Order Code IB98045
CRS Issue Brief for Congress
Received through the CRS Web
Korea: U.S.-Korean Relations —
Issues for Congress
Updated June 7, 2006
Larry A. Niksch
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
U.S. Interests in South Korea
Recent Issues
Relations with North Korea
Nuclear Weapons and the Six Party Talks
U.S. Moves Against North Korean Illegal Activities
North Korea’s Missile Program
Weapons of Mass Destruction
North Korea’s Inclusion on the U.S. Terrorism List
Food Aid
North Korean Refugees in China and Human Rights
South Korea’s Sunshine Policy and the Hyundai Payments to North Korea
U.S.-R.O.K. Negotiations over a Free Trade Agreement (FTA)
Anti-Americanism and Plans to Change the U.S. Military Presence
FOR ADDITIONAL READING

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Korea: U.S.-Korean Relations — Issues for Congress
SUMMARY
North Korea’s decision in December
to leave the talks, actual boycotts of the talks,
2002 to restart nuclear installations at Yongb-
the issuance of settlement proposals, accusa-
yon that were shut down under the U.S.-North
tions that the United States plans an “Iraq-
Korean Agreed Framework of 1994 and its
like” attack on North Korea, and denials that
announced withdrawal from the Nuclear Non-
it has an HEU program. North Korea’s posi-
Proliferation Treaty create an acute foreign
tion, first taken in August 2005, that it will not
policy problem for the United States. North
dismantlement until light water nuclear reac-
Korea claims that it has nuclear weapons and
tors are constructed inside North Korea (con-
that it has completed reprocessing nuclear
struction would take an estimated 10-15 years)
weapons-grade plutonium that could produce
creates a significant gap between the Bush
six to eight atomic bombs. U.S. intelligence
Administration’s timetable for dismantlement
estimates reportedly agree that North Korea
and Pyongyang’s timetable.
has this capability. North Korea also is oper-
ating a secret nuclear program based on highly
Differences have emerged between the
enriched uranium (HEU).
Bush Administration and South Korea over
policies toward North Korea. South Korea
The main elements of Bush Administrat-
emphasizes bilateral reconciliation with North
ion policy are (1) that North Korea must
Korea and a policy more equidistant between
dismantle both its plutonium and HEU
the United States and China. The South Ko-
programs; (2) that dismantlement must be an
rean public has become critical of Bush Ad-
early stage in a settlement process; (3) assem-
ministration policies and the U.S. military
bling an international coalition to apply pres-
presence. Anti-U.S. demonstrations erupted -
sure on North Korea in multilateral talks; and
in 2002, and Roh Moo-hyun was elected
(4) asserting that a full normalization of U.S.-
President after criticizing the United States.
North Korean relations is dependent on the
In 2003-2004, the Pentagon announced plans
resolving of several issues, including nuclear
to relocate U.S. troops in South Korea away
weapons, missiles, and human rights; and (5)
from the demilitarized zone and Seoul. The
instituting financial sanctions at foreign banks
United States will withdraw 12,500 troops
and companies that cooperate with North
between the end of 2004 and September 2008,
Korea in international illegal activities.
and U.S. military officials have hinted that
further withdrawals will come after 2008.
China organized six party talks among
U.S.-South Korean negotiations are underway
the United States, China, Japan, North Korea,
to change the military command structure and
South Korea, and Russia in mid-2003, but the
determine the degree to which the United
talks have made little progress. U.S. attempts
States could deploy U.S. troops in South
to isolate North Korea in the talks have been
Korea to other trouble spots.
countered by North Korea’s strategy of threats
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
North Korea continued its second lengthy boycott of the six party talks, demanding that
the Bush Administration lift recent U.S. financial sanctions against Banco Delta Asia in
Macau. The U.S. Treasury Department accused Banco Delta of laundering counterfeit U.S.
100 dollar bills produced by North Korea. Recent reports indicated that the Treasury
Department was considering applying similar financial sanctions against banks on the
Chinese mainland that were cooperating with North Korean illegal activities. In other
developments, North Korea ordered the U.N. World Food Program (WFP) to cease food-
donating operations at the end of 2005, but the WFP reached an agreement with Pyongyang
for a two-year, $102 million program to provide food to young children and women of child-
bearing age. Following criticism from Members of Congress, the Bush Administration
admitted the first group of six North Korean refugees into the United States. The United
States and South Korea began negotiations over a Free Trade Agreement.
