Roh Moo-hyun: Anti-American or Radical Activist?

We will state upfront that we are not a big fans of Roh Moo-hyun. We were in Korea in 2002 when Kim Dae-jung did not to stop the anti-Americanism that swept the country. Roh was a member of Kim Dae-jung's the Millineum Democratic Party (MDP). Roh as a black horse won the MDP Presidential candidacy. He was swept into office on the anti-American rhetoric that he spewed -- and the allegations against the far better-qualified candidate of the Grand National Party. The mud-slinging and dirty politics gained him the advantage. Hopping on the anti-American bandwagon, his statements fanned the flames of anti-American hatred in Korea.

We first wondered whether he was anti-American or a radical activist or simply a political opportunist. We now conclude that he is anti-American and a radical activist and a political opportunist. The fanciful term "progressive" or "left-leaning" is a term that comes as close to a communist in his ideology as you can without being investigated under the National Security Law. He has sought to weaken the NIS from within by appointing a leftist head and a "left-leaning" (North Korean supporter) to the ANSP (Agency for National Security Planning). He has sought to weaken the investigative powers of the Prosecution -- and has succeeded in killing any domestic investigations of communist subversives by handing the job to the Korean National Police and then ensuring they have no funding to do the job.

During his short three-years, he has installed over 40,000 new employees on the government payroll -- most assuredly those who have a "progressive" outlook. He has attempted to neuter the major newspapers (Gangster Press) with a law that is considered by some as unconstitutional. He has implemented his strange vision of "egalitarian education" -- most people would term as "dumbing down" the education of children. He has turned loose the radical Korean Teachers Union (KTU) to make a shambles of education and teach the youth of Korea a strange brand of anti-American tripe. He has attempted to "un-outlaw" the radical student unions -- that form the cadre of activists that attack the American bases and riot policemen. He has attempted to castrate the National Security Law -- but has so far been thwarted by conservatives. However, he has used the NIS to foster his "truth commission" to implement his strange form of "revisionist history" by rewriting the facts to suit his agenda. As a minimum, it is a witchhunt to enforce his own personal revenge on those he felt wronged the progressives. He has left the economy in shambles as he continues to give away the South Korean wealth to aid the North in the name of "Reunification." The economy has been in a recession for over two years -- with prospects of Korea coming out of it being promised again and again. He has just about sealed the fate of Korea by turning the US-ROK alliance into a shambles...and the proposal for a "self-reliant" defense is a pipe-dream that Korea simply cannot afford. The relocation of the ministries to the new "administrative city" is a trick that will cost well-above what is mandated by law to be spent. He has intentionally lied to the people -- but the people don't want to listen. All of these programs are going to cost monies that Korea simply does NOT have. Currently one in ten live in poverty with a median income of $14,000 a year. The recession has lasted for over two years and the Roh administration keeps trying to mask its impacts. There is nothing good that I can say about the Roh administration.

Our only regret is that the Korean people do not agree with our view. We believe that there are some rude surprises in store for Korea -- and the conservatives can only hope that they can salvage what remains. Though a "lame duck" President with a 20 percent approval rating, his Uri Party has been able to band together with other minority groups to solidify their hold on the National Assembly and railroad bills through. The handwriting is on the wall. In Oct 2005 the Uri Party did not win a single seat in the by-elections. They need to move swiftly to implement THEIR laws before they lose more seats in National Assembly. (See President Roh Moo-hyun: Anti-American or simply a Radical Reformist? for details of his Presidency in 2003 up to Mar 2005.)

President Roh starts Third Year (Feb 2005 - Dec 2005) According to a Korea Herald editorial on 25 Feb, Roh's approval ratings, which started at 75 percent shortly after his inauguration, tumbled down to 58 percent in May 2003; then to 42 percent in June 2003; and lost another 10 points in October 2003 when a sagging economy, nukes up North, and a corruption scandal placed President Roh under siege. It remained in the 30-percent-to-37-percent range except for the brief period when the National Assembly's impeachment suspended his powers in April 2004. When he resumed office it remained there until December 2004 when it dropped to 29 percent.

Roh Creates International Rows on Tokdo, Visits to Yasukuni Shrine and History Seoul and Tokyo greeted the year 2005 with a variety of goodwill events to celebrate the 40th anniversary of the normalization of diplomatic ties. But bilateral relations in what they designate as the ``Friendship Year'' went from bad to worse at the very outset due to the distortions in Japanese history textbooks and Japan's territorial claim on Dokdo, South Korea's easternmost islets.

The signs in Jan 2005 were that Roh was prepared to pursue more co-operative relations with big business, the media and his political opponents. The pundits were wrong. Instead, he again launched attacks on the conservative "big three" newspapers and attacked the opposition GNP party head-on.

In July 2004, Roh said he would not bring up past history between Korea and Japan during his tenure. Eight months later, at a ceremony marking the anniversary of the March 1 Independence Movement, he demanded that Japan "clarify the truth of the past and apologize." It was at this point, he started to play short-term political games to enhance his popularity by taking on the David (Roh) versus Goliath (US-Japan) role and playing on the Japanese hysteria for a witchhunt for collaborators -- and finally using "Tokdo" to arouse nationalistic fervor with Roh being portrayed as the "protector" of the nation. He espoused his unrealistic "balancer" role for Northeast Asia and jabbed his ally the US in the eye over military issues. His approval rating bounced back up to 39.2 percent in Feb 2005 playing for short-term public approval ratings prior to the Apr 2005 elections.

