CHARTING OUT INTER-KOREAN COOPERATION

C O N F I D E N T I A L SEOUL 000795

SIPDIS

SIPDIS

NSC FOR CHA

E.O. 12958: DECL: 03/19/2017
TAGS: PREL ECON MNUC KS KN
SUBJECT: CHARTING OUT INTER-KOREAN COOPERATION

REF: A. SEOUL 634


B. 05 SEOUL 4057

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


1. (C) SUMMARY: At February 27 - March 2 inter-Korean
ministerial talks, the Koreas agreed to resume several
stalled North-South projects, including: construction of a
family reunion center at Mt. Kumgang; video and direct family
reunions; Economic Cooperation Promotion Committee and Red
Cross talks; test runs of inter-Korean railways within the
first half of this year; and ROKG humanitarian aid (ref A).
The Koreas are now in the process of turning these projects
back on, especially those suspended in the wake of the DPRK
missile launches in July 2006 and nuclear test in October

2006. While ROKG officials have insisted that inter-Korean
cooperation will remain "one-half step" behind progress in
Six-Party Talks (6PT),the ROKG seems to be proceeding on the
assumption that the DPRK will fulfill all of its obligations
under the February 13 "Initial Actions" agreement. END
SUMMARY.

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20TH INTER-KOREAN MINISTERIAL
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2. (SBU) Capitalizing on the February 13 "Initial Actions"
agreement, North and South Korean delegates to the 20th round
of inter-Korean ministerial talks (February 27 - March 2,
2007),agreed to resume stalled inter-Korean projects (ref
A). The two Koreas pledged to resume construction of the
separated family reunion center at Mt. Kumgang and to hold
video and direct family reunions as well as working-level and
plenary Economic Cooperation Promotion Committee (ECPC) talks
and Red Cross talks. They also agreed to conduct test runs
of inter-Korean railways within the first half of this year,
after military authorities implemented guarantee measures.
Finally, both sides agreed to take steps to promote the
Kaesong Industrial Complex.

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SEPARATED FAMILY REUNION CENTER
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3. (SBU) At March 9 - 10 working-level Red Cross talks, the
two Koreas decided to resume construction of a separated
family reunion center at Mt. Kumgang on March 21.
Construction of the center was suspended following the DPRK's
decision to halt joint humanitarian projects with the ROK Red
Cross, including family reunions, in a tit-for-tat response
to the ROKG's decision to suspend rice and fertilizer
assistance after the DPRK's missile launches in July 2006.
According to press reporting, Hyundai Asan had completed
about 20 percent of the 19,000-square meter, 12-story
separated family reunion center at Mt. Kumgang as of July

2006.


4. (SBU) At the same March 9 - 10 talks, the ROK Red Cross
also agreed to provide construction materials and equipment
(worth roughly USD 3.1 million) to construct a "permanent"
video family reunion center in Pyongyang. The ROK decided to
give an additional USD 400,000 in cash to the DPRK Red Cross
to buy video communication equipment (computers, LCD
monitors, etc.) and vehicles (10 buses, 6 passenger cars) for
use in future video family reunions. ROK Red Cross
assistance for construction of the video family reunion
center, including the cash assistance, had been agreed to
during June 2006, but was not delivered, according to press
reports.

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FAMILY REUNIONS
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5. (SBU) The two Koreas have held 14 rounds of family
reunions since August 2000 and four rounds of video family
reunions since August 2005. Over 13,000 Koreans have
participated in the reunions, but in the ROK alone the
waiting list is 90,000, according to press reports. The
Koreas have agreed to hold the 5th round of video family
reunions March 27-29, 2007. The last round of video family
reunions had been planned for August 2006, but was canceled
following the missile launches. The 15th round of family
reunions is set for May 9-14, 2007 at Mt. Kumgang. The 14th
round of family reunions in June 2006 involved four stages in
which the ROK and DPRK sides each identified 200 "delegates,"
and then the other side located "relatives" to meet with the
delegates. Specifically, 100 DPRK "delegates" or
"participants" met with 407 ROK "relatives," June 19 - 21;
100 ROK "delegates" met with their "relatives," June 22 - 24;
100 DPRK "delegates" met with 414 ROK "relatives," June
25-27; and, 100 ROK "delegates" met with their "relatives,"
June 28-20. Generally, the ROK is able to find more
"relatives" willing to participate in the reunions than the
DPRK, so the count of DPRK "delegates" is harder to identify.


