U.S.-South Korea Relations Mark E. Manyin, Coordinator Specialist in Asian Affairs Emma Chanlett-Avery Specialist in Asian Affairs Mary Beth Nikitin Specialist in Nonproliferation July 8, 2011 Congressional Research Service 7-5700 www.crs.gov R41481 CRS Report for Congress Prepared for Members and Committees of Congress U.S.-South Korea Relations Summary Since late 2008, relations between the United States and South Korea (known officially as the Republic of Korea, or ROK) have been arguably at their best state in decades. By the middle of 2010, in the view of many in the Obama Administration, South Korea had emerged as the United States’ closest ally in East Asia. Of all the issues on the bilateral agenda, Congress has the most direct role to play in the proposed Korea-U.S. Free Trade Agreement (KORUS FTA). Congressional approval is necessary for the agreement to go into effect. In early December 2010, the two sides announced they had agreed on modifications to the original agreement, which was signed in 2007. South Korea accepted a range of U.S. demands designed to help the U.S. auto industry and received some concessions in return. In the United States, the supplementary deal appears to have changed the minds of many groups and Members of Congress who previously had opposed the FTA, which is now expected to be presented to the 112th Congress in 2011. If Congress approves the agreement, it would be the United States’ second-largest FTA, after the North American Free Trade Agreement (NAFTA). U.S.-South Korean coordination over policy towards North Korea has been particularly close. The Obama and Lee Administrations have adopted a medium-to-longer-term policy of “strategic patience” that involves four main elements: refusing to return to the Six-Party Talks without an assurance from North Korea that it would take “irreversible steps” to denuclearize; gradually attempting to alter China’s strategic assessment of North Korea; using Pyongyang’s provocations as opportunities to tighten sanctions against North Korean entities; and insisting that significant multilateral and U.S. talks with North Korea must be preceded by improvements in North-South Korean relations. Lee, in turn, has linked progress in many areas of North-South relations to progress in denuclearizing North Korea. South Korea halted almost all remaining inter-Korean projects after the March 2010 sinking of the South Korean naval vessel, the Cheonan, an event the United States and South Korea have blamed on North Korea. Tensions with North Korea were further heightened by Pyongyang’s late November 2010 shelling of a South Korean island, killing two South Korean soldiers and two civilians. The events further eroded the loose consensus that had prevailed in South Korea against openly discussing and planning for reunification in the short or medium term. While few South Koreans advocate actively trying to topple the Kim Jong-il regime, North Korea’s actions have led many in the Lee government to view North Korea as much more of an immediate danger than previously thought. As a result, South Korea has adopted a new defense posture of “aggressive deterrence” that would involve a more significant military response to any North Korean attacks. The United States maintains about 28,500 troops in the ROK. Since 2009, the two sides have accelerated steps to transform the U.S.-ROK alliance’s primary purpose from one of defending against a North Korean attack to a regional and even global partnership. Washington and Seoul have announced a “Strategic Alliance 2015” plan to relocate U.S. troops on the Peninsula and boost ROK defense capabilities. Some Members of Congress have criticized the relocation plans. Much of the current closeness between Seoul and Washington is due to President Lee. It is unclear how sustainable many of his policies will be, particularly into 2012, when South Koreans will elect a new president and a new legislature. Bilateral coordination will be particularly tested if South Korea’s left-of-center groups, which bitterly oppose much of Lee’s agenda, retake the presidency and/or the National Assembly. This report will be updated periodically. Congressional Research Service U.S.-South Korea Relations Contents Developments in the First Half of 2011 .......................................................................................1 New U.S. Ambassador Appointed .........................................................................................1 The KORUS FTA .................................................................................................................1 North Korea Policy Coordination ..........................................................................................2 South Korea’s New “Aggressive Deterrence” Military Posture ..............................................3 Issues Surrounding U.S. Troop Deployments in South Korea.................................................3 President Lee’s Influence Waning? ........................................................................................4 Reports of Dumping of Agent Orange at U.S. Bases ..............................................................4 South Korea’s Pyeongchang Chosen to Host 2018 Winter Olympics......................................5 Overview ....................................................................................................................................5 Historical Background ..........................................................................................................8 North Korea in U.S.-ROK relations.............................................................................................9 Policy Coordination ..............................................................................................................9 Coordination over the Cheonan Sinking ..........................................................................9 New Revelations of North Korea’s Uranium Enrichment Capabilities............................ 10 North Korea’s Artillery Attack Against South Korea...................................................... 10 Inter-Korean Relations .............................................................................................................. 11 South Korea’s Regional Relations ............................................................................................. 13 Growing South Korea-Japan Cooperation............................................................................ 13 South Korea-China Relations .............................................................................................. 14 Security Relations and the U.S.-ROK Alliance .......................................................................... 15 Budgetary and Operational Challenges ................................................................................ 15 U.S. Alliance and ROK Defense Reform Plans .................................................................... 16 The Relocation of U.S. Forces Korea (USFK) ............................................................... 16 Tour Normalization ....................................................................................................... 17 Cost Sharing ................................................................................................................. 18 Opcon Transfer ............................................................................................................. 18 The “Strategic Flexibility” of USFK.............................................................................. 19 South Korean Defense Industry and Purchases of U.S. Weapons ................................... 19 South Korea’s Deployment to Afghanistan .................................................................... 20 Economic Relations .................................................................................................................. 20 The KORUS FTA ............................................................................................................... 21 South Korea’s Economic Performance ................................................................................ 22 Other Issues .............................................................................................................................. 23 Bilateral Nuclear Cooperation ............................................................................................. 23 South Korean Nonproliferation Policy................................................................................. 24 South Korean Politics................................................................................................................ 24 A Powerful Executive Branch ............................................................................................. 25 Political Parties ................................................................................................................... 25 Selected CRS Reports on the Koreas ......................................................................................... 26 South Korea ........................................................................................................................ 26 North Korea ........................................................................................................................ 26 Congressional Research Service U.S.-South Korea Relations Figures Figure 1. Map of the Korean Peninsula........................................................................................7 Figure 2. USFK Bases After Realignment Plan is Implemented ................................................. 17 Figure 3. Party Strength in South Korea’s National Assembly.................................................... 25 Tables Table 1. Annual U.S.-South Korea Merchandise Trade, Selected Years .................................... 21 Contacts Author Contact Information ...................................................................................................... 27 Congressional Research Service U.S.