But these ploys may not have been that effective in the long run. In Apr 2005, the proof was that Roh's Uri Party did not gain a single seat in the by-elections and became the minority governing party with the GNP becoming the majority opposition party. Roh had become a lame-duck and only by working out special "deals" with the DLP and MDP was his party able to block legislation it opposed.

According to Roh's Approval Rating Plummets: Survey in June 2005, "Recent surveys show that the public has seriously lost confidence in President Roh Moo-hyun and the ruling Uri Party. Surveys of 1,086 students at Seoul National University (SNU) conducted over the last three years indicate many are increasingly disappointed in the leadership of President Roh." By July 2005, Roh was talking of a "coalition" form of government to regain legislative power for his government -- which the GNP rejected off-hand even after Roh tried to take his position to the indifferent public. In Sep 2005, he backed off his stance as the Uri Party suffered political defeats at the polls. He was showing signs of a lame duck President.

Things were getting absurd when Roh forced a breach in the Japan-ROK relationship by resurfacing "history" and "Tokdo" -- though everyone sees its futility and obvious intent to incite the Korean people into a "hate Japan" frenzy. See Tokdo for details on this dispute. His hype whipped Koreans into such a nationalistic frenzy that two Koreans chopped their fingers off and one set himself on fire over the Tokdo issue. Every school child now exclaims, "TOKDO IS OURS!!!" as a matter of national pride -- and ready to fight anyone who says otherwise. (SITE NOTE: Fed up with the manure that has been thrown its way, Japan's Fisheries Agency has embarked on a massive crackdown on illegal fishing by Korean vessels in disputed waters off Tokdo, the Sankei Shimbun reported in Nov 2005. The rock is of no significance, but the prize fishing grounds that surround the area is. A growing number of Korean crab fishing boats have been crossing into Japan’s exclusive economic zone (EEZ). Korea and Japan had previously agreed in a fisheries accord in 1999 to finalize “provisional waters” -- areas where the two countries’ EEZ claims overlap and vessels from both countries are allowed to operate -- at a later date, and seek ways of preserving maritime reserves. But talks stalled due to a chill in relations cause by renewed Japanese claims to the Tokdo islets.)


KF-16 Flyover of Tokdo


Maritime Police Stand Guard on Tokdo

Then Roh whipped up the erroneous history issue with accusations over a Japanese middle school history book that HAD NOT EVEN BEEN SELECTED FOR USE. Though there was a summit to "patch over" the differences, the end result was nothing more than a Photo Op with nothing resolved. At the beginning of 2005, there was a continuing Japanese love-affair with Korean sitcoms, but Roh's actions has dampened the fever considerably. During the Nov 2005 APEC meeting in Pusan, a side meeting between Roh and Koizumi ended in open hostility with Roh "lecturing" the Japanese on history, while Koizumi flatly stated he would continue with his "private visits" to the Yasukuni Shrine. Relations between the two leaders is now as cold as the Ice Age. (SITE NOTE: Because of the nationalism that has been aroused by Roh impuning Japan's honor, many schools that would NOT have chosen the textbook were ordering the text book for use. However, the percentage still remains below 1 percent.)

The posturing of Roh as the protector of Korea's honor continued unabated throughout the year. During the Nov 2005 APEC meeting in Pusan, Roh and Koizumi had a half-hour side meeting. Roh stated, ``We don't demand an apology by the Japanese government any more. We don't demand government-to-government compensation either.'' He supposedly told Koizumi. ``But we can't tolerate Japan's positions on the Yasukuni Shrine, the Dokdo islets and on history textbooks at all.'' The Japanese premier, however, only repeated his earlier position that his visits to the shrine are not aimed at paying homage to the war criminals but to repent for the past and reaffirm that Japan should not stage a war ever again. (NOTE: Koizumi considered funding a new Yasukuni Shrine but decided against the idea possibly because the Japanese nationalistic fervor is growing because of the condemnations from Korea and China.)


Roh-Koizumi Summit where Roh "lectured" Koizumi

Roh to "Correct" History in Search for Japanese Collaborators The Uri Party -- and Roh blessed -- Japanese collaborator witch hunt was started. On 29 Aug 2005, the Institute for Research in Collaborationist Activities, a non-profit civic group, disclosed the names of 3,090 Koreans who allegedly collaborated with Japanese colonial rulers in the early part of the 20th century. The release of a politically sensitive list presents a direct challenge to the core of the South Korean establishment. Though the Institute stressed its motive for the "historic work" was pure so as to liquidate the country's shameful history and take lessons from its dark past. Those identified as having collaborated with the Japanese before and during the 1910-45 period of colonization include former president Park Chung-hee, composer Hong Nan-pa, Korea University founder Kim Song-su, and Kim Hwal-ran (Helen Kim), first Korean president of Ewha Womans University. GNP officials and other critics see President Roh's current campaign to revisit the history as a maneuver to discredit the GNP party and its leader, Park Geun-hye, who is Park Chung-hee's daughter and one of the leading presidential hopefuls to replace him in 2007. (NOTE: In Dec 2005, the Unification Minister Chung Dong-young resigned from his position to return to the Uri Party to prepare for his bid for the Presidential seat. But with the Uri Party approval rating hovering at 20 percent, it is imperative that they discredit Park Geun-hye. To fault her leadership is impossible as she turned the GNP's complete defeat after the overturning of Roh's impeachment into significant gains in by-elections. Thus they are going to attempt to attack her through her father -- but this may backfire as many -- including those from the 386 generation, don't really remember Park Chung-hee's authoritarian rule, but only the fruits of his vision of the "Miracle of the Han." This is a dangerous ploy. In fact the first victim was the Uri Party Chairman in 2004 who resigned after it was found out that his father was a Police Sergeant under the hated Japanese colonial police.)


