Order Code IB98045
Issue Brief for Congress
Received through the CRS Web
Korea: U.S.-Korean Relations —
Issues for Congress
Updated January 23, 2003
Larry A. Niksch
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

---

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
U.S. Interests in South Korea
Recent Issues
Relations with North Korea
Nuclear Weapons
North Korea’s Missile Program
Weapons of Mass Destruction
Conventional Force Reductions and Pullbacks
North Korea’s Inclusion on the U.S. Terrorism List
Food Aid
North Korean Refugees in China
Responding to South Korea’s Sunshine Policy
Roh Moo-hyun’s Election and South Korean Criticism of the U.S. Military Presence

---

IB98045
01-23-03
Korea: U.S.-Korean Relations — Issues for Congress
SUMMARY
North Korea’s decision in December
suggestions of future U.S. economic aid to
2002 to restart nuclear installations at Yongb-
North Korea; (4) terminating the Agreed
yon that were shut down under the U.S.-North
Framework; (5) assembling an international
Korean Agreed Framework of 1994 and its
coalition to pressure North Korea (China,
announced withdrawal from the Nuclear Non-
South Korea, Japan, and Russia); and (6)
Proliferation Treaty creates an acute foreign
disavowing any intention to attack North
policy problem for the United States. North
Korea militarily but warning of future eco-
Korea’s major motive appears to be to escalate
nomic sanctions. However, the Administra-
pressure on the Bush Administration to nego-
tion’s reliance on other governments to press-
tiate a nuclear agreement that would provide
ure North Korea ran into difficulties when
new U.S. political and economic benefits to
these governments (except Japan) began
North Korea, starting with Pyongyang’s pro-
criticism of Bush Administration policy,
posed non-aggression pact. However, restart-
especially over its refusal to negotiate and
ing the Yongbyon facilities opens up a possi-
threat of economic sanctions.
ble North Korean intent to stage a “nuclear
breakout” of its nuclear program and openly
This criticism came from South Korea
produce nuclear weapons within six months.
and reflected both disagreement over policy
North Korea’s actions follow the disclosure in
toward North Korea but also mounting South
October 2002 that North Korea is operating a
Korean public discontent over the 37,000 U.S.
secret nuclear program based on uranium
troops in South Korea. Declining South
enrichment and the decision by the Korean
Korean fear of a North Korean invasion has
Peninsula Energy Development Organization
resulted in questioning of the U.S. military
(KEDO) in November 2002 to suspend ship-
presence and calls for U.S. withdrawal. Incid-
ments of heavy oil to North Korea–a key U.S.
ents involving U.S. troops and South Korean
obligation under the Agreed Framework.
civilians led to mass demonstrations in late
2002 in response to the killing of two South
The main elements of Bush Administrat-
Korean schoolgirls by a U.S. military vehicle
ion are (1) give priority to Iraq by keeping the
in June 2002. This also contributed to the
North Korea issue from becoming a full-
election of Roh Moo-hyun as President in
blown crisis; (2) no negotiations with North
December 2002. His campaign stressed
Korea until Pyongyang satisfies U.S. concerns
criticism of the United States. Since the
over its nuclear weapons program; (3) an offer
election, Roh has stated that he favors the
of dialogue to specify to North Korea the steps
alliance but envisages future changes in the
it must take to end its nuclear program with
U.S. military presence.
Congressional Research Service ˜ The Library of Congress

---

IB98045
01-23-03
MOST RECENT DEVELOPMENTS
In mid-January 2003, the Bush Administration attempted to develop a new strategy
toward North Korea after North Korea withdrew from the Nuclear Non-Proliferation Treaty,
reopened nuclear installations shut down under the 1994 U.S.-North Korean Agreed
Framework, expelled monitors from the International Atomic Energy Agency (IAEA), and
demanded new negotiations with United States; and after South Korea, China, and Russia
increased criticism of U.S. policy, especially the Administration’s refusal to negotiate with
North Korea and its threat of economic sanctions. The Administration offered a dialogue
with North Korea that would discuss the steps that North Korea would take to bring its
nuclear program back into compliance with agreements it had broken. President Bush
suggested that the United States might offer North Korea food and energy aid after North
Korea ended its nuclear program. Administration officials backed away from warnings of
economic sanctions, and President Bush stated repeatedly that the United States would not
attack North Korea. South Korea’s criticism of the Administration came in the wake of the
election of Roh Moo-hyun as President on December 19, 2002. Roh criticized the United
States during the campaign and apparently was bolstered by mounting South Korean public
discontent over the 37,000 U.S. troops in South Korea.
BACKGROUND AND ANALYSIS
U.S. Interests in South Korea
U.S. interests in the Republic of Korea (R.O.K. — South Korea) involve a wide range
of security, economic, and political concerns. The United States fought the Korean War
from 1950 to 1953, suffering over 33,000 killed and over 101,000 wounded. The United
States agreed to defend South Korea from external aggression in the 1954 Mutual Defense
Treaty. The United States maintains about 37,000 troops there to supplement the
650,000-strong South Korean armed forces. This force is intended to deter North Korea’s
(the Democratic People’s Republic of Korea — D.P.R.K.) 1.2 million-man army, which is
deployed in forward positions near the Demilitarized Zone (DMZ) dividing North and South
Korea. Since 1991, attention has focused on the implications of North Korea’s drive to
develop nuclear weapons (see CRS Issue Brief IB91141, North Korea’s Nuclear Weapons
Program) and long range missiles, and severe food shortages in North Korea.
U.S. economic assistance to South Korea, from 1945 to 2002, totaled over 6 billion;
most economic aid ended in the mid-1970s as South Korea’s reached higher levels of
economic development. U.S. military aid, 1945-2002, totaled over $8.8 billion. The acute
financial crisis in late 1997 saw Seoul receive a $57 billion bailout from the International
Monetary Fund (IMF). The United States is South Korea’s second largest trading partner
(replaced as number one by China in 2002) and largest export market. South Korea is the
seventh largest U.S. trading partner. The United States has long viewed South Korean
political stability as crucial to the nation’s economic development, to maintaining the
security balance on the peninsula, and to preserving peace in northeast Asia. However, U.S.
officials over the years have pressed the South Korean administration with varying degrees
CRS-1