-South Korea Relations Developments in the First Half of 2011 New U.S. Ambassador Appointed In June, President Obama announced his intent to nominate Sung Kim, chief representative to the Six-Party Talks over North Korea’s nuclear program, to be the next Ambassador to South Korea. If confirmed by the Senate, Kim will be the first Korean American to hold the post. Kim, whose father was a South Korean government official, emigrated to the United States when he was seven, and became a U.S. citizen in the early 1980s. The KORUS FTA In 2007, the United States and South Korea signed the South Korea-U.S. Free Trade Agreement. If approved by both houses of Congress and the South Korean National Assembly, it would be the second-largest FTA by market size in which the United States participates (after the North American Free Trade Agreement, NAFTA). It would also be South Korea’s second-largest FTA (after the Korea-European Union FTA, which went into effect on July 1, 2011). As of early July 2011, the KORUS FTA remains poised for legislative action in both countries. In the United States, however, controversies over whether and how to link the FTA to other trade and economic measures have stalled the agreement. Throughout the winter and early spring of 2011, many Republican leaders pushed the Administration to submit the KORUS FTA together with the Colombia and Panama FTAs. In the spring of 2011, the Obama Administration announced that it had completed the technical procedures necessary to submit implementing legislation for the KORUS FTA—along with FTAs with Colombia and Panama—for congressional consideration. In May, the Administration announced it would not submit the three FTAs to Congress unless an agreement was reached on Trade Adjustment Assistance (TAA) programs, which provide aid for trade-affected workers, firms, farmers, and communities. A number of Republicans oppose reauthorizing TAA. In late June, the Obama Administration announced its intent to include TAA in the KORUS FTA’s implementing bill and the Senate Finance Committee posted a draft implementing bill that included an extension of TAA programs. On July 7, the Senate Finance Committee held a “mock” markup of these bills and approved the combined KORUS FTA-TAA bill by a party-line 13-11 vote. The committee’s 11 Republicans voted against the measure due to the inclusion of the TAA language. On the same day, the Republican-controlled House Ways and Means Committee voted 22-15 along party lines to approve a KORUS FTA bill without the TAA language. Many Democrats who support the KORUS FTA voted against the bill because the TAA language was excluded. In South Korea, key members of the National Assembly indicated that they would likely delay moving forward on ratification of the KORUS FTA until the U.S. Congress took action. Additionally, in the late spring of 2011, Sohn Hak-kyu, the leader of the largest opposition party, the Democratic Party (DP), hardened his opposition to the agreement. Sohn has not indicated whether he will seek to boycott or physically block a vote, as his party has done in the past. Most observers think that the current National Assembly would approve the KORUS FTA, perhaps by a wide margin. (The ruling GNP—whose members appear to overwhelmingly favor the agreement—holds a comfortable majority in the National Assembly.) However, many warn that if a vote is not held until 2012, the fate of the KORUS FTA could become less certain due to the influence of 2012 electoral politics. In addition, President Lee’s influence appears to be waning, Congressional Research Service 1 U.S.-South Korea Relations and some GNP leaders have claimed to want to change the tone of politics in Seoul by, among other things, not ramming bills through the National Assembly. North Korea Policy Coordination For years, the Obama and Lee Administrations have essentially adopted a joint approach of “strategic patience” toward North Korea that involves four main elements: refusing to return to the Six-Party Talks over North Korea’s nuclear program without a North Korean assurance that it would take “irreversible steps” to denuclearize; gradually attempting to alter China’s strategic assessment of North Korea; using Pyongyang’s provocations as opportunities to tighten sanctions against North Korean entities; and insisting that Six-Party Talks and/or U.S.-North Korean talks must be preceded by North-South Korean talks on denuclearization and improvements in NorthSouth Korean relations. In early 2011, China backed the last of these principles, though it appears to have tried to use this stance to pressure South Korea (as well as the United States) to relax its conditions for holding talks with North Korea. Some have criticized the U.S. approach by saying that it effectively gives Seoul a “veto” over U.S. initiatives toward North Korea. Throughout the spring and early summer of 2011, there were a number of press reports that Obama Administration officials also were encouraging the Lee government to soften South Korea’s approach toward North Korea. If such speculation is accurate, it is not apparent from either the joint appearances by U.S. and South Korean officials or from the two countries’ actions. In early 2011, Lee invited North Korea to participate in inter-Korean nuclear talks and in the 2012 Nuclear Security Summit, which will be held in Seoul. During the first half of 2011, South Korea also was involved in secret, high-level talks with North Korea that were disclosed by Pyongyang, apparently in an effort to embarrass Lee. The Lee government also has indicated its willingness to hold separate bilateral talks with North Korea on denuclearization and on overall inter-Korean relations. None of these initiatives necessarily represent a shift in South Korean policy, however. Indeed, South Korean officials have repeatedly stated their belief that progress in nuclear negotiations, including the Six-Party Talks, should be at least partially linked to North Korea’s behavior toward South Korea—including some form of acknowledgement by Pyongyang of North Korea’s role in various provocations in 2010 (discussed below). One area of active U.S.-South Korean discussion, and perhaps debate, has been over whether one or both countries should provide food aid to North Korea, which has appealed for assistance. The Obama Administration is actively considering the North Korean request and in May dispatched an assessment team to North Korea to evaluate conditions there. South Korean officials indicated that their government would prefer that neither country provide large-scale assistance to North Korea unless Pyongyang changes its behavior.1 On June 15, 2011, the House passed by voice vote an amendment to H.R. 2112, the FY2012 Agriculture Appropriations Act, that would prohibit the Administration from using the primary U.S. food aid program to send food assistance to North Korea. The Senate has yet to act on H.R. 2112. 1 For more on the food aid debate, see CRS Report R40095, Foreign Assistance to North Korea, by Mark E. Manyin and Mary Beth Nikitin Congressional Research Service 2 U.S.-South Korea Relations South Korea’s New “Aggressive Deterrence” Military Posture South Korean attitudes toward North Korea have hardened since 2010. In March of that year, a South Korean naval vessel, the Cheonan, sank. A multinational investigation team led by South Korea determined that the ship was sunk by a North Korean submarine. In November, North Korea shelled the South Korean island of Yeonpyeong Island, which lies across the inter-Korean disputed western sea border. The barrage killed four South Koreans (two marines and two civilians), wounded dozens, and destroyed or damaged scores of homes and other buildings The provocations from North Korea, particularly the attack on Yeonpyeong Island, have introduced a new element of risk in the U.S.-South Korean alliance. In response to the attacks, the ROK military has strengthened its defense of its Northwest Islands and undertaken other structural changes to prepare for another possible provocation. South Korean President Lee stated that “war can be prevented and peace assured only when such provocations are met with a strong response. Fear of war is never helpful in preventing war ... the Armed Forces must respond relentlessly when they come under attack.”2 This posture, dubbed “aggressive deterrence,” could increase the chance of conflict escalation on the Peninsula. U.S. defense officials insist, however, that the exceedingly close day-to-day coordination in the alliance ensures that U.S.-ROK communication would be strong in the event of a new contingency. General Walter Sharp, outgoing U.S. commander of the Combined Forces Command (CFC) in South Korea, confirmed to press outlets in July that the alliance had developed coordinated plans for countermeasures against any North Korean aggression.3 Issues Surrounding U.S. Troop Deployments in South Korea In 2011, some Members of Congress have raised strong concerns with existing plans to relocate U.S. bases in South Korea and “normalize” the tours of U.S. troops there, including longer stays with family members accompanying them. In May 2011, Senators Carl Levin, John McCain, and James Webb issued a statement that urged a reconsideration of the existing plans for U.S. military presence in the Asia Pacific, including the current agreements in South Korea. A Government Accountability Office (GAO) report requested by members of the Senate Appropriations Committee released in May 2011 concluded that the Department of Defense had not demonstrated a “business case” to justify the tour normalization initiative, nor considered alternatives. 4 In June 2011, the Senate Armed Services Committee passed amendments to the 2012 Defense Authorization bill (S. 1253) that, if adopted, would prevent the obligation of any funds for tour normalization until further reviews of the plan are considered and a complete plan is provided to Congress. Critics of the Senators’ call to overhaul existing plans say that such changes could restrict U.S. military capabilities and readiness as well as jeopardize hard-fought agreements designed to make U.S. presence more politically sustainable in South Korea.5 2 The Blue House, Speech by President Lee Myung-bak, “The Building of an Advanced Nation will be Possible Only When We Sacrifice Ourselves for Others Rather Than Simply Pursuing Our Own Interest,” December 27, 2010. 3 “U.S., Seoul Secure Plans for Potential Counterattack,” Wall Street Journal. July 7, 2011. 4 Report found at http://www.gao.gov/products/GAO-11-316. 5 Bruce Klingner, “Proposed Re-Realignment for Northeast Asia Ignores Strategic Realities,” Heritage Foundation WebMemo #3262, May 18, 2011. Congressional Research Service 3 U.S.-South Korea Relations President Lee’s Influence Waning? In April 2011, President Lee’s ruling Grand National Party (GNP) lost three of four national-level by-elections for seats in the unicameral National Assembly. Many interpreted the results as a sign that the opposition Democratic Party (DP) may perform well in next year’s elections for South Korea’s National Assembly (scheduled for April 2012) and/or presidency (scheduled for December 2012). The DP generally has been critical of President Lee’s and President Obama’s tough policy toward North Korea. Its members tend to be more willing to question various aspects of the U.S.-South Korea alliance, and most have opposed the Korea-U.S. Free Trade Agreement. In reaction to the April 2011 election results, several GNP leaders resigned, and Lee replaced several members of his Cabinet. Many have observed that Lee’s clout over the GNP has declined markedly due to the elections and his “lame duck” status.6 A number of GNP members have declared their candidacy for the presidency. Thus far, the front-runner according to virtually all polls is an undeclared candidate, Ms. Park Geun-hye, whom Lee narrowly defeated in the GNP primary in 2007. The GNP continues to be divided between pro-Lee and pro-Park camps. Until the spring of 2011, the pro-Lee factions generally were ascendant. In early July 2011, a new GNP leadership team was selected through a combination of GNP members’ votes and a random telephone survey of South Korean citizens. Many analysts interpreted the results as further evidence of Lee’s declining clout. The top two vote-getters— including the new GNP chairman, Hong Chun-pyo—are seen as closely tied to Park Geun-hye. Three of the five members chosen for the leadership council are in their 40s, making the GNP’s current leadership team one of the youngest in memory. Lee’s apparently diminished clout likely will make it difficult for him to undertake major new or controversial initiatives. Most major issues in U.S.