Unification Minister Chung Dong-young


GNP Chairman Park Geun-hye

The problem with this search for collaborators was the criteria used. It appears that anyone of prominence during the Japanese colonial period was targeted to be placed on the list. If one became famous after the colonial period but was in any way associated with the Japanese establishment (government or military officer), one was added to the list. Park Chung-hee was added because he was a low-ranking Japanese officer -- as were many others who became generals in the ROK military -- but he was specifically targeted because the "left-leaning" activists have a special axe to grind with his authoritarian regime -- which has nothing to do with being a collaborator. Many of the Korean elite were targeted because of the egalitarian outlook of the activist groups. Many feel that the elite of the Korean society collaborated -- when in fact they were simply getting along in the Japanese colonial society as Japanese citizens. Many of these elite were educated in Japanese colleges simply because there was no suitable education in Korea.

Our problem with this list is that it could go on and on. The person would worked as a personal servant of a Japanese official and benefitted from a better life-style than the starving peasant could be viewed as a collaborator. The Korean youths who VOLUNTEERED for the Japanese Army -- a fact the activists do not want to recognize but there is ample historical documentation of large numbers of Korean volunteers -- could be considered collaborators. The farmer who sold his rice to the Japanese officialdom could be called a collaborator. In effect, anyone who did business with the Japanese establishment would fall into that category. That is what makes this project a witch hunt. It has selected only those it wants to point a finger at. If one was a good businessman and made a profit, he was a collaborator. If one was of the elite of Korean society, one was a collaborator. If one was educated in the Japanese military academy -- no matter how humble one's background -- one was a collaborator.

(SITE NOTE: We feel nothing but revulsion for this Roh-instituted Witch Hunt. Only people intent on destroying the fabric of Korean society would undertake this vile task. They impune people who are dead and cannot defend themselves under the guise of "truth." Many of these collaborators served their country during the Korean War valiantly -- only to be spit upon after they are dead. Many served to improve the living conditions for the masses of Korea through their dedicated efforts under the Japanese, but now are vilified as collaborators. Many were the elite who as such had the educational opportunities not afforded to the masses, but after the independence of Korea went on to form institutions of higher learning that benefitted all of Korean society. They are now crucified -- after they have died -- as collaborators. Roh deserves to be vilified in history for his role in this. Just as the "judges" of the Salem witch trials in America are viewed as misguided fanatics who burned or drowned innocents on the basis of innuendo and whispers, so should Roh to be remembered in history.)

The Chosun Ilbo on 13 Dec 2005 ran an editorial (Teach History So It Does Not Repeat Itself) on the current revisionist history movement in Korea and its effects on the next generation. We agree with the conclusions of Prof. Choi Moon-hyung, formerly of Hanyang University, about the current trend of "revisionist" history occurring in Korea. It stated in part, "A combination of left-wing historiography and blinkered nationalism, he says, misses any objective assessment of the nation’s dissolution and remains myopically fixated on Korea alone in the less than 100 years of recent history.

"Choi analyzed modern and contemporary history textbooks for high schools by six publishers including Kumsung Publishing and Doosan, and there found no account of the causes and effects of the 1894-95 Sino-Japanese War or the 1904-05 Russo-Japanese War, milestones that turned Korea into a Japanese colony. But they all give inordinate space to the Peasants War of Kabo in 1894, where Korean peasants, who were being squeezed under pressure from Japan, directed their grievances against the Korean government, thus creating the impression that modern Korean history is history of class struggles.

"That situation invalidates the entire point of teaching recent history in middle and high school. History textbooks must first be based on facts, and secondly provide the next generation with lessons that help them act prudently in the future. The Korean Peninsula late in the 19th century was a battleground for imperialist powers Japan, Russia, Britain, the United States and China. Anything that happened interlocked like a cog with the international situation. That is true even for the Kabo Peasants War now being touted as if it was somehow symbolic of nationalism and class struggle because it attacked the nobility and rejected foreign influences. In fact, we now know it to have been funded by an ultra-nationalist organization in Japan.

"History textbooks dealing with the era must offer lessons for the future by reviewing the harsh choices we faced at the time, the way we dealt with the machinations of the great powers, and the reason we eventually lost our sovereignty. If we instead use history textbooks as a mere vehicle for particular ideologies and rationalize the past under the headings of nation and class struggle, modern history education is capable of doing a great deal of harm. (SITE NOTE: Though Roh condemned Japan for its textbooks, the same thing is being done in Korea. We have objected to the revisionist history that is being taught in the schools because of the selective nature of the facts to build up a distorted image of history. The history is used to shape the minds of the children to support a warped political agenda. The Korean Teachers' Union (KTU) known for its anti-American stance has used this revisionist history in elementary and middle schools to shape the minds of the children.)

"The great powers' interest in and rivalries over the Korean Peninsula continue. If we do not teach our children that tragedy struck a century ago because we failed to assess the world situation accurately, history could well repeat itself.

Roh to "Correct" History by looking into Past Wrongdoings of NIS In February 2005, the National Intelligence Service (NIS) Development Committee for Clarifying the Past, or "Truth Committee," led by Rev. Oh Choong-il, began to reinvestigate seven suspicious cases from past authoritarian regimes, including Inhyoktang. The committee, consisting of 10 civilian members, five director-level officials from NIS bureaus and 20 investigators, began investigations earlier this year into seven mysterious cases in the past. The committee consisted of civil activists, religious leaders and lawyers, but counted NO experts in criminal investigation among its members.