BACKGROUND AND ANALYSIS
U.S. Interests in South Korea
U.S. interests in the Republic of Korea (R.O.K. — South Korea) involve security,
economic, and political concerns. The United States suffered over 33,000 killed and over
101,000 wounded in the Korean War (1950-53). The United States agreed to defend South
Korea from external aggression in the 1954 Mutual Defense Treaty. The United States
maintains about 34,000 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. Since 1991, attention has focused on North
Korea’s drive to develop nuclear weapons (see CRS Issue Brief IB91141, North Korea’s
Nuclear Weapons Program, by Larry A. Niksch) and long-range missiles.
U.S. economic aid 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, from 1945 to 2002, totaled over $8.8 billion. 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.
Recent Issues
Relations with North Korea
The Bush Administration’s policy toward North Korea has been based on three factors
within the Administration. First, President Bush has voiced distrust of North Korea and its
leader, Kim Jong-il. Second, there are divisions within the Administration over policy
toward North Korea. A coalition consists of Secretary of Defense Rumsfeld and his advisers,
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Vice President Cheney and his advisers, and proliferation experts in the State Department
and White House. They reportedly oppose negotiations with North Korea, favor the issuance
of demands for unilateral North Korean concessions on military issues, and advocate a U.S.
strategy of isolating North Korea diplomatically and through economic sanctions. Officials
within this group express hope of a collapse of the North Korean regime. An alternative
approach, advanced mainly by officials in the State Department and White House with
experience on East Asian and Korean issues, favor negotiations before adopting more
coercive measures; they reportedly doubt the effectiveness of a strategy to bring about a
North Korean collapse.1 The third factor is heavy reliance on other governments, especially
China, to bring North Korea around to accept U.S. proposals on the nuclear issue.
Nuclear Weapons and the Six Party Talks.2 From 1994 to 2003, U.S. policy was
based largely on the U.S.-North Korean Agreed Framework of October 1994. It provided
for the suspension of operations and construction of North Korea’s active five megawatt
nuclear reactor and plutonium reprocessing plant and larger 50 megawatt and 200 megawatt
reactors under construction. It also specified the storage of 8,000 nuclear fuel rods that
North Korea had removed from the five megawatt reactor in May 1994. It provided that the
United States would facilitate the shipment of 500,000 tons of heavy oil annually to North
Korea until two light-water nuclear reactors (LWRs) were constructed in North Korea. The
Korean Peninsula Development Organization (KEDO), a multilateral body, was established
to implement the LWR project. The IAEA monitored the freeze of the designated facilities
and activities. North Korea would complete dismantlement of nuclear facilities when the
construction of LWRs was completed.
According to U.S. officials, North Korea admitted to having a secret uranium
enrichment program when U.S. officials visited Pyongyang in October 2002 (North Korea
since has denied making an admission). This confirmed U.S. intelligence information of
such a program that had built up since 1998. The Bush Administration reacted by pushing
a resolution through KEDO in November 2002 to suspend heavy oil shipments to North
Korea. The Administration also secured a suspension of construction of the light-water
reactors and a total termination in November 2005. North Korea then initiated a number of
moves to reactivate the plutonium-based nuclear program shut down in 1994 under the
Agreed Framework: re-starting the five-megawatt nuclear reactor, announcing that it would
re-start the plutonium reprocessing plant, and removing the 8,000 nuclear fuel rods from
storage facilities. North Korea expelled IAEA officials who had been monitoring the freeze
of the plutonium facilities under the Agreed Framework. In January 2003, North Korea
announced withdrawal from the Nuclear Non-Proliferation Treaty. North Korea later
asserted that it possessed nuclear weapons and that it had completed reprocessing of the
8,000 fuel rods into weapons-grade plutonium. According to nuclear experts and reportedly
by U.S. intelligence agencies, this reprocessing would produce enough plutonium for four
to six atomic bombs. A Central Intelligence Agency statement of August 18, 2003, estimated
1 Kessler, Glenn. U.S. has a shifting script on N. Korea. Washington Post, December 7, 2003. P.
A25. Beck, Peter. The new Bush Korea team: a harder line? Weekly Dong-a (Seoul), November
22, 2004.
2 For assessments of diplomacy on the North Korean nuclear issues, see Pritchard, Charles L. Six
Party Talks Update: False Start or a Case for Optimism? Washington: The Brookings Institution,
December 1, 2005.
