A/S HILL'S APRIL 13-14 MEETINGS WITH MOFAT YU

S E C R E T SEOUL 001375

SIPDIS

SIPDIS

NSC FOR CHA

E.O. 12958: DECL: 08/18/2015
TAGS: PREL PARM MNUC EFIN KNNP KS KN
SUBJECT: A/S HILL'S APRIL 13-14 MEETINGS WITH MOFAT YU
MYUNG-HWAN AND YUN BYUNG-SE

REF: SEOUL 862

Classified By: POL M/C Joseph Y. Yun. Reasons 1.4 (b),(d).

SUMMARY
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1. (S) During an April 13 meeting, MOFAT Acting Foreign
Minister Yu Myung-hwan stressed to EAP A/S Christopher Hill
and the Ambassador the need for patience with North Korea on
the nuclear issue, a public emphasis on the importance of the
Six Party Talks, and increased Chinese pressure on the North.
Hill said that he went to Tokyo to demonstrate the U.S.
commitment to regional discussions and to emphasize that the
North could not continue to boycott the Six Party Talks and
be considered a partner in the process. He agreed that more
persuasion was needed from the Chinese. Hill and Yu also
discussed the U.S.-ROK Strategic Consultations, USFK base
transfers, a Free Trade Agreement and Kaesong. Hill
separately had a breakfast meeting on April 14 with MOFAT
Deputy Foreign Minister Yun Byung-se that covered similar
topics. END SUMMARY.

NORTH KOREAN NUCLEAR ISSUE
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2. (S) Acting Foreign Minister Yu Myung-hwan on April 13
noted to EAP A/S Christopher Hill and the Ambassador that
South Korean officials in Tokyo gave a strong message to the
North Korean delegation on the nuclear issue on the margins
of the April 11-12 Northeast Asia Cooperation Dialogue
(NEACD) conference. Still, he was concerned that in the
court of public opinion, especially in South Korea, it might
appear that Washington had lost interest in the Six Party
Talks. He asked for USG patience with North Korea and,
whenever possible, for the U.S. to stress the importance of
the Six Party Talks. Yu speculated that North Korean VFM Kim
Gye-gwan was in a difficult position because while he
understood the issues, he might be afraid to report the true
message to decision makers in Pyongyang. The nuclear card
was the only leverage the North had, and so Pyongyang was
tempted to use it to obtain security assurances and economic
assistance, Yu said. In that regard, North Korea with a
bankrupt economy was unlike Iran that had other resources.
The next step was to send a strong message to China that it
should press the North to show flexibility, Yu concluded.


3. (S) A/S Hill responded that patience was important but so
was a little firmness. He participated in the NEACD in Tokyo
to underscore the value of regional discussions. The
decision to not meet with VFM Kim Gye-gwan was a message that
the North could not boycott the Six Party Talks and expect to
be a full partner in the Talks. Hill said that ROK VFM
Minister Chun Young-woo told him in Tokyo that VFM Kim
Gye-gwan continued to insist on revising the September Joint
Statement to change the wording from a "discussion" of the
provision of a light-water reactor at an appropriate time to
a "decision." Hill wondered whether Kim had the ability to
convince North Korean party or military officials to stop
asking for their $24 million related to the Banco Delta Asia
issue. Hill agreed that more was needed from Beijing than
friendly persuasion with Pyongyang.

U.S.-ROK STRATEGIC CONSULTATIONS
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4. (C) A/S Hill noted that Under Secretary Burns looked
forward to coming to Seoul to inaugurate the sub-ministerial
level Strategic Consultations on Allied Partnership. Yu
responded that he would be in Beijing from May 22-25, but he
would be glad to host the talks any time after that.

USFK PRESENCE AND MILITARY RELATIONS
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5. (C) Yu asserted that he understood the urgency of the
return of some USFK bases to South Korea, but he thought that
the May 31 regional elections in Korea might affect the
calculus of other ministries. He recently urged Environment
Minister Lee Chi-beom to take a broader view of what South
Korea would gain from base transfers, but unfortunately Lee
had an environmental-activist background. Once the land was
returned to Korea, the ROKG could resell the property and

should take a pragmatic view, something that some activists
did not understand. He wondered aloud whether the Defense
Ministry might consider supplementing custodial costs of some
closed U.S. bases before the transfer, perhaps by providing
gardeners. Yu hoped there would be some progress at the next
round of the Security Policy Initiative.