-South Korean relations are likely to be insulated from Lee’s political fortunes, for at least two reasons: (1) the institutional dominance of South Korea’s presidency; and (2) the GNP’s continued control over the National Assembly. The link between South Korean politics and U.S. interests could become more direct, however, if new sources of bilateral controversy flare up or if the “progressive” camp, led by the DP, should win a majority in the April 2012 National Assembly elections. Reports of Dumping of Agent Orange at U.S. Bases In the spring of 2011, several U.S. veterans stated to U.S. news organizations that during the 1960s and 1970s they been ordered to bury chemicals, including the defoliant “Agent Orange” dioxin, on U.S. military bases in South Korea. United States Forces Korea (USFK) and South Korea’s Ministry of the Environment began investigating and testing samples at the sites, some of which are on land that has been returned to South Korea, to see if there are signs of contamination. As of early July 2011, no major health problems appear to have been linked to the sites in question. The results of the first round of testing are expected to be completed in July 2011. In the weeks after the revelations, USFK officials won praise from across the South Korean political spectrum for their speed, transparency, and humbleness in responding. However, the 6 Lee is in year four of his five year term. By law, South Korean presidents cannot run for re-election. Congressional Research Service 4 U.S.-South Korea Relations issue could become an irritant in bilateral relations if many South Koreans begin to suspect a cover-up or a violation of U.S.-South Korean agreements. South Korea’s Pyeongchang Chosen to Host 2018 Winter Olympics In a sign of South Korea’s continued emergence as a global player, International Olympic Committee (IOC) delegates in early July 2011 voted overwhelmingly to award the 2018 Olympics to Pyeongchang, a city of 40,000 located about 110 miles east of Seoul. Pyeongchang had lost in the final round of two previous bids, in 2003 (for the 2010 Games, which were awarded to Vancouver) and in 2007 (for the 2014 Games, which will be held in Sochi, Russia). South Korea’s bids at the time were criticized for the lack of world-class facilities in Pyeongchang. In response, the South Korean government and various companies cooperated to spend billions of dollars in new facilities and infrastructure in and around the city. According to one report, between 2011 and 2018 the government plans to spend roughly 20 trillion won (approximately $19 billion), including around $3 billion for a high-speed rail connection to Seoul. 7 In its two previous Winter Games bids, South Korea’s proposals reportedly emphasized the Olympics’ potential to help ease tensions between North and South Korea. In contrast, the 2018 bid—under the slogan of “New Horizons”—stressed Pyeongchang’s ambitions to become a new regional winter sports center. After the result was announced, IOC President Jacques Rogge said that among the reasons for Pyeongchang’s selection were that the bid “enjoys massive support from the government and the public,” and that “the South Korean project will leave a tremendous legacy as ... a new winter sports hub in Asia.”8 Overview While the U.S.-South Korea relationship is highly complex and multifaceted, five factors arguably drive the scope and state of U.S.-South Korea relations: • the challenges posed by North Korea, particularly its weapons of mass destruction programs and perceptions in Washington and Seoul of whether the Kim regime poses a threat, through its belligerence and/or the risk of its collapse; • the growing desire of South Korean leaders to use the country’s middle power status to play a larger regional and, more recently, global role; • increasingly, China’s rising influence in Northeast Asia, which has become an integral consideration in many aspects of U.S.-South Korea strategic and (to a lesser extent) economic policymaking; • South Korea’s transformation into one of the world’s leading economies—with a very strong export-oriented industrial base—which has led to an expansion of 7 In-Soo Nam, “Get Ready For The Olympic Spendathon,” The Wall Street Journal, Korea Real Time blog, July 7, 2011, 5:38 PM KST. 8 International Olympic Committee Press Release, “IOC Elects PyeongChang as the Host City of 2018 Olympic Winter Games,” July 6, 2011. Congressional Research Service 5 U.S.-South Korea Relations trade disputes and helped drive the two countries’ decision to sign a free trade agreement; and • South Korea’s continued democratization, which has raised the importance of public opinion in Seoul’s foreign policy. Additionally, while people-to-people ties generally do not directly affect matters of “high” politics in bilateral relations, the presence of over 1.2 million Korean Americans and the hundreds of thousands of trips taken annually between the two countries has helped cement the two countries together. 9 9 For an estimate of the number of ethnic Koreans in the United States, see U.S. Census Bureau, “The Asian Population: 2000,” Census Brief C2KBR/01-16, February 2002, Table 4. Congressional Research Service 6 U.S.-South Korea Relations Figure 1. Map of the Korean Peninsula Source: Prepared by CRS based on ESRI Data and Maps 9.3.1; IHS World Data. Congressional Research Service 7 U.S.-South Korea Relations Since late 2008, relations between the United States and South Korea have been arguably at their best state in nearly a decade, if not ever. Coordination over North Korea policy has been particularly close, with one high-level official in late 2009 describing the two countries as being “not just on the same page, but on the same paragraph.”10 At a summit in June 2009, the two parties signed a “Joint Vision” statement that foresees the transformation of the alliance’s purpose from one of primarily defending against a North Korean attack to a regional and even global alliance, in which Washington and Seoul cooperate on a myriad of issues, including climate change, energy security, terrorism, economic development, and human rights promotion, as well as peacekeeping and the stabilization of post-conflict situations. Reflecting this evolution, in a June 2010 meeting with President Lee, President Obama referred to the alliance as “the lynchpin” for security in the Pacific region. This statement stirred some degree of anxiety in Tokyo; Japan has traditionally considered itself to be the most significant U.S. partner in the region. Much of this closeness is due to the policies of President Lee, including his determination after assuming office to improve Seoul’s relations with Washington. However, it is unclear how much domestic support exists for some of President Lee’s policies. On North Korea, for instance, the United States and South Korea often have different priorities, with many if not most South Koreans generally putting more emphasis on regional stability than on deterring nuclear proliferation, the top U.S. priority. Currently, these differences have been masked by North Korea’s general belligerence since early 2009 and to a large extent negated by President Lee’s consistent stance that progress on the nuclear issue is a prerequisite for improvements in many areas of North-South relations. Also, President Lee’s enthusiastic support for expanding the role of the U.S.-ROK alliance beyond the Korean Peninsula has come under domestic criticism. Moreover, while large majorities of South Koreans say they value the U.S.-ROK alliance, many South Koreans are resentful of U.S. influence and chafe when they feel their leaders offer too many concessions to the United States. This is particularly the case among Korea’s left-of-center, or “progressive” groups, who bitterly oppose much of President Lee’s policy agenda and his governing style. Thus, it is unclear how sustainable the current bilateral intimacy is likely to be, particularly beyond 2011. South Korea’s legislative and presidential elections in 2012 could erode some of the momentum established under Lee. Bilateral coordination will be particularly tested if South Korea’s progressives retake the presidential office (called the Blue House) and/or the National Assembly. Historical Background The United States and South Korea have been allies since the United States intervened on the Korean Peninsula in 1950 and fought to repel a North Korean takeover of South Korea. Over 33,000 U.S. troops were killed and over 100,000 were wounded during the three-year conflict. In 1954, a year after the parties to the conflict signed an armistice agreement, the United States and South Korea signed a Mutual Defense Treaty, which provides that if either party is attacked by a third country, the other party will act to meet the common danger. The United States maintains about 28,500 troops in the ROK to supplement the 650,000-strong South Korean armed forces. South Korea deployed troops to support the U.S.-led military campaign in Vietnam. South Korea 10 December 2009 interview. Congressional Research Service 8 U.S.-South Korea Relations subsequently has assisted U.S. deployments in other conflicts, most recently by deploying over 3,000 troops to play a non-combat role in Iraq and over 300 non-combat troops to Afghanistan. Beginning in the 1960s, rapid economic growth propelled South Korea into the ranks of the world’s largest industrialized countries. For over a decade, South Korea has been one of the United States’ largest trading partners. Economic growth also has helped transform the ROK into a mid-level regional power that can influence U.S. policy in Northeast Asia, particularly the United States’ approach toward North Korea. North Korea in U.S.-ROK relations Policy Coordination Dealing with North Korea is the dominant strategic element of the U.S.-South Korean relationship. Since breakdown of the Six-Party Talks in late 2008 and North Korea’s second nuclear test in May 2009, coordination over North Korea policy has been remarkably close. South Korea’s growing economic, diplomatic, and military power has given Seoul a much more direct and prominent role in Washington’s planning and thinking about how to deal with Pyongyang. One indicator of South Korea’s centrality to diplomacy over North Korea is that no successful round of the Six-Party nuclear talks has taken place when inter-Korean relations have been poor. For much of the 2000s, policy coordination between the United States and South Korea was difficult, sometimes extremely so, because the countries’ policies toward Pyongyang were often out-of-synch, and at times and in many ways contradictory. Presidents Kim Dae-jung (19982003) and Roh Moo-hyun (2003-2008) pursued a “sunshine policy” of largely unconditional engagement with North Korea that clashed with the harder policy line pursued by the Bush Administration until late 2006. President Roh, who was elected in part because of his embrace of massive anti-American protests that ensued after a U.S. military vehicle killed two Korean schoolgirls in 2002, also alarmed U.S. policymakers by speaking of a desire that South Korea should play a “balancing” role among China, the United States, and Japan in Northeast Asia. Despite this, under Roh’s tenure, South Korea deployed over 3,000 non-combat troops to Iraq— the third-largest contingent in the international coalition—and the two sides initiated and signed the KORUS FTA. Although relations between the two capitals improved dramatically after President Lee Myung-bak’s 2008 inauguration, his tougher stance toward North Korea was not always aligned with the late Bush Administration’s push for a nuclear deal with North Korea. Coordination over the Cheonan Sinking The two Administrations’ closeness has been both confirmed and cemented by their coordinated reaction to the March 2010 sinking of a South Korean naval vessel, the Cheonan. Forty-six South Korean sailors died in the incident. A multinational investigation team led by South Korea determined that the ship was sunk by a North Korean submarine. 