SCENESETTER: MARCH 26 MEETING WITH ROK FOREIGN

S E C R E T SECTION 01 OF 05 SEOUL 000592

SIPDIS

SIPDIS

FOR THE SECRETARY FROM AMBASSADOR VERSHBOW

E.O. 12958: DECL: 02/18/2018
TAGS: PREL PGOV MARR MNUC KN KS OVIP
SUBJECT: SCENESETTER: MARCH 26 MEETING WITH ROK FOREIGN
MINISTER YU MYUNG-HWAN

Classified By: AMB. ALEXANDER VERSHBOW. REASONS 1.4 (b/d).

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SUMMARY
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1. (C) Madam Secretary, the main reason for Foreign Minister
Yu Myung-hwan's March 26-27 visit to Washington is to set the
stage for a successful April 18-19 summit meeting at Camp
David between President Lee Myung-bak and the President.
Since your meeting with FM Yu on February 25, political
interest in winning a legislative majority in the upcoming
April 9 National Assembly elections has severely limited any
new policy initiatives by President Lee and his Government.
It has also not helped that President Lee and his political
allies in the Grand National Party (GNP) have been heavily
criticized for mismanaging Cabinet appointments and party
nominations for the elections, the latter leading to an open
rift with Park Geun-hye. All of this has damaged Yu's
ability to engage fully on the issues of greatest concern to
us. Nonetheless, we have already reaped some positive
results from the new Korean Government. On March 24, the
ROKG informed us that it would recognize Kosovo's
independence by the end of this week, and that FM Yu had
taken a much tougher line on North Korea in his meeting with
the Chinese last week. We expect the political situation
will improve after the April 9 elections, and that more
progress will then be possible. We believe the new
Administration recognizes how much is at stake for Lee's
first visit.


2. (C) I recommend that you focus on the following issues
with FM Yu to ensure that we have genuinely positive results
when the President meets with Lee on April 19.

-- KORUS FTA: Without quick resolution of the beef issue, we
will lose the opportunity to ratify the FTA this year.

-- SIX PARTY TALKS: South Korea needs to use all its leverage
with North Korea and whatever influence it has with China to
obtain a complete and correct declaration of the North's
nuclear assets and programs.

-- THE ALLIANCE: The Lee Administration has pledged to
revive the Alliance but has not said how. You should urge Yu
to start spelling out specifics, and warn that deep defense
budget cuts could create problems on Capitol Hill.

-- VISA WAIVER PROGRAM: Many Koreans expect to achieve VWP
status by the end of 2008 -- so much so that some are holding
off applying for visas. Yu will want to make significant
progress on accession to the VWP to justify his Government's
expressed commitment to improve ties with the U.S. End
Summary

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BEEF AND FTA -- KEEPING THE PROCESS ON TRACK
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3. (C) Since your visit a month ago, we have continued to
press President Lee and his team to reopen the beef market
quickly. Senior ROKG policymakers understand that if Lee's
visit is to generate the momentum necessary to obtain
Congressional ratification of the KORUS FTA this year, Korea
will need to reopen the beef market in line with
international scientific (OIE) guidelines by the time Lee
arrives in Washington on April 16. Lee's team has told us
it will be politically impossible for them to be seen
negotiating with us before Korea's April 9 legislative
elections. The politics of the beef issue are too sensitive
in agricultural constituencies. At the same time, Korea's
trade team is working hard behind the scenes to tee up a deal
that will meet our needs and can be announced by President
Lee's visit.


4. (C) Our challenge is that all the bad news on trade in
the United States ever since the Ohio primary has made
Koreans increasingly pessimistic about the prospect of
Congressional ratification of the FTA. This, in turn, is
prompting a few of Lee's political advisors to question
whether rapid action on beef, or a complete rather than
partial or two-phase solution, is truly warranted. Polls
show that the majority of Koreans currently believe that U.S.
beef is unsafe. Lee's Government thinks it can nonetheless

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justify reopening the beef market as a necessary payment for
ratification of the FTA, which the vast majority of Koreans
support. Still, some advisors fear that if Lee opens the
beef market right now, against the public's wishes, and then
no headway is made on Congressional ratification, it will
open him up to domestic criticism of apparent incompetence or
at least over-eagerness to please the United States.


