WI SAYS DENUCLEARIZATION IS STILL ROKG'S TOP

C O N F I D E N T I A L SEOUL 001380

SIPDIS

E.O. 12958: DECL: 08/28/2019
TAGS: PGOV PREL PINR ECON EFIN KN KS CH
SUBJECT: WI SAYS DENUCLEARIZATION IS STILL ROKG'S TOP
PRIORITY

Classified By: POL M/C James L. Wayman. 1.4(b/d)

Summary
--------------


1. (C) During an August 24 meeting, ROK Special
Representative for Korean Peninsula Peace and Security
Affairs Wi Sung-lac emphasized to Ambassador Philip Goldberg
that the ROKG's top priority is still denuclearization. Wi
noted that UNSCR 1874 was forcing the North Koreans to find
creative ways to undermine implementation. Wi agreed that
Chinese banks, increasingly worried about their reputations,
were taking 1874 seriously and understood clearly the
business consequences of being "named and shamed" for shady
dealings with Pyongyang. While the USG supported North-South
dialogue, Goldberg noted that cash is fungible; the
approximately USD 36 million that the DPRK earned annually
from its participation in the Mt. Kumgang tours and the
Kaesong Industrial Complex could free up money for North
Korea's nuclear or missile programs. In a private discussion
at the end of the meeting, Wi told Goldberg that five of the
North Korean entities covered in 1874 were still trying to do
business in China. Wi also expressed concern about Egypt's
continuing cooperation with KOMID. End summary.

Where We're At
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2. (C) During a one-hour meeting on August 24th, ROK Special
Representative for Korean Peninsula Peace and Security
Affairs Wi Sung-lac assured Ambassador Philip Goldberg that
the ROKG's top priority is still denuclearization. Wi
related that President Lee Myung-bak, in a meeting with the
DPRK delegation to former President Kim Dae-jung's funeral,
said that without progress on denuclearization there would be
little significant improvement in North-South ties. Wi
agreed with Ambassador Goldberg's observation that
maintaining solidarity among China, Russia, Japan, the ROK
and the United States would be key. The five parties could
not waiver on denuclearization and implementation of UNSCR

1874.

DPRK "Aware" of 1874
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3. (C) Responding to Ambassador Goldberg's observation that
the DPRK was now "aware" of 1874, Wi said that the resolution
was clearly causing concern in Pyongyang. 1874 was not yet
"biting" the regime, but it was causing the North Koreans to
find creative ways to undermine implementation by using, for
example, foreign companies in China and foreign-flagged ships
to move contraband. 1874 would also likely force Pyongyang
to move more prohibited items by air, Wi said, noting that
there are at least two flights weekly from Pyongyang to
Tehran.

Keeping China Steady
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4. (C) Ambassador Wi said the ROKG was concerned about
Chinese backsliding on 1874 implementation as the DPRK
pursued its "peace offensive." Chinese cooperation has been
spotty, he said, noting that the PRC is still permitting a
branch of Kwangson Bank was still operating in the
northeastern Chinese city of Dandong and had been involved in
transactions involving entities covered by 1874. Wi added
that the flights from Pyongyang to Tehran passed through PRC
airspace; the Chinese could do more to "shut that door." Wi
agreed, though, with Ambassador Goldberg's observation that
Chinese banks, increasingly worried about their reputations,
were taking 1874 seriously and understood clearly the
business consequences of being "named and shamed" for shady
dealings with the North Koreans.

Mount Kumgang and Kaesong
--------------


5. (SBU) Ambassador Goldberg agreed with Wi's assessment
that Hyundai Asan's Mount Kumgang tourism project likely fell
outside the bounds of 1874. While the USG supported
North-South dialogue and anything that reduced North-South
tensions, Goldberg noted that cash is fungible; the
approximately $36 million that the DPRK earned from its
participation in the Mt. Kumgang tours and the Kaesong
Industrial Complex could free up money for North Korea's
nuclear or missile programs.

Pull-Aside on Implementation Issues

--------------


6. (C) In a private discussion at the end of the meeting, Wi
told Goldberg that that five of the North Korean entities
covered in 1974 were still trying to do business in China.
(Note: He gave Goldberg a list of their activities which has
been passed separately to EAP/K. End note.) Wi added that a
retired senior Chinese official had recently told ROKG
interlocutors that PRC export controls were having an impact
on the DPRK, asserting that PRC actions had forced the DPRK
to give up on plans to build a fuel fabrication facility as
well as 50MW and 200MW plants at Yongbyon.


7. (C) Wi also expressed concern about Egypt's continuing
cooperation with KOMID. The ROKG had approached the
Egyptians to remind them that 1874 bans also military
cooperation with the DPRK. Wi said the Egyptians responded
privately -- "as they always do" -- that their relationship
with North Korea was "special" because the DPRK had provided
fighter pilots to the Egyptian Air Force during the 1973 Yom
Kippur War.


8. (U) This cable has been cleared by Ambassador Goldberg.
TOKOLA