6. (C) Hill told Yun that USFK Commander General Bell and
others were concerned that alliance issues not get dragged
into South Korean elections. For example, General Bell was
dismayed that South Korean authorities were unable to secure
beaches used for recent U.S.-ROK amphibious training
exercise. It would have been a tragedy had there been any
casualties due to such incidents.


7. (C) Yun noted that Seoul was still considering the U.S.
request to support provincial reconstruction teams (PRT) in
Iraq. Hill characterized the opportunity to support a PRT as
befitting the world's 11th largest industrial economy, saying
it was something that Seoul should be able to do. It would
be helpful for South Korea to demonstrate that it had the
capacity and experience to be able to handle the job, and it
was a logical extension of South Korean military
modernization efforts. USFK Commander General Bell had been
extremely complimentary about South Korean military training
and equipment during recent meetings, A/S Hill said.

FREE TRADE AGREEMENT
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8. (C) Yu pointed to some short-term obstacles to successful
FTA discussions, but he was generally optimistic. With
democracy taking firmer root in South Korea, NGO voices were
getting stronger. This was unavoidable but understandable.
Hill said that he looked forward to meeting later in the day
with the Trade Minister (septel) to emphasize the large
impact that a FTA would have on South Korea's competitiveness
in Asia. Moreover, a FTA would strengthen the bilateral
alliance.


9. (C) Hill mentioned to Yun that he had asked Uri Party
Chairman Chung Dong-young the day before whether the ruling
party would support FTA negotiations, but the response was
less than enthusiastic (septel). Chung had said that the Uri
Party would support the FTA, but there might not be enough
time to complete negotiations and concerns remained about
certain sectors like agriculture, rice in particular,
healthcare services, and education. Hill emphasized to Yun
that a FTA would be a big shot in the arm for Korean
competitiveness, help the economy, and lay the foundation for
the next 50 years of the alliance. Yun explained that the
Uri Party consisted of divergent voices, but President Roh
stood fully behind his decision to launch FTA negotiations.
As for MOFAT, it had declared that FTA negotiations, along
with Visa Waiver Program and Strategic Consultations, were
its top-three alliance priorities for this year.

KAESONG
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10. (C) Yu expressed his hope to organize a trip to the
Kaesong Industrial Complex (KIC) for foreign diplomats in
South Korea. The purpose would be to show the reality of
KIC, such as the fact that the workers were provided a good
meal and that it was a place for North Koreans to learn about
business opportunities. Yu said that Seoul had tried to get
permission to pay the workers directly, but in lieu of that
workers were being required to sign for their paychecks so
that they would see how much of their salary was taken by the
North Korean government.


11. (C) Hill told Yun that the KIC project raised delicate
concerns. The KIC had become a symbol of the South Korean
and Chinese lifeline that explained why the North Korean
economy had not yet collapsed. Others criticized Seoul for
not demanding that it be allowed to directly pay KIC workers
their wages. The issue of human rights in North Korea was a
significant problem.


12. (C) Yun said he was troubled by that kind of publicity
because from the ROK viewpoint the KIC was an important
experiment that could help change North Korea into a market
economy over time. Plus, it would help set the stage for an

eventual reunification by increasing understanding about
South Korea. North American Affairs Bureau Director-General
Cho Tae-yong added that a recent delegation of U.S.
Congressional staffers in a visit earlier in the week to KIC
took pictures of North Korean payroll signatures. The KIC
itself only involved about $5 million annually, too small an
amount to stabilize the North Korean regime.

JAPAN
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13. (C) Yu mentioned that during his visit to Tokyo last
month (ref a),he told his Japanese interlocutors that Prime
Minister Koizumi should pay more attention to the views of
China and Korea. Without Chinese and Korean cooperation,
Japan would not be able to play a significant role in the
region. While he felt more confident about his Foreign
Ministry counterparts, he thought Japanese politicians might
not understand regional concerns. Yu opined that the
Yasukuni museum also fueled anti-American sentiments by
claiming that the war tribunal after WWII lacked legitimacy,
and so this was an affront to the United States too. Some
conservative Japanese, he said, thought they were the victims
of WWII, but from the Korean point of view Korea was a
victim. Still, Korea had to live with its geographical
neighbor, and on the bright side people and trade exchanges
continued to grow despite the political difficulties.
VERSHBOW