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“that North Korea has produced one or two simple fission-type nuclear weapons and has
validated the designs without conducting yield-producing nuclear tests.” Reuters News
Agency and the Washington Post reported on April 28, 2004, that U.S. intelligence agencies
were preparing a new National Intelligence Estimate that would conclude that North Korea
had approximately eight atomic bombs based on plutonium and that the secret uranium
enrichment program would be operational by 2007 and would produce enough weapons-
grade uranium for up to six atomic bombs annually. “Senior officials across the government”
were quoted in March 2006 that North Korea had plutonium for 8 to 12 nuclear weapons.3
In early 2003, the Administration proposed multilateral talks, which became six party
talks hosted by China. South Korea, Japan, and Russia also participated along with North
Korea. Six party talks began in August 2003 and remained stalemated until September 2005,
when the six parties produced a statement of principles on September 19. However, the talks
quickly deadlocked as North Korea and the United States gave very different interpretations
of the Six Party Statement and North Korea announced its second major boycott of the talks
in November 2005, which has continued to the present.
There are at least four reasons for the deadlock. The first is a fundamental disagreement
between the United States and North Korea over the timing in a settlement process of North
Korean dismantlement of its nuclear programs. The Bush Administration has maintained a
core position that dismantlement must come in an early stage of a settlement, and it estimated
in 2005 that dismantlement would take about three years. Until August 2005, North Korea
took the position that it would dismantle only after receiving a number of concessions and
benefits from the United States, but it was ambiguous on the timing. In August 2005, North
Korea made a relatively secondary demand for light water nuclear reactors its core demand
for U.S. concessions, taking the position that it would dismantle only after LWRs were
constructed. Pyongyang maintained this position after the Six Party Statement, which called
for discussions of LWRs. This position set a time frame of at least ten years and more likely
15 years before North Korea would begin dismantlement (ten years is the amount of time
nuclear experts say is needed to construct LWRs in a “normal nation”4).
A second reason is the relative lack of support for U.S. positions in the talks from
China, South Korea, and Russia. In the early stages of the talks, Administration officials
emphasized that North Korea would become isolated diplomatically and that the other parties
in the talks would pressure North Korea to accede to U.S. proposals and demands.
Administration officials stressed that China should exert diplomatic pressure on North Korea
by exploiting North Korea’s dependence on China for an estimated 90% of its oil and 40%
of its food. However, North Korea exerted an effective counter-strategy in late 2003 into
2004 featuring proposals of a U.S. security guarantee, a long-term freeze of North Korea’s
plutonium program coinciding with U.S. concessions (“reward for freeze”), and retention by
North Korea of a “peaceful” nuclear program. North Korea instituted a concerted
propaganda campaign to promote these proposals, and it began a campaign of repeated
denials that it had a secret highly-enriched uranium (HEU) program. Throughout 2004,
3 Brinkley, Joel. U.S. squeezes North Korea’s money flow. New York Times, March 10, 2006. P.
A11.
4 Herskovitz, Jon. N. Korea says to build light-water nuclear reactors. Reuters News, December 19,
2005.
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China, Russia, and even South Korea expressed sympathy for Pyongyang’s proposals, and
Russia and China voiced doubts that North Korea has an HEU program. Pyongyang’s first
boycott of the talks (August 2004-July 2005) drew little criticism from these governments;
and while South Korea criticized the second boycott (November 2005 to the present), Beijing
and Moscow refrained from any public criticism. China appeared to demand from North
Korea at least a nominal commitment to the talks and avoidance of provocative acts like a
nuclear test; but China displayed a permissive attitude toward North Korean tactics in the
talks, rejected sanctions on North Korea, and heightened levels of economic and financial
aid to North Korea — the last being a reported commitment of $2 billion in October 2005.
A third factor may have been the slowness of the Bush Administration in moving from
a diplomatic strategy of demanding a unilateral North Korean nuclear dismantlement and
rejecting bilateral discussions with North Korea to a strategy of offering some reciprocal
concessions to North Korea in return for dismantlement and engaging in bilateral discussions
in six party meetings. This reportedly was due to the factional disputes within the Bush
Administration. China, South Korea, and Russia criticized the absence or limits of U.S.
offers of reciprocity and the U.S. refusal to negotiate bilaterally with North Korea. In
response to these criticisms, the Bush Administration offered a core proposal in June 2004
and modified it in July 2005 under Assistant Secretary of State Christopher Hill. The
Administration’s proposal calls for North Korean dismantlement over about a three-year
period in an initial stage of a settlement. During this period, South Korea and Japan would
supply North Korea with heavy oil, and South Korea would implement its offer of July 2005
to provide North Korea with 2,000 megawatts of electricity annually. After North Korea
completed dismantlement, it would receive a permanent security guarantee. However, the
Bush Administration did not offer North Korea full diplomatic relations in exchange for
dismantlement, despite calls from Beijing, Seoul, and Moscow for Washington to make such
an offer. These governments, too, gave little support to the Bush Administration’s initiatives
beginning with the June 2004 proposal. China and Russia, in particular, have not supported
the core U.S. position that dismantlement must be an early stage of a settlement process.