---

IB98045
01-23-03
of intensity to gradually liberalize its political process, broaden the popular base of its
government, and release political prisoners. In recent years, South Korea has become more
democratic, but democracy has spawned more open criticism of the United States
Recent Issues
Relations with North Korea
As part of a policy review toward North Korea, President Bush issued a statement on
June 6, 2001, outlining policy objectives related to implementation of the U.S.-North Korean
1994 Agreed Framework on North Korea’s nuclear program, North Korea’s missile program,
and its conventional forces. He stated that if North Korea took positive actions in response
to the U.S. approach, the United States “will expand our efforts to help the North Korean
people, ease sanctions, and take other political steps.” President Bush’s designation of North
Korea as part of an “axis of evil” in his January 29, 2002 State of the Union address clarified
the Administration’s policy that had emerged after the June 6 statement. The policy is aimed
at reducing and/or eliminating basic elements of North Korean military power, including
weapons of mass destruction (WMDs), nuclear weapons and/or nuclear weapons-grade
materials, missiles, and conventional artillery and rocket launchers positioned on the
demilitarized zone (DMZ) within range of the South Korean capital, Seoul. The
Administration’s emphasis on WMDs mounted after the Central Intelligence Agency gained
documentary evidence in Afghanistan that al Qaeda seeks WMDs and plans new attacks on
the United States. This reportedly influenced the Bush Administration to broaden the
definition of the war against terrorism to include states like North Korea that potentially
could supply WMDs to al Qaeda.
Until December 2002, the Administration’s strategy was to employ public accusations
and warnings to pressure North Korea to make policy changes regarding its military assets
in line with U.S. objectives. Since July 2001, the Bush Administration has warned that it
will suspend construction of the two light water nuclear reactors in North Korea (a provision
of the 1994 U.S.-North Korean nuclear Agreed Framework) unless North Korea soon comes
into compliance with its obligations to the International Atomic Energy Agency to allow full-
scope inspections of nuclear facilities, including the secret uranium enrichment program
North Korea admitted to in October 2002. The Bush Administration made a number of
statements calling on North Korea to pull back artillery and rocket launchers from the DMZ.
Beginning with statements in November 2001 and dramatically in the State of the Union
address and in subsequent pronouncements, the Bush Administration set a demand that North
Korea stop the export of missiles and weapons of mass destruction to the Middle East and
South Asia, eliminate these weapons from its arsenal, and allow verification of such steps.
President Bush’s repeated declarations since the State of the Union that he would not stand
by while this threat mounts constituted a broader warning to North Korea alongside the
explicit warning of shutting down the light water reactors.
Administration officials said that they want a comprehensive negotiation with North
Korea on all these issues. However, Administration officials reportedly disclosed that there
was substantial opposition within the Administration to any negotiations with North Korea.
Except for vague references to political and economic benefits, the Administration gave no
CRS-2

---

IB98045
01-23-03
indication that it would offer North Korea reciprocal measures, including reciprocal military
measures, for North Korean agreement and steps to reduce its military power in these areas.
Public statements by the Administration continually call for North Korea to take actions
unilaterally. During his visit to South Korea in February 2002, President Bush issued a
general offer to “welcome North Korea into the family of nations, and all the benefits, which
would be trade, commerce and exchanges.” Bush Administration officials reportedly have
indicated in private remarks that the Administration believes that it does not have to offer
strict reciprocal measures or compensation for North Korean concessions.
In June 2002, Administration officials placed food aid to North Korea on the agenda
for U.S.-North Korean negotiations. Previously, negotiations with the North Korean
government were carried out by the United Nations World Food Program. The U.S. officials
announced new food aid of 100,000 tons of grain but asserted that future food aid would
depend on North Korea agreeing to three conditions: access of food aid donors to provinces
(mainly in the north and northeast) which the North Korean government has barred aid
donors from entering; a larger monitoring capability for the donors; and allowing donors to
conduct a nation-wide nutritional survey. U.S. officials reaffirmed the policy in December
2002 and January 2003.
Nuclear Weapons. U.S. policy since 1994 has been based largely on the U.S.-North
Korean Agreed Framework of October 1994. The Agreed Framework dealt primarily with
nuclear facilities that North Korea was developing at a site called Yongbyon. Existing
facilities included a five megawatt nuclear reactor and a plutonium reprocessing plant. Two
larger reactors were under construction. U.S. intelligence estimates concluded that these
facilities could give North Korea the capability to produce over 30 atomic weapons annually.
North Korea had concluded a safeguards agreement with the International Atomic Energy
Agency (IAEA) in 1992, which requires North Korea to report all nuclear programs to the
IAEA and gives the IAEA the right to conduct a range of inspections of North Korea’s
nuclear installations. However, North Korea obstructed or refused IAEA inspections in
1993-94, including refusal to allow an IAEA special inspection of a underground facility,
which the IAEA believed was a nuclear waste site. Secretary of Defense Rumsfeld estimated
that North Korea has from two to five warheads in a statement of August 2001 in Moscow.
The U.S. National Intelligence Council published an estimate in December 2001 “that North
Korea has produced one, possibly two, nuclear weapons.”
The Agreed Framework provided for the suspension of operations and construction of
North Korea’s “graphite-moderated reactors and related facilities” and the storage of 8,000
nuclear fuel rods that North Korea had removed from the five megawatt reactor in May 1994.
It provided to North Korea 500,000 tons of heavy oil annually until two light water nuclear
reactors (LWRs) are constructed in North Korea. The United States is obligated to facilitate
the heavy oil shipments and organize the construction of the light LWRs. The IAEA
monitored the freeze of the designated facilities and activities. The Agreed Framework
states that before North Korea receives nuclear materials for the LWRs, it is obligated to
come into full compliance with its obligations as a signatory to the Nuclear Non-Proliferation
Treaty with regard to its past nuclear activities. Clinton Administration officials testified that
this clause will obligate North Korea to allow IAEA inspection of the suspected waste site
and the stored fuel rods. They also testified that any additional North Korean nuclear
programs, including any secret programs, are covered by the 1992 safeguards agreement and
are subject immediately to IAEA safeguards, including inspections.
CRS-3

