue with economic, the Sunshine Policy, will have to accept that it will be subsidizing economic interventions.  I'm not talking about aid here, but economic developments or industrial developments in the DPRK, and therefore, it is in a position to have some regulatory control over how economic intervention takes place, even if those subsidies go to South Korean business and then they're going to North Korea.  And I would suggest that this a good thing to be supporting, this economic investment in the DPRK providing the modalities are changed, not just because it assists in providing a better quality of life, hopefully, for a number of people, but because as some foreign markets practices are introduced, this can have, it's not necessary that it will have, it can have a positive feedback effect on facilitating person freedoms.  Personal mobility, which is already increasing in the DPRK.  And also encouraging individual responsibility and rewards, basically, individual economic incentives rather than on incentives which go back to the community, which there are some good things about this, but it's not going to lead the way forward to opening up in the DPRK.  The DPRK also, we need to continue to receive humanitarian support.  There's a terrible practice going on at the moment, internally in the DPRK, and there's not enough food and there's a lot of people dying.  So foreign economic inter-reaction should reinforce the positive aspects of the development of marketization, should insist on transparency, proper accounting practices, value for money, and through the process of investment and trade, should help to build viable economic institutions including banking, credit and legal systems.  So we should be thinking collectively, this isn't just the Sunshine policy, but for all of those with an interest in this, not just about how much is being invested in the DPRK, but how it is being done.  I think the South Korean government is in a position, permit me for being impertinent and saying this because it's not my country, where it could, for instance, develop a code of practice for the modalities of investing in the DPRK.  We could also be considering policy recommendations, for instance, such as a very light inter-governmental and regional framework for investment in the DPRK, which would involve the DPRK to pan-China, South Korean and Russian, not a U.N. DP, with all U.N., with all its bureaucracy and more for those of you that know the history of the European integration set-up, the European call them sealed communities, functional, as the earlier speaker said, at organization with a technocractic secretary rather than a big, you know, massive organization with integration.  This I think helps resolve the sovereignty issue for the PDRK.  And in many instances, DPRK's looking for ways to, in my view, to move forward, but to save face.  We can go into the details of this.  A multinational organization precisely as this happened in other multinational organizations, allows the government which is receiving and having to do things it doesn't want to do, to say, oh, it's not somebody else telling us what to do, another government, it's actually we're doing this for tactical reasons.  Also, any inputs that should come forward should come forward along with institution building.  You know, we do a lot of nation building, and there's lot of talks about nation building in many different parts of the world.  Often, nation building comes after there's been a war, after there's been outright devastation in the country.  Well there is outright devastation in North Korea.  I can go into this, I've gone quite a long time now, I haven't got time to tell stories, I've got a few I haven't got time to tell.  There is outright devastation there.  And so I think we should be starting with the nation building now, and not waiting for a war to take place.  And, I think that of course South Korea is crucial in this.  They're in no short to medium term profitability reasons for most investors to investment in DPRK.  Even if American sanctions were lifted tomorrow, the positive aspect of this, whether you think it's positive or negative I supposed depends on how you feel about the overall political issues, but the positive economic result of this would be that this would open up the World Bank in the  Asian Development Bank to be able to help in structural development in the DPRK, which would then assist in business finding more profitable outlets in the DPRK, but there's not likely to be much more trade between the U.S. and the DPRK if sanctions come about tomorrow. So there are really only national reasons, and by this I mean Korean reasons, North and South reasons for investment in the DPRK, and as far as Korean business is concerned, then in my view, it will continue to be looking for the South Korean government to give its subventions(?).  I don't think there's much wrong with this, subventions for peace building as well as economic development, provided these are made explicit in their building toward accounting practices.  For instance, you could easily see, not just the Kay Sung(?) development being pushed along, but also perhaps development in the Northern county areas in the PDRK, from Mu- San(?) in the North East, which is the most hideous area of DPRK that I've ever been in, apart from perhaps Hey-Du(?), which is different for, and which is just a complete mining county where there's enormous impoverishment, unlike, say, West in Yan-Gang(?), where there is quality fertile land which people can use to, there's a lot of population movement going into Yan-Gang(?), and houses being built, and people being able to produce food.  In Mu-San and Yan-Gang this is not the case.  So if you have something, again, such as what the EU is doing in North Africa, where the EU is investing in North Africa with the local businesses, precisely to stop, to try to prevent the conditions arising where refugees would want to go into the EU, then I think there's room for South Korean government support of economic development in the North.  And, again, provided this is done in a way which is managed according to international standards of transference and accountability, this helps not just in economical improvement, but also in providing more transparency, more accountability in the DPRK and in our economic inter-reactions with them. And my view is also from working on a capacity building project with the Ministry of Foreign Trade in the DPRK over the last three years, that there would be a lot of room, a lot of support from within the DPRK, there'd be a lot of opposition as well for efforts that were made from the outside to try to clamp down on some of these worst practices that have, that are happening inside the country.  Perhaps I'd better finish now.  But nevertheless, the messages I think, if I can give a message, is that we should have engagement, maybe not hawk engagement, but engagement without illusions.  Thank you.

