EAP PDAS STEPHENS' JUNE 11 MEETING WITH MOFAT

C O N F I D E N T I A L SEOUL 001972

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E.O. 12958: DECL: AFTER KOREAN REUNIFICATION
TAGS: PREL MARR MNUC KN KS
SUBJECT: EAP PDAS STEPHENS' JUNE 11 MEETING WITH MOFAT
NORTH AMERICA DG CHO TAE-YONG


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

SUMMARY
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1. (C) In a June 11 meeting, Ministry of Foreign Affairs and
Trade (MOFAT) Director General for North American Affairs Cho
Tae-yong informed EAP PDAS Kathleen Stephens that the ROKG
preferred having Secretary Rice visit the ROK before the July
26-28 ASEAN Regional Forum (ARF) meeting so that the
Secretary would have a chance to call on President Roh

SIPDIS
Moo-hyun, who planned to leave for official travel after ARF.
ROK National Security Advisor Song Min-soon planned to visit
Washington from June 25-27 and would further explore a
U.S.-ROK summit later in the year. Per Cho, MOFAT North
Korean Nuclear Issue Task Force DG Lee Yong-joon was
traveling to Beijing to discuss the DPRK's latest statements
and the missile issue with Chinese counterparts. Cho
stressed that it was important for the U.S. investigations
into Banco Delta Asia (BDA) to end quickly, as it would
deprive the DPRK of its current excuse for boycotting the Six
Party Talks. Cho proposed having quiet, informal U.S.-ROK
consultations on how to approach the peace regime issue. On
the issue of the Nogun-ri incident, Cho underscored the
importance of having a single, accurate account of the U.S.
document that was not included in the final USG report. He
said he would urge the surviving family members to use the
Nogun-ri scholarship funds before September during a memorial
event in July but also pleaded for flexibility on the part of
DOD in light of the renewed attention to the issue. PDAS
Stephens urged the ROKG to resolve the environmental
remediation issue to facilitate the return of closed U.S.
bases. END SUMMARY.


2. (U) On June 11, visiting EAP PDAS Kathleen Stephens met
with Cho Tae-yong, Director General for North American
Affairs, Ministry of Foreign Affairs and Trade (MOFAT).
POL-MIL Chief and poloff also attended. Cho was joined by
Cho Byung-jae, Deputy Director General for North American
Affairs, and Hahn Choong-hee, Director, North America
Division 1.

ROKG PREFERS SECSTATE VISIT BEFORE ARF MEETING
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3. (C) DG Cho said Foreign Minister Ban Ki-moon enjoyed his
June 2 meeting with Deputy Secretary Zoellick in Washington,
during which both spoke frankly about the state of the
bilateral relationship. Cho added that Seoul had sent
instructions to its embassy in Washington recommending a
visit to Seoul by Secretary Rice before the July 26-28 ASEAN
Regional Forum (ARF) meeting in Kuala Lumpur. The ROKG was
concerned that the Secretary would not be able to call on
President Roh Moo-hyun if she were to arrive post-ARF due to
Roh's scheduled travel abroad. PDAS Stephens responded that,
per EAP A/S Christopher Hill, the Secretary was interested in
visiting the ROK and Washington would try to fix the schedule
for the visit as soon as possible.

NSA SONG TO EXPLORE U.S.-ROK SUMMIT DURING JNE 25-27 VISIT
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4. (C) Cho confirmed the ROK remained interested in
arranging a meeting between President Bush and President Roh
during the latter's visit to Washington, suggesting September
12-13 as a possible timeframe. ROK National Security Advisor
Song Min-soon would explore the idea further during his visit
to Washington at the end of June. He planned to arrive June
25, and would be available for meetings on June 26 and 27.
The ROKG had requested meetings for Song with the Secretary
and with members of Congress, including Senators Lugar and
Biden, and Rep. Leach, Cho said.

