Order Code RL33567
Korea-U.S. Relations:
Issues for Congress
Updated April 28, 2008
Larry A. Niksch
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

---

Korea-U.S. Relations: Issues for Congress
Summary
The United States has had a military alliance with South Korea and important
interests in the Korean peninsula since the Korean War of 1950-53. Many U.S.
interests relate to communist North Korea. Since the early 1990s, the issue of North
Korea’s development of nuclear weapons has been the dominant U.S. policy concern.
Experts in and out of the U.S. government believe that North Korea has produced at
least six atomic bombs, and North Korea tested a nuclear device in October 2006.
Negotiations over the nuclear issue have been underway since 2003. In 2007, a six
party negotiation (between the United States, North Korea, China, South Korea,
Japan, and Russia) produced agreements encompassing two North Korean and two
U.S. obligations: disablement of North Korea’s Yongbyon nuclear installations, a
North Korean declaration of nuclear programs, U.S. removal of North Korea from
the U.S. list of state sponsors of terrorism, and U.S. removal of North Korea from the
sanctions provisions of the U.S. Trading with the Enemy Act. By April 2008,
progress had been made on the disablement, and a U.S.-North Korea agreement
reportedly negotiated at Singapore sets the format and content of a declaration and
secret side agreement.
The Bush Administration has subordinated to the nuclear issue a number of
other North Korean activities that affect U.S. interests. North Korean exports of
counterfeit U.S. currency and U.S. products produce upwards of $1 billion annually
for the North Korean regime. North Korea earns considerable income from sales of
missiles and missile technology cooperation with countries like Iran and Syria. It has
developed short-range and intermediate range missiles, but it has failed to develop
an intercontinental ballistic missile. It is estimated to have sizeable stockpiles of
chemical and biological weapons. North Korean involvement in international
terrorism has included the kidnapping of Japanese citizens and reportedly arms and
training to the Hezbollah and Tamil Tigers terrorist groups. U.S. human rights
groups are involved in responding to the outflow of tens of thousands of North
Korean refugees into China, due to severe food shortages inside North Korea and the
repressive policies of the North Korean regime. U.S. and international food aid to
North Korea has been provided since 1995 but has declined since 2002. The Bush
Administration reportedly was considering in March 2008 a new commitment of
500,000 tons of foodgrains.
South Korea followed a conciliation policy toward North Korea under the
administrations of Kim Dae-jung and Roh Moo-hyun; but the administration of
President Lee Myung-bak, elected in December 2007, states that it will link South
Korean aid to North Korea more closely to the nuclear issue and will press North
Korea on human rights. The United States signed a Free Trade Agreement (FTA)
with South Korea (the seventh largest U.S. trading partner) in 2007. There is support
but also opposition to the FTA in both the United States and South Korea, and U.S.
congressional support of the FTA is an uncertain prospect. The U.S.-R.O.K. military
alliance is undergoing structural changes, including relocation and withdrawals of
U.S. troops in South Korea (down to 25,000 by September 2008) and an agreement
to disband the unified military command and establish separate U.S. and R.O.K.
military commands.

---

Contents
U.S. Interests in South and North Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Relations with North Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Nuclear Weapons and the Six Party Talks . . . . . . . . . . . . . . . . . . . . . . . 2
U.S. Policy Toward North Korean Illegal Activities . . . . . . . . . . . . . . . 6
North Korea’s Missile Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Weapons of Mass Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
North Korea’s Inclusion on the U.S. List of State Sponsors of
Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
North Korean Refugees in China and Human Rights . . . . . . . . . . . . . 11
North Korea-South Korea Relations . . . . . . . . . . . . . . . . . . . . . . . . . . 13
U.S.-R.O.K. Free Trade Agreement (FTA) . . . . . . . . . . . . . . . . . . . . . . . . . 15
U.S.-South Korea Military Alliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
South Korea’s Political System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

---

Korea-U.S. Relations:
Issues for Congress
U.S. Interests in South and North 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 Treaty obligates the United States and South Korea to (1) seek to settle
international disputes “by peaceful means”; (2) refrain from “the threat or use of
force” that is inconsistent with the purposes of the United Nations; (3) consult
together when either party “is threatened by external armed attack” and resort to
“mutual aid” and “appropriate means” to deter an armed attack; (4) “act to meet the
common danger in accordance with its constitutional processes” if the territories of
either party “in the Pacific area” are subject to “an armed attack.” Under the Mutual
Defense Treaty, South Korea grants the United States the rights to station U.S.
military forces in South Korea “as determined by mutual agreement.”
The United States maintains about 28,000 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, U.S. attention has focused primarily on North Korea’s drive to
develop nuclear weapons. However, other North Korean policies and actions have
affected U.S. interests including proliferation of missiles and other weapons of mass
destruction to Middle Eastern countries, support for terrorist groups in the Middle
East and South Asia, counterfeiting of U.S. currency and U.S. products, human rights
abuses, and policies that have forced thousands of North Koreans to flee to China as
refugees. North Korean policies are important issues in U.S. relations with China
and Japan.
The United States is South Korea’s third largest trading partner (replaced as
number one by China in 2002) and second largest export market. South Korea is the
seventh-largest U.S. trading partner. Total trade is close to $80 billion annually. In
2007, the United States and South Korea signed a Free Trade Agreement (FTA).
President Bush has not submitted the FTA to Congress for approval. If approved, it
would be the second largest U.S. FTA; only the North American Free Trade
Agreement would be larger.

---

CRS-2
Relations with North Korea
The Bush Administration, throughout its time in office, has concentrated on
North Korea’s nuclear weapons program in its policy toward North Korea. Other
issues, from North Korean missiles to human rights, have been subordinated. After
the breakdown of the 1994 U.S.-North Korean Agreed Framework in late 2002 and
North Korea’s resumption of plutonium production, the Bush Administration and
China organized a six party negotiation to deal with the nuclear issue. Besides the
United States and China, the other members of the six party talks are North Korea,
South Korea, Russia, and Japan.
Nuclear Weapons and the Six Party Talks. (For additional information
on this subject, see CRS Report RL33590, North Korea’s Nuclear Weapons
Development and Diplomacy and CRS Report RL34256, North Korea’s Nuclear
Weapons, Latest Developments.) On October 9, 2006, North Korea conducted its
first nuclear test, a small plutonium explosion of less than one kiloton (3-4 percent
of the explosion power of the Nagasaki plutonium atomic bomb).1 U.S. intelligence
agencies estimated that North Korea has about 50 kilograms of nuclear weapons
grade plutonium that it extracted from its operating five megawatt nuclear reactor at
Yongbyon. Using six kilograms per weapon, this would be enough for six to eight
atomic bombs.2 The test came amidst three years of stalemated negotiations over
North Korea’s nuclear program by six governments: the United States, North Korea,
South Korea, China, and Russia. China had hosted the six party talks in Beijing.
Within two months after the test, the Bush Administration fundamentally
changed its strategy toward dealing with North Korea and its view of the type of
agreement to be negotiated. The Administration’s approach since the six party talks
began in 2003 had been to allow only limited bilateral dealings with North Korea,
seek unilateral concessions from North Korea, and seek an agreement providing for
near-term, complete dismantlement of North Korean nuclear programs, facilities, and
activities.3 The new strategy, initiated in November-December 2006, actively sought
bilateral talks with North Korea. The Administration continued to state
dismantlement as the U.S. diplomatic objective, but it sought to negotiate several,
staged agreements with North Korea with interim goals in each of these. The
Administration also began to offer benefits and concessions to North Korea as part
of interim agreements. While emphasizing bilateral talks with North Korea, the Bush
Administration maintained close consultations with China.4
1 Michael Evans, Now for stage two: putting a warhead on the end of a ballistic missile, The
Times (London), October 10, 2006, p. 7. U.S. nuclear scientist assesses N. Korea program,
Reuters News, November 15, 2006.
2 Ibid.
3 Peter Beck, The new Bush Korea team: a harder line? Weekly Dong-a (Seoul), November
22, 2004. Charles Pritchard L., Six Party Talks Update: False Start or a Case of Optimism.
Washington, The Brookings Institution, December 1, 2005.
4 Glenn Kessler, To reach pact with N. Korea, Bush adopted an approach he had criticized,
Washington Post, October 4, 2007, p.A17.