VC: Thank you, Hazel.  Next we'll shift from the economic dimension to the security dimension, and Dr. Kurt Campbell will be the first speaker.

KC: Thank you very much, Victor.  First of all, I’ll just begin with just a quick remark.  We've had a lot of discussions here over the last couple of months about Asian policy, and it invariably, in one of the first sessions, someone will quote one of the sacred words from the Armitage reports, either Korea or Japan.  I participated in one of them, Jim Pristrip (?), I know was involved in both of them, but it's interesting, if you'd been a part of the process, and it's a wonderful kind of process, sort of easy going, an opportunity to kick issues around, but now subsequently, these texts are sort of given near biblical scrutiny in terms of what this particular section meant, and how to interpret it.  I would just urge all of you to read them with a degree of distance, if at all possible.  My discussions today really spring from some of the comments that Don Oberdorfer made, and I thought, as always, very provocative.  And he talked a little bit about the role of the Pentagon, and how the Pentagon sees particularly security developments on the Korean Peninsula, and I'm going to do a slight departure today, because I'm not going to talk specifically about the role of the Pentagon on the Korean Peninsula in terms of thinking about the security dynamics.  I'm going to talk about the role of U.S. forces Korea, and particularly the CinCs organization and operation, because I think in a really remarkable sense, their dramatic, critical role is sometimes overlooked in the formulation and execution of larger U.S. security policy. And let's remember, of all the regional CinCs, the Korean CinC has the most unique qualities.  If you look at both CinC Pack, or CinC Yore, their responsibilities are vast regions, huge amount of diplomatic and military activities.  CinC, for the Korean Peninsula is really responsible for a very narrow set of issues, and as a result, their role in interagency deliberations, and discussions, and particularly the role on Capital Hill, is enormous. And I think sometimes, what their interests are, can often be misunderstood.  And also, I would also suggest that their interests sometimes are starkly different from the interest of both the Pentagon and the Executive Branch at large.  So let me begin, I'm going to make six propositions about that, and then sort of six things for the future of a broader nature, in terms of what we might think about in terms of security issues going forward.  First of all, anyone who's ever visited Korea, and gone to Yang-San(?), would, I think, acknowledge that there is a remarkable feel to the place.  I mean, it is like going back in time. It is almost sort of parochial expression of American empire.  There's really a sense of, you know, boy, this is a place almost captured, or trapped in time, and there is a certain mentality, frankly, that is benevolent, in many respects, parochial in others, but is also capturing, and I think you see it reflected in a variety of approaches to security issues, not only on the Peninsula, but in a wider Asia, and I think it's important to understand them, as you sort of contemplate what might be next in terms of policies on the Peninsula at large.  The second point, so the first is really that, don't underestimate in security discussions and dynamics how that institution plays such an important role.  Second, I think often misunderstood, or underestimated, is that a vast, perhaps not majority, but perhaps near a majority of issues, that the command deals with, really are not related to North Korea.  They are related to managing an increasingly challenging set of issues associated with South Korea.  Land use issues, behavior questions, environmental issues, questions of history associated with No Gun Re(?), host nation support, these issues are taking up an increasingly large share of time and burden.  They're very difficult, very challenging issues that require enormous amount of efforts, and they are like negotiations, trade negotiations, they are tough, they are hand-nosed, they often involve, you know, large numbers of peoples out on the street, and I think that is an interesting part of what we sometimes don't consider, than the management of the relationship, on the military side, is much harder than people recognize, and I will argue, as I go forward, that likely to get harder going forward.  Third issue, just in general, and again, this relates directly to Don's point.  The military had never been averse to diplomacy.  In fact, in many respects, even today, and historically, have been very supportive of efforts associated with not only the United States playing a role with North Korea, but also certain aspects of North-South dialogue.  And I underscore certain aspects.  The key is that they have very strong convictions about how those negotiations will be structured.  The role they will play, and the issues that will be on the table.  If you think about the overriding belief, or structure of discussions between the United States and North Korea, which was essentially the sort of the tacit bargain, is we will provide you food, and certain kinds of humanitarian support in exchange for changes on the security side.  And also some protocol visits and the like.  And so the idea would be, that fundamentally, our military forces and capabilities would genuinely, or generally remain static, while yours will change.  Well that's an easy dynamic to accept, if you're sort of the military going in.  If, and I would just suggest, again, this is to Don's point, where we've had problems on these issues, did not begin in the Bush Administration, and indeed, throughout the Clinton Administration, any time that there were suggestions about, well maybe we should take some conventional steps, here, or maybe halt these exercises there, very, very strong pushback.  So, keep in mind, interest in diplomacy, but, again, security issues, very, very cautious about.  And that sort of leads to the fourth issue.  