AMBASSADOR'S LUNCH WITH FORMER PRESIDENT KIM

C O N F I D E N T I A L SEOUL 000136

SIPDIS

SIPDIS

E.O. 12958: DECL: AFTER KOREAN REUNIFICATION
TAGS: PREL PGOV MNUC ETRD ECON KS KN CH
SUBJECT: AMBASSADOR'S LUNCH WITH FORMER PRESIDENT KIM
DAE-JUNG


Classified By: Amb. Alexander Vershbow. Reasons 1.4 (b/d)


1. (C) Summary: On January 16, Ambassador and Mrs. Vershbow
hosted former President Kim Dae-jung and his wife Lee Hee-Ho
to lunch at the Ambassador's Residence. While professing to
avoid interfering in politics, the 83-year old Kim -- who
said his health had improved recently -- offered his views on
a range of issues. Kim expressed strong support for a
Korea-U.S. Free Trade Agreement (FTA),which he said was in
the best interest of Korea as well as the U.S., while
acknowledging that sensitive areas of disagreement had to be
overcome and noting that the ruling Uri Party, if it were in
opposition, would have opposed an FTA. Kim thought it likely
that the Democratic and Uri parties would form an alliance or
a merger by mid-year, and if they did so, they had some
chance of beating the Grand National Party (GNP). Stating
that South Korea remained adamantly opposed to a
nuclear-armed North Korea, Kim stressed the urgency of
achieving denuclearization this year. To that end, he said
China needed to put more pressure on the North, and the U.S.
needed to offer a comprehensive package deal to Kim Jong-il
which would recognize his regime and lift financial
sanctions. Kim defended North-South economic cooperation as
a check on North Korea's over-dependence on China, and
expressed support for a North-South Summit in 2007 in which
the first agenda item would be denuclearization, as already
agreed in the 1991 agreement with the North. The Ambassador
took the opportunity of the meeting with Kim, who remains
extremely influential on the progressive side of Korean
politics, to clarify U.S. policies on North Korea, an FTA,
and other issues, and to emphasize our hope that the ROK-U.S.
relationship would not become a Korean election issue. End
Summary.

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Non-Interference in Politics
--------------


2. (C) Kim Dae-jung opened the substantive discussion at
lunch by noting that he did not interfere at all in domestic
politics. While it was difficult to stay out, many people
visited him and the media overstated his role. This was the
case even when he was just offering New Year's greeting to
others. As a result, Kim said he was quite cautious, adding
that politicians, like diplomats, had to be careful how they
conducted themselves.

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Free Trade Agreement
--------------


3. (C) Asked by Kim for his assessment of the prospects of
an FTA, the Ambassador said he still remains cautiously
optimistic that we could finish an agreement by the end of
March. The Ambassador noted that the atmosphere in the
latest FTA round this week was good and we were beginning to
confront the difficult issues on both sides. Kim said he
believed an FTA with the U.S. was important for Korea and
therefore he hoped it succeeded. The Ambassador observed
that both of our presidents have expressed support for an
FTA; what was important was for their political will to be
translated into action by the negotiators and affected
ministries. Kim said that while there had been some protests
in Korea against an FTA, as there had been elsewhere, both
government and opposition were united in support of a
U.S.-ROK FTA.


4. (C) The Ambassador said that this broad support would
count when the FTA went to the National Assembly for
approval. Before we got to that point, however, we had to

find solutions to difficult issues such as autos,
pharmaceuticals, and agriculture. Despite the protests,
recent polls showed that the majority of Koreans supported
the FTA and we hoped to push an agreement through. Kim
agreed, noting that many people were now aware that in order
to prosper in an age of globalization, the FTA was very
important. It was, of course, also necessary to address
difficult issues like agriculture and good results were
needed. He observed that most Koreans appeared most
interested in the areas of agriculture and anti-dumping. The
Ambassador pointed out that anti-dumping issues had proved
most difficult in recent weeks. While something might be
done in this area, it remained a very difficult issue given
strong Congressional views, and the ROK's emphasis on our
differences in this area risked "making the best the enemy of
the good."


5. (C) The Ambassador noted that many people wondered if the
ROK Government would be able to conclude an FTA given the
Government's low approval ratings, and were concerned that
tensions between the Blue House and the ruling Uri Party
might have a spill-over effect on the FTA. Kim responded
that when the U.S. and ROK reached agreement, both the
opposition and of course the ruling party would support it.
If the ruling party were now in opposition, they would not do
so. The Democratic Labor Party did not support the FTA but
it was not large. Kim added that while he did not interfere
in politics, he had made known his view that an FTA was
needed and he had expressed his support in principle.