---

CRS-3
The Administration’s new strategy produced two integrated nuclear agreements
concluded between the United States and North Korea and issued by the six parties
on February 13 and October 3, 2007. The agreements set out two phases for
implementing a series of obligations by North Korea, the United States, and the other
six party governments. The main provisions opened the way for an end to the
operation of North Korea’s plutonium production facilities at Yongbyon, first
through a freeze of operations in phase one followed, in phase two, by a disablement
of the Yongbyon installations through the destruction and removal of key pieces of
equipment from the facilities. The agreements also obligated North Korea to issue
a “complete and correct declaration” of all of its nuclear programs by December 31,
2007. North Korea was to receive benefits from the United States and other six party
governments. One benefit was the provision of about 500,000 tons of heavy fuel oil
and the equivalent of another 500,000 tons in equipment for North Korea’s coal
mines and electric power facilities. The Bush Administration also promised to
remove North Korea from the U.S. list of state sponsors of terrorism and from the
sanctions provisions of the U.S. Trading with the Enemy Act in reciprocity for the
disabling of Yongbyon and the issuance of a satisfactory declaration of North Korean
nuclear programs.
The Bush Administration also abandoned major elements of its anti-
counterfeiting policy against North Korea when North Korea conditioned the
implementation of the freeze of the Yongbyon facilities upon the Administration
facilitating the return to Pyongyang of $24 million that had been frozen in the Banco
Delta bank in Macau, China.
Following the October 3, 2007 agreement, the disablement of Yongbyon went
smoothly. Assistant Secretary of State Christopher Hill told the Senate Foreign
Relations Committee on February 6, 2008, that essential machinery had been
removed from the nuclear fuel fabrication plant and the plutonium reprocessing plant
at Yongbyon under the observation of U.S. technical experts. The removal of nuclear
fuel rods from the five megawatt nuclear reactor was underway and was being carried
out slowly for safety reasons. Hill also said that North Korea had slowed the removal
of the fuel rods because of its complaint that the United States and the other six
parties were slow in delivering the promised heavy fuel oil. Hill stated the
disablement would create a situation in which it would take North Korea “upwards
of 12 months” to restore the disabled facilities and re-start them.5 Deliveries of
heavy fuel oil to North Korea, financed by six party governments, reached 200,000
tons by March 2008.
However, a deadlock developed over the declaration of nuclear programs, which
resulted in the December 31, 2007 deadline not being met. Following the October
3, 2007 agreement, the Bush Administration listed several areas of information
which, it said, North Korea needed to address in the declaration: the size of the
plutonium stockpile, the number of nuclear weapons, the status of a uranium
enrichment program, and nuclear cooperation with Syria. In early December 2007,
President Bush spelled out U.S. requirements in a letter to North Korean leader, Kim
5 Statement of Assistant Secretary of State Christopher Hill to the Senate Foreign Relations
Committee, February 6, 2008.

---

CRS-4
Jong-il.6 North Korea gave the Bush Administration a declaration in November 2007
and stated in early January 2008 that this was sufficient to fulfill the October 3
agreement. The Bush Administration asserted that the information was inadequate.7
There appeared to be three and possibly four issues on which the Administration
does not believe that North Korea provided adequate information:
! The number of atomic bombs: North Korea has stated that it will not
supply that information as part of implementing phase two.8
! Uranium enrichment: North Korea showed U.S. experts samples of
aluminum tubes that it had imported from Russia suitable for a
uranium enrichment centrifuge infrastructure, but it asserted that it
did not use the aluminum tubes for any such program. However,
traces of enriched uranium were found on the samples. North Korea
reportedly did not disclose receiving a “starter kit” for a highly
enriched uranium program from Pakistan’s nuclear czar, A.Q. Khan.
It continued to deny that it ever had a highly enriched uranium
program.9
! Nuclear proliferation with Syria: Israeli warplanes bombed a facility
in Syria in September 2007 that Israeli officials asserted was a
nuclear-related facility involving North Korean nuclear technicians.
U.S. officials reportedly have reached a similar conclusion.10 In
April 2008, U.S. intelligence officials briefed several congressional
committees that the construction of the reactor was near completion
and that North Koreans were involved.11 However, North Korea has
stood by its statement in the October 3, 2007 six party statement that
it has not proliferated nuclear materials or technology.
North Korean is reported to have declared to the Bush Administration that it has
30 kilograms of plutonium and has used 18 kilograms in nuclear development and
6 Deb Riechmann, Bush sends letter to N. Korean leader, Associated Press, December 6,
2007.
7 For a good description of the areas of contention in the declaration, see Brian Lee, North
to miss today’s declaration deadline, JoongAng Ilbo (internet version), December 31, 2007.
8 Nicholas Kralev, U.S. to hold N. Korea to vows, Washington Times, November 29, 2007,
p. A1.
9 Glenn Kessler, Uranium traces found on N.Korean tubes, Washington Post, December
2007, p. A25. Glenn Kessler, N. Korea offers evidence to rebut uranium claims,
Washington Post, November 10, 2007, p. A1.
10 Nanae Kirashige, Syria got N. Korea help for N-facility, Asahi Shimbun, March 31, 2008.
U.S. called N. Korea’s bluff over Syria, Chosun Ilbo (internet version), April 1, 2008.
11 David Sanger, Bush Administration releases images to bolster its claims about Syrian
reactor, New York Times, April 25, 2008, p. A1.