---

IB98045
01-23-03
The Korean Peninsula Energy Development Organization (KEDO) was created to
implement provisions of the Agreed Framework related to heavy oil shipments and
construction of the light water reactors. Lead members are the United States, Japan, South
Korea, and the European Union. The Agreed Framework set a target date of 2003 for
completion of the first of the light water reactors. There have been delays in the project,
caused by North Korean obstructionist tactics, by legal and bureaucratic obstacles, and by
an apparent Clinton Administration policy of not hurrying implementation. KEDO officials
now project the completion of the first light water reactor in 2008. From October 1995
through November 2002, North Korea has received the annual shipments of 500,000 tons
of heavy oil. The cost to the United States of the heavy oil and financial support of KEDO
from FY1995 through FY2002 is $378 million Congressional appropriations for the heavy
oil and KEDO have risen from $30 million in FY1996 to $95 million in FY2002.
North Korea’s admission of a secret uranium enrichment program in October 2002
confirmed U.S. intelligence information that had built up since 1998 concerning such a
program. North Korea used the admission to warn that it possessed “big powerful weapons,”
and it demanded a negotiation with the United States to include a non-aggression pact, an
end to U.S. “stifling” of North Korea’s economy, and recognition of North Korea’s
“sovereignty.” Some experts believe that the proposals of a non-aggression pact and an end
to U.S. economic “stifling” are “smokescreens” for long-standing North Korean demands
for a U.S.-North Korean bilateral peace treaty that would include U.S. troop withdrawal from
South Korea and removal of North Korea from the U.S. list of terrorist states. However,
reports in January 2003 held that U.S. and South Korean officials were exploring formulas
under which the United States could offer North Korea a security guarantee as part of a
nuclear settlement.
North Korea’s major motive appears to be to escalate pressure on the Bush
Administration to negotiate a new nuclear agreement that would provide new U.S. security,
political, and economic benefits to North Korea. Pyongyang long has emphasized
intimidation tactics in its diplomacy; since October 2002 it has threatened to end a
moratorium (since September 1999) on testing of long-range missiles and stepped-up
proliferation of weapons to other countries. However, re-starting the Yongbyon installations
opens up a possible North Korean intent or option to stage a “breakout” of its nuclear
program in 2003 by openly producing nuclear weapons. The most dangerous North Korean
move would be to move 8,000 stored fuel rods at Yongbyon into the plutonium reprocessing
plant for the production of nuclear weapons-grade plutonium . According to estimates by
nuclear experts and reportedly by U.S. intelligence agencies, if North Korea began to
reprocess fuel rods, it would take about four months to produce weapons grade plutonium
and another one or two months to produce four to six atomic bombs.
The Bush Administration’s policy response to the secret program and the re-starting
of the Yongbyon facilities consists of:
(1) Continuing priority to Iraq. President Bush reportedly says that he does not want
two simultaneous crises. U.S. officials say they will rely on diplomacy and expect diplomacy
to run well into 2003.
(2) Progressive suspension of the Agreed Framework. Administration officials have
stated that the Agreed Framework will be terminated. Statements indicate a debate within
CRS-4

---

IB98045
01-23-03
the Administration over the timing of ending it. The Administration secured KEDO’s
decision to suspend heavy oil shipments to North Korea beginning in December 2002 despite
reluctance by Japan and South Korea to move as quickly. North Korea cited this as
justification for re-starting the Yongbyon nuclear facilities. The next decision for KEDO will
be whether to continue or suspend construction of the two light water nuclear reactors
promised to North Korea in the Agreed Framework.
(3) Ambivalence toward negotiations with North Korea. Until January 7, 2003, the
Administration rejected negotiation of any new agreement with North Korea over the secret
program, insisting that North Korea first abide by its past nuclear agreements, especially
placing the secret program under IAEA safeguards and dismantling it under IAEA
supervision. Administration officials argued that negotiation of a new agreement would
reward North Korea for its violation of its previous nuclear agreements. On January 7, the
Administration proposed a dialogue with North Korea that would not be the negotiation of
a new agreement. In a communique of January 7, 2003, with Japan and South Korea, the
proposal stated that “the United States is willing to talk to North Korea about how it will
meet its obligations to the international community” but that “the United States will not
provide quid pro quos to North Korea to live up to its existing obligations.” President Bush
said that the United States might consider agricultural and energy aid to North Korea after
North Korea satisfied the U.S. concerns over its nuclear and military policies. Secretary of
State Powell referred to a “new arrangement” with North Korea to replace the Agreed
Framework.
(4) Forming an international coalition to pressure North Korea to end the secret
program. President Bush, Japan’s Prime Minister Koizumi, and South Korea’s President
Kim Dae-jung issued a statement at the APEC summit on October 26, 2002, that North
Korea should “dismantle this program in a prompt and verifiable manner and to come into
full compliance with all its international [nuclear] commitments.” The Administration has
agreed to continued Japanese and South Korean talks with North Korea but has urged Japan
not to commit any of the economic aid (an estimated $10 billion) that Prime Minister
Koizumi promised to North Korea in the Japan-North Korean agreement to begin talks to
normalize relations on September 17, 2002. Japanese officials have stated repeatedly that
Japan will not commit any aid until North Korea satisfied U.S. and Japanese concerns over
its military policies. The Administration has asked for Chinese cooperation and reportedly
requested that China warn North Korea against re-opening the nuclear facilities frozen under
the Agreed Framework. China has a mutual defense treaty with North Korea and supplies
North Korea with large quantities of oil and food. The Administration’s response to the re-
starting of the Yongbyon installations was to place additional weight on generating
international pressure on North Korea. However, with each new North Korean provocative
act, South Korea, Russia, and China increased criticism of the Bush Administration for not
negotiating with North Korea, and they criticized the idea of economic sanctions against
North Korea. This resulted in the Administration’s shifts on negotiations.
(5) Stating that the Administration does not intend to attack North Korea militarily but
warn of the prospect of economic sanctions if North Korea does not end the secret program.
Administration officials indicate that the Administration would not consider sanctions until
the Iraq issue is settled. References to economic sanctions have produced an open dispute
with South Korea; President Kim Dae-jung stated that he is unalterably opposed to economic
sanctions. He said in a speech of October 30, 2002, that sanctions “would likely lead to a
CRS-5

