ROK-DPRK SUMMIT LIKELY TO BROADEN ECONOMIC

C O N F I D E N T I A L SEOUL 002410 SIPDIS SIPDIS E.O. 12958: DECL: 08/10/2017 TAGS: KN KS PGOV PINR PREL SUBJECT: ROK-DPRK SUMMIT LIKELY TO BROADEN ECONOMIC COOPERATION REF: SEOUL 2383 Classified By: POL M/C Joseph Y. Yun. Reasons 1.4 (b/d) SUMMARY -------------- ¶1. (C) During the two days since the surprise announcement of an August 28-30 North-South summit to be held in Pyongyang (reftel),hints have emerged that the ROKG will offer to considerably broaden economic cooperation with the North under the heading of "social overhead capital," possibly including new industrial parks, tourism projects, and road and rail construction. Polls show strong support for a second summit, but concerns about the timing and venue. In the runup to vice minister-level meetings next week in Kaesong to set the agenda for the talks, presidential hopefuls and pundits have offered both enthusiastic and cautionary opinions about what the talks may cover. All acknowledge that the summit is bound to affect the presidential election. Conservative editorials call the summit flawed in terms of timing and venue, caution that the ROKG should not give away taxpayers' money, but concede that the summit -- a rare chance to talk directly with Kim Jong Il -- could lower tensions, reinforce Six-Party efforts at denuclearization, and pave the way for peace regime discussions. End Summary. AGENDA NOT SET BUT REPORTS EMPHASIZE ECONOMIC COOPERATION -------------- -------------- ¶2. (C) The ROKG has made clear that the agenda for the August 28-30 summit meeting between President Roh Moo-hyun and Kim Jong-il will be determined at bilateral meetings starting next week, but the media and pundits are already trying to fill in the blanks. President Roh reportedly told his National Security Council to focus on four objectives: denuclearization, inter-Korean peace, arms control, and economic cooperation. The weight given to each of these remains an object of intense debate. MOFAT and MOU have emphasized that this summit can help resolve the nuclear issue, while the Blue House has claimed that improved inter-Korean relations will in turn lead to a greater likelihood of denuclearization. Pundits are mostly cynical about the ROKG's emphasis on denuclearization, which they see more as a move to placate the international community, particularly the U.S., than a real priority. Press reports point to the ROKG spending most of its energy on prospective inter-Korean economic cooperation projects and on preparation for a peace regime. ¶3. (SBU) Former Prime Minister, presidential hopeful, and Roh-confidant Lee Hae-chan seemed to claim that the summit was his initiative ("When I proposed the idea of holding a South-North summit to President Roh Moo-hyun at the Jeju Peace Forum...") and also asserted that its agenda will include ambitious economic projects: "It is highly likely that the two Koreas will reach agreement on large-scale economic cooperation during their planned summit meeting," including more industrial complexes at Nampo, Wonsan, Shinuiju and/or Najin and tourism projects at Mount Baekdu, Mount Myohyang and/or Mount Guwol. Uri Party representative Lee Hwa-young, who along with Lee Hae-chan traveled to Pyongyang in March to press for a summit, said that the former Prime Minister's remarks were in line with the ROKG's views. Other reports and rumors point to economic deliverables such as regular cross-border train service in exchange for energy aid, improvement of the highway between Kaesong and Pyongyang, and other infrastructure investment. Sensitive to criticism that followed the 2000 summit, when it was revealed that Hyundai Asan provided USD 500 million in cash as an inducement for holding the June summit, the ROKG appears to be planning overt large-scale investments under the heading of "social overhead capital," which theROKG can sell as advance investments toward a unified Korea. Press reports indicate that the aid package could be in the range of 9-13 trillion won (USD 9.7-14 billion). ¶4. (SBU) Apart from economic cooperation, press reports and editorials suggest that the ROKG may seek establishment of liaison offices, regular military-to-military talks, increased family reunions (with a round of such reunions scheduled for next week),and return of abductees. It is not clear whether these are items on the ROKG's notional agenda or laundry lists of sensitive issues. SUMMIT PREPARATION -------------- ¶5. (SBU) The summit is clearly a Blue House initiative, with press reports suggesting that neither MOFAT nor other key ministries were in the loop before the decision. But since the August 8 announcement, the ROKG has announced interagency structures to prepare for the summit: -- A "Summit Promotion Committee," chaired by Blue House Chief of Staff Moon Jae-in, with membership including National Security Advisor Baek Jong-cheon, Minister of Unification Lee Jae-joung, Foreign Minister Song Min-soon, Defense Minister Kim Jang-soo, and NIS Chief Kim Man-bok, will provide overall supervision and coordination; -- A separate "Summit Preparation and Planning Committee," headed by the Minister of Unification Lee and including officials from MOFAT (VFM Chun Yung-woo),Justice, Defense, Culture and Tourism, NIS, the Office of Policy Coordination, and the Blue House, will coordinate details; -- A "Summit Secretariat," headed by new Vice Minister of Unification Lee Kwan-sei, will provide interagency coordination, and will include MOFAT DG