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The Future of the Progressive Parties
--------------


6. (C) The Ambassador asked Kim for his assessment of the
very confused situation in recent months on the progressive
side of ROK politics. Noting that there were potentially two
or three parties that might emerge from the fractious ruling
Uri Party, he asked what its future might be. Kim responded
that in the first half of this year new political parties
would likely emerge, but in the end he thought they would
coalesce around former Prime Minister Goh Kun. (Note: Not
long after lunch, local media reported Goh Kun's decision to
drop out of the race for the Presidency. End Note.) While
politics were difficult to predict, Kim said he thought the
Democratic and Uri parties would in the end form an alliance
and support a strong presidential candidate. An alliance was
possible and there was an even bigger possibility of a
merger, he added. Kim noted that originally both the current
Democratic and Uri parties had been part of one party. The
Uri Party had broken off with bad consequences. It was
possible, however, that now the two would converge into one
again. Kim recalled that beginning in the mid-fifties Korean
politics had been mostly based on two big parties: the
liberals and the democrats. These parties had in effect
become, respectively, the GNP and the Uri/Democratic parties.
As a result, the Korean people were used to two major
parties and this situation was likely to re-emerge.


7. (C) The Ambassador asked whether the progressives could
win the next national election if they managed to come
together. Kim responded that while currently the GNP
appeared to be ahead, there was still one year to go.
Prospects would remain unclear until mid-year. If the
political system developed into two major parties once again,
a new progressive party had some possibility of winning.

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North Korea
--------------



8. (C) The Ambassador noted that one of his tasks in the
coming year would be to ensure that our bilateral
relationship did not become an ROK election issue. This
might be easier said than done, however. The FTA itself, for
example, whether agreed to or not, could become a
controversial issue. And the issue of North Korea could not
be separated from our bilateral relationship. Right now,
however, our two governments were close in our approach to
North Korea. Although we were relatively disappointed in the
results of the last round of Six-Party Talks in December, we
both agreed on the need to be patient and to keep North Korea
focused on fulfilling its commitment to denuclearization.


9. (C) Kim Dae-jung said he hoped the North Korean nuclear
issue would be completely resolved this year. If it were not
resolved before long, he feared another nuclear test or
missile launch. He therefore hoped the U.S. would more
decisively move ahead on negotiations and actively come up
with a comprehensive solution. The Ambassador responded that
A/S Hill, who was leading our negotiations, had President
Bush's full support for a comprehensive solution based on the
September 2005 Joint Statement. He was seeking to get off to
a fast start, trying to convince North Korea to carry out
early measures to convince us that it was serious about
denuclearization. We hoped that North Korea, when it
reflected on what we had proposed in December, would do just
that.


10. (C) Agreeing, Kim said he had heard that during the last
round of Six-Party Talks, the U.S. had presented a more
advanced deal which the North Koreans were now reviewing.
Kim reiterated, however, that he hoped the U.S. would more
actively initiate a comprehensive package solution.
Recalling his experience with Kim Jong-il, Kim noted that
North Korea remained a country ruled by one person and as a
result it could reach decisions faster than one might think.
Kim Jong-il could even make important decisions on the spot.
He was also known for "having guts" and would want a package
deal to demonstrate that. This was the best way to solve the
problem, Kim reiterated.

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The Chinese Role
--------------


11. (C) Kim noted that in resolving the North Korean nuclear
issue, the role of China was also important. China opposed
North Korea having nuclear weapons, but the question was
whether China was really determined and willing to stop all
assistance even if it meant the North Korean regime were
jeopardized. The Ambassador agreed, observing that this was
why we had spent so much time and effort at every level with
the Chinese to get their help in reaching a deal. The very
dilemma that Kim Dae-jung had described, however, was one
that the Chinese apparently wanted to avoid. Nevertheless,
the Chinese may soon need to make a choice between
denuclearization and regime stability in the North. The
Ambassador said he thought that North Korea had been
surprised by the strength of China's reaction thus far.
Pyongyang might have calculated that because of Beijing's
fear of its collapse, neither China nor South Korea would be
willing to put decisive pressure on North Korea.


12. (C) Agreeing, Kim said that the South Korean government
and people were adamantly opposed to North Korea having
nuclear weapons. They saw this as a priority because it
represented a threat to South Korea. He believed, however,
that as a result of the North Korean nuclear test, North
Korea had reached the ceiling of its influence. Now was the

time to compromise. If the North did not do so, it would
face more "counter-attacks." The first counter-attack would
come from China, which would never accept a nuclear North
Korea because even now there was talk in Japan of going
nuclear and Taiwan might be next. Even if regime collapse
were not the issue, Kim Jong-il had to calculate that China
could support another leader in Pyongyang. As a result, Kim
said, he did not think North Korea could resist China much
longer.

