NATIONAL ASSEMBLY MEMBERS DISAGREE ABOUT

C O N F I D E N T I A L SEOUL 002335

SIPDIS

E.O. 12958: DECL: 12/05/2018
TAGS: PGOV PREL KS KN
SUBJECT: NATIONAL ASSEMBLY MEMBERS DISAGREE ABOUT
SOUTH-NORTH RELATIONS

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


1. (C) SUMMARY: Four National Assembly members evinced
frustration with worsening South-North relations in separate
December 2-3 meetings, but disagreed on the causes and
possible solutions. They saw close coordination with the USG
as crucial. All were pessimistic about KIC's future, though
they stopped short of saying it would close:

-- Moon Kook-hyun, 2007 Presidential candidate and now
National Assembly member (progressive Creative Korea Party)
criticized President Lee Myung-bak's overall approach to
North Korea, calling his offer of aid based on a request from
the North an effort to "make North Korea kneel down." Moon
saw recent DPRK restrictions on border crossings and the KIC
as understandable, because the South had breached the 1992
Basic Agreement by allowing leafleting to continue.

-- Similarly, during a breakfast with the Ambassador,
Democratic Party (DP) Chair Chung Se-kyun and Executive
member of the Foreign Affairs Committee Moon Hak-jin railed
against President Lee Myung-bak's attempts to "tame" North
Korea and frequent changes in message on North Korea policy.
The two took turns explaining how Lee had failed to construct
a policy that was capable of improving relations with North
Korea.

-- On the conservative side, Hwang Jin-ha (GNP, Executive
Member of the Foreign Affairs and Unification Committee) told
us that the fault lay with North Korea. It was a shame that
both the Korean left and North Korea had rejected Lee's
"Denuclearization, Openness, USD 3000" plan out of hand,
because it was a sincere offer of dialogue and economic
assistance, given progress on denuclearization. END SUMMARY.

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LEE'S INITIAL DPRK APPROACH...
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2. (C) Our recent conversations with progressive and
conservative members of the National Assembly showed that
both camps are distressed at the state of South-North
relations, but differ fundamentally on why relations have
soured and on what to do about it.


3. (C) Progressive Moon Kook-hyon portrayed North Korea as
the injured party. Asked about the current impasse over the
KIC, he said one had to go back to President Lee's initial
stance on North Korea, including during his presidential
campaign (when Moon was a third-party candidate opposing Lee)
to understand the latest developments. North Korea
understandably took umbrage at each element of President
Lee's approach to the North.

-- The insistence on reciprocity was specious because the
North had already provided it by allowing over 1 million
South Koreans to visit the North, unthinkable before
engagement policy.

-- The "Denuclearization, Openness, USD 3000" pledge was
"absurd" because South Koreans were not willing to pay huge
costs to help North Korea raise its per capita income to that
extent; the same reason that they shied away from
contemplating unification. Furthermore, the nuclear issue
was best left to the Six-Party Talks (which he said could
lead to good results, but only over a long time horizon).

-- The bungling of the discussion of prior summit agreements
was most unfortunate, because the June 2000 agreement had
essentially already been implemented, and the October 2007
agreement would require detailed discussion over several
years, Qhere was no risk involved in Lee showing respect
for it.

-- Finally, the North had also understandably rejected Lee's
demeaning call for it to "kneel down" by officially
requesting economic aid before any would Qrovided. It was
clear from the overall conversation with Moon that he saw
continued unconditional assistance to the North as squarely
in the South's interest.


4. (C) Democratic Party leaders Chung Se-kyun and Moon
Hak-jin were equally critical of Lee's basic approach to
North Korea during a December 2 meeting with the Ambassador.
The DPRK had decided it could not work with the Lee

government for two reasons, Chung said: the North had not
truly decided to denuclearize, so rejected Lee's slogan, and
the DPRK did not feel they could trust Lee. Chung and Moon
Hak-jin noted the dissonance Lee created by calling for
dialogue but casting doubt on the previous summit agreements.



5. (C) Chung rejected what he called Lee's effort to "tame"
North Korea, which was based on Lee's view that the DPRK had
been "spoiled" over the past 10 years. Moon Hak-jin also
took aim at Lee's statements at the November 2008 APEC Summit
in Peru that he supported unification based on market
principles and freedom. Of course, Moon granted, these
principles are drawn from South Korea's Constitution, but
there was no need to say such provocative things at this time
unless the goal was to antagonize North Korea.


6. (C) In a separate December 3 meeting, conservative former
ROK Army general Hwang Jin-ha provided the counterpoint. It
was a shame that both North Korea and the South Korean left
had rejected the "Denuclearization, Openness, USD 3000" plan
out of hand, because it was a genuine "commitment" for
"continuous support once there is progress on
denuclearization." The emphasis on denuclearization, an
internationally agreed priority, was appropriate. He noted
that GNP Chairman Park Hee-tae had delivered a speech
reinforcing the value of the "Denuclearization, Openness, USD
3000" plan the previous day.