11 In the wake of the sinking, 11 The cause of the Cheonan’s sinking has become highly controversial in South Korea. While most conservatives believe that North Korea was responsible for explosion, many who lean to the left have criticized the investigation team as biased or argue that its methodology was flawed. Alternative theories for the sinking have been swirling on the Korean blogosphere. Additionally, polls indicate many if not most Koreans believe the Lee government attempted to (continued...) Congressional Research Service 9 U.S.-South Korea Relations U.S.-South Korean cooperation was underscored by a series of military exercises in the waters surrounding the peninsula, as well as symbolic gestures such as the joint visit of Secretary of State Clinton and Secretary of Defense Gates to the Demilitarized Zone (DMZ). During the visit, a new set of unilateral U.S. sanctions targeting North Korea were announced. 12 New Revelations of North Korea’s Uranium Enrichment Capabilities13 In November 2010, the relative quietude in North Korea’s relations with South Korea and the United States that had predominated in the months after the Cheonan sinking was shattered by two events. First, North Korea showed Dr. Siegfried Hecker, the former head of the U.S. Los Alamos National Laboratory, a new “ultra-modern” uranium enrichment facility with 2,000 centrifuges that the North Koreans said is producing low enriched uranium destined for fuel for a new light-water nuclear reactor that is under construction. The revelation confirmed longstanding fears that North Korea has been developing an alternative, uranium-based nuclear program to complement or replace its existing plutonium-based facilities. Although Dr. Hecker has said that the centrifuge plant and the new reactor appear to be designed primarily for civilian nuclear power, the uranium facilities could also be used to produce fissile material suitable for nuclear weapons.14 North Korea’s Artillery Attack Against South Korea Second, on November 23, only days after the uranium revelations, North Korean artillery units fired over 150 shells on to and around Yeonpyeong Island, across the North-South disputed western sea border. North Korea claimed that the South Korean military had fired first, during routine U.S.-ROK exercises in the area. According to one report, about half the North Korean shells hit the island. The barrage killed four South Koreans (two marines and two civilians), wounded dozens, and destroyed or damaged scores of homes and other buildings.15 It was North Korea’s first direct artillery attack on ROK territory since the 1950-1953 Korean War. South Korea responded by shooting 80 shells at North Korea. An official North Korean media outlet later said that the South Korean civilian deaths were “regrettable.”16 The attacks prompted a number of responses: (...continued) exploit the incident during local elections held across the nation in early June. Though Lee’s conservative Grand National Party suffered notable losses, polls indicate that local issues, rather than North Korea policy, were more significant factors determining voting behavior. 12 For more information, see CRS Report R41438, North Korea: Legislative Basis for U.S. Economic Sanctions, by Dianne E. Rennack. 13 For more on North Korea’s suspected nuclear capabilities and the diplomacy surrounding them, see CRS Report RL34256, North Korea’s Nuclear Weapons: Technical Issues, by Mary Beth Nikitin, and CRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation, by Emma Chanlett-Avery. 14 Siegfried S. Hecker, “A Return Trip to North Korea’s Yongbyon Nuclear Complex,” Center for International Security and Cooperation, Stanford University, November 20, 2010. 15 Stratfor.com, “Satellite Imagery: Tactical Details of the Korean Artillery Exchange,” November 30, 2010. 16 “DPRK KPA Supreme Command’s Communique on Artillery Gunfire Along Inter-Korean Border,” Pyongyang Korean Central Broadcasting Station in Korean, November 23, 2010, translated by Open Source Center KPP20101123106004; “DPRK Commentary Says 23 Nov Clash Due to US, Civilian Casualties ‘Very Regrettable’,” Korean Central News Agency, November 27, 2010. Congressional Research Service 10 U.S.-South Korea Relations • South Korea and the United States held large-scale naval exercises in the Yellow Sea area with the USS George Washington aircraft carrier strike group. After the Cheonan sinking, the U.S. and South Korea had refrained from staging exercises in the Yellow Sea area, after China had warned of its sensitivity to military activities there. • In a nationally televised speech, Lee announced that South Korea would no longer hold back on retaliating for North Korean provocations. President Lee and the South Korean military have come under strong domestic criticism for what was widely perceived as faulty military preparation and a delayed counterattack, prompting the defense minister to resign. His successor stated that if attacked in the future, South Korea would consider using its air force to strike back in North Korean territory. 17 • China, after consulting widely among the other negotiating parties, proposed a meeting of participants in the Six-Party Talks to stabilize the situation. South Korea, the United States, and Japan rejected such a move, saying that it would only reward North Korea’s attack and was premature without signs that North Korea would change its behavior. • Instead, the three countries stepped up trilateral cooperation and called on China to do more to pressure North Korea. Secretary of State Clinton met in Washington, DC, with the South Korean and Japanese foreign ministers, where the three condemned North Korea’s attack, affirmed their solidarity in dealing with North Korea, and discussed cooperation on a range of regional and global issues. Relatedly, for the first time, South Korea sent military observers to a U.S. and Japanese joint military exercise. 18 Inter-Korean Relations Relations between the two Koreas have deteriorated markedly since Lee’s February 2008 inauguration. After 10 years of Seoul’s “sunshine” policy of largely unconditioned reconciliation with North Korea, the Lee government entered office insisting on more reciprocity from and conditionality toward Pyongyang. Most importantly, the Lee government announced that it would review the initiation of new large-scale inter-Korean projects agreed to before Lee took office, and that implementation would be linked to progress in denuclearizing North Korea. In another reversal of his predecessors’ policies, Lee’s government has been openly critical of human rights conditions in North Korea. His administration also offered to continue humanitarian assistance— provided North Korea first requests such aid—and indicated that existing inter-Korean projects would be continued. 17 “'Full Text’ of ROK President Lee’s 29 November ‘Address to the Nation,’” Yonhap, November 29, 2010. Lee said that for decades, South Korea had “tolerated provocations by the North time and again.… South Korea nonetheless endured these continual provocations because we entertained a slight hope that the North would change course someday…. At long last, we came to a realization that … that prolonged endurance and tolerance will spawn nothing but more serious provocations. If the North commits any additional provocations against the South, we will make sure that it pays a dear price without fail.” 18 See, for instance, State Department Press Release, “Trilateral Statement Japan, Republic of Korea, and the United States,” December 6, 2010. Congressional Research Service 11 U.S.-South Korea Relations North Korea reacted to Lee’s overall approach by unleashing a wave of invective against Lee and adopting a more hostile stance toward official inter-Korean activities. Inter-Korean relations have steadily worsened since then, to the point that by September 2010, nearly all of the inter-Korean meetings, hotlines, tours, exchanges, and other programs that had been established during the “sunshine” period have been suspended or severely curtailed.19 Whether it is a coincidence or a cause, since Lee’s inauguration North Korea has behaved more provocatively, with each provocation leading South Korea to take a harder line, which in turn has led North Korea to respond. 20 The most dramatic playing out of this dynamic occurred in the spring of 2010. In response to the sinking of the Cheonan, South Korea curtailed nearly all forms of North-South interaction, including all business transactions except for those associated with the inter-Korean industrial park in the North Korean city of Kaesong. Despite periodic restrictions, the Kaesong Complex continues to operate and has expanded slightly under Lee. 21 In August 2010 Lee publicly floated the idea of creating a “reunification tax” that would help prepare South Korea for a future reuniting of the two Koreas. Previously, a loose consensus had prevailed in South Korea against openly discussing and planning for reunification in the short or medium term, because of fears of provoking Pyongyang and of the fiscal costs of absorbing the impoverished North. While few South Koreans advocate for actively trying to topple the Kim regime, the reunification tax proposal indicates how the Cheonan sinking has led many in the Lee government to view North Korea as more much more of an immediate danger than previously thought. Polls of South Korean attitudes show widespread and increasing anger toward and concern about North Korea. Opinion toward North Korea hardened after the shelling of Yeonpyeong Island, with fewer Koreans expressing support for a return to the largely unconditional engagement with North Korea that occurred during the “sunshine policy” era. However, polls also show continued ambivalence toward Lee’s approach and a desire among many, if not most, South Koreans for their government to show more flexibility toward Pyongyang. In July 2009, South Korea began circulating to other governments and key private sector groups a proposal for a $40 billion multilateral aid fund and development strategy that would help North Korea if Pyongyang denuclearized. According to the details provided by various media outlets, the proposal appears to be a continuation of Lee’s “3,000 Policy” pledge during the 2007 presidential campaign to help raise North Korea’s per capita income to $3,000 over the next 10 years.22 The proposal also appears to complement the “comprehensive” package the Obama 19 Some figures quantify the downturn in relations from 2007 to 2008: official bilateral dialogues were down from 55 in 2007 to 6 in 2008; South Korea’s governmental humanitarian assistance declined from 3.5 million won ($215 million) to 0.4 million won ($25 million); and government-run reunions of family members fell from over 3,600 to zero. After years of double-digit growth, inter-Korean trade registered a mere 1.2% increase from 2007 to 2008. Figures are from Ministry of Unification, “Inter-Korean Relations in 2008,” February 2009. North-South Korean trade was just over $1.8 billion in 2008. 