The fourth reason for the deadlock appears to be North Korea’s strategy of securing a
protracted diplomatic stalemate on the nuclear issue. After the U.S. proposal of June 2004,
Pyongyang’s main tactic has been to progressively enlarge the gap between North Korean
proposals and the Bush Administration’s core proposal, thus “killing” the Administration’s
proposal as a basis for negotiations. After July 2004, North Korea enlarged its demands for
U.S. concessions under the demand that the United States end its “hostile policy” and
“nuclear threat.” It proposed a “regional disarmament” agenda in March 2005, demanding
a range of U.S. military concessions in return for a nuclear settlement. As stated previously,
Pyongyang’s linkage of LWR construction and nuclear dismantlement creates a huge time
frame gap between its position and the Bush Administration’s position. Pyongyang’s
boycotts create stalemate, but North Korea also appears to use boycotts and threats of boycott
to condition South Korea, China, and Russia to treat North Korea’s proposals and positions
sympathetically when it does agree to a meeting, thus isolating the Bush Administration.
(Only Japan has supported consistently U.S. positions.)
U.S. Moves Against North Korean Illegal Activities. North Korea’s justification
for its second boycott of the six party talks is the U.S. financial sanctions against a bank in
Macau, Banco Delta, for involvement in North Korean money-laundering and counterfeiting
activities. U.S. administrations have cited North Korea since the mid-1990s for instigating
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a number of activities abroad that are illegal under U.S. law. These include production and
trafficking in heroin, methamphetamines, counterfeit cigarettes, counterfeit pharmaceuticals,
and counterfeit U.S. currency. North Korea is estimated to earn between $500 million and
$1 billion annually through these activities.5 (For a detailed discussion, see CRS Report
RL33324, North Korean Counterfeiting of U.S. Currency, by Raphael F. Perl and Dick K.
Nanto; and CRS Report RL32167, Drug Trafficking and North Korea: Issues for U.S. Policy,
by Raphael F. Perl.) These earnings reportedly go directly to North Korean leader, Kim
Jong-il, through Bureau 39 of the Communist Party. He reportedly uses the funds to reward
his political elite with imported consumer goods and to procure foreign components for
weapons of mass destruction.
In September 2005, the Bush Administration made the first overt U.S. move against
North Korean illegal activities; the Treasury Department named the Banco Delta in the
Chinese territory of Macau as a money laundering concern under the U.S. Patriot Act. The
Department accused Banco Delta of distributing North Korean counterfeit U.S. currency and
laundering money from the criminal enterprises of North Korean front companies. The
Macau government closed Banco Delta and froze more than 40 North Korean accounts with
the bank. Banks in a number of other countries also froze North Korean accounts and ended
financial transactions with North Korea. According to Treasury Department officials and
other sources, these freezes have restricted the flow of foreign exchange to Kim Jong-il and
have limited his ability to distribute consumer goods to members of his political elite.
The South Korea government reacted to the U.S. financial sanctions first with concern
over their impact on the six party talks and second by asserting that it had no information that
verified the U.S. claim of North Korean counterfeiting. By March 2006, the government had
shifted its position toward agreement with the U.S. claim, and government officials stated
that they had warned North Korea to deal with the U.S. allegations. China said nothing of
substance publicly about the issue, undoubtedly reflecting China’s sensitive position as the
location for much of North Korea’s illicit banking activities. The Chinese government
reportedly investigated Banco Delta and concluded that the Treasury Department’s
allegations were correct.6 However, there have been reports that North Korea reacted to the
shutdown of Banco Delta by shifting its financial operations to banks on the Chinese
mainland. In March 2006, the Bank of China warned Chinese banks that counterfeit U.S.
$100 bills “have flowed into our country from overseas” but did not name North Korea as
the source of the counterfeit currency.7
The Bush Administration officially held that the U.S. financial sanctions were a separate
issue from the six party talks. However, some U.S. officials stated that there was increased
sentiment within the Administration that the United States needed to apply pressure on North
Korea in order to break North Korea’s strategy of creating a diplomatic stalemate on the
5 Presentation of David Asher, Institute for Defense Analyses, at the American Enterprise Institute,
February 1, 2006.