---

IB98045
01-23-03
repeat of the nuclear crisis in the early 1990s.” This, coupled with Chinese and Russian
criticism of Administration statements on economic sanctions, led the Administration by
mid-January 2003 to de-emphasize talk of economic sanctions. Only Japan reportedly is
considering economic sanctions.
North Korea’s Missile Program. On August 31, 1998, North Korea test fired a
three stage missile, dubbed the Taepo Dong-1 by the U.S. Government. The missile flew
over Japanese territory out into the Northwest Pacific. Parts of the missile landed in waters
close to Alaska. U.S. intelligence agencies responded with a conclusion that North Korea
was close to developing a Taepo Dong-1 missile that would have the range to reach Alaska,
the U.S. territory of Guam, the U.S. Commonwealth of the Northern Marianas, and the
Japanese island of Okinawa, home to thousands of U.S. military personnel and their
dependents. Reports since 2000 cite U.S. intelligence findings that North Korea is
developing a Taepo Dong-2 intercontinental missile that would be capable of striking
Alaska, Hawaii, and the U.S. west coast with nuclear weapons. U.S. and Japanese
intelligence agencies reportedly estimated in 2001 that North Korea had deployed up to 100
medium-range Nodong missiles. First tested in 1993, the Nodong missile has an estimated
range of 600-900 miles. The upper range would cover all of Japan including Okinawa.
Throughout the 1990s, North Korea exported short-range Scud missiles and Scud
missile technology to a number of countries in the Middle East. After 1995, it exported
Nodong missiles and Nodong technology to Iran, Pakistan, and Libya. In 1998, Iran and
Pakistan successfully tested medium range missiles modeled on the Nodong. North Korea
reportedly shipped 50 complete Nodong missiles to Libya in 1999.
The test launch of the Taepo Dong-1 missile spurred the Clinton Administration to
intensify diplomacy on North Korea’s missile program. The Administration’s 1999 Perry
initiative set the goal of “verifiable cessation of testing, production and deployment of
missiles exceeding the parameters of the Missile Technology Control Regime, and the
complete cessation of export sales of such missiles and the equipment and technology
associated with them.” Dr. Perry seemed to envisage the negotiation of a series of
agreements on the individual components of the North Korean missile program; each
agreement would build progressively toward termination of the entire program. The Perry
initiative offered North Korea steps to normalize U.S.-North Korean relations, an end to U.S.
economic sanctions, and other economic benefits in return for positive North Korean actions
on the missile and nuclear issues. This produced in September 1999 a qualified North
Korean promise not to conduct further long-range missile tests, which North Korea repeated
in June 2000. The Clinton Administration responded by announcing in September 1999 a
lifting of a significant number of U.S. economic sanctions against North Korea. It published
the implementing regulation for the lifting of these sanctions on June 19, 2000.
No further agreements on missiles were concluded by the end of the Clinton
Administration. Secretary of State Albright visited Pyongyang in October 2000, and missile
talks intensified. Unlike Perry’s view of a series of agreements, the Clinton Administration
proposed a comprehensive deal covering all aspects of the issue. North Korea offered to
prohibit exports of medium and long-range missiles and related technologies in exchange for
“in-kind assistance.” (North Korea previously had demanded $1 billion annually.) It also
offered to ban permanently missile tests and production above a certain range in exchange
for “in kind assistance” and assistance in launching commercial satellites. Pyongyang also
CRS-6