20 Four actions by North Korea have had a particularly dramatic impact on South Korea’s policy toward the North: the refusal to allow an independent South Korean investigation into the July 2008 fatal shooting of a South Korean tourist by a North Korean soldier at the Mt. Kumgang resort in North Korea, a nuclear test in May 2009, periodically placing greater restrictions on the inter-Korean industrial complex at Kaesong, and the sinking of the Cheonan. 21 For more, see CRS Report RL34093, The Kaesong North-South Korean Industrial Complex, by Mark E. Manyin and Dick K. Nanto. 22 Christian Oliver, “Seoul Plans $40bn Aid Fund for N Korea,” Financial Times, July 20, 2009. North Korea’s 2009 (continued...) Congressional Research Service 12 U.S.-South Korea Relations Administration has indicated could be forthcoming if North Korea took positive steps on the nuclear front. South Korea’s Regional Relations Looking at their surrounding neighborhood, South Koreans sometimes refer to themselves as a “shrimp among whales.” South Korea’s relations with China and Japan, especially the latter, are fraught with ambivalence, combining interdependence and rivalry. Despite these difficulties, trilateral cooperation among the three capitals has increased over the past decade, particularly in the aftermath of the 2008 global financial crisis. Since 2008, leaders of the three countries have met annually in standalone summits and in 2010 agreed to undertake an official study of a trilateral FTA and to establish a secretariat in Seoul.23 Growing South Korea-Japan Cooperation A cooperative relationship between South Korea and Japan, both U.S. treaty allies, and among the three countries is in U.S. interests because it arguably enhances regional stability, helps coordination over North Korea policy, and boosts each country’s ability to deal with the strategic challenges posed by China’s rise. However, despite increased cooperation, closeness, and interdependence between the South Korean and Japanese governments, people, and businesses over the past decade, mistrust on historical and territorial issues continues to linger. South Korea and Japan have competing claims to the small Dokdo/Takeshima islets in the Sea of Japan (called the East Sea by Koreans), and most South Koreans complain that Japan has not adequately acknowledged its history of aggression against Korea. For more than three generations beginning in the late 19th century, Japan intervened directly in Korean affairs, culminating in the annexation of the Korean peninsula in 1910. Over the next 35 years, Imperial Japan all but attempted to wipe out Korean culture.24 President Lee came into office seeking to improve official South Korea-Japan relations, which had deteriorated markedly during President Roh’s term. Under Lee, and throughout a succession of Japanese leaders, Cabinet and head-of-state meetings, including reciprocal visits, have become more routine. Cemented for the first time in years by a common strategic outlook on North Korea, trilateral South Korea-U.S.-Japan coordination over North Korea policy has been particularly close since the beginning of 2009 and has become even tighter since the sinking of the Cheonan. People-to-people ties have blossomed, with tens of thousands of Japanese and Koreans traveling to the other country every day. Tens of thousands of South Koreans, including some victims of Japan’s colonial period, donated funds to Japan after the March 11 earthquake and tsunami off the coast of northeastern Japan. The South Korean and Japanese militaries also have stepped up their cooperation. Lee has given less public emphasis to flare-ups over history and the (...continued) per capita income was $1,900, according to the CIA World Factbook. 23 From 1999-2007, trilateral summits were only held on the sidelines of the Association of Southeast Asian Nations’ “Plus Three” summit (which included the 10 ASEAN countries plus China, Japan, and South Korea). 24 Many Koreans believe that the United States was complicit in this history, by reportedly informally agreeing in a 1905 meeting between U.S. Secretary of War William Taft and Japanese Prime Minister Taro Katsura that the United States would recognize Japan’s sphere of influence over Korea in return for Japan doing the same for the United States in the Philippines. Congressional Research Service 13 U.S.-South Korea Relations Dokdo/Takeshima territorial dispute. He also welcomed the most recent Japanese apology for its history of aggression, from Prime Minister Naoto Kan in August 2010, that recognized the 100th anniversary of Japan’s annexation. Many observers said that the apology, along with Kan’s move to return thousands of antiquities taken from Korea during the occupation, were major reasons South Korean protests marking the anniversary were much smaller and less virulent than had been expected. However, South Koreans’ interest in forming significant new institutional arrangements with Japan is dampened by three factors. First, continued suspicions of Japan among the South Korean population place political limitations on how far and how fast Korean leaders can improve relations. Second, continued disagreements over Dokdo/Takeshima’s sovereignty continue to weigh down the relationship. A key to this issue will be whether such disputes are contained or spill over into other areas of the relationship. Third, unlike Japan, South Korea generally does not view China as an existential challenge and territorial threat. South Korea also needs Chinese cooperation on North Korea. Accordingly, Korean leaders tend to be much more wary of taking steps that will alarm China. A factor that could change this calculation is if China is seen as enabling North Korean aggression, as most South Korean leaders believe was the case after the Yeonpyeong Island shelling. Two indicators to watch over the coming months in South Korea-Japan relations are (1) whether the two countries can restart and complete free trade agreement negotiations that have been stalled since 2004, and (2) whether they can complete negotiations over an information sharing and an Acquisition and Cross-Servicing Agreement (ACSA), both of which would facilitate greater cooperation and coordination between the two countries’ militaries. In March 2011, a Japanese Ministry of Education panel announced that middle school history textbooks must state that Dokdo/Takeshima is Japanese territory. South Koreans protested. Although the response appears to have been more muted than in the past, the ACSA and military information sharing talks have not been held since then. Another flare-up of the sovereignty dispute is expected to come in August, when Japan’s Defense Ministry issues its annual white paper. South Korea-China Relations China’s rise influences virtually all aspects of South Korean foreign and economic policy. North Korea’s growing economic and diplomatic dependence on China since the early 2000s has meant that South Korea must increasingly factor Beijing’s actions and intentions into its North Korea policy. China’s influence over North Korea has tended to manifest itself in two ways in Seoul. On the one hand, most South Korean officials worry that North Korea, particularly its northern provinces, are drifting into China’s orbit. Kim Jong-il has made an unprecedented three trips to China in the 2010-2011 time period, and the two countries have greatly expanded economic cooperation between provinces straddling their border. For those on the political left in South Korea, this has been an argument against Lee’s harder line stance toward inter-Korean relations, which they say has eroded much of South Korea’s influence over North Korea. On the other hand, China’s continued support for North Korea, particularly its month-long delay in expressing public regret over the Cheonan’s sinking and its perceived backing of Pyongyang after the Yeonpyeong Island shelling, has angered many South Koreans, particularly conservatives. Many South Korean conservatives also express concern that their Chinese counterparts have been unwilling to discuss plans for dealing with various contingencies involving instability in North Korea. Furthermore, South Koreans’ concerns about China’s rise have been heightened by China’s increased Congressional Research Service 14 U.S.-South Korea Relations assertiveness around East Asia in recent years, particularly its vocal opposition in 2010 to U.S.South Korean naval exercises in the Yellow Sea. Since China’s 2001 entry into the World Trade Organization, it has emerged as South Korea’s most important economic partner. Over 20% of South Korea’s total trade is with China, and for years China has been the number one location for South Korean firms’ foreign direct investment. 25 Yet, even as China is an important source of South Korean economic growth, it also looms large as an economic competitor. Indeed, fears of increased competition with Chinese enterprises has been an important motivator for South Korea’s push to negotiate a series of free trade agreements around the globe. Security Relations and the U.S.-ROK Alliance The United States and South Korea are allies under the 1953 Mutual Defense Treaty. Under the agreement, U.S. military personnel have maintained a continuous presence on the peninsula since the conclusion of the Korean War and are committed to help South Korea defend itself, particularly against any aggression from the North. South Korea is included under the U.S. “nuclear umbrella,” also known as “extended deterrence” that applies to other non-nuclear U.S. allies as well. The U.S.-ROK alliance has enjoyed a significant boost in recent years after a period of strain under the George W. Bush and Roh Moo-hyun Administrations. Even before the Cheonan sinking, South Korea’s willingness to send troops to Afghanistan and increasing defense expenditures reinforced the sense that the alliance is flourishing. Emblematic of the close ties, the South Korean and U.S. foreign and defense ministers held their first ever “2+2” meeting in July 2010, which featured a visit to the Demilitarized Zone (DMZ) by Secretary of State Clinton and Secretary of Defense Gates. The historic meeting both commemorated the 60th anniversary of the Korean War and demonstrated the enduring strength of the alliance. The massive joint military exercises held immediately after the meeting, featuring a U.S. aircraft carrier and F-22 aircraft, signaled to North Korea and others that the American commitment to Korea remains strong. Budgetary and Operational Challenges Despite these indicators of strength, the alliance faces a host of significant challenges in the months and years ahead. Delays and increasing price tags have slowed the implementation of agreements to reduce and relocate the U.S. troop presence in South Korea. Differences over burden sharing remain, but analysts note that these issues tend to be prevalent in all alliance relationships. Although the political atmospherics of the alliance have been outstanding, defense analysts note that the Lee Administration has slowed significantly the defense budget increases planned under the earlier Roh Administration. 25 Much of South Korea’s exports to China are intermediate goods that ultimately are used in products exported to the United States and Europe. Congressional Research Service 15 U.S.