Roh defended it as a matter of utmost importance to redress the past wrongs that had been hidden in secrecy. In theory, Roh's reform of the NIS was to separate the domestic and foreign investigative powers -- but in reality it was to "castrate" the NIS and do away with the National Security Law (NSL). This was after he had installed a left-leaning head of the NIS and took measures to "reform" the NIS -- by switching the powers for seeking out North Korean sympathizers to the Korean National Police who were not funded, equipped, trained or manned to handle such a job. The NIS handled the job of foreign threats by discovering North Korean spies -- all of whom incidentally have been released by Roh Moo-hyun back to North Korea. Some felt, the committee's purpose was simply a method to discredit the NIS; overturn the NSL; and provide political fodder to discredit the GNP chairman, Park Geun-hye, by attacking her father, Park Chung-hee.


Roh and First Lady Sing National Anthem

The committee has continued with the political agenda of the 2002 Presidential Truth Commission on Suspicious Deaths set up under the Kim Dae-jung administration to implicate Park Chung-hee as the mastermind of the abuses of the KCIA. The GNP denounced it as a sham to smear the name of Park Chung-hee -- and as an indirect a method to smear Park Chung-hee's daughter, the chairman of the GNP. When public opinion showed the popularity of Park Chung-hee as the architect of the Miracle of the Han, even amongst his supporters, Roh backed off his public remarks.

In Dec 2005, the committee issued its report involving the Inhyoktang, or Peoples Revolutionary Party (PRP) and the student movement in 1964 and the Minchong Hangnyon, or Democratic Students Association, in 1974 and linking the organizations to the People Revolution Party (PRP). The committee stated these cases under the Park Chung-hee administration were manipulated at the order of then-President Park. However, the report was large on accusations, but weak on solid proof -- with the conclusions based on circumstantial evidence and inference only. The committee said it found no documents with a direct order, but added that for various reasons it is “reasonable to assume” that Park ordered the executions.

The KCIA accused Inhyoktang members (PRP) twice, in 1964 and 1974, of receiving orders from Pyongyang to destabilize South Korea and to communize the entire Korean Peninsula. The committee announced that then Korean Central Intelligence Agency (KCIA), headed by Kim Hyeong-wuk in 1964, made up a fake story in which it connected the Inhyoktang (PRP) student movement to clamp down on the students who opposed the government’s attempt to normalize diplomatic relations between South Korea and Japan. Protesters criticized Park's ``humiliating'' strategy of diplomatically recognizing Japan in return for hard currency, as they considered such a move was tantamount to allowing Japan to avoid responsibility for its 1910-45 colonial rule of the peninsula. The KCIA indicted 57 "spies" who were working for Inhyoktang stating they were taking orders from the North Korea. According to the committee, it was a politically motivated bid to break a deadlock caused by student protests against Seoul's efforts to normalize diplomatic relations with Tokyo. Allegedly, prosecutors belonging to the public security division of the Seoul District Prosecutors’ Office tendered their resignations while insisting that the first PRP case should not be indicted on the grounds that there was not enough evidence, but then-Prosecutor-General Shin Jik-su, who served as deputy director of the KCIA, pushed ahead with the indictment. (Source: Donga Ilbo, 8 Dec 2005.)

In 1974, the KCIA, then headed by Shin Jik-su, concluded that university students who were protesting against the Yusin Regime were attempting to overthrow the country by creating the Minchong Hangnyon, or Democratic Students Association. The members of the Minchong Hangnyon intensified their anti-dictatorship campaign, protesting Park’s attempts to prolong his term in office indefinitely by proclaiming a series of emergency measures that were equivalent to martial law. The KCIA put more than 180 members of the association on trial by a military court and argued that the group tried to re-form Inhyoktang (PRP). More than 1,000 student activist were arrested without warrants. Of these, 253 were put on trial leading to seven being sentenced to death but their sentences were later commuted. Tens of others were sentenced to life imprisonment and other long terms of imprisonment. Those eight given the death sentence were executed just 18 hours later. The eight were executed, starting from 4:55 a.m. on April 9 in 1975, just 18 hours after the Supreme Court in Seoul sentenced them to death. Investigators said it would probably have been impossible to carry out the execution in such a swift manner if there was no directive from Park Chung-hee. However, they failed to present material evidence to show Park’s direct involvement in creating the fake dissident group. (Source: Donga Ilbo, 8 Dec 2005.)

The committee alleges that the Park Chung-hee regime had no evidence other than the forced confessions to prove that Inhyoktang was linked to North Korea. In addition, its structure was not coherent enough to be called a party and it did not officially adopt a manifesto, pledging loyalty to Kim Il-sung, founding father of North Korea. The committee said the Inhyoktang was a small gathering-level organization rather than a party, and that there was no proof that the gathering had any intention to overthrow the government. It also said that Mincheong Hangnyon was an organization of students fighting for a democratic government, and that there was no evidence of it having received any directions from North Korea. Investigators said the government should compensate the victims of the dictatorial regime and seek ways to redeem their honor. The Korea Herald went so far as to call those executed "freedom fighters." (Source: Korea Times, 7 Dec 2005 and Korea Herald, 8 Dec 2005.) (SITE NOTE: Some would question this logic or even the soundness of this "proof" that the Inhyoktang was NOT an organization or "party". If it did not intend to be a "party," why did it assume the name of a "party"? The committee describes the group in terms of a "gathering-level" group of dissidents who met periodically in Taegu -- and treated them as though it was a loose affiliation for anti-government demonstrators. However, propaganda documents from the North (transcripts of radio broadcasts) -- "proof" in those days of communist affiliation -- were allegedly discovered in the students' possession.)