---

IB98045
01-23-03
offered to cease the deployment of Nodong and Taepo Dong missiles. It proposed that
President Clinton visit North Korea to conclude an agreement. The negotiations reportedly
stalled over four issues: North Korea’s refusal to include short-range Scud missiles in the
commitment to cease the development and deployment of missiles; North Korea’s non-
response to the U.S. position that it would have to agree to dismantle the already deployed
Nodong missiles; the details of U.S. verification of a missile agreement; and the nature and
size of a U.S. financial compensation package. North Korean leader Kim Jong-il agreed to
extend the moratorium indefinitely in his meeting with Japanese Prime Minister Koizumi on
September 17, 2002. In response to Japanese and U.S. pressure regarding its secret uranium
enrichment program, North Korea has warned that it would end the moratorium.
President Bush’s June 6, 2001 statement set a goal of “verifiable constraints on North
Korea’s missile programs and a ban on its missile exports.” Administration officials have
emphasized the necessity of a strong verification mechanism in any missile accord. After
the January 2002 State of the Union speech, the Administration repeatedly described North
Korea as a dangerous proliferator of missiles, and they demanded that North Korea cease
exporting missiles and missile technology. However, the Administration has offered no
specific negotiating proposal on missiles.
Weapons of Mass Destruction. The Bush Administration’s emphasis on North
Korea’s weapons of mass destruction (WMDs) resulted from the September 11 terrorist
attack. A Pentagon report on the North Korean military, released in September 2000, stated
that North Korea had developed up to 5,000 metric tons of chemical munitions and had the
capability to produce biological weapons, including anthrax, smallpox, the bubonic plague,
and cholera. The Bush Administration expresses a fear that North Korea might sell nuclear,
chemical, or biological weapons to a terrorist group like al Qaeda or that al Qaeda might
acquire these weapons from a Middle East country that had purchased them from North
Korea. In November 2001, President Bush included North Korea’s WMDs as part of the
“war against terrorism” when he stated: “We want to know. Are they developing weapons
of mass destruction? And they ought to stop proliferating. So part of the war on terror is to
deny terrorist weapons.” In the State of the Union on January 29, 2002, he described North
Korea as “a regime arming with missiles and weapons of mass destruction.” Upon departing
for his trip to East Asia, President Bush stated on February 16, 2002, that “America will not
allow North Korea and other dangerous regimes to threaten freedom with weapons of mass
destruction.” The Bush Administration has not accused North Korea of providing terrorist
groups with WMDs. When asked about this in a joint press conference with South Korea’s
Defense Minister on November 15, 2001, Secretary of Defense Donald Rumsfeld answered
“we do not have anything specific.” There are reports from the early 1990s that North Korea
exported nuclear technology to Iran and that North Korea assisted Syria and Iran to develop
chemical and biological weapons capabilities.
Conventional Force Reductions and Pullbacks. Before and after taking office,
Bush officials stated that the Administration would give conventional force issues priority
in diplomacy toward North Korea. These officials stressed the objective of securing a
withdrawal of North Korean artillery and multiple rocket launchers from the positions just
north of the demilitarized zone (DMZ), where they threaten Seoul, located just 25 miles
south of the DMZ. The Bush June 6, 2001 statement set the goal of “a less threatening
[North Korean] conventional military posture.” Advocates of such an initiative argue that
North Korea might be more interested in a negotiation because of the progressive weakening
CRS-7

---

IB98045
01-23-03
of its conventional forces in the 1990s. They point out that monitoring of a pullback of
North Korean artillery and multiple rocket launchers from the DMZ would be easier to
monitor than any agreements on nuclear or missile issues. They believe that easing the
central military confrontation on the DMZ is the key to resolving other military issues,
including weapons of mass destruction.
Bush Administration statements hold that North Korea should withdraw unilaterally its
artillery and rocket launchers from the DMZ in order to facilitate negotiations with the
United States. According to the Washington Post, February 2, 2002, Secretary of State Colin
Powell said that North Korea should remove its artillery from the DMZ as a good will
gesture. President Bush stated on February 16, 2002, that North Korea would “be told
directly by us during conversations. . .Move your arms back” from the DMZ. This stated
goal of near-term North Korean force pullbacks contrasts sharply with a U.S.-South Korean
study announced on February 27, 2002, on conventional force reductions. The study
concentrated on confidence-building measures with North Korea (military exchanges of
personnel and information) as a short- to medium-range goal. The study postulates actual
force reductions as a distant objective. Some observers believe that this joint study suggests
that the Bush Administration has de-emphasized seeking conventional forces reductions and
pullbacks in favor of more modest confidence-building proposals, which date back to the
1980s. They attribute this to South Korean opposition to negotiations on conventional
forces, possible opposition from elements of the U.S. military, and the Bush Administration’s
reluctance to offer North Korea reciprocal military measures involving U.S. forces.
North Korea’s response to Bush Administration statements have denounced the
Administration for proposing unilateral North Korean withdrawals from the DMZ. However,
North Korean statements also have pointed out that Pyongyang in the past has proposed
conventional force negotiations and pullbacks (these past proposals have included the total
withdrawal of U.S. forces from South Korea). Japanese press reports in September 2002
asserted that North Korea had told Russian officials that it wanted to reduce its conventional
forces and negotiate force pullbacks with the United States. Some experts believe that the
Bush Administration will have to include mutuality and military reciprocity in any proposal
for conventional force negotiations. They argue that the United States and South Korea will
have to offer North Korea a pullback of some U.S. and R.O.K. forces from the DMZ in order
to obtain North agreement to pull back artillery, rocket launchers, and other forces.
North Korea’s Inclusion on the U.S. Terrorism List. Beginning in February
2000, North Korea began to demand that the United States remove it from the U.S. list of
terrorist countries. It made this a pre-condition for the visit of a high level North Korean
official to Washington. Although it later dropped this pre-condition, it continued to demand
removal from the terrorist list. In response to the terrorist attack of September 11, 2001,
North Korea issued statements opposing terrorism and signed two United Nations
conventions against terrorism. North Korea’s proposal related to the current nuclear situation
that the United States end its “stifling” of North Korea’s economy is believed by several
Korean experts to be a subterfuge for the demand for removal from the terrorist list.
South Korea also urged the United States to remove North Korea from the terrorism list
in order to open the way for North Korea to receive financial aid from the World Bank and
the International Monetary Fund (IMF). U.S. law P.L. 95-118, the International Financial
Institutions Act, requires the United States to oppose any proposals in the IMF and World
CRS-8