6. (SBU) From time to time, "missing" South Koreans turn up
at family reunions held in the DPRK, which can be a sensitive
issue for both sides. During the 14th round of family
reunions in June 2006, Kim Young-nam, a ROK citizen who was
allegedly abducted by the DPRK in 1978 and who married
Japanese abductee Megumi Yokota, was allowed to meet with his
visiting mother, an event that some in the ROK perceived as a
sign of DPRK flexibility. During the 13th round of family
reunions in March 2006, an incident arose when the DPRK
demanded an apology after a ROK reporter used the word
"abductee" to describe a former ROK fisherman who was taken
from the ROK in the 1960 and allowed to see his visiting ROK
wife during the reunions. In protest, all ROK reporters
pulled out of the reunion. In the course of 13 rounds of
family reunions from November 2000 to February 2006, a total
of 12 ROK POWs and 12 ROK abductees were able to meet with
their South Korean relatives, while the fates and whereabouts
of another 100 POWs and abductees have been confirmed.

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POWS AND ABDUCTEES
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7. (SBU) The eighth round of inter-Korean Red Cross talks
are set to be held April 10 - 12 at Mt. Kumgang and are
expected to discuss those (Koreans) "missing" during and
after the Korean War. South Korean officials in
conversations with U.S. interlocutors have stressed that
getting the DPRK to agree to discuss, in some fashion, ROK
POWs and MIAs was a successful outcome of the North-South
ministerial. While it is positive that the DPRK agreed to
continue these discussions, the issue has been discussed
without success since the 4th round of inter-Korean Red Cross
talks in 2002. During the sixth round of inter-Korean Red
Cross talks (August 23 - 25 2005),the ROK even presented a
list of 2,000 missing South Koreans, comprising POWs,
abductees and others, but the DPRK rejected the list and
stated the DPRK would not acknowledge the existence of
abductees, only that some Koreans from the South were living
voluntarily in the DPRK (ref B). The ROKG has stated that
around 1,000 ROK are still living in North Korea, around half
abducted since the Korean War and the other half POWs. The
Korean War Abductees Family Union (KWAFU),a ROKG NGO,
estimates that between 80,000 and 100,000 South Korean
civilians were abducted by the DPRK between 1950 and 1953.

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FERTILIZER AND RICE HUMANITARIAN AID
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8. (C) The Koreas at the February 27 - March 2 ministerial
agreed to resume working-level talks of the Economic
Cooperation Promotion Committee (ECPC) on March 14 - 15 to
discuss the Kaesong Industrial Complex and the 13th round of
the plenary ECPC talks April 18 - 21 to discuss "various
issues concerning economic cooperation." At the April ECPC
talks, the Korea are expected to discuss the resumption of
rice "loans" to the DPRK. At the March ministerial, the ROKG
"agreed in principle" to give the DPRK 300,000 metric tons of
fertilizer and 400,000 metric tons of rice. ROKG officials,
publicly and privately, have stressed that the April ECPC
talks will come after the first 60 days of the "Initial
Actions" agreement, so ROK aid can be calibrated with DPRK
actions toward denuclearization. On March 9, MOFAT
counterparts signaled that the ROKG intended to ship 6,000
tons of fertilizer to the DPRK at the end of March, the
fertilizer would arrive approximately the same time as the
50,000 tons of heavy fuel oil deliveries to the DPRK. MOFAT
officials have told us that the remainder of the expected
300,000 tons of fertilizer that the DPRK in March requested
from the ROK would be shipped over a three-month period, and
could be terminated if the DPRK failed to fulfill its
commitments to denuclearization.