5. (C) Accordingly, we are redoubling our efforts to
convince the Koreans -- FM Yu included -- both that fully
reopening the beef market now is necessary to preserve any
hope of KORUS ratification in 2008, and that KORUS FTA
ratification by Congress this year remains do-able, despite
opposition from a few vocal Congressmen and the general U.S.
disenchantment with foreign trade. Koreans eagerly lapped up
Senator Maria Cantwell's remarks in Seoul last week that,
given the huge U.S. business interests at stake, she thought
there was considerable latent Congressional support for KORUS
ready to be mobilized once beef was resolved; she even
suggested that the actual vote on KORUS might prove easier
than the vote on Colombia or Panama once the Congressional
leadership allowed KORUS to come to a vote.


6. (C) The Korean Government understands that the
Administration cannot promise the outcome or timing of
Congressional deliberations on the FTA. They also know that
we are committed to seeing the Colombia process through
first, even though a protracted Colombia debate that eats up
all the legislative time for KORUS is their nightmare. But
as Lee's Government continues its own internal efforts to
come up with a beef solution, it would be useful for Yu to
hear that the Bush Administration remains committed to KORUS,
and that while achieving ratification this year may be
difficult, it is do-able (as has been the case with every
major trade agreement).

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NORTH KOREA
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7. (C) FM Yu told me on March 4 that he expected the DPRK
eventually would make an acceptable declaration of its
nuclear programs, but that additional time would be required.
Under Yu's guidance, MOFAT can be expected to stay closely
in synch with the USG on North Korea policy, as well as
providing able leadership of the Economy and Energy
Cooperation Working Group established under the February 13,
2007 Initial Actions agreement. Yu will want to hear how the
ROK can be helpful in pressing the DPRK to produce a complete
and correct declaration. He will also want to know what will
be our response if the deadlock cannot be resolved.


8. (C) In keeping with President Lee Myung-bak's emphasis on
reciprocity in the ROK-DPRK relationship, FM Yu can be
expected to coordinate closely with fellow diplomat and
Minister of Unification Kim Ha-joong to make sure that
assistance to the North -- still an open question -- remains
in line with progress on denuclearization. In our March 4
meeting, Yu indicated that he was in no hurry to reach out to
the North, preferring to wait for the DPRK to make the first
move. This attitude marks a subtle but important shift from
the Sunshine Policy era, when the ROKG's judgment was that it
was important to continue reaching out to the DPRK even in
the face of the North's recalcitrance.


9. (C) We have also heard from MOFAT that during FM Yu's
visit to Beijing last week he had used "strong language" with
the Chinese to convey his Government's views on the North
Korea nuclear issue, taking a much tougher stance toward the
DPRK than his predecessors had. The ROKG has already adopted
a more critical public position on human rights in North
Korea and indicated increased interest in North Korean
refugees, as well as South Korean abductees and prisoners of
war. Even so, Yu and others have been careful, especially in
public, to characterize the new Government's stance as
seeking cooperation with the North rather than as a radical
departure from past policies. On balance, we expect there
will be changes, possibly to include a narrower definition of
what qualifies as humanitarian aid, with increased attention
to monitoring and reciprocity. FM Yu would likely welcome a
frank discussion on coordinated U.S.-ROK ground rules for
such assistance.

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STRENGTHENING THE U.S.-ROK ALLIANCE
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10. (C) Throughout his presidential campaign and in his
inaugural address on February 25, President Lee Myung-bak
clearly stated that he is committed to strengthening the
U.S.-ROK Alliance. To the USG that means that on the Korean
Peninsula the ROK must continue to support, financially as
well as politically, implementation of our three alliance
transformation agreements: the Yongsan Relocation Plan, the
Land Partnership Plan and the Strategic Transition Plan for
OPCON transfer (YRP, LPP and STP). Regionally, it means
closer security coordination on North Korea and improved
trilateral cooperation with Japan. Globally, it means
increased ROK contributions of troops, equipment, training
and assistance to fight terrorism and address other pressing
international security concerns around the world.