---

IB98045
01-23-03
Bank to extend loans or other financial assistance to countries on the terrorism list. The Kim
Dae-jung Administration advised the Clinton Administration in July 2000 to drop from
consideration past North Korean terrorist acts against South Korea. The Kim Dae-jung
Administration advocated North Korean admission to the World Bank and the IMF.
Japan urged the Clinton and Bush administrations to keep North Korea on the terrorism
list until North Korea resolved Japan’s concerns. Japan’s concerns are North Korea’s
sanctuary to members of the terrorist Japanese Red Army organization and evidence that
North Korea kidnapped and is holding at least ten Japanese citizens. The Clinton
Administration gave Japan’s concern increased priority in U.S. diplomacy in 2000. Secretary
Albright raised the issue of kidnapped Japanese when she met with Kim Jong-il in
Pyongyang in October 2000. A high ranking State Department official met with family
members of kidnapped Japanese in February 2001 and reportedly assured them that the Bush
Administration would not remove North Korea from the terrorism list. (See CRS Report
RL30613, North Korea: Terrorism List Removal?) Kim Jong-il’s admission of kidnapping
Japanese during the Kim-Koizumi summit of September 2002 did not resolve the issue. His
claim that 8 of the 13 admitted kidnapped victims are dead and his ambivalence regarding
the return to Japan of the five living Japanese raised new issues for the Japanese government,
including information about the deaths of the kidnapped victims, North Korean
compensation to the families of the victims, and the possibility that more Japanese were
kidnapped. The five living kidnapped Japanese returned to Japan in October 2002 for a visit.
However, the Japanese government did not allow them to return to North Korea, and their
family members remain in North Korea.
Food Aid. Agriculture production in North Korea began to decline in the mid-1980s.
Severe food shortages appeared in 1990-1991. In September 1995, North Korea appealed
for international food assistance. From 1996 through 2001, the United States contributed
about 1.8 million tons of food aid to North Korea through the United Nations World Food
Program. The Clinton Administration used food aid to secure North Korean agreement to
certain types of negotiations and North Korean agreement to allow a U.S. inspection of the
suspected nuclear site at Kumchangri. Critics have asserted that the use of food aid in this
way negates consideration of two other issues: the weaknesses in monitoring food aid
distribution in North Korea and the absence of North Korean economic reforms, especially
agricultural reforms. The Bush Administration made commitments of 305,000 tons from
May 2001 to June 2002. On June 8, 2002, the Administration stated that future U.S. food
aid would depend on North Korea’s willingness to allow access of food donors to all areas
of the country, a nationwide nutritional survey, and an improved monitoring system. In
December 2002 and January 2003, U.S. officials reiterated the conditions.
The U.N. World Food Program requested donations of 611,000 tons of food for North
Korea in 2002, but it received only 430,000 tons. It acknowledges that the North Korea
places restrictions on its monitors’ access to the food distribution system, but it believes that
most of its food aid reaches needy people. Several private aid groups, however, withdrew
from North Korea because of such restrictions and suspicions that the North Korean regime
was diverting food aid to the military or the communist elite living mainly in the capital of
Pyongyang. It is generally agreed that the regime gives priority to these two groups in its
overall food distribution policy. Some experts also believe that North Korean officials
divert some food aid for sale on the extensive black market. The regime, too, refuses to
adopt agricultural reforms similar to those of fellow communist countries, China and
CRS-9

---

IB98045
01-23-03
Vietnam, including dismantling of Stalinist collective farms. While such reforms resulted
in big increases in food production in China and Vietnam, North Korea continues to
experience sizeable food shortages year after year with no end in sight. It is estimated that
one to three million North Koreans died of malnutrition between 1995 and 2002.
The conditions set on future food aid by the Bush Administration in June 2002, cited
above, appears to result from two factors. One is the influence of Andrew Natsios, the
Director of the U.S. Agency for International Development, who was intimately involved in
food aid programs to North Korea in the 1990s. His 2002 book, The Great North Korean
Famine, highlights a view that the North Korean government employed duplicity and
manipulation of food aid donors.
North Korean Refugees in China. This issue confronted governments after March
2002 when North Korean refugees sought asylum in foreign diplomatic missions in China
and the Chinese government sought to prevent access to the missions and forcibly removed
refugees from the Japanese and South Korean embassies. The refugee exodus from North
Korea into China’s Manchuria region began in the mid-1990s as the result of the dire food
situation in North Korea’s provinces in the far north and northeast along the Chinese border.
The North Korean government reportedly suspended the state food rationing system in these
provinces beginning about 1993 and never allowed international food aid donors into them
Estimates of the number of refugees cover a huge range, from 10,000 to 300,000.
China followed conflicting policies reflecting conflicting interests. Generally, China
tacitly accepted the refugees so long as their presence was underground and/or not highly
visible. China also allowed foreign private non-government groups (NGOs), including South
Korean NGOs, to provide aid to the refugees, again so long as their activities were not highly
visible. China barred any official international aid presence, including any role for the
United Nations High Commission for Refugees. It also interrupted its general policy of tacit
acceptance with periodic crackdowns that included police sweeps of refugee populated areas,
rounding up of refugees, and returning them to North Korea.
North Korea remains as China’s last ally, and China supports the North Korean regime
and trying to prevent any scenario that would lead to a collapse of the Pyongyang regime.
Chinese officials fear that too much visibility of the refugees and especially any U.N.
presence could spark an escalation of the refugee outflow and lead to a North Korean regime
crisis and possible collapse. China’s crackdowns are sometimes a reaction to increased
visibility of the refugee issue. China’s interests in buttressing North Korea also has made
China susceptible to North Korean pressure to crack down on the refugees and return them.
Reports in January 2003 described stepped-up security on both sides of the China-North
Korea border to stop the movement of refugees. The Chinese government also appears
reluctant to establish the precedent of allowing any United Nations presence on its soil.
In 2002 several South Korean and European NGOs assisted a small number of refugees
to travel to Chinese cities where there are foreign diplomatic missions and seek asylum from
foreign governments and repatriation to South Korea. China’s attempts to prevent this added
to the world-wide publicity, and China eventually allowed all of these refugees to emigrate
to South Korea. China, however, reportedly instituted another crackdown in Manchuria
against both the refugee population and the foreign NGOs. Chinese security authorities
reportedly tortured captured refugees to gain information on the NGOs that assisted them.
CRS-10