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A North Korean Delay?
--------------


13. (C) The Ambassador noted some speculation that Kim
Jong-il might decide to wait until the next U.S.
administration before acting, even though both Democrats and
Republicans essentially agreed with our basic goals in
dealing with North Korea. Kim Dae-jung said that, based on
his understanding of Kim Jong-il, the North Korean leader had
two fundamental goals: first, recognition of his regime; and
second, an end to economic sanctions. If he thought
President Bush's Administration could help him achieve these
goals, he would negotiate.


14. (C) The Ambassador observed that we had a process under
way to address North Korea's concerns about financial issues.
In this regard, however, North Korea needed to address our
concerns about its illicit activities. These could
nonetheless be resolved if North Korea wanted to join the
international financial system. Kim Jong-il's desire for
recognition of his regime was more complicated. While the
United States was willing to accept Kim Jong-il as a
negotiating partner, and even sign a peace treaty with him,
as President Bush had told President Roh, the USG wasn't
going to guarantee the Kim Jong-il regime's survival. On the
contrary, we believed that North Korea needed to adopt the
path of China and other countries that had opened up to the
rest of the world and conducted economic and political
reforms. North Korea needed to move toward democracy and to
improve respect for its citizens' human rights if it wanted
to survive.


15. (C) Kim Dae-jung said he would like to propose that the
U.S. try another method of dealing with North Korea. He
suggested that, excluding North Korea, the five other parties
could reach agreement on how to ensure the lifting of
economic sanctions against North Korea and security
guarantees for North Korea. They could then propose this
package to North Korea. If North Korea rejected it, the five
parties could then join together to impose consequences. The
Ambassador replied that was what in effect we were trying to
do in the September 19 Joint Statement. We all agreed on the
fundamental goals and were now discussing the timetable and
methods to achieve them. Once we saw that North Korea was
serious about denuclearization, we were willing to develop
parallel measures and roadmaps showing how we would translate
our general commitments (on economic assistance,
normalization, peace regime) into specifics. We also now had
UN Security Council Resolution 1718 that spelled out North
Korea's legal requirement to denuclearize. If it did so, UN
sanctions would eventually be lifted. If it did not,
sanctions would get tougher.


16. (C) Kim Dae-jung stated that the Korean people aspired
to good inter-Korean relations and cooperation and ultimately
reunification. On some issues, South Koreans could be quite
tolerant. In no case, however, could they accept a path that
would lead to war. And in no case could they accept a
nuclear North Korea, which could lead to the end of the

Korean Peninsula. Kim added that if China took strong steps
against North Korea, he believed South Korea would follow.
The Ambassador observed that the five parties were more
unified than ever before. They needed to convince Kim
Jong-il that now was the time for denuclearization and that
his interests would not be served by waiting.

--------------
North-South Summit?
--------------


17. (C) The Ambassador noted that there was lately
considerable talk about the possibility of a North-South
summit in 2007. While some saw a summit as something that
could assist denuclearization, others had criticized a
proposed summit as just a way of helping the ruling party in
an election year. The Ambassador asked Kim for his view.
Expressing support for a summit, Kim said that if a summit
were held, the very first item on the agenda would be
denuclearization because in 1991 the North and South had
already agreed on denuclearization. So if there were a
summit, this should be the first priority. He had so advised
President Roh.


18. (C) Another key issue, Kim continued, was economic
progress in North Korea, including through projects like the
Kaesong Industrial Complex. Economic cooperation, he noted,
was good for both sides. Kim said he knew that some in the
U.S. had criticized this economic cooperation, but North
Korea currently received some 80 to 90 percent of its
necessities from China. China had more and more economic
influence over North Korea. With the North's increasing
economic dependence, Chinese political influence would grow.
South Korea needed to keep this influence in check. He
added, however, that in all cases South Korea should consult
with the United States.


19. (C) The Ambassador agreed that North Korean
over-dependence on China was not healthy. We were not
opposed in principle to inter-Korean economic relations. We
had specific questions, however, about some of the
North-South projects, such as how workers at Kaesong were
paid and about their rights. The Ambassador added that until
we solved the nuclear problem, the climate for investment in
North Korea would in any case remain very unfavorable. These
issues were interlinked. The sooner the nuclear issue was
resolved, the sooner economic cooperation and development
could make progress.


20. (C) Kim said he understood what the Ambassador was
saying but commented that the current situation had gone on
for too long and needed to be solved this year. He
reiterated therefore that the U.S. should propose a package
deal to North Korea and let North Korea say "yes" or "no" to
the package. The Ambassador observed that a deal with North
Korea was what we were seeking, based on the September 2005
Joint Statement.
VERSHBOW