Any of you who've also been to Yang-San(?) and have seen the presentation about here's the threat we faced, it is undeniable, that the threat that North Korea poses to South Korea and the United States use combined forces, is great.  There's just no doubt about it.  But, I would argue, I'd be one of those people that would say over the last decade, it is probably changed rather dramatically.  And I would suggest that it has focused more on the destruction, I hate to talk in such crude terms, of Seoul, rather than seizing the entire peninsula.  But, you will see, as you sort of read and go through these briefings, that the belief that North Korea maintains and retains the capability to seize the entire peninsula, is an article of faith.  And it is something that you see throughout consistent briefings, from U.S. military officials.  Now I think there are a strong number of reasons for that.  What's also interesting, by the way, when you look at these analyses, until very recently, there was a underestimation, I would say, of the threats posed by chemical weapons, and also nuclear weapons.  An overriding focus on conventional forces, and also, the belief that conventional forces can move decisively south, rapidly, and seize the entire peninsula.  I would have suggested that over the last decade we have lots of evidence that suggests that completing that strategy because of dramatic economic problems is very difficult.  I think on the last day of the North Korean regime, they will still maintain the capability to destroy Seoul.  I think the ability to move dramatically South is in question, but that issue really is not debated, and it's really now allowed to be debated within the Pentagon, because it goes to so many sort of sacred cows, in terms of belief, of what you need in terms of forces and other capabilities.  Fifth point, very, very wary of conventional arms control. And so what's interesting is when the Bush Administration came in and said, "Look, the entire approach of the past in terms of focusing, not focusing on conventional forces was a mistake, we've got to look at conventional forces."  What they found very quickly was not only is it very difficult conceptually, but there are certain aspects within the military that are very much against it.  Because of fear that as you go down this road, that it will mean putting some of your own forces on the table.  So conventional forces, and you see this history repeating itself very prominent in European discussions in the 1970s and 1980s, and NBFR(?) and then leaving to CFE(?).  The same dynamic plays out on the Korean Peninsula.  Now, Six, just to leave you with a last point, in addition to these other issues, the CinC and his team can also be extraordinarily creative and dynamic in their approaches to a variety of situations, and let me just give you a couple of ideas, or a couple of incidents on this front.  The work that was done, now, in retrospect seems almost quaint.  In the late 1990s on instability planning, in which you recall there was the uproar that we were not prepared for the inevitable, immediate collapse of North Korea, and so there was a remarkable amount of very creative work associated between the United States and South Korea, associated with how we would respond to certain circumstances, what we would do together, and that work really was, I think, instrumental.  And the CinC was also prepared to begin a dialogue with other countries in the region, Japan, and China, to begin to discuss what would happen in certain circumstances.  Ultimately, what the CinC and the U.S. military is worried about on security sides is independent action.  Either independent action of the civilians back in Washington, or independent action, particularly of the South Korean military, and we've seen, over the last six or seven years, the book ends, the two things that they're worried about that sort of bracket, one the one hand, under KYS efforts of negotiations between the United States and South Korea, of how they could respond to certain provocations.  What they would be allowed to do on their own, without consulting with us, and you can imagine those sorts of negotiations with the United States saying, wait a second, if you respond tit for tat, that could lead to the whole Peninsula going up in smoke.  That's sort of one end of the book ends.  The other end of the book ends was, of course, the very important meetings between the defense ministers, in which the CinC did not have a role and was very nervous of negotiations that were going on directly between North and South Korea, even though there were excellent debriefings, and discussions.  So that gives you a sense of some of the issues that the CinC is interested and nervous about, as he looks forward.  And I would argue, to you, that role of the CinC, really those issues are almost constant over a range of CinCs, stretching back in green for decades.  Let me just take quickly, and I'm cognizant of the time, six issues to think about as we go forward.  First of all, trying to think about what is the nature of the military picture on the Korean Peninsula, is remarkably difficult.  Certain areas of dramatic atrophy, clearly, unmistakable areas of lack of investment, huge problems in upkeep coupled with certain niche areas of investment, including chemical weapons that are very troubling and very worrying, that, together, plus a fact that the Koreans, North Koreans, if they demonstrated anything over the last five to seven years, is that they will spend any amount of money, in terms of taking from the humanitarian pot, to upkeep certain aspects of their military, and so this whole idea of taking the jacket off, either in Sun, or rain, or when, I think they've decided they're going to keep the jacket on no matter what, right, and they'll pay for that.  And that might mean paying in thousands, hundreds of thousands, millions of lives.  Second point, if I can, I'm going to violate here, and I realize this, one of the prime directives of the Bush Administration, which is, I'm going to say something good about a member of the Clinton Administration, but, the reality is that Bill Perry both as a Secretary of Defense, and then subsequently basically as a man of peace, played a remarkably important role on the Korean Peninsula.  