ROKG'S CALM REACTION TO DPRK BORDER-RESTRICTION

C O N F I D E N T I A L SEOUL 002206

SIPDIS

E.O. 12958: DECL: 11/13/2018
TAGS: PGOV PREL KS KN
SUBJECT: ROKG'S CALM REACTION TO DPRK BORDER-RESTRICTION
ANNOUNCEMENT

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


1. (C) Summary: DPRK authorities announced on November 12
that "rigid limits and blockages" would be placed on land
border crossings between South and North Korea as of December

1. The ROKG responded through military channels on the
morning of November 13 that the announcement was regrettable;
that the ROKG remained open to dialogue and respected the
June 2000 and October 2007 summit agreements; and that the
ROKG was prepared to provide border-area communications
equipment to the DPRK immediately. The DPRK's November 12
border restriction announcement followed weeks of DPRK
rhetoric warning of drastic action in response to ROK
civilian leafleting, and a November 6 unprecedented senior
DPRK military visit to the Kaesong Industrial Complex (KIC).
On November 13, ROKG and Hyundai Asan officials sought to
downplay the importance of the North Korean statement. Even
the possibility that the DPRK will close down both KIC and
Kaesong City tours, unless the ROKG reaches some
accommodation with it during the next few weeks, did not
appear to phase our ROKG interlocutors, but they noted that
the new prominence of the Korean People's ARMY in KIC-related
developments. END SUMMARY.

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DPRK ANNOUNCEMENT; ROKG PUBLIC REACTION
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2. (SBU) Pyongyang announced on November 12 that the DPRK
"would restrict and cut off" land border crossings between
South and North Korea as of December 1. ROKG officials
called attention to the fact that the statement was conveyed
to the ROK military by the Korean People's Army, acting in
the name of the National Defense Commission, seeing this
evidence of the KPA's higher profile on KIC. The KCNA report
called the December 1 restrictions (not specified) a "first
step." The report did not specifically refer to continued
leafleting, complaining instead that "confrontation against
the Republic (DPRK) by the South Korean puppet authorities --
including the military -- is going over the dangerous level."
DPRK domestic evening television news reportedly included an
item on the announcement on November 12, saying that it was
delivered by the "head of the North side's delegation to the
North-South general-level military talks" (Lt. Gen. Kim
Yong-chol).


3. (SBU) KCNA also carried on November 12 a statement from
the DPRK Red Cross Society Central Committee that it had
closed its office at Panmunjom, adding that family reunions
would remain suspended. The statement linked this step to
the ROKG's planned co-sponsorship of a DPRK human rights
resolution in the UN's Third Committee, and warned that
"should the South Korean conservative authorities hurt its
(the DPRK's) dignity even a bit and persist in their reckless
moves for confrontation with it, it will have no option but
to make a crucial decision including the severance of
inter-Korean relations."


4. (C) On November 12, shortly after Pyongyang's
announcement, the ROKG expressed regret at the DPRK
announcements on November 12 somewhat blandly: "If the North
carries out such measures, it will have a negative impact on
efforts to improve inter-Korean relations," MOU spokesman Kim
Ho-nyoun said. Minister of Unification Kim Ha-joong told the
National Assembly on November 11, in the context of rumors
about a KIC shutdown, that the ROKG would make every effort
to keep it open. Minister Kim met with KIC business owners
on November 13, who reportedly told him that the ROKG should
stop the leafleting.


5. (SBU) Foreign Minister Yu Myung-hwan, in a November 13
breakfast speech, said that the ROK needed to take its time
and analyze the North Korean statement and respond calmly.
He also cited the need to step back and look at the big
picture of South-North relations.

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ROKG TO DPRK
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6. (C) On November 13, Blue House and MOFAT officials told
us, the ROKG responded to the DPRK through military channels
that:

-- the November 12 announcement was regrettable;


-- the ROKG remained open to dialogue and "respected" the
June 2000 and October 2007 summit agreements, and that
discussions should encompass all previous South-North
agreements;

-- the ROKG would try to persuade private organizations to
stop the leafleting, and,

-- the ROKG was prepared to provide border-area
communications equipment to the DPRK immediately.