---

IB98045
01-23-03
South Korea, which previously had turned refugees away from its diplomatic missions,
changed its policy in response to the new situation. It accepted refugees seeking entrance
into its missions and allowed them entrance into South Korea, and it negotiated with China
over how to deal with these refugees.
The Bush Administration gave the refugee issue low priority. President Bush did not
raise the issue with Chinese leaders when he visited China in February 2002. The
Administration has asserted that South Korea should have the lead diplomatically in dealing
with China. Congress has been more active on the issue. The issue has been aired in
hearings. In June 2002, the House of Representatives passed H.Con.Res. 213, which calls
on China to halt forced returns of refugees to North Korea and give the U.N. High
Commission on Refugees access to the North Korean refugees.
Responding to South Korea’s Sunshine Policy. U.S. responses to President
Kim Dae-jung’s “sunshine policy” has been an issue since South Korea achieved a
breakthrough in relations with North Korea with the meeting of Kim Dae-jung and North
Korean leader Kim Jong-il in Pyongyang, June 13-14, 2000. Their joint declaration said
North Korea and South Korea would work for economic cooperation, cultural and sports
exchanges, and meetings of divided Korean families. The summit apparently was in part the
result of Kim Dae-jung’s speech in Berlin in March 2000. He offered to provide large scale
economic aid to rebuild North Korea’s infrastructure. Following the summit, Seoul and
Pyongyang negotiated agreements on the restoration of a railway and road across the DMZ,
investment guarantees and tax measures to stimulate South Korean private investments in
North Korea, provision of 600,000 tons of South Korean food aid to North Korea, and flood
control projects for the Imjim River. A meeting of defense ministers occurred but with little
result. President Kim called on the United States to support his sunshine policy by
normalizing diplomatic relations with North Korea, negotiating a missile agreement with
Pyongyang, and removing North Korea from the U.S. terrorist list. However, the sunshine
policy stagnated after December 2000. North Korea demanded that South Korea supply it
with two million kilowatts of electricity and rejected a South Korean reply proposing a
survey of North Korea’s electrical grid. North Korea broke off talks in March 2001 and
suspended implementation of the 2000 economic and family reunion agreements.
The Bush Administration periodically issues a general statement that it supports the
sunshine policy. However, the U.S. response to the component parts of the sunshine policy
indicates a mixed reaction. The Bush administration supported South Korea’s proposals to
build a railroad and road across the demilitarized zone and assist North Korea in flood
control of the Imjim River. It also supported North-South agreements to reunite divided
Korean families and for investment guarantees for R.O.K. firms investing in North Korea.
However, the Bush Administration appears to have reservations over other components
of the sunshine policy. As stated previously, the Bush and Kim administrations appear to
disagree over North Korea’s inclusion on the U.S. terrorism list. The U.S. military command
in Korea and the Central Intelligence Agency reportedly believe that North Korea has gained
greater financial flexibility to make military purchases because of the nearly $400 million
it has received from the Hyundai Corporation during 1999-2001 for the right to operate a
tourist project at Mount Kumgang in North Korea. According to informed sources, Hyundai
made additional secret payments to North Korea. Hyundai denies making secret payments,
but new accusations of secret payments and government subsidies to Hyundai for these
CRS-11

---

IB98045
01-23-03
payments arose and were debated in South Korea in late 2002. According to the South
Korean newspaper, Choson Ilbo, February 25, 2001, U.S. officials voiced this concern to
South Korean intelligence chief, Lim Dong-won, during his visit to Washington in February
2001 and that the CIA delivered a memorandum to the R.O.K. government containing a list
of weapons that North Korea recently purchased from overseas. The Korea Herald,
February 5, 2001, quoted a spokesman for the U.S. Military Command in Korea that “I know
that military experts at home and abroad are concerned about Pyongyang’s possible diversion
of the [Hyundai] cash for military purposes.” South Korea’s Unification Minister stated
before a Korean National Assembly committee on April 2002 that the government was aware
of a possibility that North Korea would use the Hyundai payments for military purposes. The
Kim Dae-jung Administration has touted the Mt. Kumgang project as a highlight of its
sunshine policy. It has decided to financially subsidize the project, which has been a big
money loser for the financially troubled Hyundai Corporation.
The Bush Administration also has reservations over Kim Dae-jung’s proposal that the
1997-1999 Four Party Talks (North and South Korea, the United States, and China) be
reconvened and used for North-South negotiation of a Korean peace agreement to replace
the 1953 Korean armistice agreement. Past U.S. administrations endorsed North-South
negotiation of a peace agreement, and President Reagan originally proposed Four Party Talks
as a vehicle for peace negotiations. President Kim did not raise his four party talks proposal
directly during the March 2001 summit, but Bush Administration officials appeared to be
skeptical toward President Kim’s peace initiative.
The Kim Dae-jung Administration has supported the general Bush Administration goals
toward North Korea, including the U.S. position that North Korea should end its secret
uranium enrichment program under IAEA safeguards; but it has urged the Bush
Administration to make greater efforts to negotiate with North Korea and opposes economic
sanctions on North Korea. Roh Moo-hyun, elected President on December 19, 2003, states
that he will continue the sunshine policy and opposes economic sanctions.
North Korea’s blockage of implementation of the agreements of 2000 continued until
August 2002. North-South relations reached a nadir in June 2002 when the North Korean
navy attacked South Korean naval units. However, North Korea expressed “regret”over the
incident, and negotiations in August 2002 produced a family reunion held in September and
agreements to implement economic agreements of 2000. A key agreement called for the
North and South Korean militaries to construct the rail and road linkages through the
demilitarized zone (DMZ) in east and west sectors. Work actually began on September 18,
2002, with target dates of December 2002 for the western sector and spring 2003 for the
eastern sector. South Korea is to supply needed materials to North Korea for the road and
rail connections. Seoul and Pyongyang reached agreement in November 2002 on South
Korean infrastructure aid to construct a special economic zone at Kaesong inside North
Korea to attract South Korean and other outside private investment. North Korea is to issue
a law and regulations for foreign investment at Kaesong.
Roh Moo-hyun’s Election and South Korean Criticism of the U.S.
Military Presence
Roh Moo-hyun’s election as President was due at least partly to his campaign
statements critical of the United States. This was the direct result of South Korean public
CRS-12

