Inter-Korean relations in the first quarter of 2003 were a curious mixture. The now familiar forms of interaction, re-established in the preceding quarter after more than a year of on-off hiatus, continued. Ministerial talks, economic dialogue, family reunions, semi-official civic events, and others were all held. On a non-official level, business and aid contacts went ahead as is now normal. If all this suggests marking time, there was at least one breakthrough: the partial opening of two temporary roads across the demilitarized zone (DMZ), breaching the heavily armed border for the first time in half a century. In happier times this would have made headlines and been an occasion for rejoicing as a further step toward reunification.

But these are not happy times in Korea, and rejoicing was muted. The Peninsula has indeed made headlines – for the escalating North Korean nuclear crisis, as Pyongyang unleashed one provocation after another: quitting the Nuclear Non-Proliferation Treaty (NPT), restarting its nuclear reactor (but not yet the reprocessing plant) at Yongbyon, shadowing a U.S. spy plane, test firing two short-range missiles, and more. Most of that is beyond the scope of this article, if only because North Korea insists that the nuclear issue is no business of Seoul’s – despite the December 1991 joint declaration on denuclearization of the Peninsula, which says otherwise.

Inevitably, nuclear concerns formed a somber backdrop to all inter-Korean intercourse this quarter. The South raised them at every opportunity, but made no headway. Nor was this the only dark cloud, as revelations emerged to cast a pall on past inter-Korean progress. During former President Kim Dae-jung’s final weeks in office, it was admitted that the June 2000 summit with Kim Jong-il, for which Kim Dae-jung won that year’s Nobel Peace Prize, had been preceded by a secret payment of at least $500 million by the Hyundai business group to North Korea. The further investigations now under way pose a delicate challenge for South Korea’s new president, Roh Moo-hyun, who comes from Kim’s Millennium Democratic Party (MDP) and is pledged to continue the Sunshine Policy approach, albeit now renamed as “policy for peace and prosperity.”

But it takes two to engage. North Korea marked Roh’s inauguration with a missile test. As always, it objected to annual joint U.S.-ROK war games. When Roh backed the U.S. on Iraq, and after an erroneous report that South Korea had raised its defense alert status, Pyongyang pulled out of talks due in the last week of March; it went on to cancel Cabinet-level talks set for early April. It was not immediately clear if this was a limited protest, or if it presaged a general suspension of official inter-Korean dialogue, as was the case during most of 2001 and 2002. All this points to a bumpy ride for Roh, and, despite those first tiny holes in the border, no obvious roadmap for a broad highway going forward.

Out on a Lim

As the year began with North Korea’s nuclear intransigence making global headlines, South Korea was one of a number of states seeking to mediate and pull Pyongyang back from the brink. For its part, the North clearly did not see blood as thicker than water. In late January, Lim Dong-won – architect of the Sunshine Policy, then a special adviser to Kim Dae-jung – went to Pyongyang, only to find Kim Jong-il out of town. As the Dear Leader had just met a Russian envoy for six hours of talks, this was seen in Seoul as a snub; Lim was reportedly furious. He did meet the titular head of state Kim Yong-nam and Party Secretary Kim Yong-sun, but had clearly expected to hold top-level talks, as in the past. This may be a brush-off to South Korea in general, or to an administration on its way out in particular, although the entourage did include Lee Jeon-seok, a member of Roh Moo-hyun’s transition team.

A Nuclear North: Better than Collapse?

Despite Pyongyang’s refusal to discuss the nuclear issue bilaterally, how to respond to this – and to do so in sync with the U.S. – is a major challenge for Roh Moo-hyun. In February, Yoon Young-kwan – then a member of Roh’s transition team, now ROK foreign minister – caused consternation in Washington for allegedly preferring a nuclear North to a collapse scenario. Though he later claimed he was just saying that some in Seoul hold this view, this was widely taken as illustrating an ostrich pacifist position. Coupled with Roh’s oft-repeated insistence – plainly intended to become a self-fulfilling prophecy – that a military solution is unthinkable, this raised fears of a one-sided approach: all carrot, apparently with no stick no matter what.