7. (C) Blue House National Security Assistant Secretary to
the President for Unification Yu Joon-ha said that the DPRK's
November 12 border announcement was intended to shock the
ROKG into begging for dialogue, but the ROKG saw it as just
another escalation step. He characterized the announcement
as calibrated, saying it would result in stricter controls on
persons going to KIC as of December 1, possibly eliminating
politicians or business people seen as unfriendly. However,
he doubted that the DPRK would close all traffic so that KIC
would have to close, arguing that the DPRK must recognized
that such a step would preclude any further foreign
investment in the North. Even if the DPRK did close KIC, the
ROKG was prepared to pay the involved ROK companies the
"several hundred million dollars" in investment guarantee
compensation. He said that the ROKG position was to stick to
its principle of offering dialogue with the North but not
caving in to DPRK demands as previous governments had done.


8. (C) Yu and MOFAT Director of Inter-Korean Affairs Chin
Ki-hoon both said that the ROK's provision of border-area
communications equipment was important. The equipment, worth
about USD 100,000, had been partly delivered before the July
11 Mt. Kumgang shooting, but was placed on hold pending an
agreeable resolution to that shooting; now it was being
offered without the linkage.


9. (C) According to former deputy unification minister Park
Chan-bong, now with GNP committee on unification, the closing
of all land traffic, assuming Kaesong Industrial Complex is
included, would pose a serious burden on both Pyongyang and
Seoul. For Seoul, there would be loud complaints from some
80 companies operating in KIC, employing over 30,000 North
Korean workers. For Pyongyang, these North Korean workers
would be unemployed, presenting enormous difficulties for the
city of Kaesong, where all of them live. We understand that
almost one out of two households in Kaesong now has someone
working in KIC. This was an aggressive and risky move for
the North Koreans, Park said. One way out was for the South
Koreans to do "something" about the leaflets before December
1; but that was easier said than done, because South Korean
law does not prohibit such activities.


10. (C) Ministry of Unification Inter-Korean Exchanges and
Cooperation Bureau Deputy Director Kim Seong-hyoun said on
November 13 the situation would "require senior-level
intervention," but appeared to be cautiously optimistic that
KIC would not close. Kim based his optimism on the following
elements: the DPRK statement did not contain an immediate
evacuation request; sea and air crossings were not mentioned
and therefore remained unaffected (NOTE: the ROK imports a
considerable amount sand for construction from the DPRK,
unconstraint by environmental restrictions, through the west
coast shipping route. END NOTE.); and ROK-DPRK
military-to-military communication remained open. According
to Kim, the Blue House convened a cabinet-level emergency
session in the evening of November 12 and drafted the
response message above (para. 5).


11. (C) Kim believed that if the current situation is not
resolved in a timely fashion the DPRK would close KIC before
Kaesong City tours because the KIC project offers less profit
for North Korea while inflicting more damage on South Korea.
If tourism ended, Kim noted, "no one would care but a few
civilians," but a shutdown of KIC would raise grave concerns
among South Korean businesses. In addition, Kim explained
that North Korea received USD 100 per head through Kaesong
city tourism, but at KIC received only 15 to 25 percent of
each workers monthly salary of about USD 65. Kim said
Kaesong tourism remained unaffected, as 240 tourists,
transported in seven buses, crossed the border on November
13, a day after the DPRK announcement. Turning to Mt.
Kumgang's 10-year anniversary celebrations on November 18,
Kim shared that the event would be celebrated quietly, with

about 30 Hyundai Asan employees traveling to Mt, Kumgang to
join the maintenance crew who are stationed at the resort.

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HYUNDAI ASAN REACTION
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12. (C) Hyundai Asan Vice President Jang Whan-bin, a frequent
Embassy interlocutor about KIC, Kaesong City tours and Mt.
Kumgang resorts, the three main inter-Korean projects that
his company established and operates, told us on November 13
that he saw the KPA's November 12 announcement as serious
because, coming on the heels of the unprecedented military
visit to KIC on November 6, it suggested that the KPA was
asserting itself about KIC. Previously, he said, KPA
officers had been seen at KIC but had never led an official
visit to Hyundai Asan's and other offices in the industrial
complex. However, Jang said that he did not read the
November 12 DPRK announcement as a December 1 border closure.
Instead, civilian traffic to KIC would continue, as would
the "completely private" tours to Kaesong City. He also
believed that there was time for the ROKG to reach an
accommodation with the DPRK before December 1, stressing that
the DPRK was leaving itself room for maneuver.

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COMMENT
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13. (C) After months of hostile rhetoric and recent hints
about a move against KIC, the November 12 DPRK announcement
had little shock value but was still a setback for
inter-Korean relations. There are several unkwowns: will
the restrictions be completed, leading to the closure of KIC;
is the ROKG serious in trying to limit leafleting activity;
and will the much-needed expansion of KIC proceed? For now
at least, the answers seem to be no, no, and not likely
STEPHENS