---

CRS-5
about six kilograms in the October 2006 nuclear test.12 The U.S. intelligence
estimate is 50 kilograms,13 but some experts says that 30 kilograms would be at the
low end of an estimated range.
A Hill-Kim Gye-gwan meeting in Singapore on April 7-8, 2008, reportedly
produced a basic agreement on the declaration based on two formulas.14 One is a
Bush Administration proposal that the issues of uranium enrichment and nuclear
cooperation with Syria be included in a secret minute separate from the declaration.15
The declaration thus would deal only with North Korea’s plutonium program. A
second is a Chinese proposal for the secret minute to be modeled after the 1972 U.S.-
China Shanghai Communique in which the United States and China stated their
differing positions on issues like Taiwan and stated a recognition of the positions of
the other side.16 Thus, in the secret minute, North Korea reportedly would
acknowledge or take note of the U.S. position that North Korea has engaged in past
activities related to uranium enrichment and proliferation with Syria, but it would not
admit to such activities. Hill has suggested that the Administration would accept
North Korea’s declaration of 30 kilograms of plutonium but that the U.S. experts
would need to examine North Korean records of nuclear activities to judge whether
the 30 kilogram declaration is accurate.17 In his testimony before the Senate Foreign
Relations Committee on February 6, 2008, he restated the requirement that North
Korea must declare the number of nuclear weapons it possesses, but he has omitted
this in other statements regarding U.S. requirements. Some observers believe that
this issue may be deferred to the future beyond the conclusion of phase two.
Administration officials also have reiterated the U.S. offer to remove North Korea
from the list of state supporters of terrorism and from the Trading With the Enemy
Act as part of a completion of phase two.
Amidst the nuclear negotiations, North Korea invited the New York
Philharmonic Orchestra to perform a concert in Pyongyang, which was held on
February 26, 2008.
12 North Korea produced 30 kg of plutonium — newspaper, Reuters News, April 20, 2008.
The newspaper referred to by this Reuters report was the Tokyo Shimbun.
13 The White House, Report to Congress on Nuclear and Missile Programs of North Korea,
November 2007.
14 Glenn Kessler, U.S. ready to ease sanctions on North Korea, Washington Post, April 11,
2008, p. 15. Melanie Lee and Daryl Loo, Nuclear talks with N. Korea make progress, US
says, Reuters News, April 8, 2008.
15 Nicholas Kralev, U.S. suggests secret disclosure of nuclear past, Washington Times,
February 28, 2008, p. A11. Donald Kirk, High-level talks keep N. Korea deal alive,
Christian Science Monitor, March 17, 2008, p. 4.
16 Takeo Miyazaki, Paper on DPRK N-declaration floated, The Daily Yomiuri (Tokyo),
March 7, 2008, p. 7.
17 Glenn Kessler, Glenn, U.S., N. Korea to work toward ending weapons impasse,
Washington Post, March 12, 2008, p. A8. Council on Foreign Relations, Interview with
Christopher Hill, Assistant Secretary of State for East Asian and Pacific Affairs, February
15, 2008.

---

CRS-6
U.S. Policy Toward North Korean Illegal Activities. U.S.
administrations have cited North Korea since the mid-1990s for instigating a number
of activities abroad that are illegal under U.S. law. These include production and
trafficking in heroin, methamphetamines, counterfeit U.S. brand cigarettes,
counterfeit pharmaceuticals, and counterfeit U.S. currency. (For a detailed
discussion, see CRS Report RL33324, North Korean Counterfeiting of U.S.
Currency, and CRS Report RL32167, Drug Trafficking and North Korea: Issues for
U.S. Policy.) Earnings from counterfeiting and drug trafficking 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 for 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 totaling $24 million. Banks in a
number of other countries also froze North Korean accounts and ended financial
transactions with North Korea, often after the Treasury Department warned them
against doing further business with North Korea. North Korea reportedly has
maintained accounts in banks in mainland China, Singapore, Switzerland, Austria,
Luxembourg, and Russia.
As part of the implementation of phase one of the February 2007 nuclear
agreement (freezing the Yongbyon nuclear facilities), North Korea demanded the
release of all of the $24 million in its accounts in Banco Delta before it would carry
out its obligations under phase one. The Bush Administration decided on April 10,
2007, to allow the release of the $24 million.18 North Korea then demanded
assurances from the Bush Administration that the U.S. Treasury Department would
not penalize any foreign banks that received the transferred Banco Delta money. In
June 2007, the Bush administration and the Russian government arranged for the
money to be transferred through the New York Federal Reserve Bank to Russia’s
central bank, which then forwarded the money to a private Russian bank that
maintained a North Korean account.19 The Treasury Department also ceased its
campaign to warn and pressure foreign governments and banks to stop doing
business with North Korea. Treasury Undersecretary Stuart Levey told the Senate
Finance Committee on April 1, 2008, that many foreign banks had terminated their
dealings with North Korea.20
18 Lee Dong-min, Interview with former White House official Victor Cha, Vantage Point,
June 2007, p. 22-24.
19 Jay Solomon, Money transfer advanced North Korea pact, The Wall Street Journal Asia,
June 15, 2007, p. 22-24.
20 N.K.’s counterfeit U.S. bills still showing up: Treasury, Yonhap News Agency, April 2,
2008.

---

CRS-7
In December 2007, the Japanese government revealed estimates of North
Korean exports of counterfeit drugs and cigarettes. It estimated North Korea’s
earnings from counterfeit cigarettes at 60-80 billion yen annually ($600-$800
million) and up to 50 billion yen ($500 million) from counterfeit stimulant drugs and
heroin. The government said that North Korea was increasing production of
counterfeit cigarettes because of increased Chinese and Japanese measures against
the smuggling of North Korean drugs. North Korea, it estimated, was producing
about 41 billion counterfeit cigarettes annually at ten factories.21 In his April 2008
testimony to the Senate Finance Committee, U.S. Treasury Undersecretary Stuart
Levey stated that counterfeit U.S. dollars produced by North Korea “continue to
surface.”
North Korea’s Missile Program. North Korea maintained a moratorium
on flight testing of long-range missiles since September 1999 until the missile
launches on July 4, 2006, when North Korea fired seven missiles into the Sea of
Japan, including one long-range Taepodong II missile. The Taepodong II’s liftoff
failed after 40 seconds, and the missile fell into the sea, an apparent failure.
However, the other missiles tested successfully, reportedly including a new model
of the Scud short-range missile. A previous missile test, of a Taepodong I on August
31, 1998, flew over Japanese territory out into the Pacific Ocean.22
North Korea is estimated to have more than 600 Scud missiles with a range of
up to 500 kilometers, including new solid-fuel Scuds, which can be fired quickly, in
contrast to liquid-fuel missiles. The range of the Scuds could cover all of South
Korea. North Korea also is estimated to have deployed approximately 200
intermediate-range Nodong missiles. The Nodongs have an estimated range of 1,300
kilometers (900 miles), which could reach most of Japan.23 North Korea reportedly
has developed since 2003 a more accurate, longer-range intermediate ballistic
missile. This new missile, dubbed the Taepodong X or the “Musudan,” appears to
be based on the design of the Soviet SS-N-6 missile. It is believed to have a range
of between 2,500 and 4,000 kilometers, sufficient to reach Okinawa and Guam, the
site of major U.S. military bases.24 In 2005, Iran reportedly purchased 18 Musudan
missiles from North Korea. North Korea displayed the Musudan missile for the first
time in a parade on April 25, 2007. On January 17, 2006, Iran tested successfully a
“Shahab-4” missile that reached a distance of nearly 3,000 kilometers before being
21 Shift from stimulant drugs to counterfeit cigarettes at 10 factories in North Korea, earning
more than 60 billion yen annually, Sankei Shimbun (internet version), December 12, 2007.
22 Kim Kyoung-soo (ed.), North Korea’s Weapons of Mass Destruction. Elizabeth, New
Jersey, and Seoul: Hollym Corporation, 2004, p. 121-148.
23 Jon Herskovitz, General alarmed by Pyongyang’s advanced missile tests, Washington
Times, July 3, 2007, p. A9. Jung Sung-ki, S. Korea vulnerable to NK chemical warheads,
The Korea Times (internet version), October 17, 2007.
24 North Korea’s growing missile arsenal. Reuters News, July 7, 2006. Kerr, Paul. New
North Korean missile suspected. Arms Control Today (internet version), September 2004.