[Senior Editor’s Note:  As one who attended the Washington meeting in question, I can attest that Yoon was seriously misquoted and unjustly maligned; he spoke that evening about strident attitudes – in response to a direct question – and did not imply that this was his view or the view of the incoming government. –RAC]

In office, Yoon visited Washington again; but his plea for a bold U.S. opening to Kim Jong-il (à la Nixon and Mao) got short shrift. In early April, on the eve of the UN Security Council’s debate on North Korea, he was still preferring a non-UN solution. Yet elsewhere there were signs of a more robust ROK position. Pyongyang’s call for pan-Korean anti-U.S. struggle had no takers in Seoul as the negative impact of the nuclear threat sunk in, not least for a slowing economy: Moody’s Feb. 11 two-notch downgrade of the ROK’s credit ratings outlook served to concentrate minds. On March 13, at the 10^th CSCAP North Pacific Working Group meeting in Berkeley, CA (which North Korea also attended, encouragingly), South Korea’s position – officially the personal views of Moon Hayong, policy planning director at the ROK Foreign Ministry – took a firm line: not only that “North Korea’s nuclear development can never be condoned,” but also on the “benefits of a multilateral approach” (the subtitle of his paper.) Roh Moo-hyun’s bold support of the U.S. in Iraq, though unpopular both at home and with North Korea, implies awareness of the need to prioritize and mend the US-ROK alliance.

Cabinet and Economic Talks: Marking Time

The nuclear issue naturally overshadowed the ninth inter-Korean ministerial talks since the June 2000 summit, held in Seoul days before Lim’s abortive visit to Pyongyang. Northern delegates resisted discussing the nuclear issue, and the final joint press statement mentioned it only perfunctorily. Partly for this reason, there was no great progress on other matters, either. Basically the two sides agreed to keep on keeping on, and meet again in Pyongyang in April. These ministerial talks were originally monthly, but now seem to have become quarterly.

It was a similar story at the inter-Korean Economic Cooperation Committee, whose fourth meeting was held in mid-February, again in Seoul. (This, and the ministerial talks, alternate between the two capitals). Again the South emphasized nuclear concerns, and again the North insisted these were not on the agenda. Nor was there concrete progress on matters economic: not even the implementation of rules for inter-Korean business first agreed over two years ago in December 2000, yet never ratified. But it was agreed to expedite road and rail links, as well as joint surveys of the Imjin river, and to fix a date for ground-breaking at the proposed Kaesong Industrial Complex, just north of the DMZ not far from Seoul. In a theme shared by other donors to the DPRK, the South also asked for better monitoring of the use of food, materials, and equipment that it provides; the North “said it understood the view.”

Breaching the Border

One area where there was a real advance on the ground, literally, was in cross-border links. After months of stalling, to make a political point denying the authority of the United Nations Command (UNC) in the two new trans-DMZ corridors, North Korea switched to full steam ahead. In quick succession, technical working talks in Pyongyang were followed by the crucial military green light: an “Interim Agreement to Provide Military Assurances for Transit of the Temporary Roads Inside the South-North Administration Areas in the East and West Zones,” signed at Panmunjom at colonel level on Jan. 27. Article 2 explicitly states the authority of the 1953 Armistice, as well as of more recent UNC-KPA and North-South agreements.

That cleared the way for border crossings to begin on two temporary roads – railways and full-scale highways are due later – in the Kyongui and Donghae corridors, on the west and east sides of the Peninsula, respectively. Actual usage so far remains highly restricted, and is mostly in the easterly corridor that opens a land route to the North’s Mt. Kumgang resort. First to cross, on Feb. 5, was an 87-strong advance team from Hyundai Asan, which runs the Mt. Kumgang tours; Korea National Tourism Corporation (KNTC), whose subsidies enable it to do so; and the government. Having established that a new liaison office handling customs, immigration, and quarantine worked smoothly, this was followed on Feb. 14 by an official opening ceremony, on the Southern side only, and a larger convoy of almost 500 dignitaries. Most spent two nights at Mt. Kumgang, returning on Feb. 16, Kim Jong-il’s 61st birthday.

First Overland Family Reunions

The first ordinary South Koreans to use this route, a week later, were the elderly participants in the sixth round of family reunions since the 2000 summit; the first since last September. For some months Red Cross talks had not gone smoothly, for two reasons: the South raised the sensitive matter of Northern abductions, and the two also disagreed on details of building a permanent reunion center at Mt. Kumgang. Talks in January made some headway on the latter, while postponing the former (officially described as “those unaccounted for during the [Korean] War”) and finalizing a further round of reunions for the following month.