11. (C) Nonetheless, while the Lee Government has generated
detailed plans about how it will fulfill a great many of
Lee's campaign promises, it has yet to offer even an outline
of actual steps to strengthen the Alliance. To date,
President Lee's words of support for the Alliance have given
the impression that alliance relations have improved; but he
has chosen not to back that up in tangible ways in order to
avoid diverting political capital and national treasure from
his domestic economic priorities at a time when the Korean
economy has worsened. Meanwhile, we are picking up
disturbing signs that Lee's Blue House is pushing drastic
cuts in defense spending that could undercut alliance
transformation and exacerbate burdensharing concerns on
Capitol Hill.


12. (C) You should take this opportunity and seek Foreign
Minister Yu's specific views on the direction of the U.S.-ROK
Alliance. Kim Byung-kook, the Blue House National Security
Advisor, told Steve Hadley last week that the Lee
Administration would like to produce a Declaration on the
Future of the Alliance in advance of the next summit in July.
We think it important that such a declaration include
concrete "deliverables" that would put clear meaning behind
our mutual goal of strengthening the Alliance. You may want
to explore with FM Yu what areas of security cooperation he
believes could be included in that declaration. Topping the
U.S. list of security priorities are: ROK troops for
Afghanistan for a train-and-equip mission; another troop
extension in Iraq; endorsement of PSI; and an increased SMA
(burdensharing) contribution. Topping the ROK list of
security priorities will be: public confirmation of a
long-term U.S. security commitment, and elevation of the ROK
to NATO-plus-4 FMS status.


13. (S) Yu needs to hear directly that alliance management
is also about sharing the costs. As noted, President Lee has
repeatedly directed the Ministry of National Defense (MND) to
cut its budget by 10 percent this year -- a USD 3 billion
cut, USD 900 million of which would come out of new and
continuing military modernization programs. If reflected in
the final budget, these cuts will postpone completion of the
ROK military's Defense Reform 2020 plan, or require
significant revisions of the Plan. The cuts could also
hinder ROK procurement of new systems, such as the U.S.-made
Global Hawk UAV. According to MND sources, the Ministry's
budget is now likely to fall to 2.5 percent of GDP, lower
than during the Roh administration. (Last year Roh increased
defense spending by 6 percent -- which was still short of the
11 percent annual increase required to meet the goals of
Defense Reform 2020.)


14. (S) MND has sensed a storm brewing since Defense
Minister Lee Sang-hee met with President Lee on March 12. At
that meeting, an aide to President Lee told the Defense
Minister very bluntly that there would be budget cuts and to
plan accordingly. The aide curtly warned the Defense
Minister that the Blue House would not be "writing checks for
MND toys." President Lee reportedly said nothing, but kept
looking straight ahead, indicating that he agreed with
everything his aide was saying. You should discuss with FM
Yu the negative effect these deep cuts could have on
Congress's already flagging support for the alliance.

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VISA WAIVER PROGRAM
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15. (C) After pressing for years to join the Visa Waiver
Program (VWP),the Republic of Korea has made very
significant progress toward VWP membership during the last
few months. ROK officials hope the Memorandum of
Understanding required for VWP participation can be signed
during President Lee's visit, perhaps along with a key
VWP-related accord on sharing information to screen for
terrorists. Diplomatic and official Korean e-passports have
just gone into production -- President Lee intends to carry
one during his April visit -- and plans continue apace for
full-scale production of regular Korean e-passports later
this summer. Although no dates have been announced, DHS may
visit Korea as early as June for an in-country technical
visit as part of the VWP initial designation review process.
At the same time, DHS has not yet provided the ROK with a
draft of one of the required "implementing arrangements"
mentioned in the MOU that will potentially involve sharing
criminal-record information. This could run counter to ROK
privacy laws, and therefore might require considerable
negotiations before agreement can be reached.