9. (SBU) At the 12th round of the ECPC talks, June 3 - 6,
2006, the Koreas agreed that the ROKG would supply USD 80
million worth of light industry raw materials to the DPRK,
and the DPRK would repay three percent of this with raw
material like zinc ingot, magnesia clinker, and other
resources. The ROKG, however, suspended this project
following the DPRK's nuclear test in October 2006. This
topic is likely to be revisited at the 13th round of ECPC
talks April 18 - 21.

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TEST RUNS OF RAILWAYS
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10. (SBU) At the March North-South ministerial, the Koreas
agreed to "carry out test runs of trains on the inter-Korean
railways within the first half of this year, as soon as the
military guarantee measures are put in place." At
working-level ECPC talks March 14 - 15 in Kaesong, the ROK
linked its pledge of assistance for DPRK light industries,
like clothing and soap production, to the trial runs along
the railways, but the talks ended without agreement. An
unnamed ROK Unification Ministry official told reporters that
when there is a trial run of the railway, an agreement on
light-industry cooperation projects will kick-in
automatically. Last year, the Koreas had agreed to hold rail
crossings on May 25, 2006, but the DPRK canceled at the last
minute, apparently due to objections from its military
authorities. At the time, the North's official media outlet,
KCNA, said that it was "impossible to conduct the trial runs
without a military security agreement."


11. (SBU) The biggest obstacle blocking the trial runs of
the trains, allegedly, has been the DPRK military, which is
not officially represented at inter-Korean ministerial talks.
This has allowed the DPRK military to claim that agreements
on military issues are void without their consent. The
fourth round of North-South General Officer Talks, May 16-18,
2006 was called to discuss ways to avoid armed clashes in the
West Sea, establish a joint fishing area in the West Sea, and
to reach a security guarantee on the railways. The
discussions stalled, however, when the DPRK insisted first on
redrawing the Western sea border. After the Korean War, the
United Nation Command delineated a de facto border, the
Northern Limitation Line, but the DPRK never recognized it.
Despite recent agreements to restart the trial runs of
trains, some remain skeptical that the DPRK will allow them
to occur.

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KAESONG INDUSTRIAL COMPLEX
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12. (SBU) Following the DPRK missile launches in July 2006,
South Korea in September stopped leasing land to ROK
companies interested in investing in the Kaesong Industrial
Complex (KIC). Shortly after the February 13 "Initial
Actions" agreement, however, on February 20, ROK Unification
Minister Lee Jae-joung told reporters that the Ministry would
resume the halted expansion of the KIC by mid-April at the
latest. The Koreas at the ministerial, February 27 - March
2, then agreed to promote the construction of the KIC and
"take necessary steps in this regard." As of March 14, 2007
a total of 21 South Korean garment and other labor-intensive
plants are currently in operation in the complex, employing
11,160 North Korean workers. ROK officials have publicly
claimed that a resumption of the inter-Korean railway would
provide a boost for investment and construction in the KIC.

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COMMENT
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13. (C) The February 13 "Initial Actions" agreement has
jump-started inter-Korean relations. Seoul appears to be
proceeding on the assumption that Pyongyang will fulfill all
of its February 13 "Initial Actions" obligations. The two
Koreas have mapped out a resumption of projects and will hold
the next round of ministerials May 29 - June 1 in Seoul to
look at follow-on steps. The debate about how fast to go on
inter-Korean projects have already spilled over to the ROK
presidential election campaign and has included discussions
about a possible inter-Korean summit in 2007. The heart of
the debate is whether the action-for-action concept has
worked in North-South engagement. Conservatives would argue
that there have been no reciprocal actions from the North in
return for rice, fertilizer and other assistance.
Progressives, on the other hand, would point to the
engagement policy as a long-term policy with small initial
payoffs. Many progressives would also argue that the lack of
North-South hostilities is enough for now. END COMMENT.
VERSHBOW