NUCLEAR ISSUE TASK FORCE DG IN BEIJING
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5. (C) DG Cho informed PDAS Stephens that MOFAT North Korean
Nuclear Issue Task Force DG Lee Yong-joon was traveling to
Beijing on June 11 to meet Chinese Ambassador for Korean
Peninsula Affairs Li Bin and, possibly, VFM Wu Dawei. He
said Lee would not be sharing any new ideas for the Six Party

process, but would query his Chinese counterparts' thoughts
on the DPRK's recent statements and its intentions. Lee
might, however, discuss the issue of a possible missile test.
To date, there was no response from the DPRK to the ROK's
strong message urging Pyongyang not to test the Taepodong II
missiles, Cho said.

RAILWAY TEST-RUN APPEARS TO BE A "GO," MIL TALKS "NOWHERE"
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6. (C) Regarding the June 3-6 inter-Korean economic
cooperation vice ministerial in Jeju, Cho reported that the
ROK "appeared to have been" successful in persuading the DPRK
to agree to resume the test-run of the inter-Korean railway.
The two Koreas also discussed various economic projects,
particularly the ROK provision of raw materials for consumer
goods. Cho asserted that this request was new, possibly
indicating a shift in the DPRK's focus in inter-Korean
relations. On the May 17-19 inter-Korean general
officer-level military talks, Cho said the talks "went
nowhere" as the DPRK refused to budge on all key issues
without an agreement to redraw the Northern Limit Line (NLL).
Cho noted that the DPRK seemed "not to be in a hurry" to
discuss military issues between the Koreas.

DPRK NEEDS "ROPE" TO GET OUT OF BDA "HOLE"
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7. (C) DG Cho, remarking on reports that a Stanford
university professor might invite DPRK MFA North American
Affairs DG Li Gun to the United States to participate in an
event organized by NCACP, expressed concern that, if Li were
unable to meet with USG officials, he and other negotiators
from the MFA would have difficulty convincing others in the
North Korean government to be more flexible on returning to
the Six Party Talks. The DPRK had dug itself into a "deep
hole" by linking the freeze on the Banco Delta Asia (BDA)
accounts to its return to the Six Party Talks and was unable
to bring itself out. In this regard, the other parties to
the Talks needed to "throw it a rope." PDAS Stephens said
the DPRK needed first to "stop digging." Washington was
growing impatient with the DPRK's linkage of the two matters
and its pursuit of bilateral talks with the United States
outside the Six Party framework. The United States and the
DPRK could discuss the BDA issue and others, but the
discussion must take place within the context of the Six
Party Talks.


8. (C) Cho stressed that U.S. investigations into the BDA
case were taking too long, adding that the slow process
merely gave the DPRK a convenient excuse to boycott the Six
Party Talks. Pyongyang would no longer have the same excuse
once the investigations ended. Cho explained there was
debate within the ROKG about whether the DPRK was more
interested in recovering USD 24 million in the frozen BDA
accounts or being able to conduct transactions with foreign
banks more easily. Cho opined, however, that the DPRK
foreign ministry appeared to be focusing more on recovering
the money from the BDA accounts in light of VFM Kim Gye
Gwan's statements at the recent Northeast Asia Cooperative
Dialogue in Tokyo.

PDAS STEPHENS' KIC VISIT: WAGE ISSUE REMAINS A CONCERN
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9. (C) Asked about her visit to the Kaesong Industrial
Complex (KIC),PDAS Stephens noted that South Korea's vision
for the future scale of KIC was large, but that questions of
method of wage payments and labor issues must be addressed.
Moreover, it was difficult to imagine KIC reaching its
envisioned scope absent political progress, including
implementing the September 19 Joint Statement. The
facilities were clean and modern, but the issue of wage
payments to North Korean workers continued to generate
questions in Washington and elsewhere. In this regard, it
was important for the ROK to move quickly with the DPRK to
the system of direct payment, to which Seoul and Pyongyang
had agreed.

