As the second half of 2005 begins, the prospects for inter-Korean relations appear more propitious than they have for at least a year. Not only has Pyongyang ended its wholly unreasonable boycott of most forums of North-South dialogue created after the June 2000 Pyongyang summit, but it has agreed to deepen and extend these in significant ways. If – always a big if – a 12-point joint statement signed in Seoul on June 23 is fully adhered to, then the summer and fall will see a busy calendar of meetings. Besides such familiar fora as ministerial talks (already resumed), the joint economic committee, and family reunions, there are to be military talks – but at remote Mt. Paekdu, of all places – plus new panels on cooperation in farming and fisheries. North Korea has even agreed to discuss the sensitive issue of persons “missing” (i.e., abducted, or POWs retained) from the Korean War.

So after a gray year, the Sunshine Policy, appropriately for summer, is now blazing brightly. Yet shadows persist. On past form, North Korea might not deliver; it may sulk, or take its bat home again. Above all, there is as yet no assurance that the DPRK will return to the Six-Party Talks. Although movement around this issue gives reasonable optimism that a much-delayed fourth round could be held in July or August, nothing is yet certain.

The two matters are patently linked. Continued nuclear defiance must set limits to how far Sunshine can go; though earlier fears of nuclear tests seem to have receded, any nuclear escalation would surely force Seoul to pull back. How to finesse the conditionalities here threatens in any case to be contentious, especially between a South Korea wedded to carrots and a skeptical U.S., which (at least rhetorically) would not rule out the stick.

The torrid growth in Sino-Korean bilateral trade relations has slowed by half to the 20 percent range in the first part of 2005 after expanding by almost 40 percent to $79.3 billion in 2004. Nonetheless, South Korean firms are working with their government to lobby for expanded access to China’s domestic market in key sectors. This quarter, the focus included the Chinese energy, insurance, and automobile sectors, cooperation in nanotechnology research, and facilitation of Korean expanded cultural exports to China. A bevy of South Korean ministers, CEOs, and opinion leaders flocked to Beijing – including separate visits by the prime minister and the Grand National Party (GNP) opposition leader – to meet Chinese counterparts and to lobby for expanded Sino-South Korean economic cooperation.  Presidents Hu Jintao and Roh Moo-hyun met briefly on the sidelines of a ceremony commemorating the end of World War II in Moscow, and Foreign Ministers Ban Ki-moon and Li Zhaoxing also met on the side of an Asia-Europe Meeting (ASEM) in Kyoto for consultations on the North Korean nuclear issue, including a “balanced” rebuke to both the U.S. and DPRK for exchanging vituperative rhetoric instead of face-to-face negotiations.

The Sino-Korean contact that did not take place this quarter was an anticipated call by PRC President Hu Jintao on the Dear Leader in Pyongyang. Despite extensive China-DPRK diplomatic activity in early April, including a visit to Beijing by Kim Jong-il’s trusted advisor Vice Minister Kang Sok-ju, the Chinese made no apparent progress in securing the DPRK’s participation in the Six-Party Talks. (The talks marked the first anniversary of their suspension in June.)  While Washington tried to turn up the heat on Beijing to turn up the heat on Pyongyang, Chinese diplomats blew hot and cold in public comments about when and whether North Korea would return to the talks.  Following a mid-May jolt from The New York Times, which reported that the U.S. intelligence community was debating an imminent North Korean nuclear test, Chinese and South Korean officials downplayed the possibility of a test and treated the reports with skepticism.

From the April anti-Japanese riots through Vice Premier Wu Yi’s snubbing of Koizumi and the June debates over Yasukuni and China policy within the Liberal Democratic Party (LDP) and governing coalition, history demonstrated its power over the Japan-China relationship. The past influenced the present and future as sovereignty issues over the Senkaku islands and East China Sea were caught up in surging nationalisms in both countries. The Japanese prime minister’s visits to the Yasukuni Shrine to pay homage to Japan’s war dead touched almost every aspect of the relationship, including Japan’s official development assistance (ODA) program. Even traditionally robust commercial and economic ties wobbled.  History punctuated the end of the quarter as well, when, at the end of June, three Chinese residents of Guangzhou city were afflicted by poison gas leaking from shells abandoned by the Japanese Imperial Army and Chinese authorities in Dalian confiscated Japanese textbooks intended for use in the local Japanese school for inappropriate references to Taiwan.