The committee then announced that it would delve into the former President Kim Dae-jung kidnapping on 15 Dec 1973. It is obivious that the committee is politically motivated in zeroing in on Park Chung-hee.

Accepting petitions filed three years ago from the families of eight convicted criminals executed in 1975, the Seoul Central District Court on 26 Dec 2005 ordered a new trial on the treason charges against them. The court said the original convictions in 1974 were based on confessions obtained by torture. The prosecution had three days to respond to the order for a retrial. If it did not object, the court would move to reopen the case. The statute of limitations would prevent any prosecution of those involved in the torture. (Source: Joongang Ilbo, 27 Dec 2005.) The trial division said, "The investigation result of the PTCOSD confirms that the accused were brutally treated and tortured by investigators from the then Korean Central Intelligence Agency," and noted that illegal acts by investigators while working on the case were enough cause for a review as stipulated by criminal procedure law." The trial division said, "Given that the defendant confessed more frequently and that their confessions got more specific even though there was no serious evidence against them, the period when defendants were prescribed antibiotics and painkillers at a prison and their confession period coincide, and given the statements from the people involved in the case, it is hard to see any other reason for their confessions except harsh treatment or tortures." (Source: Donga Ilbo.)

It was obvious to outside observers that there was political pressure to accept the petitions -- which is not an automatic procedure. The judges are politically appointed, and the courts tend to reflect the policies of the current administration. The "Truth Commission" of the NIS could NOT "prove" that Park Chung-hee directed the executions, so now the Seoul District Court -- which has a record of issuing rulings that support the left-leaning NGO activist causes -- is going to reopen the matter based upon the "new" proof that torture was used. Unfortunately, this "new proof" has been public knowledge -- and was the reason the KCIA to changed its name to the NIS. It wanted to get away from the tarnished public image of the KCIA. Though one would suspect the Roh administration and Uri Party behind this move, it cannot be proved.

NOTE: In our opinion, the "investigators" started out with a pre-assumed conclusion and simply looked for any justification -- no matter how absurd -- to support their conclusions. The committee's use of circumstantial evidence to arrive at their conclusions instead of solid proof deserves to be condemned. There were no confessions, no revelations, no proof. It says something about the 20 "investigators" (activists hired to pursue their agenda) and the NIS which is an organization that knows how to keep its secrets. The committee members were selected to complete the agenda started the the 2002 Truth Commission -- but just do not have the background to do the job.

Published histories do cite the Inyoktang (PRP) as a "communist-inspired" organization in 1964 and Minchong Hangnyon in 1974 to North Korean subversion -- though most do condemn the use of torture by the KCIA. In attempting to revise history, the committee is relying on the fact that the younger generation has "forgotten" the anti-communist fervor of the times. Just before the Korean War groups using titles of "Revolutionary Parties" staged bloody communist-led insurrections -- that were brutally put down by Syngman Rhee. After the war, the constant infiltration by the North, kidnappings in South Korea, and unrelenting attacks along the DMZ made the fear of the North real. The eight sentenced to death came only six years after the North attempted to assassinate Park and captured the USS Pueblo and shot down an EC-121. The threat from the North was real. However, the memories of those times are fading and the committee is playing upon this fact.

What we have NOT heard is whether the long-term imprisoned "spies" of Inhyoktang and Mincheong Hangnyon accepted pardons -- meaning they signed documents stating they had given up anti-government communist activities -- or remained in prison as steadfast communists. Roh and Kim Dae-jung have and/or later returned to North Korea. None supposedly remain in prison today. However, Minkahyup, or the Association of Family Members of Democratization Activists, claims that there are still about 50 prisoners of conscience in jail.

One convicted activist was reported as saying that he had faith that the "truth would eventually come out," but the report made no mention of whether he was pardoned under an amnesty after signing a statement -- tantamount to admitting guilt -- or not. For example, Ham Ju-myeong was recently found innocent on charges of being a North Korean spy. He confessed that he was a spy after undergoing torture under the military regime. Minkahyup claims that about 100 activists still need to be cleared from wrongful charges as North Korean spies. However, no interviews were attached. In its attempt to revise history, the only conclusion is that the committee was selective in what materials to include. Unfortunately, inference and circumstantial evidence is not proof -- and the report's conclusions are based on just that.

BACKGROUND: (See SPIES, ESPIONAGE & INFILTRATION (19 59-Present) for our opinion and history of Espionage and the DCS/KCIA/NIS.) After the military coup that brought Park Chung-hee to power, the KCIA was born in May 1961. It was to "supervise and coordinate both international and domestic intelligence activities and criminal investigation by all government intelligence agencies, including that of the military." In July 1960, the KCIC was separated as a strictly national defense organization -- no longer responsible for domestic intelligence which was handed off to the newly created KCIA. At that time, the KCIC became the Army Special Investigation Service (ASIS) which continued to search out spies and underground spy networks. However, its focus sharpened on internal military surveillance -- especially of high ranking military officers.

Under Park Chung-hee, the ASIS started to take on domestic surveillance duties associated with its "spy catching" duties as well as monitoring the activities of the military. Soon after the 1968 North Korean assassination attempt on Park, the ASIS became the Army Security Command responsible for the external threat of spies and infiltrators. In 1977, the ASIS and the other services intelligence branches were combined under the Defense Security Command (DCS).