There was a major effort in the early 1990s to make sure that certain capabilities, particularly involving intelligence and other capabilities to increase U.S. fire power and capabilities on the Korean Peninsula.  Basically unprecedented, that leaves the United States and  South Korean allies in an extraordinarily good position, in terms of deterrence.  And the ability to respond military if necessary.  And I think that's very important.  At the same time, what's interesting that's going on right now, very quietly within the Pentagon is a real whole scale review of what does it mean to have foreign presence forward based, right?  Is it vulnerable?  Does it serve American interests?   What are the questions about it?  And I think in terms of the zero based analysis that's being done, one of the things that Secretary Rumsfeld and his team is most uncomfortable with is the notion of engagement or shaping the environment, which was, of course, one of the principals of Clinton military dialogue in diplomacy.  And if you actually look at what the CinCs, the military liked most about Clinton, and there wasn't that much, they did like the idea that there was a doctrine that specifically had them playing a role in shaping and engagement and diplomacy, sort of forward deployed, so to speak.  Those precepts, those beliefs are really under significant review, and I wouldn't be at all surprised that some point in the future, that there are questions about whether we need the same kind, and the same number of forces forward deployed.  Now the question, of course, will be what are the unintended consequences of messages associated with shifting the nature or the number of our forces, but look forward.  Those are things when we face inevitable pressures to redistribute some capabilities to the Middle East. I think we might find in  Asia some questions about whether we have to look more carefully and have the same number of forces forward deployed  A third point, all the military organizations are glimpsing the future and thinking about the future.  The organizations in the U.S. government that are best about thinking about the future are all in the military.  And they are all thinking about the nature of military forces, the size of military capabilities and the nature of the relationship between the United States and South Korea.  My own personal sense is that all of us spout the words that we hope, or some hope, some fear, that the United States and Korea will have an enduring security relationship over the transom, after tensions on the Korean Peninsula have been reduced.  My own sense, even though President Kim has been very strong in this, is that there has not been a national debate, either in Korea or the United States, about the nature of the relationship on the Peninsula, and all these ideas that the army will have some forward command, or that no, no, we'll need expeditionary forces, and it will be basically a haven for the marines, and the air force, is very premature.  And that if anything, what, over the next several years we will need is a much more heard-headed discussion between the two countries about the nature of our military and security relationship.  I take for granted that we will have some kind of security relationship, and I think it's in both of our countries' interests.  The nature of that presence, or how that is amplified, or expressed, I think is still very much upward diplomacy, and I think it is not in our interest just to assume that inevitably we're going to have sort of military forces on the Peninsula going forward.  Fourth point.  Conventional forces, even though there has been talk that maybe too hard for right now, there are still efforts underway to try to come up with a framework for how to go ahead on these issues, particularly, we get back to the table and I have to really thank my friend Lee Siegle for spurring us at CSIS to think about how you would go about doing conventional forces on the Korean Peninsula, and of course we find it's an extraordinary difficult challenge that perhaps the first step is important confidence building measures of which they are completely absent.  Fundamentally.  On the Korean Peninsula, and there's no shared language, or understanding about how we'd do this, and, not least of which is that South Korean friends have said, "Wait a second, Americans, not your issue.  Our issue.  Thank you very much.  We'll be in charge of this, you can come talk to us first before you talk to North Korean friends."  Fifth point, almost done, Victor, is that the issue that, if you asked me what I was worried about going forward, is that the high point of a couple of years ago, real improvement in security dialogue between South Korea and Japan.  That's looking increasingly like something in the past.  And it worries me greatly.  Because the hope for really, one of the things that we hope for, for future ages, not only better relationships between Japan and China, also increasingly difficult, but at least a modicum of understanding between South Korea and Korean friends.  A couple of years ago, I would have said, almost, you know, despite history, despite problems, but because of a tremendous leadership from President Kim, the sky's the limit.  I'm much less optimistic now, and I don't think the United States has played an important and dynamic enough role of late to try to bring these two countries together.  Finally, local issues.  Local issues between the United States and the U.S. military, between commands, I, even though they sort of ebb and flow, over time, they are going to increase.  And they are like sand in the gears.  And they are challenges, and they will take increasing skill, and dynamic leadership in the United States in order to make sure that we have a strong relationship going forward.  Overall, I think the set of challenges that we have ahead are going to be even more daunting than the ones that we've faced in the past.  Thank you, Victor.

VC: Thanks, Kurt.  We will now have another perspective on the security dynamic from the Korean side.  Dr. Han from National Defense University.