for North America Cho Byong-jae; -- An advisory organization led by the Presidential Advisory Council on Unification is expected to take into account public opinion. The Summit Preparation and Planning Committee first met on August 9, will meet again on August 11, and will meet with DPRK counterparts in Kaesong as early as August 13. The Kaesong meetings are to cover all logisitical aspects of the meeting. MOU Minister Lee told the media that the ROKG will ask that President Roh Moo-hyun and delegation arrive by land, perhaps by rail to Kaesong and then by roadto Pyongyang. PUBLIC OPINION -------------- ¶6. (SBU) According to public opinion polls conducted by the JoongAng Ilbo and Chosun Ilbo newspapers after the summit was announced on August 8, most South Koreans (80 percent for JoongAng Ilbo and 76 percent for Chosun Ilbo) expressed support for a second inter-Korean summit, but among JoongAng Ilbo respondents 53 percent said the timing was inappropriate and 56 percent said the venue was problematic (since Kim Jong-il had agreed in 2000 that the next meeting would be in the ROK). The Chosun Ilbo survey found that 69 percent of respondents did not think the summit would induce North Korea to change, and 73 percent were against further large-scale economic concessions to the North, compared to 24 percent who supported "more concessions." The latter result contrasted with a June 2000 Gallup poll that found 54 percent in favor of more economic concessions. Former Minister of Unification Kang In-duk said that the polls showed that "South Koreans do not seem to be as excited or have as high expectations as in the past." EDITORIAL REACTION: ENTHUSIASTIC AND CAUTIONARY -------------- --- ¶7. (SBU) Early editorial reaction to the summit includes a spectrum of opinions on the merits of the summit, with general acknowledgment that it will be a major issue for the December presidential election. Liberal Hankyoreh placed the summit in its international context in an August 9 editorial, arguing that July's progress on denuclearization means that the two Koreas can now consider fundamental change to the Cold War regime on the Korean peninsula, and can prepare the ground for four-party talks on a permanent peace regime. The conservative Chosun Ilbo, in an August 10 editorial entitled "Issues the Inter-Korean Summit Shouldn't Touch," cautioned that President Roh may give in to Kim Jong-il's demands to redraw the Northern Limit Line, scrap the ROK's National Security Law, and halt joint military exercises with U.S. troops, arguing that "if we fall into the trap of weakening the justification for the joint military drills while North Korea's threat remains the same, then the South Korean people will be the ones paying the price." The conservative Dong-A Ilbo focuses on the potential cost to taxpayers in an August 10 editorial, noting that the ROKG has spent 6.6 trillion won (about USD 7 billion) on assistance to the North during 2000-2006, without "any significant change to the attitude of the Stalinist regime or the lives of the North Korean people." Hence, the ROKG should not agree to further "lavish" spending without first securing public support. ¶8. (SBU) Several editorials, including one in Hankyoreh, point to the summit as a game-changer for the December presidential elections. GNP front-runner Lee Myung-bak was confident about focusing on the economy, where the Roh administration has earned low marks, but the summit could shift the focus to "peace on the peninsula." Dong-A Ilbo cites approvingly a GNP leadership statement that, "Holding the summit appears to be inappropriate and politically motivated, given that it will take place in Pyongyang in the latter term of the incumbent presidency, just ahead of presidential elections. In addition, the government has secretly pushed the second inter-Korean summit without making SIPDIS the procedures public and even failed to set an agenda." COMMENT: OPEN ROK DEBATE -------------- ¶9. (C) The Blue House may have prepared the summit in secret, but presidential hopefuls, the media, academics and the public are now engaged in a broad-based debate about what it should focus on, what the ROKG can reasonably offer, and what the summit should aim to accomplish. It appears unlikely that the summit will mainly focus on denuclearization -- as the U.S. would prefer at this juncture -- because the announcement of the summit instead is prompting South Koreans of all stripes to put the entire spectrum of North-South issues on the table. MOFAT officials stressed during an August 9 briefing to diplomats that, even when the agenda is agreed, the content and extent of discussions between the two leaders will not be scripted in advance. ¶10. (C) Even more unpredictable is, of course, what the North Koreans want out of the summit. An article of faith among most South Korean pundits is the Kim Jong-il too wants to help progressives in the December election. Some are already speculating on a return visit by Kim Jong-il sometime in the fall, say November, to truly help the progressive candidate. Another much-debated point here concerns Kim Jong-il's health. Perhaps he is quite sick and wants to shape a stable transition for his successor. Then there are the grander speculations on the future of the North Korean "military first" policy, economic opening, and long-term North-South relations. Even if a little cynical, most South Koreans are clearly excited about what might unfold in Pyongyang at the end of this month. STANTON