---

CRS-8
destroyed in mid-flight. It reportedly was the Musudan.25 Tests of this missile’s
engine also reportedly have been conducted in Iran.26
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. 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 observers maintain have diluted the
limitations of the September 1999 moratorium. The Iranian test of the Musudan was
an example. Iranians reportedly were at the North Korean test site for the July 4,
2006 missile launches. (For further information, see CRS Report RS21473, North
Korean Ballistic Missile Threat to the United States.)
Weapons of Mass Destruction. Official and unofficial estimates of North
Korea’s stockpile of chemical weapons range between 1,000 and 5,000 tons,
including nerve gas, blister agents, mustard gas, and vomiting agents. These
estimates also cite North Korea’s ability to produce biological agents of anthrax,
smallpox, and cholera.27 A report in the February 2007 edition of the magazine,
Popular Mechanics, cited the estimate of 5,000 tons of chemical weapons and also
asserted that North Korea was producing biological weapons at over 20 facilities
throughout the country.28
North Korea’s Inclusion on the U.S. List of State Sponsors of
Terrorism. In February 2000, North Korea began to demand that the United States
remove it from the U.S. list of state sponsors of terrorism. North Korea’s proposals
at the six party nuclear talks also call for the United States to remove Pyongyang
from the terrorist list. One of North Korea’s motives 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 list of state sponsors of
terrorism. Since 2000, the South Korean government has urged the United States to
remove North Korea from the terrorism list so that North Korea could receive
international financial assistance.
25 Iran develops missile with 4,000-KM range. Middle East Newsline, March 2, 2006. Vick,
Charles P. Has the No-Dong B/Shahab-4 finally been tested in Iran for North Korea?
Global Security (internet version) May 2, 2006.
26 Takashi Arimoto, North Korea may have tested engine combustion of a new type missile
in Iran — the two countries may share data, Sankei Shimbun (internet version, June 21,
2007.
27 U.S. Department of Defense, 2000 Report to Congress: Military Situation on the Korean
Peninsula, September 12, 2000, p. 6. Ministry of National Defense, Republic of Korea,
Defense White Paper 2004, p. 45. Kim Kyoung-soo (ed.), North Korea’s Weapons of Mass
Destruction: Problems and Prospects, p. 79-111.
28 N.Korea producing biological and chemical weapons at 32 facilities: U.S. report, Yonhap
News Agency, February 4, 2007. Karl Eiselsberg, Korea Report, August 26, 2007, p. 10-11.

---

CRS-9
Until 2007, U.S. administrations had listed several international terrorism-
related acts of North Korea as reasons for placing and maintaining North Korea on
the list of state sponsors of terrorism: the blowing up of a South Korean airliner in
1987, providing sanctuary for members of the Japanese Red Army terrorist group,
and the kidnappings of Japanese citizens in the 1970s and 1980s. However, the Bush
Administration did not cite reports from Israeli, French, and Japanese sources that,
in the 2000-2007 period, North Korea had supplied arms and training to Hezbollah
in Lebanon and the Tamil Tigers in Sri Lanka — two groups on the U.S. list of
international terrorist organizations. North Korea also appears to have a longstanding
cooperative relationship with the Iranian Revolutionary Guards, which the U.S. State
Department designated as a terrorist groups in November 2007. (See CRS Report
RL30613, North Korea: Terrorism List Removal?)
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. At the six party Beijing meetings since August 2003, the
Bush Administration called on North Korea to resolve the issue with Japan. Kim
Jong-il’s admission, during his summit meeting with Japanese Prime Minister
Koizumi in September 2002, that North Korea had kidnapped Japanese citizens did
not resolve the issue.29 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,
coupled with the stalemate in the six party nuclear talks, prompted Japan to tighten
economic sanctions and other restrictions on North Korea.
The initiation of the Rice-Hill strategy toward the North Korean nuclear issue
in 2007 included a major change in the Bush Administration’s position toward North
Korea’s inclusion on the list of state sponsors of terrorism. The Administration
offered to remove North Korea from the list as part of the implementation of the
February 2007 nuclear agreement.30 The October 3, 2007 agreement embodied a
U.S. commitment to remove North Korea from the terrorism support list in
reciprocity for the disabling of the Yongbyon nuclear facilities and a North Korean
declaration of nuclear programs.
Correspondingly, the Bush Administration separated the Japanese kidnapping
issue and other terrorism-related acts from the justifications for keeping North Korea
29 Japan. Ministry of Foreign Affairs. Abductions of Japanese Citizens by North Korea.
April 2006.
30 U.S. offered to remove N. Korea from terror list — South Korea. Dow Jones International
News, December 26, 2007. Arimoto Takashi, Six-party talks: Japan, PRC concerned about
US-DPRK pre-talk coordination becoming regularized, suspect ‘secret deal’, Sankei
Shimbun (internet version), August 14, 2007.

---

CRS-10
on the list of state sponsors of terrorism.31 Assistant Secretary of State Hill stated
that he continually urged North Korea to take steps to resolve the kidnapping issue
with Japan, but Administration officials emphasized that the United States was under
no legal obligation to link the kidnapping and terrorism support list issues. Japanese
officials responded by voicing opposition to the Administration’s plan to remove
North Korea from the list, and Japan said it would not provide money for the heavy
oil shipments to North Korea under the 2007 nuclear agreements until there was
progress on the kidnapping issue.32 On January 22, 2008, the State Department’s
director of counterterrorism said that North Korea had met the legal requirements for
removal from the list of state sponsors of terrorism in that it had committed no acts
of terrorism for the last six months.33 (See CRS Report RS22845, North Korea’s
Abduction of Japanese Citizens and the Six Party Talks.)
Food Aid. North Korea’s order to the U.N. World Food Program (WFP) to
suspend food aid after December 2005 significantly curtailed 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. Moreover,
apparently influenced by North Korea’s nuclear and missile tests, country donations
to the WFP for North Korea aid declined from 2006 to the present.34 However,
Assistant Secretary of State Christopher Hill told the Senate Foreign Relations
Committee on February 6, 2008, that the Bush Administration was prepared to
extend food aid to North Korea “subject to appropriate program management
consistent with international standards.” In late March 2008, Radio Free Asia
reported that the WFP had entered into discussions with the Bush Administration
over a substantial U.S. commitment of new food aid to North Korea, possibly
500,000 tons.
From 1995 through 2004, the United States supplied North Korea with over 1.9
million metric tons of food aid through the WFP. Since 2000, South Korea has
extended bilateral food aid to North Korea of 400,000 to 500,000 tons of rice
annually. Agriculture production in North Korea began to decline in the mid-1980s.
Severe food shortages appeared in 1990-1991 and have continued since. South
Korean experts stated in late 2007 that North Korea likely would produce about 3.9
million tons of food grain in 2008, leaving a shortfall of 1.4 million tons.35 In
September 1995, North Korea made its first appeal for international food assistance.
31 In Christopher Hill’s testimony to the Senate Foreign Relations Committee on February
6, 2008, he stated “I don’t think it’s in our country’s interest or Japan’s interest or anyone’s
interest to make these hard linkages in advance” between the Japanese kidnapping issue and
North Korea’s status on the list of state sponsors of terrorism.
32 Gilles Campion, Senior Japanese adviser to Fukuda warns US over taking DPRK off
terrorist list, Agence France Presse, October 25, 2007. Ignore abductees at your peril, Japan
warns the United States, JongAng Ilbo (internet version), October 26, 2007.
33 Arshad Mohammed, N.Korea seems to meet US criteria on terror listing, Reuters News,
January 22, 2008.
34 WFP says N. Korean food aid massively underfunded, Kyodo News, February 9, 2007.
35 Park Chan-kyong, Expert tells AFP: North Korea may face famine in 2008, Agence
France Presse, October 18, 2007.