Han Yong Sop [HYS]: Thank you, Chairman.  I'd like to start from the threat assessment of North Korea.  And, how do we go about to reduce the North Korea as a nuclear threat.  And, in conclusion, I would like to propose my own approach to observe this kind of problem.  As pointed out in our first panel, I think North Korean military threats is unchanging.  And is real.  Think about on the nuclear threats, according to political framework something is being done, to freeze their nuclear facilities, and, however, their past records of nuclear weapons program is outstanding to be sure.  And so chemical and biological weapons, they have 2,500 tons of chemical weapons and agents, and they are developing biological agents.  On the missile issue, they are keeping the test moratorium, but they are continuing export.  And indigenous development.  And also on conventional issue, I think military posture is clearly offense oriented, given it, for someone say that their mind is a defensive oriented.  Given the strategic isolation from their allies.  I think this increasing threat is very alarming, given the two points.  One is that despite the Sunshine Policy of South Korea, the threat is unchanging, or even increasing.  The Chairman of joint, Joint Chief of Staff in CFC(?), former CinC CFC talked about North Korean threat, it's a bigger and better, closer and deadlier, and South Korean Defense Minister agreed to this point.  Although the president and other communication ministers, people don't want to point out this kind of a thing, the militaries in Korea and also in the U.S.A. have assessed North Korean threats with a cold head, not warm head.  Maybe a cold head.  South Korean Defense Ministry published the Defense White Paper in the year 2000, six months after the summit meeting, naming North Korea as a main enemy.  That aroused debate in South Korea, severely, and now it has been two years for South Korean Defense Ministry, did not publish Defense White Paper.  Somebody say that the reason for that is North Korean threat is changing.  Diminished.  And somebody say that this is proof of continuing threat, because, in the year 2000, the Defense White Paper said that its main enemy, threat is unchanging.  Then nothing has been published since then, so that is continuing assessment.  Clearly, there was a missing element in the June 15 joint statement between the two head of states on the security matters.  I think it was because it was a very difficult task to raise military issue with North Korea, because North Korea only wants to address security issues with the United States.  And also, addressing security issues needs some kind of a fundamental and structural approach.  We need to change the cold war structure.  It is a very difficult task any way.  So I think President Kim was complacent about, you know, North Korean leaders mentioned that it's okay for the United States to stay in South Korea, even after unification.  And how we go about the North Korean's military threats, as pointed out in the first panel, there were four kind of approaches.  The Sunshine Policy is different from that the policy I am going to describe.  That is condition engagement.  Sunshine Policy, the basic assumption is that, as South Korean improve relations with North Korea on political and economic terms, finally, North Korea will reduce tension.  But, I think, North Korea has not changed its military policy and capabilities, yet, and also, another assumption is that South Korea is concentrating on economic and political relationship with North Korea, whereas United States should focus on the restoration of the weapons of mass destruction issue.  It is based on the raw division of the two allies.  How about conventional military threats?  Before the Bush Administration cam in, the assumption was that South Korean government would revitalize 1992 basic agreements that stipulated…..approach to arms control.  But, as North Korea rejected it, revitalizing any basic agreements during the summit, before the summit, South Korea start raising this issue, so security issue is outstanding, in general.  Two obstacles in this policy option, in terms of security, domestic and the U.S. support for the Sunshine Policy, sort of security aspects could be decreasing, because it is disregards, disregarding military threats, although they say that tension has been reduced, but perception of South Koreans about North Korea threat has significantly declined, I think.  According to popular opinion survey.  But I don't know about the North Koreans public opinion survey, they don't have a public opinion survey.  And second approach could be containment policy.  My colleague here, Leon Segal, put crime and punishment approach.  That is I think equivalent to a Bush Administration policy now.  But, this approach is also having two weak points.  That is, that can run the risk of abrogating the agreed framework.  We need to preserve and strengthen political framework.  That term this government doesn't like to hear.  Maybe we need to improve the agreed framework instead of preserving and strengthening.  And benign neglect approach, let's wait and see what, how North Korean will respond to the Sunshine Policy that has been implemented up to now.  Why we bother to offer both things, more, for free, because North Korean is not responding?  Is not prepared to change their military policy.  But this policy has also two weak points.  We need to improve political framework, and also, North Korea will end their missile test moratorium next year, so we need to build upon the… process and political framework.  Then, what is the more prudent policy to address North Korea's military threats?  I term this is a comprehensive condition of engagement.  Conditional engagement, I think, is what Ambassador Gallucci has done to North Korea, to resolve the nuclear problem, I've heard from Ambassador Gallucci, his episode in dealing with North Korea, when North Korean head of delegation proposed to replace the graphite reactor with light water reactor, the Ambassador Gallucci didn't even smile.  Because he didn't want to show weakness in the negotiation.  From that point, I think, Ambassador Gallucci was tough negotiator.  So condition engagement means that we ask really test some conditions that North Korea should accept, and North Korea will test things in their time, so we can negotiate, but, Clinton's Administration did that on issue by issue basis, nuclear issue first, and then missile export issue, missile test launch is the second one, but we cannot desegregate the issue, because, by desegregating the issue, we were, we played into North Korean hands.  