6 Fackler, Martin. “North Korean Counterfeiting Complicates Nuclear Crisis.” New York Times,
January 29, 2003. P. 3. “China Finds N. Korea Guilty of Money Laundering.” Chosun Ilbo (Seoul,
internet version), January 11, 2006.
7 Fairclough, Gordon. “China Warns of Forgeries.” The Wall Street Journal Asia, March 24, 2006.
P. 7.
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nuclear issue. These officials also stated that the Treasury and Justice departments had
authority to take additional financial and legal steps against North Korea’s illegal activities.
North Korea’s Missile Program.8 North Korea has maintained a moratorium on
flight testing of long-range missiles since September 1999. The last such missile test, on
August 31, 1998, flew over Japanese territory. Japan also believes it is threatened by
approximately 200 intermediate-range Nodong missiles, which North Korea has deployed.
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. officials reportedly claimed in September 2003
that North Korea had developed a more accurate, longer-range intermediate ballistic missile
that could reach Okinawa and Guam (sites of major U.S. military bases) and that there was
evidence that North Korea had produced the Taepo Dong-2. U.S. officials reportedly told
Japanese counterparts in July 2003 that North Korea was close to developing nuclear
warheads for its missiles.
In the 1990s, North Korea exported short-range Scud missiles and Scud missile
technology to countries in the Middle East. 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. Japan’s Sankei Shimbun newspaper
reported on August 6, 2003, that North Korea and Iran were negotiating a deal for the export
of the long-range Taepo Dong-2 missile to Iran and the joint development of nuclear
warheads. In February 2006, it was disclosed that Iran had purchased 18 BM-25 mobile
missiles from North Korea with a range of 2,500 kilometers. Pakistani and Iranian tests of
North Korean-designed missiles have provided “surrogate testing” that dilutes the limitations
of the September 1999 moratorium.
The test launch of the Taepo Dong-1 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 ... and
the complete cessation of export sales of such missiles and the equipment and technology
associated with them.” The Perry initiative offered to normalize U.S.-North Korean
relations, end to U.S. economic sanctions, and provide other economic benefits in return for
North Korean concessions on the missile and nuclear issues.
In October 2000, the Clinton Administration reportedly 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 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 a missile settlement; North Korea’s
non-response to the U.S. position that it would have to agree to dismantle the already
8 Kim Kyoung-soo (ed.). North Korea’s Weapons of Mass Destruction. Elizabeth, New Jersey, and
Seoul: Hollym Corporation, 2004: p.121-148.
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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. The Bush Administration has
offered no specific negotiating proposal on missiles. The Administration emphasized the
necessity of installing an anti-missile defense system and sought to dissuade a number of
North Korea’s customers from buying new missiles.
Weapons of Mass Destruction.9 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 has expressed
concern that North Korea might sell nuclear, chemical, or biological weapons to a terrorist
group such as Al Qaeda or that Al Qaeda might acquire these weapons from a Middle East
country that had purchased them from North Korea. The Bush Administration has not
accused North Korea directly of providing terrorist groups with WMDs. There are reports
from the early 1990s that North Korea assisted Syria and Iran in developing chemical and
biological weapons capabilities.
North Korea’s Inclusion on the U.S. Terrorism List. In February 2000, North
Korea began to demand that the United States remove it from the U.S. list of terrorist
countries. North Korea’s proposals at the six party nuclear talks also call for the United
States to remove Pyongyang from the terrorist list. North Korea’s chief motive appears to
be to open the way for the nation to receive financial aid from the World Bank and the
International Monetary Fund (IMF). P.L. 95-118, the International Financial Institutions Act,
requires the United States to oppose any proposals in the IMF and World Bank to extend
loans or other financial assistance to countries on the terrorism list. The South Korean also
has urged the United States to remove North Korean from the terrorism list so that North
Korea could receive international financial assistance.
Japan has urged the United States to keep North Korea on the terrorism list until North
Korea resolves Japan’s concerns over North Korea’s kidnapping of Japanese citizens. The
Clinton Administration gave Japan’s concerns increased priority in U.S. diplomacy in 2000
(See CRS Report RL30613, North Korea: Terrorism List Removal?, by Larry Niksch and
Raphael Perl). At the Beijing meetings, the Bush Administration called on North Korea to
resolve the issue with Japan. In 2004, the Administration made the kidnapping of Japanese
citizens an official reason for North Korea’s inclusion on the terrorist list. Kim Jong-il’s
admission, during the Kim-Koizumi summit of September 2002, that North Korea had
kidnapped Japanese citizens did not resolve the issue. His claim that eight of the 13 admitted
kidnapped victims are dead raised new issues for the Japanese government, including
information about the deaths of the kidnapped and the possibility that more Japanese were
kidnapped. The five living kidnapped Japanese returned to Japan in October 2002. In return,
Japan promised North Korea 250,000 tons of food and $10 million in medical supplies.