---

CRS-11
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 reported Bush Administration consideration in 2008 of a new
commitment of food aid, if true, appears to be motivated by the Administration’s
desire to secure an agreement with North Korea on a declaration of North Korean
nuclear programs and thus fulfill the provisions of the February 2007 six party
nuclear agreement.
The WFP acknowledges that North Korea places restrictions on its monitors’
access to the food distribution system, but it professes 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. In March 2008, the United Nations human rights monitor for North
Korea criticized the “great disparity between access by the elite to food and the rest
of the population.” On March 20, 2008, the South Korean newspaper, Chosun Ilbo,
published photographs taken by the South Korean military on the demilitarized zone
(DMZ) showing North Korean soldiers on the other side of the DMZ loading rice
sacks with the South Korean Red Cross symbol aboard military trucks and moving
rice sacks to military posts. The Chosun Ilbo report claimed that since 2003, the
South Korean military had seen the North Korean military divert more than 400 sacks
of apparent South Korean rice over ten occasions to soldiers in frontline units.36
Some experts also believe that North Korean officials divert some food aid for sale
on the extensive black market. The regime has spent little of several billion dollars
in foreign exchange earnings since 1998 to import food or medicines. The regime
has not adopted agricultural reforms similar to those of fellow communist countries,
China and Vietnam, including dismantling of Soviet-style collective farms.
Estimates of the number of North Koreans who die of malnutrition or related causes
range widely, from 600,000 to three million.37
North Korean Refugees in China and Human Rights. The U.S. State
Department estimates that 30,000-50,000 North Korean refugees live in China.
Other estimates by non-governmental organization range between 100,000 and
300,000. 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.
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
36 UN raps ‘military first’ food access in North Korea, Agence France Presse, March 13,
2008. Photo of N.Korea diverting rice aid to army revealed, Chosun Ilbo, March 20, 2008.
37 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.

---

CRS-12
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.
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 accepts refugees seeking entrance into
its missions and allows them entrance into South Korea, and it negotiated with China
over how to deal with these refugees.38 However, South Korea, too, opposes
encouragement of a refugee exodus from North Korea.
Groups that aid North Korean refugees apparently operate an “underground
railroad” that transports refugees through China into countries on China’s southern
border, including Thailand, Vietnam, Laos, and Cambodia. Several hundred refugees
at a time reportedly are in these countries awaiting repatriation to South Korea or
other countries. In early 2008, the number in Thailand was estimated at about
1,200.39
Most observers, including refugee and human rights groups, believe that 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. It has not raised the issue in the six
party talks. 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. Assistant Secretary of State Christopher Hill told the Senate Foreign
Relations Committee on February 6, 2008, that the United States had admitted 37
North Korean 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
38 Kirk, Jeremy. “N. Korean Defections Strain Ties,” Washington Times, February 11, 2005.
p.A17.
39 Thailand urged Seoul to accept more N. Korean refugees, Chosun Ilbo (internet version),
March 19, 2008.

---

CRS-13
Union under Stalin.40 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. The United States and the
European Union have secured resolutions from the U.N. Human Rights Commission
expressing concern over human rights violations in North Korea, including
concentration camps and forced labor. The North Korean Human Rights 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. However, the Bush
Administration has refrained from raising human rights with North Korea in the six
party nuclear talks. Assistant Secretary of State Christopher Hill has said that the
United States would normalize relations with North Korea when North Korea
dismantles its nuclear programs, but he also has stated that human rights will be on
the agenda of normalization.41 (For a complete analysis of the refugee and human
rights issues, see CRS Report RL34189, North Korean Refugees in China and
Human Rights Issues: International Response and U.S. Policy Options.)
North Korea-South Korea Relations. 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. His successor, Roh Moo-hyun, continued
these policies under a “Peace and Prosperity Policy,” which his government
described as seeking “reconciliation, cooperation, and the establishment of peace”
with North Korea. South Korean officials also held that these policies will encourage
positive internal change within North Korea. Key principles of this conciliation
policy have been: the extension of South Korean economic and humanitarian aid to
North Korea, the promotion of North-South economic relations, separating economic
initiatives from political and military issues, no expectation of strict North Korean
reciprocity for South Korean conciliation measures, avoidance of South Korean
government public criticisms of North Korea over military and human rights issues,
and settlement of security issues with North Korea (including the nuclear issue)
through dialogue only without pressure and coercion.
South Korea’s conciliation policy included significant amounts of food and
fertilizer, including 400,000 to 500,000 tons of rice annually through 2007. North-
South trade surpassed $1 billion in 2005, a ten-fold increase since the early 1990s.
Seoul and Pyongyang also instituted a series of reunion meetings of members of
separated families. As of 2005, nearly 10,000 South Korean had participated in
reunions.42
40 U.S. human rights report — Korea, Yonhap News Agency, March 11, 2008.
41 Statement by Assistant Secretary of State Christopher Hill to the Senate Foreign Relations
Committee, February 6, 2008.
42 Republic of Korea. Ministry of Unification. Peace and Prosperity: White Paper on
Korean Unification 2005. 169 pages.

---

CRS-14
The conciliation policy also has produced three major economic projects. A
tourist project at Mount Kumgang, in North Korea just north of the demilitarized
zone (DMZ). Operated by the Hyundai Asan Corporation, the Mount Kumgang
tourist project has hosted over one million visitors from South Korea. Another
agreement is for the connecting of roads and railways across the DMZ. The roads
opened in 2003, and the first train crossed the DMZ in November 2007. The third
project is the establishment by Hyundai Asan of an “industrial complex” at Kaesong
just north of the DMZ. South Korean companies are to invest in manufacturing,
using North Korean labor. As of March 2008, 69 companies had set up facilities,
employing nearly 24,000 North Korean workers.43 The plan envisages 2,000
companies investing by 2012, employing at least 500,000 North Koreans. The wages
of North Korean workers are paid in hard currency to a North Korean state agency.44
The Mount Kumgang and Kaesong projects have been a significant source of
finances for North Korean leader, Kim Jong-il. The Mount Kumgang tourist project
resulted in large South Korean monetary payments to Kim Jong-il through both
official payments and secret payments by Hyundai Asan, especially in the 1999-2001
period.45 It also appears likely that the North Korean government keeps most of the
hard currency paid to North Korean workers at Kaesong.46 The Kaesong industrial
complex will generate considerable foreign exchange income to the North Korean
regime in the near future as it expands — an estimated $500 million in annual wage
income by 2012 and an additional $1.78 billion in estimated tax revenues by 2017.47
President Roh and Kim Jong-il held a summit meeting in October 2007. Roh
promised South Korean financing of several large infrastructure projects in North
Korea, including a second industrial zone, refurbishing Haeju port, extension of
North Korea’s railway line north of Kaesong, a highway between Kaesong and
Pyongyang, and a shipbuilding complex in the port of Nampo.48
43 Businesses concerned about inter-Korean industrial park, Yonhap News Agency, March
27, 2008.
44 “Factbox — South Korea’s industrial park in the North.” Reuters News, June 12, 2006.
Faiola, Anthony. “Two Koreas learn to work as one.” Washington Post, February 28, 2006.
p. A10.
45 CRS reported the secret Hyundai payments in 2001. The Kim Dae-jung administration
denied for two years that secret payments were made. In June 2003, a South Korean special
prosecutor reported that secret payments of $500 million were made shortly before the June
2000 North-South summit. See Kang Chu-an, North cash called “payoff” by counsel,
Chungang Ilbo (internet version), June 26, 2003.
46 SKorea says northern workers at joint industrial zone get paid, Associated Press,
November 11, 2006. An official of the South Korean Unification Ministry stated that North
Korean workers at Kaesong received only about five percent of the monthly wage of $57
from the North Korean agency that collects the wages.
47 Moon Ihlwan, Bridging the Korean economic divide, Business Week Online, March 8,
2006.
48 Norimitsu Onishi, Korea summit meeting paves way for joint projects, New York Times,
October 5, 2007, p. A3.