So in that connection, i think Bush Administration's policy to address the comprehensive aspect of security is well grounded.  So, I'm saying...for the comprehensive condition engagement, to aggregate all issues, nuclear, and missile and chemical, biological, and also conventional issues, then how can we be sure this comprehensive condition engagement, a new approach is needed.  I think North Korea appears really insecure.  North Korea rule respond positively to our request for arms control.  Because, arms control is a way to enhance our security, sense of security through measured action to reduce tensions and threats, so I'd rather propose, in my paper, I describe in detail what, because of time, I cannot repeat all the things, but, the thread of my argument is that, to establish arms control regime, where  South Korea, North Korea and the United States can discuss, negotiate on any military issues on a regular basis, because, two different set of talks, South Korea and North Korea, and also United States and DPRK talks, it, suppose that the bad cop, as a United States, as a bad cop, and South Korea as a gentle cop, both are present at the negotiating table, I think it's more effective to persuade North Korea by dividing our roles at the same table, but by having North Korea keep changing partners with bad cop at one time, and good cop at another time, it's very confusing for North Korea to deal with.  And also, in that sense, I would like to propose tripartite talks, because it has never been tried, but we need it because of time saving, and also, let me tell you this story.  I did assumption(?) relation to compare the four part talks with three part talks in my NDO(?) class, every year.  If you have four party talks, it takes a lot of time to enter into the discussions about the security issues.   That is really diplomatic game.  But, in the case of a three party talks, they immediately enter into security talks.  Talking about the U.S. forces in Korea, and North Korea as a…the political forces, pullbacks.  Something like that.  So, in retrospect, suppose that in Europe, if the United States had withdrawn drawn U.S. forces from Europe, without having mutually balanced arms control, mutually balanced positive action talks, then what would have happened?  Because of U.S. and Soviet mutually balance arms control talks, we could address conventional security threats in Europe.  At the same time, you had conference on security and cooperation in Europe, to enhance confidence with all the countries present, and United States and Canada.  If United States is not present at the talks, arms control talks with South and North Korea, that means nothing.  And no progress we can expect.  In that sense, we have to have all the countries who have forces on the Korean Peninsula should be present at arms control talks.  As a starting point toward this rigorous ambitious goal, we already started South Korean and United States started to develop a joint arms control program and policy.  In February this year, U.S.F.K.(?) and South Korean Ministry of Defense completed the first part of arms control, jointly.  That means confidence building measure, how do induce North Korea to come to this table.  So this is a first part of joint study.  We need another set of study about military constraints, including the pullbacks of…and also the arms reduction.  And also this should be not only CBMs, but also the pullbacks in arms reduction at the same discussion table.  We need to test North Korea's real, political will sooner than later, before we fully engage North Korea to provide our economic resistance to build gas and industrial complex, around guessing industrial complex there are many North Korean…forces.  In return for our building industrial complex, why not asking North Korea to deploy backward(?)?  And, also the, my argument is that two design a grand bargain, as I said that we need to establish a linkage between economic cooperation and security cooperation.  We need to exploit North Korea's economic vulnerability to persuade them to agree to a symmetric reduction of forces.  North Korea has more numbers, and they can reduce some.  In return for that, we can provide (Inaudible) economic resistance.  So that kind of framework should be considered as a part of comprehensive arms control plan in the future.  Thank you.

VC: Thank you, and our last speaker is Professor Ahn, of Myong Ji University.

Ahn Young Sop [AYS]:   Thank you, Mr. Chairman.  I'm great honor to be here, before distinguished guests, and express in inter-Korean relations and U.S.-Korean relations.  Before I start that, I like to make a quick remarks that the Seoul is now in the heat of world cup soccer games, and I am not soccer fan myself, but I fell victim to this excitement in a sense, and it was bad time to prepare this presentation that I've written out for you, so I do hope I have a chance to rewrite this presentation before it get published.  (Laughter)  Now let me get down to main business.  Before I start, again, I have to make a very quick remarks, I am…since I have to handle a broad, in fact a very broad range of issues.  Political, humanitarian, social issues.  Inter-Korean relations.  I am a student of political science majoring in North Korean political system, and …station political economy, all these three, all these issues are beyond my capacity to handle, so I hope you understand, and the criticisms, expected criticisms, observations, response, from the audience, will be answered by myself, I try to do that, but, I hope that this is a gathering of many experts in that area, so, on behalf of me, some of you could respond to the criticisms and observations that I have some trouble in handling on answer.  My presentation today has two objectives.  One is to introduce characteristics of the issues of Inter-Korean relations.  The other is to suggest considering these characteristics, future directions of American foreign policy, issues to take to North Korea.  Considering the time limitation of about ten minutes, since I have to handle a broad range of issues, I want the Chairman to allow me to use another 30 seconds or so.  I'll try to meet the deadline, but, I would like to handle only a few major issues of inter-Korean relations.  And then under a separate subject, I will briefly look at the issue of a future American foreign policy to North Korea.  American  policy to North Korea is of course a political issue of Inter-Korean relations.  