Under the Chun Doo-hwan administration, both the KCIA and DCS continued their oppressive sweeps of individuals who were considered in the opposition -- though not so blatantly as before.

In 2002, Presidential Truth Commission on Suspicious Deaths was set up by a National Assembly act to investigate the abuses of the NIS. However, much of its power was diluted by denying it the right to subpoena witnesses, conduct searches or even demand access to official documents. Despite this, the commission oncluded that eight men convicted of belonging to a communist party in 1975 and executed less than a day later had been framed by the Korean Central Intelligence Agency (KCIA). In another case, the commission found that Pastor Im Gi Yun, called in for questioning by military intelligence in 1980 because he was involved in a pro-democracy group, died from beatings and torture, not high blood pressure, as the military maintained. Another tragedy involved Choi Jong Gil, a law professor at the prestigious Seoul University. According to the KCIA, Choi jumped out of a seventh floor window at the agency's headquarters in 1973 rather than disclose details of a spy ring in South Korea.

However, because of the agency's secrecy based on the National Security Law (NSL), it proved to be an ideal tool to hide corruption through bribery or simply to hide money in "slush funds." Throughout the history of these organizations, there have been purges due to bribery and corruption scandals. This continued through the Roh Tae-Woo and Kim Young-sam administrations. In the Kim Dae-jung administration, the NIS transferred $200 million to North Korea just prior to the historic 2000 Summit. When the details were released in 2003, it was dubbed the "pay-for-summit" scandal -- winning Kim Dae-jung the Nobel Peace Prize and the North as much as $1 billion in aid. When the "reformist" President Roh Moo-hyun took power in 2003, his first acts were to attempt to "reform" the NIS -- though some felt "castrate" was a better word. In the words of the National Assembly committee, he appointed a "left-leaning" head of the agency and a "North Korean sympathizer" as the NIS Director of Planning.

Chun Doo-hwan and Roh Tae-woo

A continuation of the sad story of finding the "truth" is that the Roh Administration will now exact their "revenge" by stripping the medals from Chun Doo-hwan and Roh Tae-woo for their participation in the suppression of the Kwangju Uprising. According to the on 21 Dec 2005, "The move comes as a result of months of push from the ruling camp to annul the state decorations given to people who were found guilty of organizing a coup d’etat in 1979 and those who participated in the government’s bloody suppression of the democratic movement in Kwangju in 1980. Chun, who was then a major general, led the military coup on Dec. 12, 1979, about two months after the assassination of President Park Chung-hee, before seizing power. Chun was also deeply involved in the crackdown on the pro-democracy movement in Kwangju in 1980, for which he received the Taeguk distinguished service order (DSO), the officials said. Roh, successor of Chun, was also awarded with the Ulji DSO for his role as a security commander during the Kwangju movement. The ruling Uri Party put forward a revision of the relevant law last June to provide legal grounds to cancel the orders given to those who, after the nation’s democratization, were found guilty for their involvement in the Dec. 12 coup d’etat or the May 18 crackdown. The number of people to be stripped of state medals is estimated at 67, including Chun and Roh, according to the officials. The revision passed the National Assembly the same month."


Roh Tae-woo and Chun Doo-hwan on trial for Treason

(SITE NOTE: We agree with GNP Rep. Kim Yong-kap that "the errors of previous authoritarian regimes should not become a ``chain of vengeance and retaliation.’’ To remove the medals does nothing to correct the history -- it only serves as a temporary tool to extract "vengenance." It is something that does not change a thing, but serves a political purpose of reopening wounds of the past. This is an unwholesome precedent that is being set by the Roh Administration. Right or wrong, it is a historical fact of history of that time. President Roh and his ilk are REWRITING history based on their viewpoints based on present viewpoints -- not unbiased historical facts of the past. Somewhere out there a list is now being prepared with all the medals and citations that the Roh administration has handed out. What goes around comes around.

However, we believe that at a more basic gut level, Roh has just stepped over the unmarked line of a soldiers code. You NEVER mess with a soldier's medals -- those pieces of tin and ribbon are the life history of a soldier. They are worthless to anyone except to the soldier. They mark the achievements of a soldier -- and mean nothing to anyone except another soldier. By stripping the medals from Chun Doo-hwan and Roh Tae-woo, the Roh administration has just accused ALL the soldiers who participated in the action -- whether they agreed or not -- with treason. The retired soldier will look at Roh as someone who may take away his treasured scraps of tin that defined his life's achievements. Roh is attacking tradition -- he is not correcting history. This act is for revenge -- not to correct history.)

WHAT WE FIND INTERESTING: What we find interesting is that the two are KEY members of Roh's administration is positions that can affect government policy -- with Chung Dong-young as Unification Minister affecting international policy and Lee Han-chan as Prime Minister affecting domestic policy -- participated in the Mincheong Hakryeon Case. They proudly list their participation in this incident as an achievement. Another is Kim Geun-tae, Minister of Health and Welfare, who protested in the mid-1980s -- early 1990s and stated in his autobiography that he was tortured in 1985.

• Chung Dong-young, Unification Minister, is listed as being "Imprisoned for Involvement in Mincheong Hakryeon Case" in 1973 -- two years after he graduated from Jeonju High School. (Source: Korea Net.)
  