---

CRS-15
South Korea’s President Lee Myung-bak, who took office in February 2008,
stated that he will continue main features of Roh Moo-hyun’s policies, including the
provision of humanitarian aid (food and fertilizer) to North Korea and a continuation
of the Mount Kumgang and Kaesong projects. He enunciated a “3000 Policy” to
help North Korea raise per capita income to $3,000 over the next ten years. Lee,
however, says he will review the infrastructure promised by Roh Moo-hyun at the
October 2007 North-South summit, looking at options of canceling or postponing
them. He said that he will base his decisions on these projects on the extent of
progress on the North Korean nuclear issue, the economic feasibility of the projects,
the financial costs, and the degree of South Korean public support.49
Lee asserted that he will link South Korean policy toward North Korea more
closely to the status of the nuclear negotiations. He has called for the complete
dismantlement of North Korea’s nuclear programs and weapons. The newly-
designated chairman of the South Korean Joint Chiefs of Staff stated on March 26,
2008, that the South Korean military had contingencies for a strike against North
Korean nuclear installations if the South Korean government concluded that North
Korea was in the process of launching nuclear weapons against South Korea. His
Unification Minister said on March 19, 2008, that it would be difficult to expand the
Kaesong industrial zone until there was progress on the nuclear issue.50 Lee also
stated that he will reverse Roh’s policy of not raising human rights issues with North
Korea. He said the South Korean government will raise the issues of South Korean
fishermen kidnapped by North Korea and South Korean soldiers from the Korean
War still held as prisoners by North Korea.51
North Korea reacted to these statement at the end of March 2008 by expelling
eleven South Korean officials from Kaesong and test firing a number of missiles into
the Yellow Sea. Its propaganda organs issued threats against South Korea.
Moreover, annual North-South talks over South Korea’s rice aid to North Korea have
not taken place; the talks usually are held in March.
U.S.-R.O.K. Free Trade Agreement (FTA)
On June 30, 2007, the United States and South Korea signed a Free Trade
Agreement (KORUS FTA). If approved the agreement would be the largest FTA that
South Korea has signed to date and would be the second largest (next to the North
American Free Trade Agreement — NAFTA) in which the United States participates.
South Korea is the seventh-largest trading partner of the United States; total trade in
2007 was close to $80 billion. Various studies conclude that the agreement would
increase bilateral trade and investment flows.
49 Sin Sok-ho, Joint interview with President-elect Lee Myung-bak by Dong-A Ilbo, Asahi
Shimbun, and the Wall Street Journal, Dong-A Ilbo (internet version), February 4, 2008.
50 Choe Sang-hun, South Korea adds terms for its aid to the North, New York Times, March
27, 2007, p. A6.
51 Ibid.

---

CRS-16
The proposed KORUS FTA covers a wide range of trade and investment issues,
and, therefore, could have wide economic implications for the United States and
South Korea. It includes provisions for the elimination of tariffs on trade in most
manufactured goods and partial liberalization of the services trade. The agreement
also includes provisions on a number of sensitive issues, such as autos, agriculture,
and trade remedies, on which agreement was reached only during the final hours of
negotiations.
To enter into force, the FTA would need congressional approval in the form of
implementation legislation. The negotiations were conducted under the trade
promotion authority, also called fast-track authority, that Congress granted the
President under the Bipartisan Trade Promotion Act of 2002 (P.L. 107-210). The
authority allows the President to enter into trade agreements that receive expedited
congressional consideration with no amendments and limited debate. The White
House has not indicated when it will send the draft implementing legislation to
Congress. (The trade promotion authority sets no deadline for the President to do
this.)
There is vocal support for the KORUS FTA in both the United States and South
Korea. U.S. supporters view passage as important to secure new opportunities for
U.S. business in the South Korean market. Other supporters argue that the FTA will
strengthen the U.S.-South Korean alliance as a whole, although other observers
caution that the FTA should be supported on the basis of economic benefits and not
linked to the military alliance.
The South Korean National Assembly will have to ratify the FTA and the
Assembly reportedly is divided closely. In the United States, the auto and steel
manufacturers and their labor unions oppose the agreement on the grounds that it
would reduce barriers to the import of South Korean steel and automobiles and
would not open the South Korean market sufficiently for U.S. autos. The U.S.
agricultural community and some Members of Congress have withheld support for
the FTA because of South Korea’s restrictions on imports of U.S. beef. Shortly
before the Bush-Lee Myung-bak summit meeting in April 2008, the ROK
government announced a plan for a staged lifting of restrictions on the import of U.S.
beef.
Differences between the Bush Administration and the Democratic leadership in
Congress and leading Democratic presidential candidates have made uncertain the
timing and the likelihood of the President’s submission of the FTA to Congress. On
the South Korean side, President Lee Myung-bak is weighing the timing of asking
the Korean National Assembly to take up the KORUS FTA. (For more details, see
CRS Report RL33435, The Proposed South Korea-U.S. Free Trade Agreement
(KORUSFTA).)

