U.S.-JAPAN-KOREA POLICY PLANNING TALKS - WORKING

UNCLAS STATE 001522

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: CH EAID JA KS PGOV PREL
SUBJECT: U.S.-JAPAN-KOREA POLICY PLANNING TALKS - WORKING
LUNCH AND AFTERNOON SESSION

REF: STATE 1514


1. (SBU) SUMMARY. This cable reports on the working lunch
and afternoon session of the U.S.-Japan-Korea policy planning
trilateral held on December 17 (see reftel for reporting on
the welcome dinner and morning session). At the lunch, S/P
Director David Gordon, Japanese Deputy Vice Minister for
Foreign Policy Chikao Kawai, and ROK Deputy Foreign Minister
Park In-kook exchanged views on the future of China,
including military modernization. During the final afternoon
session, the officials and their delegation members discussed
regional cooperation in Asia, multilateral security regimes
in Northeast Asia, and aid cooperation. END SUMMARY.

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WORKING LUNCH: THE RISE OF CHINA
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2. (SBU) Japanese Deputy Vice Foreign Minister Kawai noted
that dealing with China was one of Tokyo's greatest foreign
policy challenges. The PRC was now Japan's top trade partner
and the number one destination for Japanese capital. The two
nations' economies were increasingly interdependent, Kawai
observed. Yet despite the robust growth in commercial ties,
Japan had serious concerns about China's internal stability
and its growing military capabilities focused, it seemed, on
Taiwan. China should hear the same message from Tokyo,
Seoul, and Washington: don't gamble on a military solution
to the Taiwan problem. Kawai added that China's growing need
for energy supplies underpinned Chinese support for
"problematic" countries throughout Africa, foremost among
them Sudan. According to Kawai, Japanese analysts feared the
Chinese economy was in worse shape than Beijing admitted
publicly; the PRC was working closely with Japan to draw on
Japanese experience in managing non-performing loans and
limiting the imp
act of the sub-prime loan crisis. Chinese leaders were very
worried about the economy, Kawai asserted, adding "so are we."


3. (SBU) South Korean Deputy Foreign Minister Park In-kook
said China posed a big challenge for the ROK, noting that the
PRC was South Korea's top trade partner as well. Echoing
many of Kawai's themes, Park added that the PRC leadership at
times used xenophobia to help placate a Chinese public
increasingly angry about corruption and the country's
economic problems. The PRC was also a major emitter of
greenhouse gases, Park added.


4. (SBU) S/P Director David Gordon noted that there has been
a shift in the PRC's approach to dealing with the United
States. The longtime view was zero sum: the United States,
as the dominant world power, sought to prevent China from
rising to its full potential and playing its rightful
international role. Now, Gordon said, there seemed to be a
less zero sum view of ties with Washington. Evidence of the
shift was visible in Darfur, where the Chinese were now part
of the solution. Still, China's lack of transparency in its
military modernization program was troubling, Gordon said,
adding that it was difficult to engage with the Chinese
military. Kawai seconded that view, explaining that Japan
had tried to expand its contacts with the PLA but was
similarly finding it hard to get the military to engage.
Park noted that the PLA Navy was now fielding ballistic
missile submarines, which the ROK found troubling.

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AFTERNOON SESSION: REGIONAL COOPERATION IN ASIA
-------------- ---


5. (SBU) DVM Kawai opened this discussion by providing an
update on the East Asia Summit held in Singapore on November
21 and 22. Main topics on the agenda there included
environmental issues, climate change, and energy security.
Kawai praised ASEAN's role in fostering regional cooperation,
and suggested that the U.S., Korea, and Japan support the
organization. Pointing to the disappointment many in Asia
felt after President Bush canceled his trip to Singapore at
the last minute, Kawai said it would be helpful for the U.S.
to send a clear signal about its support for regional
cooperation in Asia. Secretary Rice's presence at the ASEAN
Regional Forum (ARF) was one possible signal the U.S. could
send, said Kawai.


6. (SBU) DFM Park mentioned ASEAN's success in creating
consultative bodies and reiterated the importance of dialogue
in the region. However, Park said, the overlapping of
institutions can be confusing and the imbalance between real
capacity and nominal leadership must be addressed.


7. (SBU) EAP Political Advisor Kathy Stephens stated that the
perception that the U.S. is not as engaged in regional
cooperation and institution-building in East Asia -- whether
that is true or not -- must be addressed. She continued that
ASEAN's relevance was being tested on the Burma issue, and
asked participants to consider the following questions: 1)
what is the ultimate objective of the EAS?; 2) with climate
change and environmental issues on the EAS agenda, how is the
EAS the same as and different from APEC?; 3) has there been
an evolution in China's attitude towards the EAS, ARF, and
APEC?; and 4) why is the bulk of the political and economic
capital in northeast Asia, yet institution-building taking
place in southeast Asia? Deputy Assistant Secretary of
Defense David Sedney pointed out that the annual Shangri-la
conference in Singapore is an important and effective
mechanism for Asian engagement for the U.S. military.


8. (SBU) Wrapping up the session, Kawai recognized that the
number of institutions in Asia was at times frustrating but
urged countries to be patient, as such a multilateral
framework was a reflection of the reality in Asia and was
logical for Asia. Kawai argued that the region needed
multiple institutions, but must coordinate so they move in
the same direction. He also remarked that Chinese attitudes
towards regional institution-building had changed
significantly in the last five to ten years--from
non-participation to enthusiasm.