16. (C) DHS has pledged that it will have all necessary new
systems -- including an exit control system and an electronic
pre-clearance mechanism for travelers called an Electronic
System of Transportation Authorization (ESTA) -- in place in
time for the ROK and several other countries to join the VWP
before the end of calendar 2008. However, Senator Feinstein,
chair of the Senate Judiciary Committee's Subcommittee on
Terrorism, Technology and Homeland Security, has, along with
Senators Kyl and Sessions, written to DHS Secretary Chertoff
to express serious concerns that DHS plans for the exit
control system do not meet the Implementing Recommendations
of the 9/11 Commission Act of 2007. Korean citizens as well
as ROK officials will be deeply disappointed if DHS is not
able to develop the appropriate systems promptly and enlarge
the VWP to include Korean visitors by late 2008 or early 2009
-- or if Korean membership in the program falls through for
any other reason.

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PERSONNEL-LY SPEAKING
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17. (C) FM Yu Myung-whan's visit to the U.S. comes after
Yu's successful visit to China last week (his first trip
abroad as Foreign Minister) and just months after leaving his
posting as Ambassador to Japan. Yu, rated as one of the
best-ever ROK Ambassadors to Japan, is poised to play a key
role harmonizing relations between Japan and Korea without
upsetting China. At the same time, Yu has spent over 10
years of his distinguished 35-year career playing a lead role
on U.S. policy.


18. (C) In the Lee Myung-bak Government, Yu and MOFAT are
ascendant; the FM chairs the National Security Council
(previously chaired by the Unification Minister). To boot,
Yu's confirmation hearing was criticized for being too
friendly. Yu has few enemies in Government, he is widely
admired in the National Assembly, and most expect his tenure
at MOFAT will last two years -- twice the average tenure for
ministers in Korea. Unfortunately, not all of President
Lee's personnel have been viewed so favorably. Three of
Lee's cabinet nominees withdrew their candidacy in the face
of allegations of ill-gotten wealth and questions about their
qualifications. Lee's approval ratings have slumped to 51
percent, according to a March 23 KBS poll, the lowest ever
for a Korean President one month after inauguration.

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DOMESTIC POLITICS
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19. (C) The expected Sturm und Drang leading up to the April
9 National Assembly election is the main reason why the Lee
administration has made little or no progress on several key
campaign issues. The KORUS FTA was the first victim, as the
new Government, weakened by its nomination battles with the
National Assembly, was unable to overcome legislative
obstructionism and is now resigned to seeing an FTA
ratification vote not occur until after April 9, and perhaps
not until the new legislative session begins in June.
Officials are reluctant to discuss Alliance issues in detail.
Also on hold are domestic projects such as Lee's grand canal

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project and a new education policy.


20. (C) Unfortunately for President Lee, the domestic
political scene is indeed a mess, and he gets a share of the
blame. Within the ruling GNP party, various factions are at
war over the process of selecting candidates for the National
Assembly election in which 50 of 128 incumbent GNP
legislators were rejected. Park Geun-hye, a darling among
the conservatives, announced on March 23 that she had lost
confidence in Lee Myung-bak because he had not honored his
word that he would stay out of the party nomination process,
and instead allowed a "purge" of pro-Park candidates (many of
whom are running as independents). Pundits note the "loss"
of Park was Lee Myung-bak's fault, and a huge blunder, as
Park still controls about 30 lawmakers and her faction could
cause real problems for Lee if she does not support his
policy initiatives. More than that, Park remains an
appealing political figure, commanding enormous popular
support among Koreans.


21. (C) What all this means is that your meeting with FM Yu
may fall short on specifics, especially on politically
sensitive issues such as beef. Still, this is a very
different Administration than the one we have had to deal
with under Roh Moo-hyun. On Monday, MOFAT let us know that
Korea was ready to recognize Kosovo; a few weeks ago, the
ROKG UN delegation heavily criticized the North on human
rights; in the near future, we expect the Koreans will sign
on to PSI. All of this could not have taken place with Roh
in the Blue House. We all remain hopeful that Lee can
stabilize his political base and that we can make more
significant progress soon.
VERSHBOW