---

CRS-17
U.S.-South Korea Military Alliance52
The U.S. alliance with South Korea is undergoing fundamental changes that are
affecting the alliance structure and the U.S. military presence in South Korea. Four
factors influenced the initiation of this process in 2003. One was the demonstration
of anti-American sentiment in South Korea in 2002, particularly against the U.S.
military presence in South Korea, sparked by the accidental killing of two South
Korean schoolgirls by a U.S. military vehicle. Mass demonstrations against the
United States ensued throughout South Korea over the U.S. military command’s
(USFK) handling of the incident. South Korean attitudes critical of the United States
are especially pronounced among South Koreans below the age of 50, while older
South Koreans remain substantially pro-U.S. Recent South Korean polls indicate
that anti-American sentiment declined after 2005, but the situation no doubt remains
volatile. A second factor was the policies of President Roh Moo-hyun, elected in
2002, who sought changes in the alliance structure to give South Korea more equality
and independence from the United States. A third was plans for a restructuring of
U.S. forces in the Western Pacific that the Pentagon and the U.S. Pacific Command
began to develop in the late 1990s, coupled with the need for more U.S. troops for
the war in Iraq. A fourth contributing factor was the gradual recognition that the
capabilities of North Korean conventional military forces have deteriorated
substantially as a result of the collapse of the Soviet Union (North Korea’s main
supplier of arms) and the collapse of North Korea’s economy in the 1990s.
The main changes since 2003 have been:
! The planned withdrawal of the U.S. Second Infantry Division of
about 15,000 troops from its position just below the demilitarized
zone to “hub bases” about 75 miles south at Pyongtaek.
! The planned relocation of the U.S. Yongsan base, which houses
about 9,000 U.S. military personnel in the center of Seoul, to
Pyongtaek.
! The withdrawal of a 3,600-man combat brigade of the Second
Division from South Korea to Iraq in 2004.
! The withdrawal from South Korea of an additional 12,500 U.S.
troops, to be completed in September 2008, bringing total U.S. troop
strength in South Korea down to 25,000.
! An $11 billion U.S. plan to modernize U.S. forces in South Korea.
! Increased deployments of U.S. combat airpower into South Korea on
a rotational basis.
52 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.

---

CRS-18
! A U.S.-South Korea (R.O.K.) operational control (OPCON)
agreement to dismantle the U.S.-R.O.K. Combined Forces
Command (CFC), which has been headed by the U.S. commander
in Korea, and the establishment of separate U.S. and R.O.K. military
commands. These steps are slated to begin in October 2009 and be
completed by March 2012. President Roh initially proposed the
dismantlement of CFC and the establishment of separate military
commands. Under the OPCON agreement, a Military Cooperation
Center will be responsible for planning military operations, joint
military exercises, logistics support, intelligence exchanges, and
assisting in the operation of the C4I (communication, command,
control, computer) system.
Several issues remain to be resolved in implementing these plans.53 The
relocations of the Second Division and the Yongson garrison have been delayed until
at least 2013 because South Korea could not meet the financial costs (an estimated
$10.7 billion) and delays in the construction of the “hub bases” at Pyongtaek.
General B.B. Bell, U.S. military commander in Korea, expressed unhappiness over
the delay, and the division of financial costs for the relocations likely will be an issue
for future negotiations. Aides to South Korea’s new President, Lee Myung-bak, have
suggested that the Lee Administration may seek to renegotiate the OPCON
agreement in order to cancel or postpone the dismantling of the CFC. However,
Lee’s Defense Minister, Lee Sang-hee, said on March 26, 2008, that the OPCON
agreement was “an indispensable step for the future development of our military
alliance.”54 Considerable sentiment exists within Lee’s Grand National Party in favor
of a renegotiation. General Bell said that there is no rationale for a renegotiation, and
Pentagon officials reportedly have described the OPCON agreement as a “closed
subject.”55
Another issue will be whether there will be further U.S. troop withdrawals from
South Korea after the current cycle of withdrawals and relocations ends in September
2008. General Bell has stated that the future U.S. defense role in South Korea will
rely primarily on airpower.56 The spokesman for the South Korean Defense Ministry
stated in March 2008 that the Defense Ministry’s understanding was that the U.S.
53 For an informative report on the issues facing the U.S.-R.O.K. alliance, see U.S. National
Defense University, Institute for National Strategic Studies, Moving the U.S.-ROK Alliance
into the 21st Century. September 2007.
54 Delay of troop control transfer not an option: Defense chief, Yonhap News Agency,
March 26, 2008.
55 Last Korea-US military talks held under Roh government, Yonhap News Agency, January
24, 2008. Robert Campbell, U.S. commander backs S. Korea war command transfer,
Reuters News, January 28, 2008.
56 DPRK military eroded but still threat: General Bell, Yonhap News Agency, February 1,
2008.

---

CRS-19
military command (USFK) wanted a U.S. troop level after September 2008 at 28,000
rather than the planned 25,000.57
Advisers to President Lee have talked about broadening the U.S.-South Korean
alliance beyond the Korean peninsula and Northeast Asia. President Roh Moo-hyun
sent 3,600 R.O.K. troops to Iraq in 2004 the third largest contribution of U.S. allies.
They have been based in the relatively secure Kurdish area in northern Iraq and have
not engaged in anti-insurgency combat. Troop withdrawals will bring the R.O.K.
contingent down to about 650 by the end of 2008.58
In 2007, South Korea withdrew 200 non-combat military personnel it sent to
Afghanistan, and the government has not responded to appeals of U.S. commanders
since mid-2006 for U.S. allies to send ground combat troops to Afghanistan to help
deal with the resurgent Taliban. In contrast to the absence of a South Korean
commitment of troops to Afghanistan, eight other U.S. allies have each contributed
over 1,000 troops, and another five allies have each contributed over 500 troops.59 In
2007, it appears that the South Korean government paid a sizeable ransom to the
Taliban to secure the release of kidnapped South Korean Christian missionaries,
reported by one Taliban official to be $20 million.60 In response to a question, U.S.
Ambassador-designate to South Korea, Kathleen Stephens, stated that the U.S. and
South Korean governments should discuss how South Korea could contribute to the
war in Afghanistan. The South Korean newspaper, Korea Herald, reported that U.S.
Secretary of Defense Robert Gates asked South Korean Representative Chong Mong-
joon of the Grand National Party for the deployment of troops to Afghanistan to train
Afghan military and police personnel.61
The United Nations Command, established in 1950 at the start of the Korean
War, is to remain under the U.S. military commander, according to the OPCON
agreement.62 U.S. military officials have called for negotiations with R.O.K.
counterparts over the role of the U.N. Command after the U.S. and R.O.K.
commands have been separated. One issue is the role of the U.N. Command in
maintaining the 1953 Korean armistice, including commanding South Korean forces
57 Jung Sung-ki, US wants to freeze troop cuts, Korea Times, March 20, 2008.
58 Andrew Salmon, S. Korea moves to stay in Iraq, Washington Times, October 24, 2007,
p. A1.
59 Department of Defense table published in the Washington Times, January 17, 2008, p.
A10.
60 Saeed Ali Achakzai, Seoul said to have ransomed hostages, Washington Times, September
2, 2007, p. A1. Andrew Salmon, Top spy skirts ransom question on hostages, Washington
Times, September 7, 2007, p. A15.
61 Lee Joo-hee, Korea faces tough balancing act with U.S. request list, Korea Herald
(internet version), April 14, 2008. Envoy-nominee to Seoul highlights Afghan, N.K. Issues,
Yonhap News Agency, April 10, 2008.
62 Jin Dae-woon. Korea, U.S. compromise on command transfer. Korea Herald (internet
version), October 22, 2006.