However, this intentional separation and emphasis have been attempt since is such an important issue that deserves special attention, particularly in the South-Korea-U.S. conference.  Also, the issue of weapons of mass destructions, that has been brought to attention, this morning, and now, so obviously, the most serious obstacle in both inter-Korean and the North Korea-United States relations.  First let me talk about major characteristics of the issues in inter-Korean relations.  The first is the perception gap, one of the speakers this morning raised at this issue of perception gap between South Korea and the United States.  Probably the most important characteristic of the issues in inter-Korean relations, today, is the large gap in the perception of possible consequences that I expected from the North Korean opening.  That means that the North Korean policy change.  South Koreans believe that it will certain be of interest for Kim Jung's isolate regime to open up in goods and trade, and other context with South Korea, United States and the rest of the world.  North Korea, however, obviously think that, an honest opening up of society's likely to the collapse of the regime, as Dr. Joe Myung Cho(?), North Korean defector and a former professor Yim el Sung(?) University observe that.  South Korea emphasized that the North Korea ought to open up itself in a sense possible, while Kim Jung Yel(?) tend to think that this opening is likely to lead his regime's collapse.  This perception gap also appears in most conspicuous in the question of North Korea's weapons of mass destruction.  South Korea like the United States, is trying to convince North Korea that developing this weapons would not serve North Korean interests productively.  South Koreans believe that these weapons, dangerous weapons are the most serious stumbling block to not only South-North relations, but also North Korea-United States relations.  North Korea on the other hand seems to be convinced that it is too dangerous to guard down by stopping weapons of mass destructions development.  North Koreans consider the United States and its allies a serious threat to their security, so they believe equipping themselves with weapons of mass destruction is the most reliable means to protect themselves from that threat.  Now the second characteristic is divergence in South Korean public opinion.  The South Korean public opinion is divided over the question of, say, North Korea's weapons of mass destructions.  ….groups view that applying too much pressure to North Korea, to dismantle such weapons would only make the problem more complicated.  Many conservative minds, on the other hand, think that North Korea's weapons of mass destruction must be stopped as early as possible.  But the problem is that they are, they do not seem to create enough, the question of how to stop.  Many liberals in South Korea believe that pressuring Kim to halt, to make concessions on weapons of mass destruction, would enable to read result in restraining relations between the South and North and…in Washington.  Despite this difference, most conservatives and liberals share the notion, I think I'd like to emphasize this point, that North Korea's weapons of mass destruction are threatening to security and a peace on the Korean Peninsula, at the same time, they also believe that, another war on the Korean Peninsula would be catastrophic.  The division of South Korean public opinion about the question of how to deal with North Korea's weapons of mass destruction is not about whether this weapons are dangerous, or maybe allowed or not.  So the question of the characteristic of long term, what I term long term emotional nationalist issue versus immediate substantial issues.  Recently the question of how to reunify two Korea has emerged as a major political issue in the South Korea presidential race.  Mr. Re Ha Chung(?) presidential candidate of the opposition grand national party has called for a review of the second article of the joint declaration signed by the leaders of two Korea, at the signing(?) in Pyan Yan(?) June, 2000.  In the declaration South Korean president Kim Dae Jung(?), North Korean leader Kim Jung Yu(?) acknowledged the commonalities in the North proposal for rules of federation of the two Korea, and the South's proposal for a confederation as a way to reunify the Peninsula.  North Korea's state media criticized Mr. Re's(?) remarks by saying, this is an expression of his anti-reunification, anti-national intention to write up the main idea in the spirit of joint declaration, a landmark for national reunification.  On the other hand, Mr. Romoi Han(?), the…democratic party presidential candidate and liberal social groups in South Korea as well have also joined the criticism of Mr. Re's call for the review of the article.  Mr. Ro accused Mr. Re of being stuck in the so-called cold war mentality.  Whatever political debates involved might be however, the bulk of the Korean population seems to be realistic enough to think that more immediate and substantial question is how to achieve peace and stability on the Korean Peninsula.  Few South Koreans would also object to a reunified Korea with liberal democracy and market economy.  A reunified Communist Korea is simply unthinkable.  On official basis, at least, North Korea also speaks of the importance of peace on the Korean Peninsula.  Whether this, North Korea's official position is genuine or not, it would be reasonable to say that the most pressing substantial inter-Korean question is about how to achieve peace.  Reunification is surely a long term project to this, to Korean population.  In sum, how to reunify two Korea is a long range, emotional, nationalist issues, while how to bring about peace on the Korean Peninsula is an immediate substantial issue.  The post characteristic is perilous(?).  Tens of thousands of North Koreans in China, we have threat, hunger, tyranny of the home country have no means to reach these safe haven offered by South Korea, and other liberal democracies.  These issues has been raised this morning.  The issue of North Korean defectors is of course, therefore, a political mine field affecting the…relations between the two Korea and China.  Most importantly, however, the issue of North Korean defectors is of course an inter-Korean relations, even though this issue is, this issue involves relations or other countries, possibly the United States.  Understandably, many think that they are hardly helpful to inter-Korean reconciliation and cooperation.  