  
• Lee Hae-chan, Prime Minister, is listed as being "Imprisoned for Involvement in Mincheong Hakryeon Case" in 1974-1975. (Source: Korea Net.) Former Minister of Education under Kim Dae-jung which most consider a failure, but successful as Prime Minister.
  
  
• Kim Geun-tae, Minister of Health and Welfare, Oct. 1985-1988 Imprisoned for Anti-Government and 1990-1992 Imprisoned for Violation of National Security Law doesn't count in the "truth commission" investigations, but his testimony that he was tortured in 1985 established him as a leading activist. (See Kim Geun-tae Bio.) It is interesting that he also announced his candidacy for the Presidency in Dec 2005. (Source: Korea Net.)
  
  
• The others cabinet ministers all fit the classic scholar mold -- but that doesn't mean that they aren't activists. )

Lee Hae-chan, Prime Minister

Kim Geun-tae, Minister of Health and Welfare

Chung Dong-young

Roh Unrealistic Plan to become "Balancer" in Northeast Asia On the fiasco of the US-ROK alliance there is a great problem with Roh mouthing phrases that were reminiscent of the days of the communist insurrections back in the days preceding the Korean War...demands of sovereignty, Japanese reparations and fear that the US would make Korea its "debtor colony." Now Roh wants to be a "balancer" in the Northeast Asia area -- but it is an unrealistic pipe dream. Most alarming he wants to open MILITARY ties with China -- which will open a group of problems as turning the tri-way US-ROK-Japan clique into the US-Japan versus ROK-China-Russia. It would be a real bucket of worms. The naval exercises between the ROK, China, Russia and Japan to conduct search and rescue, pollution prevention and counter-terrorism drills in Jul 2005 were fine, but the tie in with the military aspects tips the balance of power. Then he wants closer ties with the North, but at the same time wants the US to remain as the ROK protector. (See Relocation of USFK Bases (2005) to view the havoc President Roh has created in international affairs in Northeast Asia and how the ROK-US military alliance is in deep trouble despite the claims of solidarity.


Seoul Armed Forces Day (2003)

(SITE NOTE: It may hurt the pride of the US forces but the overwhelming assessment by Asian officials, diplomats and analysts is that the U.S. military simply cannot defeat China if it came to a shooting war. There is widespread skepticism of US military capabilities in such countries as Australia, India, Japan, Singapore and South Korea. They said the U.S.-led war in Iraq has pointed to the American weakness in low-tech warfare. Most Asian officials have expressed their views privately, though Tokyo Governor Shintaro Ishihara went public in Nov 2005, warning that the US would lose any war with China.

Basically, Ishihara's view is that the US doesn't have the taste for war -- and after 2,000 deaths (like in Iraq) it will back out because "it has a civic society that must adhere to the value of respecting lives." The Chinese don't. Another opinion of Mr. Ishihara was that US ground forces, with the exception of the Marines, are "extremely incompetent" and would be unable to stem a Chinese conventional attack. Army veteran groups took immediate exception with these statements. However, this seems to be the private opinion of most of the US' Asian allies -- this is a leftover legacy of the Bill Clinton administration that fought "clean" wars with cruise missiles to save political suicide with American lives lost -- and now with the growing sentiment to pull out of Iraq. Allies are coming to view China as being capable of using its nuclear weapons without conscience of the "mutually assured destruction."

As a result, Asian allies of the United States are quietly preparing to bolster their militaries independent of Washington. So far, the Bush administration has been strongly opposed to an indigenous Japanese defense capability, fearing it would lead to the expulsion of the U.S. military presence from that country. On Nov. 16, Mr. Bush met with Japanese Prime Minister Junichiro Koizumi. The two leaders discussed the realignment of the U.S. military presence in Japan and Tokyo's troop deployment in Iraq.

Bush and Roh (2003)

Roh Expands Aid to North while US Wants to Isolate the North While the US wants to isolate the North, the ROK continues to pump aid to the North and opens up the Kaesong Industrial zone, while the North only gives the South "cultural and family visits."

In March 2003, reporter Donald Macintyre of Time Asia estimated that the South Korean government had sent $4.68 billion to North Korea, the private sector $2.94 billion and the general public $1.2 billion in aid and donations. Since that time, the South has opened the flood gates and the North looks to the South as the bottomless purse.

In the Kaesong Industrial Zone, the low-tech manufacturing of textiles is underway to take advantage of the North's low cost labor. Electrical power currently provided by Auxiliary Power Units on site was to be provided by the South which strung lines to the site. There have been rumors that North has attempted to renegotiate the wage issue. Trade between the ROK and the DPRK jumped 59.7 percent from 2004 to US$875.65 million in the January-October period in 2005, according to the Korea International Trade Association (KITA). The ROK shipped $130.97 million worth of goods to the complex, while bringing in $11.1 million worth of goods from the Kaesong complex.

If the Kaesong Industrial Complex project is successful, companies can save much in labor costs and have a greater supply of raw and subsiNotebook materials. The economic benefit for both Koreas is estimated to exceed $20 billion a year. Unification Minister Chung Dong-young has spoken of the need to amend the South Korean constitution to recognize North Korean territory. It would be hard to declare the products from Kaesong as goods that are made in South Korea after such an amendment.


DPRK Emblem (DPRK)

There is severe friction over the transfer of US technology to a "terrorist state" prohibition. The ROK pressed ahead and stated all items manufactured in Kaesong would bear the tag "Made in South Korea" -- or the more ambiguous "Made in Korea" tag. But some members of the Association of South East Asian Nations refused to recognize products from the Kaesong complex as "Made-in-South Korea." ASEAN said that under World Trade Organization (WTO) regulations, the origin of the country must be the place where the industrial process was completed. They said it is difficult to consider products made in North Korean territory as having been made in South Korea.