7. (C) Rather than seeing North Korea as reacting to slights
from the South, Hwang said instead that he sensed that the
DPRK had begun fundamentally reappraising engagement policy
this year, in part because the relatively moderate officials
previously in charge of inter-Korean relations had been
purged. As an example, he mentioned Deputy Director of the
United Front Department Choe Song-chol (who was the first
DPRK official to greet President Roh Moo-hyun when he walked
across the Military Demarcation Line on October, 2, 2007).
(Note: There has no official word that Choe or other DPRK
officials responsible for inter-Korean relations have been
replaced. END NOTE.) Though coming from a different
direction, he agreed with Moon that ROKG-DPRK relations were
essentially in an irreparable state, though noting somewhat
defensively that "we never closed the dialogue channel."

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...AND THE FUTURE OF THE KIC
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8. (C) All four legislators saw recent developments at the
KIC as the outgrowth of a year of antagonistic relations, but
here again the progressive-vs.-conservative split as to why
that was the case was evident.


9. (C) Hwang saw the DPRK's recent moves to restrict traffic
and personnel going to the KIC as a preliminary result of the
DPRK's review of whether to continue engagement. The issue
had come to head now, he said, because the North had "severe
anxiety" about allegations that Kim Jong-il was in ill
health, seeing not only leaflets but also tourists to Kaesong
City and personnel going to the KIC as carriers of such
allegations. He said another reason for the restrictions was
to create stress in the ROK which the DPRK hoped would lead
to public protests against Lee, and he said the ROK should
guard against this effort to exploit "South-South"
differences of opinion. Returning to the issue of
leafleting, Hwang acknowledged that continued leafleting was
a problem, but said the ROKG had to be sensitive to NGOs made
up of defectors or those with kidnapped family members. He
said GNP Chairman Park was meeting leafleting groups on
December 3 (a day when further leaflets were sent).


10. (C) Moon Kook-hyon, by contrast, saw the DPRK's
cross-border restrictions as understandable because the ROK
was violating the 1992 Basic Agreement (NOTE: "Article 3:
The two sides shall not slander or villify each other." END
NOTE) by allowing leafleting to continue. Moon said Lee had
mistakenly assumed, in asking the DPRK to "kneel down" that
the DPRK was so economically weak that it would have no
alternative, but part of the message of the KIC restrictions
was to say that the DPRK could live without the cashflow from
the South. (Separately, Chung noted that the DPRK relies on
trade and aid from South Korea for 20 percent of its economy,
and that if that dependence were 50 percent, it would be much
harder for the North to ignore the influence of South Korea.)


11. (C) Asked how KIC restrictions could reverberate among
ROK businesses, Moon, former international manager for the
Kimberly Clark Paper Company, said the KIC was a major issue
for South's small-and-medium sized enterprises, which
accounted for almost 90 percent of employment in the ROK.
While it was true that only 88 companies were operating in
the KIC, they relied on 2,700 suppliers and processed over
USD 5 billion worth of materials to create about USD 1
billion in value-added. While uncertain about what would
happen to the existing companies, Moon noted that buy orders
were already declining and feared that expansion -- which was
slated to result in 1,500 companies relying on 10,000
suppliers operating at the KIC by 2010 -- would grind to a
halt.


12. (C) While not criticizing the DPRK politically, Moon said
DPRK authorities were acting simplistically by thinking they
could restrict KIC businesses without long-term negative
effects. However, he lodged his main criticism at President
Lee, saying that the benefits to the ROK from KIC far
outweighed the approximately USD 100 million that the DPRK
earned from it each year. (He noted that Kimberly Clark
could save USD 20 million per year by relocating an operation
now in China to the KIC.) Hence, the Lee Administration
should have gotten off on the right foot by agreeing to fund
and build dormitories at the KIC to signal the expansion
would continue.


13. (C) In his conversation with the Ambassador, DP Chair
Chung also argued for the Lee Administration to be more
flexible with respect to KIC and engagement generally. Chung
said that the DPRK was not a reasonable or even civilized
country and therefore it made decisions regarding KIC that
were not in the DPRK's long-term best interest. We should
recognize the DPRK plays by a different set of rules and work
on dialogue with them. The North does not think of ways to
boost its economy or create jobs like a normal state, but
simply looks at how they can preserve their system. The ROKG
should recognize the problems the DPRK has, understand that
they are not reasonable and continue dealing with them, even
yielding to their demands if necessary to keep dialogue
going.

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COMMENT
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14. (C) The fundamental difference in these legislators'
approach to North Korea is familiar territory. Progressives
have long argued that engagement needs to continue no matter
what North Korea does, while conservatives argue that the
last 10 years of engagement "progress" has been a mirage.
That's a theological difference that can't be bridged.
However, the areas of agreement during these conversations
were troubling: none of the National Assembly members were
optimistic about prospects for South-North dialogue, the
future of the KIC, or achievement of a ROK consensus on what
to do next.
STEPHENS