This situation results in a paradox that even though South Korea is advocating human rights, it cannot afford to raise North Korea's human rights issues in an aggressive manner.  North Korean defectors have also forced Seoul to confront with delicate question of whether the South wants North Korea to collapse.  However, the incumbent South Korean government has made it clear that it does not intend to absolve North Korea.  The South Korean government seems to have determined that the large exodus of North Koreans to the South would be destabilizing to the Korean Peninsula under the present circumstances.  Even the fact, given, for instance, the huge disparity between the South and North.  And the paradox of the four ways that many  South Koreans do not want the downfall of North Korea, there is defined as a principle enemy, at least for now.  The fifth characteristic is now, about the question of doubt and to stop aid, economic aid to North Korea, or trust and continue.  The bulk of the North Korean population is living in dire poverty.  The reality is that without substantial outside assistance, result the significant improvement in North Korea-United States improvement North Korea-United States and North Korea-Japan relations, as well as inter-Korean relations, and it changed to the current miserable status is hard to expect.  More important is of course the efforts by North Korea to bring significant forms of opening to its own economic system.  The international communities often criticize its failure to help North Korea  both timely and effectively, understandably much of international society seems to suspect that economic aid to North Korea is being mostly used for military purposes and elite people's well being only, not for the masses.  Thus economic aid, even on humanitarian grounds has become a political issue internationally, and in inter-Korean relations as well.  International Consensus has been formed as to the need of humanitarian aids in kind to North Korea, such as a food, however, there are two contending perspective as to other economic aids.  One pervading notion is South Korea and elsewhere seems to be, in South Korea there seems to be in favorable continue the economic aid to North Korea.  The theory is that persistent economic support to Pun Yung(?) will help build mutual trust between North Korea and the international society especially including United States and South Korea.  A deeper perspective shows some reservations as to the economic aid.  Holds that although economic aid to this failed economy is desirable and necessary, how the aid used, is used, must be under outside inspection.  This perspective holds that outside economic aid must accompany North Korea's efforts to reform its economy into every culture.  Immediate compromise between these two positions seems difficult.  In any case, the fact is that the most North Koreans are starving, then North Korea has to act to be prepared for full outside inspection, then North Korea's opening and reform per se need outside economic assistance as inducement and they're building up mutual trust between Kim Jun Yu(?) regime and international society is always needed as something of a necessary condition for changing this closed society.  Now I'll talk a little bit about directions of American foreign policy toward North Korea.  Despite the dark reality facing North Korea, this isolate country's changing, albeit gradually.  For instance, North Korea has made efforts to establish diplomatic ties with Western countries.  It wants to normalize relations with the United States.  It's also shown at least a degree of willingness to comply with the demand of full inspection of suspicious facilities from United States and international atomic energy agency, IAEA.  All this moves that have been taken, some people interpreted this moves as kind of diplomatic gestures, but cannot be conceded that, only in their terms.  Of course the economic, economic, okay, I'll just wrap up that, I'm sorry...economic social and political problems North Korea has faced as we have seen, are very serious.  Now it seems that change is not an option for Kim Jun Yu(?) regime, it is a must.  The North Korean regime seems to have realized this well enough.  This situation provide the United States with an opportunity.  Let me skip those, of this time limitation, but by just making one quick remarks. 

VC: And make your final point.

AYS: But United States policy to North Korea has failed so far, to win broad support, broad basis both from not the South Korean public.  Paying serious attention to the consensus of different social groups, in South Korean on one hand and the common concerns between two Korea on the other hand, will be in American interests.  Then, how should the United State deal with North Korea's weapons of mass destruction?  It is recommended that the United States policy to North Korea could more emphasis on opening up this isolated society.  To the outside world.  When it seems to strategically not feasible to remove these weapons, possibly and immediately from Pen Yung(?) without enormous human and economic course(?).  In this attempt to open up North Korea, America is advised to demonstrate patience and prudence.  In this effort, United States, waiting is to engage and aid North Korea is important.  Opening up North Korea to the outside world may well result in direct inspection of these weapons of mass destruction by global society as whole, comprising international trade and financial regimes and institutions, such as International Monetary Fund, global companies, even foreign tourist is possible.  This will be a realistic and powerful compliment to dialect possible inspection by specific international organizations and countries concerned such as IEAE and the United States. By saying this, I do not mean that dangerous to other peace created by North Korea's dangerous weapons can be underestimated.  Indeed, bring international attention to their dangers.  On a continuing basis, is invariable.  I am only saying that well advised policy of patience, and workability is needed to resolve the issue of North Korean weapons of mass destruction peacefully and productively.  Thank you.

VC: Thank you very much, Professor Ahn  Unfortunately we do not have time for discussion this session.  Our guest speaker for lunch is here, so I guess we'll proceed directly to lunch, and I'd like to, if you could all thank the panelists for their presentations.  (Applause)

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