-South Korea Relations U.S. Alliance and ROK Defense Reform Plans Current security developments are taking place in the context of several concurrent defense schemes. The June 2009 Obama-Lee summit produced the broadly conceived “Joint Vision for the Alliance,” which promised to enhance and globalize future defense cooperation. After the decision to delay the Opcon transfer, the operational “Strategic Alliance 2015” roadmap (announced in September 2010) outlines the new transition, including ROK capabilities and U.S. troop relocation and tour normalization. The U.S. military is also undergoing a broad transformation of its forces in the region; the 8th Army is moving toward becoming a warfighting headquarters that can deploy to other areas of the world while still serving as a deterrent to any possible aggression from North Korea.26 Meanwhile, South Korea’s Defense Reform 2020 bill passed by the National Assembly in 2006 remains officially in effect. The plan lays out a 15-year, 621 trillion won (about $550 million) investment that aims to reduce the number of ROK troops while developing a high-tech force and strengthening the Joint Chief of Staff system. In addition, an evolving plan known as “Defense Reformation Plan 307,” intends to enhance collaboration among the ROK military branches. Driven by the North Korean provocations in 2010, the new approach calls for a more flexible posture to respond to future attacks, as opposed to the “total war” scenario that has driven much of Seoul’s defense planning in the past. Defense Reform 2020 calls for defense budget increases of 9.9% each year, but the Lee Administration reduced the increase to 3.6% for FY2010, citing economic pressures.27 Following the Cheonan sinking and amid calls for improved capabilities to counter the North, however, the Defense Ministry requested a budget increase for funds toward the acquisition of surveillance aircraft to monitor the North’s unconventional threat and to improve weapons systems on ROK islands in the Yellow Sea.28 The 2011 defense budget was approved at a 6.2% increase over the 2010 budget.29 The Relocation of U.S. Forces Korea (USFK) In 2004, Secretary of Defense Donald Rumsfeld authorized a realignment program to reduce and relocate U.S. forces in South Korea. Under the Rumsfeld program, the Pentagon withdrew a 3,600-person combat brigade from the Second Division and sent it to Iraq. The Rumsfeld plan called for the U.S. troop level in South Korea to fall from 37,000 to 25,000 by September 2008. However, in 2008, Secretary of Defense Gates halted the withdrawals at the level of 28,500. The U.S. Forces Korea (USFK) relocation plan has two elements. The first envisages the transfer of a large percentage of the 9,000 U.S. military personnel at the U.S. Yongsan base in Seoul to U.S. Army Garrison (USAG) Humphreys, which is located near the city of Pyeongtaek some 40 miles south of Seoul. The second element involves the withdrawal of about 10,000 troops of the Second Infantry Division from the demilitarized zone and their relocation to areas south of the 26 27 “U.S. Army in South Korea Begins Transformation of Forces,” Stars and Stripes. August 25, 2010. “South Korea Approves FY10 Defence Budget,” Jane’s Defence Industry. January 4, 2010. 28 “Defense Ministry Seeks 31.2 Trillion Won Budget for 2011,” Yonhap English News, September 28, 2010, and “Parliamentary Committee Approves Defense Budget Increase,” Yonhap English News, November 30, 2010. 29 “Analysis of ROK Defense Budget for 2011,” ROK Angle Issue 48, Korea Institute for Defense Analyses, April 19, 2011. Congressional Research Service 16 U.S.-South Korea Relations Han River (which runs through Seoul). The end result will be that USFK’s sites will decline from the 104 it maintained in 2002, to 48. The bulk of U.S. forces will be clustered in the two primary “hubs” of Osan Air Base/USAG Humphreys and USAG Daegu that contain five “enduring sites” (Osan Air Base, USAG Humphreys, US AG Daegu, Chinhae Naval Base, and Kunsan Air Base). A new joint warrior training center, north of Seoul, will be opened. 30 The relocations to Pyeongtaek originally were scheduled for completion in 2008, but have been postponed several times because of the slow construction of new facilities at Pyongtaek and South Korean protests of financial difficulties in paying the ROK share of the relocation costs. The original cost estimate was over $10 billion; South Korea was to contribute $4 billion of this. Estimates in 2010 placed the costs over $13 billion. In congressional testimony in September 2010, U.S. officials demurred from providing a final figure on the cost of the move, but confirmed that the South Koreans were paying more than the original $4 billion.31 U.S.-ROK discussions in 2009 reportedly indicated that the relocations to Pyeongtaek will not take place until 2015 or 2016. Some individuals involved and familiar with the move speculate that it will not be completed until 2020. Figure 2. USFK Bases After Realignment Plan is Implemented Source: Jane’s Sentinel Security Assessment - China And Northeast Asia, date posted April 15, 2010. Tour Normalization Another complicating factor in the development of the Yongsan Relocation Plan is the announcement by the Pentagon in 2008 that U.S. military families, for the first time, would be allowed to join U.S. military personnel in South Korea. Prior to this change, most U.S. troops in South Korea served one-year unaccompanied assignments. The goal is to phase out one-year 30 “US-South Korea: a New Security Relationship,” Jane’s Intelligence Weekly, January 18, 2010. “Senate Armed Services Committee Holds Hearing on Security Situation on the Korean Peninsula,” CQ Congressional Transcripts. September 16, 2010. 31 Congressional Research Service 17 U.S.-South Korea Relations unaccompanied tours in South Korea, replacing them with 36-month accompanied or 24-month unaccompanied tours. Eventually, the “normalization” of tours is estimated to increase the size of the U.S. military community at Osan/Humphries near Pyongtaek to over 50,000. Members of Congress have raised concerns about the cost of the normalization initiative and requested a review of the plan. Cost Sharing Under a Special Measures Agreement reached in 2009, South Korea’s direct financial contribution for U.S. troops in South Korea in 2011 will be 812.5 billion won (about $743 million). This is about 42% 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%. Under the 2009 agreement, South Korea’s share of the cost is to increase until 2013 in accord with the rate of inflation but no more than 4% annually. Opcon Transfer The United States has agreed with Seoul to turn over the wartime command of Korean troops later this decade. Under the current arrangement, which is a legacy of U.S. involvement in the 1950-1953 Korean War, South Korea’s soldiers would be under the command of U.S. forces if there were a war on the peninsula. In 2007, Secretary Rumsfeld accepted a proposal by thenSouth Korean President Roh Moo-hyun to set up separate South Korean and U.S. military commands by April 2012. A U.S.-R.O.K. operational control (Opcon) agreement will dismantle the U.S.-R.O.K. Combined Forces Command (CFC), which has been headed by the U.S. commander in Korea. Separate U.S. and R.O.K. military commands will be established. In accord with the plan a new U.S. Korea Command (KORCOM) will be established. Under the Opcon agreement, a Military Cooperation Center will be responsible for planning military operations, joint military exercises, logistics support, and intelligence exchanges, and assisting in the operation of the communication, command, control, and computer systems. At their June 2010 summit, Presidents Obama and Lee announced their decision to delay the transfer of Opcon by three years, until 2015. Although the decision was couched as sending a strong signal to North Korea following the sinking of the Cheonan, the agreement followed months of debate in Seoul and Washington about the timing of the transfer. Many South Korean and U.S. experts questioned whether the South Korean military possesses the capabilities—such as a joint command and control system, sufficient transport planes, and amphibious sea lift vessels—to operate effectively as its own command by the original transfer date of 2012. U.S. officials stress, however, that the transfer was militarily on track before the political decision to postpone. Opposition to the transfer in some quarters in Seoul may reflect a traditional fear of abandonment by the U.S. military. With the decision made, U.S. commanders are arguing that the three-year delay will allow the alliance to synchronize more thoroughly all the moving parts of the arrangement, including the relocation of U.S. troops.32 The Strategic Alliance 2015 plan envisages measures such as upgrading South Korean defense capabilities (such as ground operations command), improving 32 “Sharp: Korea Plan Synchronizes Capabilities,” PACOM Headlines, American Forces Press Service. September 21, 2010. Congressional Research Service 18 U.S.-South Korea Relations and recalibrating USFK and South Korean command and control systems, and better aligning military exercises to meet the new asymmetrical challenges posed by North Korea. The “Strategic Flexibility” of USFK In 2007 and 2008, U.S. commanders in South Korea stated that the future U.S. role in the defense of South Korea would be mainly an air force and naval role. The ROK armed forces today total 681,000 troops, with nearly 550,000 of them in the Army and around 65,000 each in the Air Force and Navy. Since 2004, the U.S. Air Force has increased its strength in South Korea through the regular rotation into South Korea of advanced strike aircraft. These rotations are not a permanent presence, but the aircraft often remain in South Korea for weeks and sometimes months for training. Since the early 2000s, U.S. military officials have expressed a desire to deploy some U.S. forces in South Korea to areas of international conflicts under a doctrine of “strategic flexibility.” The South Korean government of Roh Moo-hyun resisted this idea, largely for fear it might entangle South Korea in a possible conflict between the United States and China. In the mid-2000s, the two governments reached an agreement in which South Korea recognized the United States’ intention to be able to deploy its forces off the Peninsula, while the United States in turn recognized that the troops’ return to South Korea would be subject to discussion. Among other elements, the compromise seems to imply that in an off-Peninsula contingency, U.S. forces might deploy but not operate from South Korea. South Korean Defense Industry and Purchases of U.S. Weapons South Korea is a major purchaser of U.S. weapons, buying $966.9 million worth of U.S. arms in FY2010. The country is regularly among the top customers for Foreign Military Sales (FMS).33 Although South Korea generally buys the majority of its weapons from the United States, European defense companies also compete for contracts; Korea is an attractive market because of its rising defense expenditures. Recently, Boeing won the first two phases of South Korea’s fighter modernization program and Seoul has also indicated interest in Lockheed Martin’s F-35 Joint Strike Fighter.34 South Korea’s defense ministry has said that it will prioritize its defense systems against North Korea’s missile and nuclear threats, including Aegis combat destroyers, missile interceptors, and early warning radars.35 In response to recent attacks, Seoul has deployed precision-guided missiles near the DMZ36 and is currently developing a next generation multiple launch rocket system to be placed near the Northern Limit Line. 37 Korea’s Defense Reform 2020 legislation emphasizes the development of indigenous capabilities by increasing the percentage of funds allocated to defense research and development (R&D).38 South Korea competes internationally in the armored vehicle, shipbuilding, and aerospace 33 Joint United States Military Affairs Group – Korea Mission Brief. August 18, 2010. “South Korea to Buy More U.S. Weapons to Counter North,” Reuters. September 21, 2010. 