However, in late 2004, Japan announced that the remains of two alleged kidnapped Japanese
that North Korea had turned over to Japan were false remains. This prompted demands in
Japan for sanctions against North Korea. The Bush Administration reportedly advised Japan
to refrain from sanctions because of a potential negative impact on the six party talks.
9 Ibid., p.79-120.
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Food Aid. North Korea’s order to the U.N. World Food Program (WFP) to suspend
food aid after December 2005 ended a ten-year program of WFP food aid to North Korea.
The two-year program negotiated in early 2006 to feed small children and young women is
much more limited in scope. From 1995 through 2004, the United States supplied North
Korea with over 1.9 million metric tons of food aid through the United Nations World Food
Program (WFP). South Korea has extended increasing amounts of bilateral food aid to North
Korea, including one million tons of rice in 2004. 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. The Bush
Administration reduced food aid, citing North Korean refusal to allow adequate access and
monitoring. It pledged 50,000 tons for 2005 but suspended the delivery of the remaining
25,000 tons when North Korea ordered the WFP to cease operations. The WFP
acknowledged that North Korea places restrictions on its monitors’ access to the food
distribution system, but it professed that most of its food aid reached 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. The regime reportedly 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 has spent none of several billion dollars in foreign exchange earnings since 1998 to
import food or medicines. The regime refuses to adopt agricultural reforms similar to those
of fellow communist countries, China and Vietnam, including dismantling of Stalinist
collective farms. It is estimated that one to three million North Koreans died of malnutrition
between 1995 and 2003.10
North Korean Refugees in China and Human Rights. This issue confronted
governments after March 2002 when North Korean refugees, aided by South Korean and
European NGOs, 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. Estimates of the number of refugees cover a huge range, from 10,000 to 300,000,
including a State Department estimate of 30,000-50,000 in June 2005.
Generally, China tacitly accepted the refugees so long as their presence was not highly
visible. China also allowed foreign private 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 instituted periodic crackdowns that included police sweeps of
refugee populated areas, rounding up of refugees, and repatriation to North Korea. Since
early 2002, China allowed refugees who had gained asylum in foreign diplomatic missions
to emigrate to South Korea. However, China’s crackdown on the border reportedly included
the torture of captured refugees to gain information on the NGOs that assisted them.
10 Natsios, Andrew S. The Great North Korean Famine. Washington, U.S. Institute of Peace Press,
2001. Flake, L. Gordon and Snyder, Scott. Paved with Good Intentions: The NGO Experience in
North Korea. Westport, Connecticut: Praeger, 2003.
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China tries to prevent any scenario that would lead to a collapse of the Pyongyang
regime, its long-standing ally. 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 have made China susceptible to North Korean pressure to crack down on the
refugees and return them. Reports since 2002 described stepped-up security on both sides
of the China-North Korea border to stop the movement of refugees and Chinese roundups
of refugees and repatriation to North Korea. South Korea, which 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.11 However, South Korea, too,
opposes encouragement of a refugee exodus from North Korea.
The Bush Administration gave the refugee issue low priority. The Administration
requested that China allow U.N. assistance to the refugees but asserted that South Korea
should lead diplomatically with China. The issue has been aired in congressional hearings.
The North Korean Human Rights Act (P.L. 108-333), passed by Congress in October 2004,
provided for the admittance of North Korean refugees into the United States. In early 2006,
key Members of Congress criticized the Bush Administration for failing to implement this
provision, and the Administration admitted the first group of six refugees.
The refugee issue had led to increased outside attention to human rights conditions in
North Korea. Reports assert that refugees forcibly returned from China have been
imprisoned and tortured in an extensive apparatus of North Korean concentration camps
modeled after the “gulag” labor camp system in the Soviet Union under Stalin. Reports by
Amnesty International, the U.S. State Department, and, most recently, the U.S. Committee
for Human Rights in North Korea have described this system as holding up to 250,000
people. In 2003, 2004, and 2005, the United States secured resolutions from the U.N.
Human Rights Commission expressing concern over human rights violations in North Korea,
including concentration camps and forced labor. South Korea abstained from the
Commission’s votes in the interest of pursuing its “sunshine” policy with North Korea.12
South Korean officials also criticized passage by Congress of the North Korean Human
Rights Act of 2004. The act requires the U.S. executive branch adopt a number of measures
aimed at furthering human rights in North Korea, including financial support of
nongovernmental human rights groups, increased radio broadcasts into North Korea, sending
of radios into North Korea, and a demand for more effective monitoring of food aid.