Accordingly, in late February on the now familiar pattern, 100 lucky people from each side met, briefly and this once only, with such kin as the other side had been able to track down. Seoul does better at this, finding 461 relatives to meet the 100 (mostly elite) Northerners; whereas its own 100 candidates, chosen by lottery, met only 191 Northern relatives. As ever, much of this was shown in South Korea as live reality TV: moving or intrusive according to taste. Despite the bumpy unpaved mountain road, the ROK Red Cross was relieved to have this swifter access for medical care if necessary, compared to the former lengthy sea voyage. Hyundai too had high hopes for this land route, which may at last make its Kumgang venture profitable. These were promptly dashed, however, when after just three tour groups had gone in overland, North Korea abruptly closed the road indefinitely for unspecified realignments.

Kaesong Remains the Same

Hyundai’s other hoped-for money-spinner, the Kaesong industrial complex, remains a bare site. The western trans-DMZ corridor, essential for this, has so far seen even less traffic than the eastern route. On Feb. 21 a 37-strong team from Hyundai and its parastatal partner Korea Land Corporation (Koland) tested this route for a brief site survey, returning to Seoul the same day. But a date for groundbreaking has yet to be set. In March, a pro-DPRK paper in Japan reported a reorganization of Kaesong city, which, like its official gazetting as a special zone last year, raises hope that North Korea does mean business. The question is how soon.

Also using this route and raising hope were working talks at Kaesong in mid-March, which agreed to push ahead with laying track for railways in both corridors. But planned inspection trips across the border later in March by Southern technical teams appear not to have gone ahead after North Korea’s cancellation on March 21 of other upcoming meetings. Despite the opening of temporary roads, the railway and road project is already months behind schedule. In the present climate it is hard to be optimistic that progress will be other than fitful.

Was the June 2000 Summit Bought?

The inauguration of cross-border routes was overshadowed, however, by a growing scandal in South Korea which cast doubt even on the supposed achievements of the Sunshine Policy to date – and the role of Hyundai in particular. No sooner had Hyundai group Chairman Chung Mong-hun returned from mid-February’s inaugural run of the land route to Mt. Kumgang, than he confirmed rumors that Hyundai had secretly sent as much as $500 million to North Korea just before the June 2000 North-South summit. Chung insisted this payment had no political overtones, but was to secure monopoly rights for Hyundai in seven fields: railways, telecommunications, airports, electricity, a dam, a reservoir, and tourism. The secrecy, he claimed, was at Pyongyang’s insistence, and also to steal a march on German and Japanese competitors.

Given the invisibility of these seven projects, or of any rush by German or Japanese firms into North Korea, this account was not widely believed. Allegations that illicit payments preceded the summit were first made last September by the opposition Grand National Party (GNP), in the run-up to December’s presidential election. They were stoutly denied, and did not prevent Roh Moo-hyun’s narrow victory. In the new year the matter rumbled on, with probes by the Board of Audit and Inspection (BAI) and state prosecutors. On Jan. 30, the BAI stated that $200 million of a $359 million loan from state-owned Korea Development Bank (KDB) to Hyundai Merchant Marine had gone to North Korea three days before the summit, but said it could not determine the purpose. On Feb. 3, the prosecution dropped its own inquiries on grounds of national interest, prompting an outcry and charges of political pressure on the judiciary.

The plot thickened and pace quickened with claims that the National Intelligence Service had been the bagman, delivering the cash in dollars via Macau. After a long silence – first denial, then claiming the matter was “supra-legal” – finally on Feb. 14 Kim Dae-jung apologized for the fuss, but insisted that these payments – confirmed by Lim Dong-won as $500 million – were Hyundai’s alone. All this posed a dilemma for Roh Moo-hyun, who in his first two days was unable to appoint a Cabinet until the GNP, which controls the National Assembly, passed a bill to empower a special prosecutor to investigate the whole matter. Despite pressure from the MDP old guard to veto this, on March 14 Roh gave his assent. On March 26, a lawyer, Song Doo-hwan, was appointed, reportedly after other candidates had turned down the job.