35 “South Korea Pulls Back from Original Defense Spending Plan Amid Economic Woes,” Yonhap News. September 27, 2009. 36 “Seoul Deploys Precision-guided Missiles Targeting Pyongyang,” Korea Herald. June 28, 2011. 37 “Next-Generation MLRS Named ‘Cheonmu,” KBS. June 28, 2011. 38 “South Korea Defense Budget,” Jane’s Defence Budgets. December 14, 2009. 34 Congressional Research Service 19 U.S.-South Korea Relations industries. Of particular note is the T-50 Golden Eagle, a trainer and light fighter aircraft developed in conjunction with Lockheed Martin.39 The 110th Congress passed legislation that upgraded South Korea’s status as an arms purchaser from a Major Non-NATO Ally to the NATO Plus Three category (P.L. 110-429), which changed the classification to NATO Plus Four. This upgrade establishes a higher dollar threshold for the requirement that the U.S. executive branch notify Congress of pending arms sales to South Korea, from $14 million to $25 million. Congress has 15 days to consider the sale, and may take legislative steps to block the sale compared to 50 days for Major Non-NATO Allies. South Korea’s Deployment to Afghanistan After withdrawing its initial deployment of military personnel to Afghanistan in 2007, South Korea sent a second deployment, consisting of troops and civilian workers who are staffing a Provincial Reconstruction Team (PRT) in Parwan Province, located north of Kabul.40 In February 2010, the National Assembly approved and funded the deployment of over 320 Army personnel and 40 police officers to protect 100 Korean civilian reconstruction workers for a two-year mission. The first soldiers arrived in June 2010 and are scheduled to stay until the end of 2012. Increasing numbers of attacks on Korean facilities, coupled with the Obama Administration decision to begin troop withdrawal in summer 2011, have raised questions about an early return of some ROK personnel. According to some South Korean press reports, the ROK government is considering an earlier withdrawal. Economic Relations South Korea and the United States are major economic partners. In 2010, two-way trade between the two countries totaled over $86 billion (see Table 1), making South Korea the United States’ seventh-largest trading partner. For some western states and U.S. sectors, the South Korean market is even more important. South Korea is far more dependent economically on the United States than the United States is on South Korea. In 2010, the United States was South Korea’s third-largest trading partner, second-largest export market, and the third-largest source of imports. It was among South Korea’s largest suppliers of foreign direct investment (FDI). As both economies have become more integrated with the world economy, economic interdependence has become more complex and attenuated, particularly as the United States’ economic importance to South Korea has declined relative to other major powers. In 2003, China for the first time displaced the United States from its perennial place as South Korea’s number one trading partner. In the mid-2000s, Japan and then the 27-member European Union also overtook the United States. 39 “Korea’s T-50 Spreads Its Wings,” Defense Industry Insider. September 13, 2010. In 2007, South Korean President Roh Moo-hyun withdrew South Korea’s initial deployment of 200 non-combat military personnel from Afghanistan after the Taliban kidnapped South Korean missionaries. The South Korean government reportedly 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. 40 Congressional Research Service 20 U.S.-South Korea Relations Table 1. Annual U.S.-South Korea Merchandise Trade, Selected Years (Billions of U.S. Dollars) Year U.S. Exports U.S. Imports Trade Balance Total Trade 1990 14.4 18.5 -4.1 32.9 1995 25.4 24.2 1.2 49.6 2000 26.3 39.8 -13.5 66.1 2005 26.2 43.2 -17.0 69.4 2008 33.1 46.7 -13.6 79.8 2009 27.0 38.7 -11.7 65.7 2010 38.0 48.9 -10.9 86.9 Major U.S. Export Items Industrial machinery; specialized instruments; chemicals; civilian aircraft; transistors; semiconductor circuits; corn & wheat; semiconductor circuits; iron & steel scrap. Major U.S. Import Items Motor vehicles & parts; Cell phones; semiconductor circuits & printed circuit boards; machinery; iron & steel. Sources: 1990 and 1995 data from Global Trade Information Services. 2000-2010 data from U.S. International Trade Commission. The 2000-2010 U.S. export data are for U.S. domestic exports and the data for U.S. imports are for imports on a consumption basis. The KORUS FTA41 The Bush and Roh Administrations initiated the proposed KORUS FTA negotiations in 2006 and signed an agreement in June 2007. The text of the proposed free trade agreement covers a wide range of trade and investment issues and, therefore, could have wide economic implications for both the United States and South Korea. A congressionally mandated study by the United States International Trade Commission (USITC) concluded that investment and trade between the United States and South Korea would increase modestly as a result of the KORUS FTA. This result is in line with other similar studies. In general and in the short-to-medium term, the KORUS FTA’s largest commercial effects are expected to be microeconomic in nature. The U.S. services and agriculture industries, for instance, are expected to reap significant benefits if the agreement is implemented. In contrast, U.S. textile, wearing apparel, and electronic equipment manufacturers would be expected to experience declines in employment from increased South Korean imports, though some U.S. electronics companies may see competitive benefits, as it could be less expensive for them to source components from South Korea. While a broad swath of the U.S. business community supports the agreement, the original KORUS FTA was opposed by some groups, including some auto and steel manufacturers and labor unions. Following December 3, 2010, modifications to the FTA by the Obama and Lee administrations, several automotive interests—including Ford and the United Auto Workers— announced that the new auto provisions had convinced them to support the agreement. In South 41 For more information, please see CRS Report RL34330, The Proposed U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications, coordinated by William H. Cooper. Congressional Research Service 21 U.S.-South Korea Relations Korea, while public opinion polls generally show broad support for the KORUS FTA, the largest opposition party as well as many farmers and trade unionists have vocally and actively opposed the agreement. Many observers have argued that, in addition to its economic implications, the KORUS FTA would have diplomatic and security implications. Indeed, in many respects, the KORUS FTA’s fate may go beyond strengthening U.S.-Korea ties and have profound implications for U.S. trade policy and East Asia policy. For instance, some have suggested that a KORUS FTA would help to solidify the U.S. presence in East Asia to counterbalance the increasing influence of China. Some counter this by positing that the KORUS FTA need not be seen as a necessary, let alone sufficient, condition for enhancing the U.S.-ROK alliance. However, many South Koreans would likely see a failure to complete or a defeat of the agreement in part as a U.S. psychological rejection of South Korea. Additionally, many East Asian leaders would see such a move as a sign that the United States is disengaging from East Asia, where most countries are pursuing a variety of free trade agreements. South Korea has perhaps been the most aggressive in this FTA push. Since 2002, it has completed seven other agreements (including one with the European Union, awaiting ratification) and has begun negotiating seven others. South Korea’s Economic Performance South Korea has recorded strong economic growth since the global financial crisis began in late 2008. After GDP real growth declined to 0.2% in 2009, the South Korean economy has roared back and grew by 6.2% in 2010. Initially, the crisis hit the South Korean economy hard because of its heavy reliance on international trade and its banks’ heavy borrowing from abroad. The Lee government took strong countermeasures to blunt the crisis’ impact, engaging in a series of fiscal stimulus actions worth about 6% of the country’s 2008 GDP, by some measures the largest such package in the Organization for Economic Cooperation and Development (OECD) group of industrialized countries. The Bank of Korea (BOK) also acted aggressively, lowering interest rates from over 5% to a record low 2% and engaging in a range of other operations, estimated by the OECD to be worth over 2.5% of GDP, designed to infuse liquidity in the Korean economy. The BOK negotiated currency swap agreements with the United States, Japan, and China.42 The South Korean won, after depreciating to around 1,500 won/dollar—a fall of nearly one-third from early 2008 to early 2009—has gradually strengthened against the dollar, to the 1,000-1,100 won/dollar range. The won’s depreciation helped to stimulate South Korea’s economic recovery by making its exports cheaper relative to many other currencies, particularly the Japanese yen. Since the second half of 2010, South Korean real GDP growth has slowed to the 4%-5% level, in part due to the won’s appreciation. Complaints have risen that only Korea’s rich individuals and large conglomerates (called chaebol) have benefitted from the country’s growth since the 20082009 slowdown. Many analysts predict that the 2012 elections will be fought over governance and social welfare issues. Leading figures in both parties, as well as President Lee, have proposed ways to expand South Korea’s social safety net. Inflation, particularly due to rising oil prices, has also emerged as a concern. 42 The October 2008 swap agreement with the U.S. Federal Reserve gave Bank of Korea access to up to USD 30 billion in US dollar funds in exchange for won. Congressional Research Service 22 U.S.-South Korea Relations Other Issues Bilateral Nuclear Cooperation43 The United States and South Korea have cooperated in the peaceful use of nuclear energy for over fifty years.44 The current U.S.-ROK bilateral nuclear cooperation agreement (or “123” agreement) expires in 2014.45 The United States and South Korea began official talks in Washington on renewing the agreement in October 2010.46 These talks continue, and a draft agreement was proposed by South Korea in the second round of talks in March 2011. One point of potential disagreement in the renewal process is whether South Korea will press the United States to include a provision that would allow for the reprocessing of its spent fuel. The current U.S.