South Korea’s Sunshine Policy and the Hyundai Payments to North Korea.
South Korean President Kim Dae-jung took office in 1998, proclaiming a “sunshine policy”
of reconciliation with North Korea. He achieved a breakthrough in meeting with North
Korean leader Kim Jong-il in Pyongyang, June 13-14, 2000. Seoul and Pyongyang then
negotiated agreements on the restoration of a railway and road across the demilitarized zone
(DMZ), investment guarantees and tax measures to stimulate South Korean private
11 Kirk, Jeremy. “N. Korean Defections Strain Ties,” Washington Times, February 11, 2005. p.A17.
12 Hawk, David. The Hidden Gulag: Exposing North Korea’s Prison Camps. Washington, U.S.
Committee for Human Rights in North Korea, 2004.
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investments in North Korea, provision of South Korean food aid to North Korea, and flood
control projects for the Imjim River. 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.
Negotiations in August 2002 produced a renewal of family reunions and agreement to
implement economic agreements of 2000. The roads in the eastern and western sectors of
the DMZ opened in 2003, and work on the rail lines is continuing. Seoul and Pyongyang
reached agreement in November 2002 on South Korean aid to construct a special economic
zone at Kaesong inside North Korea to attract South Korean private investment. North
Korea issued a law for foreign investment at Kaesong. The first South Korean companies
began operations at Kaesong in late 2004. In June 2004, North and South Korea agreed to
set up military hotlines and cease propaganda broadcasts across the DMZ. Current South
Korean president Roh Moo-hyun has pledged to continue aid, trade, and programs with
North Korea under a “peace and prosperity” policy, despite North Korea’s nuclear policies.
Roh consistently has opposed sanctions or other coercive measures against North Korea.
U.S.-R.O.K. Negotiations over a Free Trade Agreement (FTA)
In May 2006, South Korea and the United States began negotiations over a Free Trade
Agreement. The negotiations are conducted under the trade promotion authority (TPA) that
Congress granted to the President under the Bipartisan Trade Promotion Act of 2002 (P.L.
107-210. The authority allows the President to negotiate trade agreements that would receive
expedited congressional consideration (no amendments and limited debate). However, the
TPA is due to expire July 1, 2007, placing a tight time restriction on the negotiations.
Congress would have to approve an FTA before it could enter into force. A U.S.-R.O.K.
FTA would be the second largest FTA in which the United States is a participant and the
largest in which South Korea is a participant.
The negotiations come as the U.S.-South Korean alliance has showed signs of fraying
due to differences over policies toward North Korea and anti-American sentiment in South
Korea. Some observers assert that a successful negotiation would help to shore up the
alliance. On the other hand, failure of the negotiations could the damage the relationship
fundamentally. Each country has key objectives in the negotiations. The United States will
seek reduction or elimination of South Korean restrictions on agriculture imports,
discriminatory tax and other regulations on foreign auto sales, and foreign investment. The
United States will encourage stronger South Korean government enforcement of intellectual
property rights and policies more favorable to foreign business activity in South Korea.
South Korea will seek FTA preferential treatment for goods produced in the Kaesong
industrial zone in North Korea, the inclusion of South Korean residents in the U.S. visa
waiver program, discussion of U.S. anti-dumping policies, and reduction of U.S. restrictions
on maritime services trade. A number of these issues could prove to be contentious.
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Anti-Americanism and Plans to Change the U.S. Military Presence13
Beginning in early 2003, the Bush Administration made a series of decisions that will
alter the U.S. presence in South Korea: withdrawal of the Second Infantry Division of about
15,000 troops from its position just below the DMZ to “hub bases” about 75 miles south; and
relocation of the U.S. Yongsan base, housing about 8,000 U.S. military personnel in the
center of Seoul, away from the city. (A 1991 agreement to relocate Yongsan never was
implemented.) In May-June 2004, the Pentagon disclosed a plan to withdraw 12,500 U.S.
troops from South Korea by the end of 2005, including the deployment to Iraq by August
2004 of one of the two combat brigades of the Second Division. Such a withdrawal would
reduce U.S. troop strength in South Korea from 37,000 to about 24,000. The 3,600-man
brigade left for Iraq in August 2004; but under South Korean pressure, the Pentagon agreed
in October 2004 to withdraw the remainder of the 12,500 troops in phases stretching to
September 2008 and to keep close to 1,000 U.S. military personnel in Seoul after the closing
of the Yongsan base. Pentagon officials spoke of U.S. military compensation measures,
including the augmentation of air and naval forces in the Western Pacific; they later deployed
F-117 stealth fighters to South Korea. The Pentagon and the U.S. Pacific Command
reportedly are considering changes in the U.S. military command structure in Korea, which
presently includes the United Nations Command, the U.S. Forces Korea (USFK) Command,
and the U.S.-South Korean Combined Forces Command. The Pentagon is investing $11
billion to upgrade U.S. forces in Korea. South Korea has agreed to assume the estimated $3-
4 billion cost of relocating the Yongsan garrison by 2008.