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AFTERNOON SESSION: SECURITY REGIMES IN NORTHEAST ASIA
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9. (SBU) Moving to Northeast Asia specifically, DFM Park
named five principal, ongoing security issues in the region:
1) North Korean denuclearization; 2) Taiwan; 3) historical
animosities; 4) nationalism; and 5) territorial disputes. He
also listed several non-traditional security concerns,
including terrorism, illegal migration, pollution,
transnational crime, and pandemics. Finally, Park pointed
out challenges to regional security that had an economic
dimension, as well as the rise of China.


10. (SBU) Park recommended taking a three-track approach when
dealing with northeast Asian security: 1) the
denuclearization of North Korea, 2) the establishment of a
peace regime on the Korean peninsula, and 3) the
establishment of a Northeast Asian Peace and Security
Mechanism (NEAPSM). According to Park, the DPRK did not have
an objection to moving forward on discussions on the NEAPSM,
but preferred to revisit the idea after it normalized ties
with Japan and the U.S. Park said that the ideal outcome
after North Korean denuclearization would be a nuclear free
zone, but that other options included: 1) a system similar
to the OSCE based on confidence building measures; 2) one
resembling NATO; and 3) another resembling the ASEAN Regional
Forum. Park did not express a preference among these three
options, but did emphasize the need for some kind of
institution as well as U.S. involvement as a guarantor or
facilitator.


11. (SBU) Political Advisor Stephens pointed to the absence
of a security mechanism in Northeast Asia, and praised
efforts through the Six-Party Talks to create a NEAPSM as
novel and good. She emphasized, however, that there was no
zero sum between any future regional mechanism and U.S.
bilateral alliances in the region. Stephens remarked that in
Europe, bilateral alliances actually strengthened as regional
groupings developed around them.


12. (SBU) DVM Kawai echoed the importance of the Six-Party
Talks for northeast Asian security and the potential that it
will develop into a framework for discussions on security,
but reminded the group that the first priority was to address
the denuclearization of the DPRK.

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AFTERNOON SESSION: AID COOPERATION
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13. (SBU) S/P staff members James Green and Nazanin Ash
explained the structure and goals of USG offices working on
foreign assistance, recently consolidated under the office of
the Director of U.S. Foreign Assistance (referred to as "F").
As the largest donor of official development assistance
(ODA),the U.S. has provided USD 23 to USD 28 billion over
the last few years, to 155 of 190 sovereign nations as well
as to tackle problems that transcend borders. Seeing the
need to focus on the administration and allocation of aid,
U.S. aid administrators have been working to improve: 1) the
alignment of foreign assistance with U.S. foreign policy
goals; 2) coordination and efficiency between the 80 agencies
and accounts that deal with foreign aid; 3) transparency; and
4) accountability and evaluation of performance and results.
American aid efforts can be separated into five major
categories: 1) peace and security; 2) economic growth; 3)
effective governance; 4) investment in human capacity; and 5)
humanitarian
assistance.


14. (SBU) DFM Park informed the group that the ROK currently
provided USD 700 million in foreign assistance but hoped to
increase the figure to USD 1 billion by 2009 and USD 3.2
billion by 2015. Although he said there could be strong
resistance from domestic groups who opposed increased foreign
aid, Park explained that the ROKG had set goals for increased
spending. Because of the interest many recipient nations
have shown in South Korea's rapid transformation from
receiving aid to providing it, Park said that the ROK had
started to focus on training programs. He also stated that
South Korean aid initiatives were traditionally aimed at
Asian countries but were increasingly targeted towards other
regions such as Africa and at global initiatives such as the
Partnership for Democratic Governance. Before ending his
remarks, Park proposed that the U.S., Japan, and the ROK
organize policy consultation groups to discuss development
policies with the aim of coordinating aid policy in Asia and
beyond.


15. (SBU) The top provider of foreign aid until 2000, Japan
was now number three behind the U.S. and UK, said DVM Kawai.
He explained that the drop was due to budgetary reasons and
increasing public criticism during a time when the country
faced serious problems with its pension fund and health care.
The government of Japan, continued Kawai, must turn the
trend around and increase the level of its ODA. With the
Japanese economy recovering, Kawai felt the public would
support a renewed emphasis on foreign aid. Because many
Asian countries (including Thailand and Malaysia) had
"graduated" from recipient status, Japan was now looking to
the Middle East, Africa, and Central Asia for its aid
efforts. Kawai mentioned that Japan was also engaging in
aid-related dialogue with China, which wanted to learn more
about how to implement ODA.

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LIST OF PARTICIPANTS
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16. (SBU)
UNITED STATES OF AMERICA
S/P Director David Gordon
S/P Principal Deputy Kori Schake
S/P James Green
S/P Nazanin Ash
EAP DAS Alex Arvizu
EAP Senior Advisor Kathleen Stephens
EAP/K Jim Heller
EAP/K Andrew Ou
EAP/J Forest Yang
Embassy Seoul Brian McFeeters
OSD DASD David Sedney

JAPAN
Deputy Vice Minister Chikao Kawai
Policy Planning Division Deputy Director Daisuke Hoshino
Japanese Embassy First Secretary Taisuke Mibae

REPUBLIC OF KOREA
Deputy Foreign Minister Park In-kook
Development and Cooperation Division Director Jeong Jin-kyu
North America Division First Secretary Kang Dae-soo
Policy Division First Secretary Jung Young-soo
Policy Division First Secretary Hwang Jun-shik
Staff to Director Jeong Lee Ah-jung
ROK Embassy Political Counselor Lee Baek-soon
ROK Embassy First Secretary Ryu Chang-soo
RICE