The twin issues of North Korea and history continued to dominate Japan-Korea relations in the second quarter of 2005. Unfortunately, little progress toward resolution was made on either issue. In dealing with North Korea, Japan continued to mull sanctions or other measures against the North, although the government did not take any actions toward that end and Prime Minister Koizumi Junichiro publicly disavowed sanctions in early June. In mid-June, South Korean President Roh Moo-hyun and Koizumi met in Korea for a summit that failed to bring any progress on the range of issues between the two countries, from the disputed Tokdo/Takeshima territory to the issue of Yasukuni Shrine visits and how Japan’s middle-school textbooks treat the past. On the economic front, Japan and South Korea continued to deepen their relationship. However, increasing economic interdependence has hardly dampened political disputes between the two countries.

Past, present, and prospect were played out in the second quarter of 2005 when Russian and Chinese leaders commemorated the 60^th anniversary of Russia’s victory (May 9, 1945) in World War II, mended fences in Central Asia in the wake of a surge of “color revolutions” in Ukraine and Kyrgyzstan, and toyed with the idea of a multilateral world order with a Russia-China-Indian trio in Vladivostok. The quarter ended with President Hu Jintao’s state visit to Russia, which aimed to elevate the strategic partnership to a new height. Meanwhile, Russian and Chinese generals were hammering out details of their first-ever joint exercises in eastern China to be held in the third quarter.

The visits of Kuomintang (KMT) chairman Lien Chan and People’s First Party (PFP) Chairman James Soong Chu-yu to China have ameliorated cross-Strait relations. Cross-Strait tensions and the fears of potential conflict so evident throughout 2004 have eased, and the controversy over Beijing’s Anti-Secession Law has faded into the past. The visits illustrated the potential for dialogue if a different government were in office in Taipei, and produced a new verbal formula that could bridge differences over preconditions for talks with a future government. However, the visits have poisoned the atmosphere between Beijing and the administration of Taiwanese President Chen Shui-bian. Despite speculation in Taipei, there is no prospect for political dialogue between the two. Furthermore, domestic politics is complicating the possibility for progress on functional issues such as transportation, agricultural exports, and tourism, which would be beneficial to both sides, particularly Taiwan.

More of the same! That appears to be the Asia policy theme for the Bush administration as it begins its second term. During her maiden voyage through Asia, incoming Secretary of State Condoleezza Rice reinforced the central themes of her predecessor: the centrality of the U.S.-Japan alliance relationship and Washington’s support for a more “normal” Japan; a commitment both to the defense of South Korea and to a peaceful settlement, via the six-party process, of the nuclear standoff with Pyongyang; and a continuation of Washington’s “cooperative, constructive, but candid” relationship with the PRC, including a “one China” policy that objects to unilateral changes in the status quo by either Beijing or Taipei. Underlying all this was Washington’s continued commitment to the promotion and expansion of democracy in Asia and around the globe, a central theme in President George W. Bush’s second inauguration address.

Unfortunately, it was more of the same from Pyongyang as well, as it continued to boycott the Six-Party Talks, insisting that Washington, among other preconditions, abandon its “hostile attitude” toward the DPRK and apologize for branding North Korea as an “outpost of tyranny” during Secretary Rice’s confirmation testimony. China and Taiwan also continued their familiar dance: one step forward (direct flights between Taiwan and the mainland during the Chinese New Year period), two steps back (the PRC’s anti-secession law and the massive protests it drew in Taiwan). Further complicating this issue and adding to already rising tensions between Japan and China were reports – largely erroneous – that Japan was now prepared to actively assist the U.S. in maintaining stability in the Taiwan Strait.

Surprisingly, Secretary Rice made no mention of regional multilateral organizations during her Asia policy address. Nor did Assistant Secretary of State-designate Christopher Hill during his March 15 confirmation hearings, although he did express a desire to “thicken up” multilateral diplomacy in East Asia during his end of quarter “listening and learning” trip to Southeast Asia.