---

CRS-20
in fulfilling functions related to the armistice. Another is the authority of the U.N.
commander in wartime once U.S. and R.O.K. commands are separated.63
South Korea purchased over $3.7 billion worth of American military weapons
and equipment in 2007. The South Korea government has requested that the U.S.
government upgrade South Korea’s status as an arms purchaser to the NATO Plus
Three category. South Korea currently is treated as a Major Non-NATO Ally. This
upgrade would establish a higher dollar threshold for the requirement that the U.S.
Executive Branch notify Congress of pending arms sales to a country, from $14
million to $25 million. Congress would have 15 days to consider the sale vs. 50 days
for Major Non-NATO Allies. Legislation (H.R. 5443) has been introduced in the
House of Representatives to grant South Korea NATO Plus Three status.
The total cost of stationing U.S. troops in South Korea is over $2 billion
annually. The South Korean direct financial contribution for 2007 was
approximately $770 million (725.5 billion won). This is about 40% of the total cost
of maintaining U.S. forces in South Korea. In recent U.S.-R.O.K. military
negotiations, Pentagon officials called for South Korea to increase its share to at
least 50%. They stated that if South Korea does not raise its share, the Pentagon will
make cuts in costs and/or U.S. personnel.64 A U.S.-R.O.K. agreement of December
2006 specified a South Korean financial contribution of about $785 million in 2008.
South Korea’s Political System
From the end of the Korean War in 1953 until 1988, South Korea was governed
by authoritarian leaders, Rhee Syngman, Park Chung-hee, and Chun Doo-hwan. Park
and Chun were military leaders who took power through coup d’etats. Except for
several years in the 1960s, the governments under these leaders followed policies that
highly restricted political and civil liberties. However, the Park Chung-hee
government (1963-1979) orchestrated the Korean “economic miracle,” which turned
South Korea from a poor, agricultural-based country into the modern industrial and
high technology country it is today. In 1987, massive pro-democracy demonstrations
(and behind-the-scenes American pressure) forced Chun to allow the drafting of a
new constitution and the holding of free presidential elections. The constitution
established a President, elected for a single five year term. Since 1987, five
presidents have been elected to office. A National Assembly of 299 members,
elected to four-year terms, received expanded powers to legislate laws and to conduct
oversight and investigations over the executive branch. Courts were given greater
independence from South Korean presidents. Municipal and provincial governments
were given new powers independent of the central government.
63 Jin Dae-soong. Speculation rises over U.S. intentions on UNC. Korea Herald (internet
version), January 21, 2007.
64 Pentagon taps Seoul on cost-sharing, Washington Times, October 3, 2006. p. A4.

---

CRS-21
The developments of 1987 also ushered in new political forces which have
operated alongside more traditional elements of Korean political culture.65 The
President remains a powerful figure. However, his tenure is only one term, and his
base of support is no longer the military. The military since 1987 has ended its
political role. Political parties were weak and unstable under the authoritarian
regimes, and they have retained many of those characteristics despite their growing
importance in the National Assembly and at the local level. Political parties
generally have been the appendages of powerful political leaders. They often have
been based in different regions of South Korea. Members have viewed their loyalty
as directed to the leader rather than to a party as an institution. They have viewed the
political parties as a means of acquiring power and position. Parties thus have been
unstable, often lasting only for short periods before breaking up. The latest example
is the disintegration of the Uri Party in 2007. The Uri Party was led by President Roh
Moo-hyun, who was elected in December 2002. It was the largest party in the
National Assembly with 139 seats. However, with polls showing Roh’s public
approval extremely low and the Uri Party’s prospects in the December 2007 president
election as very poor, defections began from the party in 2007. Uri’s strength in the
National Assembly fell to 110, and remaining party leaders created a new party, the
United Democratic Party.
Nevertheless, the United Democratic Party entered the presidential race in 2007
in a weakened condition. Its candidate lost badly to the candidate of the opposition
Grand National Party (GNP), former mayor of Seoul, Lee Myung-bak, in December
2007. Lee, who won nearly 49% of the vote, ran on a pro-business platform,
pledging to relax government regulations over domestic and foreign business and cut
the corporation tax in order to restore the high level of South Korean economic
growth that had persisted from the late 1960s until the late 1990s and create up to
600,000 new jobs annually. He said he would create a $40 billion investment fund
to develop North Korea toward raising its per capita income from an estimated $500
to $3,000.66
However, the Lee Administration got off to a shaky start after his inauguration
in February 2008. Three of his cabinet appointees were forced to resign over charges
of corruption.67 Lee’s Grand National Party suffered defections over the selection of
candidates for National Assembly seats in the election of April 9, 2008.68 The
election results gave the GNP a bare majority of 153 seats in the 299 seat National
Assembly. Two other parties perceived as conservatives won 32 seats, but they are
65 Steinberg, David I and Shin, Myung. Tensions in South Korean political parties in
transition. Asian Survey, July-August 2006. p. 517-537.
66 Andy Jackson, Seoul Choice, The Wall Street Journal Asia, October 30, 2007, p. 13. Jim
Ji-hyun, Champion of open economy soft on N Korea, Korea Herald (internet version),
December 5, 2007.
67 Choe Sang-hun, Corruption allegations batter South Korea’s new President, New York
Times, March 6, 2008, p. A6.
68 Large group of swing voters poses threat to ruling party, Yonhap News Agency, March
30, 2008.

---

CRS-22
viewed as anti-Lee Myung-bak. Former President Roh’s United Democratic Party
won only 81 seats.
Political parties and political institutions that have arisen since 1987 have
demonstrated sharper ideological positions, especially on issues like relations with
North Korea and the United States. Ideological divisions on these issues have had
a strong generational element in them. Older South Koreans have attitudes more
favorable to the United States and are anti-communist. Younger South Koreans are
more supportive of conciliation with North Korea and are critical of key elements of
the South Korean-U.S. alliance. An array of non-governmental groups influence the
government on key policy issues such as the role of labor unions, environmental
policies, government support of farmers, women’s issues, and consumer issues. The
press includes a number of newspapers but also extensive news-oriented computer
websites.
For Additional Reading
CRS Report RL32167. Drug Trafficking and North Korea: Issues for U.S. Policy,
by Raphael F. Perl.
CRS Report RL34256. North Korea: Terrorism List Removal?, by Larry A. Niksch
and Raphael F. Perl.
CRS Report RS22845. North Korea’s Abduction of Japanese Citizens and the Six
Party Talks, by Emma Chanlett-Avery and Andorra Bruno.
CRS Report RL33885. North Korean Crime-for-Profit Activities, by Liana Sun
Wyler and Dick K. Nanto.
CRS Report RL31785. Foreign Assistance to North Korea, by Mark E. Manyin.
CRS Report RL31696. North Korea: Economic Sanctions, by Dianne E. Rennack.
CRS Report RL30493. The Kaesong North-South Korean Industrial Complex, by
Dick K. Nanto and Mark Manyin.
CRS Report RL34189. The North Korean Economy: Leverage and Policy Analysis,
by Dick K. Nanto and Emma Chanlett-Avery.
CRS Report RL33435. The Proposed South Korea-U.S. Free Trade Agreement
(KORUSFTA), by William H. Cooper and Mark E. Manyin.
CRS Report RL33590. North Korea’s Nuclear Weapons Development and
Diplomacy, by Larry A. Niksch.
CRS Report RL34256. North Korea’s Nuclear Weapons: Latest Developments, by
Mary Beth Nikitin.

---

CRS-23
CRS Report RS24173. North Korean Ballistic Missile Threat to the United States,
by Steven Hildreth.
CRS Report RL31555. China and Proliferation of Weapons of Mass Destruction
and Missiles: Policy Issues, by Shirley A. Kan.
CRS Report RL34189. North Korean Refugees in China and Human Rights Issues:
International Response and U.S. Policy Options, by Rhoda Margesson, Emma
Chanlett-Avery, and Andorra Bruno.

---