Without preempting a case still sub judice, even the facts admitted so far cast a shadow over the summit and the Sunshine Policy. While (absurdly) all North-South contact is technically illegal, since the ROK has yet to repeal its National Security Law, nonetheless by now there are established guidelines, which these payments – whosoever they were – clearly breached. The suggestion that Kim Jong-il received financial inducement (to put it no more strongly) for the June 2000 summit bolsters criticisms that this was a stunt and photo opportunity, boosting both leaders and winning one a Nobel prize, rather than a solid sincere political breakthrough.

Sunshine: A Preliminary Verdict

Whatever happened in 2000 – and the coming months should reveal more, perhaps messily for politics in Seoul – the end of Kim Dae-jung’s presidency is an occasion to reflect on his Sunshine Policy overall. History’s verdict may well be kinder than that of his compatriots currently. After decades of Cold War hostility punctuated by brief bursts of dialogue, Kim was the first ROK president to stand foursquare for engagement with the DPRK, and to stick with that stance despite provocations from Pyongyang and criticism at home and (since Bush) abroad – although, the U.S. apart, the world has applauded. The tangible fruit, as we detailed last time, is a far greater intensity of North-South interaction than ever before – with private and business contacts continuing even when the two governments are not talking. If not yet friends, the two Koreas are no longer strangers. That is progress, and that much is irreversible.

Yet criticism is also in order. While one can see the “loss-leader” argument for front-loading benefits to North Korea to build trust, the lack of reciprocity or substantial progress is a warning that Kim Jong-il may be milking Seoul as a cash cow and taking it for a ride. That at least is widely felt in South Korea, where Kim Dae-jung failed to build solid support for his approach. He leaves a society divided, above all by generation. The old remain as suspicious as ever of Northern intentions, while many of the young seem naively pacifist in their view that brother would never threaten brother, and that it is only the U.S. that is stirring tension.

The Challenge for Roh Moo-hyun

Having been elected largely on a surge of such sentiment, South Korea’s new president now faces the harsh realities of office at an anxious moment both locally and globally. It is early days yet, but already Roh Moo-hyun is backtracking, at least on the U.S. front: affirming the necessity of the U.S. troop presence in Korea, and even boldly backing the campaign in Iraq. Yet he also signalled the continuity of the Sunshine Policy – albeit now rebranded as “peace and prosperity” – by keeping on Unification Minister Jeong Se-hyun, the only member of Kim Dae-jung’s Cabinet to retain his post. He further insists, with a frequency that is clearly meant to become a self-fulfilling prophecy, that it is inconceivable for the U.S. to attack North Korea.

Yet Pyongyang is unimpressed (one wonders about Washington, too). Testing a missile on the eve of Roh’s inauguration was hardly an olive branch. The North may judge him as weak, or be unclear where he really stands. In February, just before Roh was installed, his new national security adviser, Ra Jong-yil, met in Beijing with an unnamed senior DPRK leader – on what authority remains unclear. The news was leaked and badly handled. Even more unfortunate was a widely reported remark by the Blue House spokeswoman on March 20 that the ROK had raised its defense alert status. Although promptly denied (such a step was considered, it seems, but not in fact implemented), this gaffe gave Pyongyang a further pretext – on top of Roh’s support for the “cash for peace” probe, the hardy perennial of ongoing U.S.-ROK war games, and assorted other grievances real or imagined – to pull out of two rounds of working-level economic talks set for late March. At the time of writing it was not clear whether the 10^th round of ministerial talks, due in Pyongyang in early April, would be cancelled also.

Hostage to Fortune

Looking ahead, in the short run North-South relations will remain hostage to the nuclear issue and thus to the U.S.-DPRK relationship (or lack of one). How the latter plays out may hinge in turn on the fortunes of war in Iraq: a swift allied victory raising risk in Korea, and vice versa. In other words, despite Roh Moo-hyun’s best intentions, for the time being inter-Korean ties look set to be a dependent variable: subordinate to events beyond Seoul’s control, whose outcome is impossible to predict. It promises to be a bumpy ride, and a steep learning curve.

On March 25, a Northern fishing boat drifted into Southern waters. The ROK Navy, finding the intruder had no navigation equipment, gave it a compass that was gratefully received. Roh Moo-hyun may hope to do the same for Kim Jong-il, but first he must set his own course.