---

IB98045
01-23-03
anger over the killing of two South Korean schoolgirls by a U.S. military vehicle in June
2002. The South Korean government wanted the two American military personnel operating
the vehicle turned over to South Korean authorities; but the U.S. Military Command refused,
citing the provision in the U.S.-R.O.K. Status of Forces Agreement that American military
personnel accused of crimes while on duty would remain under U.S. military jurisdiction.
The court-martials of the two vehicle operators found them innocent. The South Korean
reaction was massive demonstrations, isolated violence directed at U.S. soldiers, and wider
discrimination against Americans (businesses refusing to serve Americans). Since his
election, Roh has stated support for the U.S.-R.O.K. alliance; but in a meeting with South
Korean military commanders, he told them to start planning for a day when U.S. troops
would withdraw from South Korea.
These events were the culmination of changing South Korean attitudes toward the U.S.
military presence that began to appear in 1998. Since that time, South Korean fears of a
military threat from North Korea have declined. In June 1999, South Korean naval forces
inflicted severe damage on the North Korean navy in a serious naval clash in the Yellow Sea,
which experts attributed to superior South Korean technology and antiquated North Korean
weaponry. According to recent polls, South Koreans increasingly do not register the same
level of concern as many Americans over a North Korean invasion threat, suspected nuclear
weapons development, ballistic missile testing, and missile sales abroad. In congressional
testimony in March 2001, General Thomas Schwartz, U.S. Commander-in-Chief in Korea,
asserted that the North Korean military threat was growing due to the size of its forces (over
one million) and armaments, the holding of large North Korean field exercises in 2000, and
especially the concentration of artillery and multiple rocket launchers within range of the
South Korean capital, Seoul. Schwartz’s testimony received criticism within South Korea
and from a number of U.S. experts. The credibility of the U.S. military command (USFK)
declined in South Korea. The critics argued that North Korean conventional military
capabilities have eroded since the early 1990s due to the obsolescence of offensive weaponry
like tanks and strike aircraft, logistics/supplies deficiencies, the absence of major field
exercises from 1994 to 2000, food shortages among even North Korean front-line troops on
the DMZ, and the decline in the physical and mental capabilities of North Korean draftees
after a decade of malnutrition.
Declining South Korean fears of a North Korean invasion and the inter-Korean dialogue
have produced a growing debate in South Korea over the U.S. military presence. Small
radical groups, which demand a total U.S. military withdrawal, have been joined by a
network of non-government civic groups. Several prominent South Koreans have proposed
changes in the size and functions of U.S. troops, including a proposal to convert U.S. troops
to a peacekeeping force. Some polls, including a poll commissioned by the State
Department’s Office of International Information Programs in September 2000, show a
majority of South Koreans in favor of a reduction in the number of U.S. troops in South
Korea. The official U.S. position is that the United States has no plans to reduce the number
of U.S. troops in South Korea. In March 2002, the U.S. and R.O.K. governments announced
a ten-year program to reduce by nearly 50% the bases and land used by U.S. forces in South
Korea but that the total number of 37,000 U.S. troops would remain.
The North-South summit of June 2000 and South Korea’s sunshine policy intensified
this debate. South Koreans grew increasingly skeptical of President Bush’s statements that
CRS-13

---

IB98045
01-23-03
he supported the sunshine policy. South Koreans viewed U.S. forces more and more from
the standpoint of their impact on prospects for improved North-South relations.
This debate has been intensified by new controversies over the conduct of the U.S.
military and U.S. policy. The Clinton Administration in its final days concluded two
agreements with South Korea that settled contentious issues. One was a new Status of
Forces Agreement, completed in December 2000 after six years of negotiations. It provides
that U.S. military personnel accused of particular, specified crimes would be turned over to
South Korean authorities prior to their trial and that such individuals would receive certain
legal guarantees from the R.O.K. government. The second agreement was a settlement of
the No Gun-ri issue, which involved the report that U.S. troops had massacred Korean
civilians at No Gun-ri in July 1950 during the early stage of the Korean War. The agreement
found that U.S. troops had killed a large number of South Korean civilians at No Gun-ri but
that there was no evidence that they were acting under orders from higher U.S. commanders.
President Clinton issued a statement of regret for the incident, but the Clinton Administration
rejected demands from South Korean groups that the United States issue a formal apology
and pay compensation to surviving family members. The Clinton Administration also settled
with South Korea the issue of R.O.K. development of missiles. South Korea sought
agreement to extend the range of its missiles, which had been the subject of a 1979 U.S.-
R.O.K. accord. An agreement announced in January 2001 will allow South Korea to develop
missiles with a range of up to 187 miles, up from the 1979 limit of 112 miles. South Korea
joined the global Missile Technology Control Regime (MCTR).
Contentious issues arose, however. A South Korean court in April 2001 ordered
compensation for 14 Korean civilians, who claimed injury from a U.S. bombing exercise;
the court ruled that the U.S. military had violated Korean law. The Bush Administration
reportedly decided to seek a 30% increase in South Korea’s host nation support for U.S.
troops. The total cost of stationing U.S. troops in South Korea is over $2 billion annually.
The South Korean direct financial contribution for 2002 is $490 million, up from $399
million in 2000. In 2000, criticism arose in the South Korean media and among civic groups
over the R.O.K. government’s selection of the Boeing’s F-15K fighter over European
competitors as South Korea’s next generation fighter. The controversy arose over reports
and statements that the selection was made under pressure from the Bush Administration.
CRS-14

---