Finally, in the “more of the same” category, the quarter ended the way it began, with Indonesia responding to its second devastating massive earthquake in three months, thankfully this time without the tsunami and staggering death tolls experienced in the aftermath of the Dec. 26 event. The U.S. and global response to this earlier crisis raised international cooperation (and generosity) in humanitarian/disaster relief to new levels and helped to improve the Bush administration’s battered image in this part of the world.

In the first quarter of 2005, the United States and Japan signed a historic declaration that laid a foundation for the future of their bilateral security alliance. The Feb. 19 Security Consultative Committee (SCC) meeting both locked in the impressive progress that has been made in the security dimension of the alliance over the past four years and committed Washington and Tokyo to continuing efforts to modernize their alliance. Yet, as the two governments looked toward a rejuvenated alliance, an increasingly contentious trade spat over beef reminded both countries that bad old habits were ever ready to spoil celebrations over “the best relations ever.”

Both governments will have their hands full. To help reassure Japanese that a new foreign policy team in Washington – or at least the departure of the most prominent Japan hands – does not augur a shift in U.S. priorities, Secretary of State Condoleezza Rice made Japan her first stop in East Asia during a six-country Asian tour. In Tokyo, she wowed the crowd despite sending a tough message on beef and walking a careful line on North Korea policy.

President Bush’s second term opened with an active agenda of bilateral U.S.-China interactions.  Secretary of State Condoleezza Rice traveled to Beijing on a six-nation tour of South and East Asia during which she sought to enlist China’s help in exerting pressure on North Korea to give up its nuclear weapons. China’s National People’s Congress passed an anti-secession law that the Chinese government viewed as reasonable and necessary, but U.S. officials characterized as “unhelpful” and likely to increase cross-Strait tensions.  Urging China to enhance its protection of intellectual property rights (IPR) was the central task of outgoing U.S. Secretary of Commerce Donald Evans’ visit to Beijing. Deputy Under Secretary of Defense Richard Lawless conducted the first ever “special policy dialogue” between the two militaries. Senior U.S. officials voiced concern about China’s military buildup and its proliferation activities, and strongly opposed the lifting of the EU’s 15-year old arms embargo on China.

Shortly after a U.S. official briefed South Korea, Japan, and China on North Korea’s clandestine sales of processed uranium to Libya, North Korea declared in early February that it possessed nuclear weapons and would indefinitely suspend its participation in the Six-Party Talks.  Seeking to keep alive the nuclear negotiations, both the U.S. and South Korea downplayed Pyongyang’s announcement.  But in the following days, media leaks indicated that Vice President Richard Cheney pressed Seoul to turn down North Korea’s request for a large quantity of fertilizer and sought to suspend Seoul’s participation in a joint industrial project at Kaesong, just north of the demilitarized zone.

When South Korea resisted the U.S. request, the Bush administration called for “coordinated approaches” to North Korea, diplomatic code words for Seoul to support the U.S. position.  South Korean President Roh Moo-hyun indirectly responded by emphasizing the equality of South Korea with the U.S. in their alliance relationship.

In late February, North Korea’s leader Kim Jong-il told a high-level Chinese delegation that North Korea would return to the Six-Party Talks when conditions are “mature” and “suitable.”  Kim emphasized once again that the U.S. would have to show “no hostile intent” before it could expect Pyongyang to rejoin the negotiations.

Visiting the region in the latter part of March, U.S. Secretary of State Condoleezza Rice urged North Korea to return to the Six-Party Talks.  In her bilateral meetings, she said the U.S. would pursue unspecified “other options in the international system” if Pyongyang continues to refuse to negotiate.

U.S. and South Korean defense negotiators could not reach agreement this quarter on the amount of Seoul’s contribution to the cost of keeping U.S. troops in Korea.  The two countries remained wide apart in their demands, with South Korea asking for a 50 percent cut in its share and the U.S. requesting a 10 percent increase.

This quarter South Korea became ranked as the 10^th largest economy in the world, based on 2004 gross domestic product.  Despite an ongoing dispute over South Korea’s refusal to import U.S. beef, American and South Korean trade officials conducted two working-level meetings in their early efforts to conclude a bilateral free trade agreement.