There are several rationales for the Pentagon’s decisions. One is a doctrine of “strategic
flexibility” under which the United States could use U.S. forces in South Korea in
contingencies outside the Korean peninsula. Relocation of the Second Division will
facilitate its restructuring along the lines of the Pentagon’s plans to restructure the Army’s
traditional combat divisions into smaller, mobile combat brigades. The withdrawal of troops
will help the U.S. Army meet the manpower burdens in Iraq and in other fronts in the “war
against terrorism.” U.S. officials also have voiced the hope that the troop changes and
reduction would mitigate the rising anti-American sentiment among South Koreans.
Anti-American sentiment is based on a younger generation of South Koreans who came
of age under South Korean authoritarian regimes. Members of this “386” generation now
occupy positions of power and criticize the United States for the perceived U.S. support of
these regimes. After 1998, South Korean public opinion became critical of the U.S. military
presence because of incidents involving South Korean civilians and the U.S. military,
declining South Korean concerns over a North Korean military threat, and a view that USFK
had exaggerated the capabilities of North Korean conventional forces. Later, criticisms arose
of the Bush Administration’s policies toward North Korea, reflecting South Korean public
support for Kim Dae-jung’s sunshine policy. In 2002, massive South Korean protests
erupted when a U.S. military vehicle killed two Korean schoolgirls and the U.S. military
personnel driving the vehicle were acquitted in a U.S. court martial. Roh Moo-hyun was
13 Perry, Charles. Alliance Diversification and the Future of the U.S.-Korean Security Relationship.
Herndon, Virginia: Brassey’s, Inc., 2004. Mitchell, Derek (ed.). Strategy and Sentiment: South
Korean Views of the United States and the U.S.-ROK Alliance. Washington, Center for Strategic
and International Studies, 2004.
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elected in December 2002 after criticizing the United States during his campaign. Anti-U.S.
sentiment is strong among younger South Koreans under 40, according to polls. Polls since
January 2004 have found that more South Koreans view the United States as the biggest
threat to South Korea as compared to those who view North Korea as the principal threat.
A network of non-governmental civic groups has taken up anti-American themes, including
some accusations similar to those advanced by North Korean propaganda. The U.S. invasion
of Iraq also drew criticism from the South Korean public. President Roh faced public
criticism for his decision to send a brigade-sized (about 3,600 troops) South Korean combat
unit to Iraq. Roh has asserted that his ability to influence U.S. policy toward North Korea
is a primary reason for his support of the U.S. war against Iraq. In October 2003, the R.O.K.
government announced that it would commit $200 million in reconstruction aid to Iraq.
President Roh raised new issues in early 2005 that potentially could affect the alliance.
He asserted that U.S. forces in South Korea could not be used in contingencies in Northeast
Asia without South Korean consent. He also declared that future South Korean security
policy would seek for South Korea the role of a “balancer” among the major powers in
Northeast Asia. Most analysts viewed both pronouncements as influenced by South Korea’s
growing ties with China and a desire to keep South Korea out of future disputes between the
United States and China or Japan and China.
The total cost of stationing U.S. troops in South Korea is nearly $3 billion annually.
The South Korean direct financial contribution for 2005 and 2006 is $681 million.
FOR ADDITIONAL READING
CRS Report RL31555. China and Proliferation of Weapons of Mass Destruction and
Missiles: Policy Issues, by Shirley A. Kan.
CRS Report RL32167. Drug Trafficking and North Korea: Issues for U.S. Policy, by
Raphael F. Perl.
CRS Report RL31785. Foreign Assistance to North Korea, by Mark E. Manyin.
CRS Report RL31696. North Korea: Economic Sanctions, by Dianne E. Rennack.
CRS Issue Brief IB91141. North Korea’s Nuclear Weapons Program, by Larry A. Niksch.
CRS Report RS21473. North Korean Ballistic Missile Threat to the United States, by
Andrew Feickert.
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