ROK FTA NEGOTIATOR TO SAVE KIC FOR LAST
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10. (C) Cho thought the ROK could probably leverage the
international community's concerns about the wage payment
issue against the DPRK and negotiate an agreement. This
would not, however, resolve the problem of the wages not
being at real market rate. He asked whether a visit to the
KIC by a team of international labor experts would be
helpful. Cho added that perceived disagreement between the
United States and the ROK on KIC was problematic, given the
unanimous support for the project across the political
spectrum in South Korea. PDAS Stephens responded that it
might be worth exploring whether a visit by qualified experts
might be helpful, if the ROK could identify experts with
sufficient expertise in the development of industrial parks
in other parts of the world. Stephens added that including
the KIC in the U.S.-Korea Free Trade Agreement (FTA)
negotiations was another concern. Cho assured PDAS Stephens
that chief ROK negotiator Kim Jong-hoon had told him
personally that he would "save political problems for last."
Kim received firm instructions from Seoul to include KIC in
the initial offer. He did not, however, intend to put the
issue front and center in the negotiations, Cho said.

ROK PROPOSES INFORMAL MEETING ON PLANS FOR PEACE REGIME
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11. (C) Cho said he had received reports saying that Chinese
President Hu Jintao, during his recent summit with President
Bush in Washington, had conveyed the DPRK's concerns about
perceived threat from the United States, to which President
Bush responded that Washington could "discuss peace with
North Korea." PDAS Stephens confirmed the U.S. hope that, as
envisioned in the Statement of Principles, discussion on a
peace regime would be a part of progress in the Six Party
Talks. To move in that direction, however, North Korea had
to return to the Six Party Talks. Cho concurred, suggesting
that Seoul and Washington each deliberate internally about
the process for establishing a peace regime, then meet
informally to share ideas. PDAS Stephens agreed to take that
idea back to Washington.

NOGUN-RI: NEED CONSISTENT ACCOUNTING OF WHAT HAPPENED
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12. (C) DG Cho addressed a number of issues related to the
Nogun-ri incident during the Korean War, including recent
revelations of the Muccio letter. Cho stressed that: (1) the
USG and the ROKG needed to have a common understanding of why
such document was not included in the final report on the
Nogun-ri incident; (2) the ROKG needed to figure out next
steps with respect to that issue; and (3) both sides had to
think about how to address the document problem in relation
to the bigger Nogun-ri issue. Initial ROK assessment was
that the document contained no new information that would
overturn the final report. DDG Cho Byung-jae added that,
with the press focusing on why the document was not included
in the final report, it was important to have a single,
accurate account of what happened.


13. (C) DG Cho said he had informed the association of the
families of the Nogun-ri victims that the U.S. budget
allocated for setting up a scholarship fund for the victims'
children would expire in September and urged them to use the
money before the budget disappeared. The initial response
was not positive, Cho asserted, but he would meet the
families again in July during a memorial event in Nogun-ri.
He did not understand, however, the rationale for terminating
the fund in September. PDAS Stephens explained that the
budget termination was a feature of USG, and in this case,
DOD budget planning, in which allocated funds would be lost
if unused within a prescribed time period. For several years
allocated funds had been unused because of the failure to
reach agreement. Stephens agreed to relay Cho's concerns to
DOD and to work with them on the points Cho raised.

FACILITATING BASE RETURN, MUSEUM EXHIBIT TOO NEGATIVE
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14. (C) PDAS Stephens urged the ROKG to resolve the
environmental remediation issue as soon as possible to
facilitate a quick return of the closed U.S. bases.

Reflecting on her recent visit to Camp Hialeah in Busan,
Stephens stressed that, given the Busan City Mayor's plans to
develop the land into a park and make it available to all
Busan residents, the return of Camp Hialeah in particular
could act as an effective symbol for both the strength of the
alliance and the positive effect of facilitating the return
of U.S. bases. Noting her recent visit to the Busan City
Museum, which used to house the former U.S. Consulate

General, Stephens expressed disappointment that the exhibit
of Busan's modern history conspicuously left out any positive
depiction of U.S. presence in Busan, while highlighting that
the USG returned the building in 1996 after student activists
had firebombed it. Stephens suggested that more positive
content about U.S. presence in Busan would be helpful,
underscoring that the current exhibit was not historically
accurate and did not portray the bilateral relationship
fairly.


15. (U) PDAS Stephens has cleared this message.
VERSHBOW