-Korea nuclear cooperation agreement, as with other standard agreements,47 requires U.S. permission before South Korea can reprocess U.S.-origin spent fuel, including spent fuel from South Korea’s U.S.-designed reactors.48 The issue has become a sensitive one for many South Korean officials and politicians, who see it as a matter of national sovereignty. The United States has been reluctant to grant such permission due to concerns over the impact on negotiations with North Korea and on the nonproliferation regime overall. Reprocessing of spent fuel can be used to make reactor fuel or to acquire plutonium for weapons. For many years, the United States and South Korea have worked on joint research and development projects to address spent fuel disposition, including joint research on pyroprocessing, a type of spent fuel reprocessing. The Korean Atomic Energy Research Institute (KAERI) is conducting a laboratory-scale research program on reprocessing spent fuel with an advanced pyro-processing technique. 49 U.S.-South Korean bilateral research on pyro-processing began in 2002 under the Department of Energy’s International Nuclear Energy Research Initiative (INERI). New R&D work on pyro-processing was halted by the United States in 2008, due to the proliferation sensitivity of the technology. In an attempt to find a way forward, in March 2010 the United States and South Korea began a six-month joint study on the economics, technical feasibility, and nonproliferation implications of pyro-processing.50 This initial study resulted in the announcement in October 2010 of a 10-year, three-part joint research project that is separate from the 123 renewal negotiations.51 It will include bilateral work on pyro-processing at the Idaho 43 Written by Mary Beth Nikitin, Specialist in Nonproliferation. The original agreement was concluded in 1956, and amendments were made in 1958, 1965, 1972 and 1974. See also CRS Report R41032, U.S. and South Korean Cooperation in the World Nuclear Energy Market: Major Policy Considerations, by Mark Holt. 45 Full text at http://nnsa.energy.gov/sites/default/files/nnsa/inlinefiles/Korea_South_123.pdf. 46 “Discussions on the New U.S.-R.O.K. Civil Nuclear Cooperation Agreement State Department Press Release, October 26, 2010, http://www.state.gov/r/pa/prs/ps/2010/10/150026.htm. 47 CRS Report RS22937, Nuclear Cooperation with Other Countries: A Primer, by Paul K. Kerr and Mary Beth Nikitin. 48 Under the 1978 Nuclear Nonproliferation Act, consent rights apply to material originating in the U.S. or material that has been fabricated into fuel or irradiated in a reactor with U.S. technology. The majority of South Korea’s spent fuel would need U.S. consent before it could be reprocessed. 49 Pyro-processing technology would partially separate plutonium and uranium from spent fuel. 50 http://www.koreaherald.co.kr/NEWKHSITE/data/html_dir/2010/03/17/201003170029.asp. 51 “Discussions on Korea-U.S. Joint Research on Fuel Cycle,” Press Release, Ministry of Education, Science and (continued...) 44 Congressional Research Service 23 U.S.-South Korea Relations National Laboratory, development of international safeguards for this technology, economic viability studies, and other advanced nuclear research including alternatives to pyro-processing for spent fuel disposal.52 South Korean Nonproliferation Policy South Korea has been a consistent and vocal supporter of strengthening the global nonproliferation regime. It is a member of the Nuclear Suppliers’ Group and adheres to all nonproliferation treaties and export control regimes. An International Atomic Energy Agency Additional Protocol for South Korea entered into force as of February 2004. South Korea also participates in the G-8 Global Partnership, and U.S.-led initiatives—the Proliferation Security Initiative, the International Framework for Nuclear Energy Cooperation (formerly GNEP), and the Global Initiative to Combat Nuclear Terrorism. South Korea will host the next Nuclear Security Summit in 2012.53 At the 2010 Summit, South Korea announced it would host the next Plenary session for the Global Initiative to Combat Nuclear Terrorism in 2011 as part of its contribution to improving international nuclear security coordination. South Korean Politics54 For most of the first four decades after the country was founded in 1948, South Korea was ruled by authoritarian governments. Ever since the mid-1980s, when widespread anti-government protests forced the country’s military rulers to enact sweeping democratic reforms, democratic institutions and traditions have deepened in South Korea. In 1997, long-time dissident and opposition politician Kim Dae-jung (commonly referred to as “DJ”) was elected to the presidency, the first time an opposition party had prevailed in a South Korean presidential election. In December 2002, Kim was succeeded by a member of his left-of-center party: Roh Moo-hyun, a self-educated former human rights lawyer who emerged from relative obscurity to defeat establishment candidates in both the primary and general elections. Roh campaigned on a platform of reform—reform of Korean politics, economic policymaking, and U.S.-ROK relations. Lee’s victory in the December 2007 election restored conservatives to the presidency. A striking feature of the election was how poorly the left-of-center candidates performed, after a decade in power, receiving only around 30% of the vote. Shortly after Lee’s inauguration, his Grand National Party retained control of the National Assembly in national parliamentary elections. Lee had a rocky first two years of his presidency. Until late 2009, his public approval ratings generally were in the 20%-30% range. It took over a year for him to recover from the massive (...continued) Technology, Republic of Korea, April 18, 2011. 52 “S. Korea, U.S. Agree to Start Joint Study on Nuclear Fuel Reprocessing,” Yonhap, April 17, 2011. 53 See also, CRS Report R41169, Securing Nuclear Materials: The 2010 Summit and Issues for Congress, by Mary Beth Nikitin. 54 For more, see CRS Report R40851, South Korea: Its Domestic Politics and Foreign Policy Outlook, by Mark E. Manyin and Weston Konishi. Congressional Research Service 24 U.S.-South Korea Relations anti-government protests that followed an April 2008 deal with the United States to lift South Korea’s partial ban on imports of U.S. beef. The ban had been in place since 2003, when a cow in the United States was found to be infected with mad cow disease, or BSE (bovine spongiform encephalopathy). By the early to mid-spring of 2010, his ratings had risen to the 40%-50% range, a development many attribute to South Korea’s strong recovery from the 2008-2009 global financial crisis. South Korea’s next National Assembly and presidential elections are scheduled for April and December 2012, respectively. By law, Lee cannot run again; South Korean presidents serve one five-year term. A Powerful Executive Branch Nominally, power in South Korea is shared by the president and the 299-member unicameral National Assembly. Of these, 245 members represent single-member constituencies. The remaining 54 are selected on the basis of proportional voting. National Assembly members are elected to four-year terms. The president and the state bureaucracy continue to be the dominant forces in South Korean policymaking, as formal and informal limitations prevent the National Assembly from initiating major pieces of legislation. Political Parties Presently, there are two major political parties in South Korea: President Lee’s conservative Grand National Party (GNP) and the opposition, center-left Democratic Party (DP). U.S. ties have historically been much stronger with South Korea’s conservative parties. Because Korean politics tend to be hyper-partisan, this phenomenon could make U.S.-South Korea relations more difficult to manage if the progressives regain power. Figure 3. Party Strength in South Korea’s National Assembly As of June 28, 2011 Note: Last nationwide elections held in April 2008; next elections to be held in April 2012. Congressional Research Service 25 U.S.-South Korea Relations The GNP’s numerical strength masks significant intra-party divisions. Lee’s most significant rival is GNP stalwart Park Geun-hye, the popular daughter of Korea’s former military ruler Park Chung-hee, whom Lee only narrowly defeated in the GNP’s presidential primary in 2007. Initially, Lee had tried to marginalize Park’s influence, an effort he later abandoned when the GNP absorbed some of Park’s supporters who had formed a new party. This move, however, has failed to resolve the tensions between the two camps. There is little cooperation between the GNP and the Democratic Party, so keeping the GNP unified on controversial issues is critical to Lee’s ability to govern. After the 2007 election, the Democratic Party were even more divided than the GNP. The Democrats’ lack of unity, their minority status in the National Assembly, and the absence of national elections until 2012 have deprived them of most tools of power and influence within the South Korean polity. In a sign that the progressive camp may be regrouping, however, the DP scored significant victories in important local elections in June 2010. DP members and their supporters often are more critical of U.S. policies and are much more likely to support engagement policies toward North Korea than their conservative counterparts. Selected CRS Reports on the Koreas South Korea CRS Report RL34330, The Proposed U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications, coordinated by William H. Cooper CRS Report RL34093, The Kaesong North-South Korean Industrial Complex, by Mark E. Manyin and Dick K. Nanto CRS Report RL34528, U.S.-South Korea Beef Dispute: Issues and Status, by Remy Jurenas and Mark E. Manyin CRS Report R41032, U.S. and South Korean Cooperation in the World Nuclear Energy Market: Major Policy Considerations, by Mark Holt North Korea CRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation, by Emma Chanlett-Avery CRS Report R40095, Foreign Assistance to North Korea, by Mark E. Manyin and Mary Beth Nikitin CRS Report RL34256, North Korea’s Nuclear Weapons: Technical Issues, by Mary Beth Nikitin CRS Report R41438, North Korea: Legislative Basis for U.S. Economic Sanctions, by Dianne E. Rennack Congressional Research Service 26 U.S.-South Korea Relations CRS Report R41843, Imports from North Korea: Existing Rules, Implications of the KORUS FTA, and the Kaesong Industrial Complex, coordinated by Mark E. Manyin CRS Report RL30613, North Korea: Back on the Terrorism List?, by Mark E. Manyin CRS Report RL32493, North Korea: Economic Leverage and Policy Analysis, by Dick K. Nanto and Emma Chanlett-Avery CRS Report RS22973, Congress and U.S. Policy on North Korean Human Rights and Refugees: Recent Legislation and Implementation, by Emma Chanlett-Avery CRS Report R41043, China-North Korea Relations, by Dick K. Nanto and Mark E. Manyin CRS Report RS21473, North Korean Ballistic Missile Threat to the United States, by Steven A. Hildreth CRS Report R41749, Non-Governmental Organizations Activities in North Korea, by Mi Ae Taylor and Mark E. Manyin Author Contact Information Mark E. Manyin, Coordinator Specialist in Asian Affairs mmanyin@crs.loc.gov, 7-7653 Mary Beth Nikitin Specialist in Nonproliferation mnikitin@crs.loc.gov, 7-7745 Emma Chanlett-Avery Specialist in Asian Affairs echanlettavery@crs.loc.gov, 7-7748 Congressional Research Service 27