In Nov 2005, James Lilley, a former U.S. ambassador to Korea, said that it will be hard for the US to import products made in the Kaesong Industrial Complex for "geographical" reasons and will develop into a major trade issue in the "near future." The US and Japan bans imports of items with the tag "Made in North Korea" under current trade sanctions. However, Singapore and the European Free Trade Association welcomed the combined tag. But items which are made partially in North Korea (Kaesong) and undergo final assembly in South Korea is another story -- falling under the WTO rules of origin. The tariffs are levied based upon the percentage of items in the end product manufactured in North Korea. Though there is no standard rule, law cases suggest that 35 percent may be the "limit" of items in the end product.

According to Comments on the editorial "Made in which Korea?" by the Joongang Ilbo by Pilho Park, "While South Korea in its Constitution declares that its territory encompasses the whole Korean peninsula and its adjacent islands, rules of origin of a product are governed by the practical component of the product rather than territorial boundaries themselves. A good produced in the KIC is a typical example of non-preferential rules of origin - a good which is produced in two or more countries. According to the Agreement on Rules of Origin of the World Trade Organization, country of origin of a good is determined by the principle that the "last substantial transformation" of the good is carried out. In the Unites States, federal regulations also suggest the "substantial transformation" standard in order to determine the country of origin.

There is no universal standard what the substantial transformation means. Individual countries set their own rules, by statues or cases, to determine it. The United States has accumulated a number of cases during the last century; however, no single standard to determine the country of origin has been made yet. In a case (Torrington v. U.S. 764 F.2d 1563 (1985)) where two or more countries are involved for a good, the court suggested 35 percent of components of a good to be recognized as a substantial transformation. In other case (Superior Wire v. U.S. 867 F.2d 1409 (1989)), the court denied 15 percent of components as a substantial transformation. If a good produced in the KIC is determined as that of North Korea by the substantial transformation standard, it is subject to a very high customs duty in the United States. As such, the standard to determine the country of origin is not a mechanical application of territorial boundaries.

Moreover, in the international trade law, the country is not necessarily to mean a sovereign state. Suffice it to say that it is a "government acting on behalf of a separate customs territory possessing full autonomy in the conduct of its external commercial relations (i.e., formerly Hong Kong; GATT Art. XXXIII)" or "political entity known as a nation (19 U.S.C.F.R. §134.1)." No one can deny that North Korea is a government with a separate customs territory and a political entity known as a nation. As long as North Korea maintains such a status regardless of South Korea's constitutional provisions, whenever it is imported into a country, a good produced in the KIC can be subject to scrutiny in order to determine what degree of transformation has been made in the "practical territory" of North Korea.

On 2 Nov, it was reported that the government wants to give North Korea another W5.25 trillion (about US$5.25 billion) in aid over the next five years. Under a Unification Ministry proposal, the government plans to spend W445 billion next year, W1.2 trillion in 2007, and W1.19 trillion in 2008, 2009 and 2010 to aid the North. The plan, drawn up based on a July meeting of the inter-Korean Economic Cooperation Committee, is only now being revealed. The government has additionally set aside W3.32 trillion to supply electricity to the North over the next five years if it abandons its nuclear program, planning to spend W68 billion on a geological survey and blueprints next year, W1.65 trillion on supply lines, substations and transformers in 2006 and 2007, and W1.6 trillion on electricity generation and supply in 2009 and 2010. Another W1.93 trillion is to be spent on boosting North Korea’s light industry, agriculture, fisheries, mining, and science and technology sectors. A total of W1 trillion of that has been earmarked to support the light industry and meet a request from the poverty-stricken country for 30,000 tons of fabric and 60 million pairs of shoes. W560 billion will go to agricultural projects like the development of joint farming complexes, forestation and exchanges of agricultural experts. W100 billion will be spent on marine cooperation, W150 billion on joint mining projects and W120 billion on science and technology cooperation over the next five years.

But the government has yet to find a way to secure the resources needed for the aid plan. (Source: Choson Ilbo )

Estimation of minimum costs based on government data shows that it would take 3.606 trillion won to provide energy to North Korea in a variety of ways. More specifically, sending electricity to the North costs a total of 1.72 trillion won when choosing to install electricity conversion facilities between the two Koreas. That amount includes one trillion won for equipment preventing reverse flow of electricity and electricity conversion facilities, 600 billion won for power transmission lines between Yangju, Gyeonggi Province and Pyongyang, and 120 billion won for installing two 345kV electricity conversion facilities. (Source: Donga Ilbo , 21 Sep 2005.) According to the Joongang Ilbo on 22 Nov 2005, the Unification Ministry had set aside 68 billion won ($64.8 million) from next year's budget for inter-Korean cooperation efforts for a project to send electricity from the ROK to the DPRK. The ministry said the funds would be used to examine routes for power lines and plans for the necessary infrastructure. The money earmarked for the electricity plan would only be spent after the talks in Beijing hammer out plans to implement the September accord and both Koreas agree on specifics of the electricity proposal.

According to Unification Minister Chung Dong-young, South Korea will need at least 6.5 trillion won ($6.3 billion) and perhaps as much as 11 trillion won over the next decade to meet its obligations for energy aid to North Korea if Pyongyang honors its pledge to end its nuclear programs. Critics complained that the government's estimates of the cost were unrealistically low. (NOTE: Associated Press reported on 23 Nov 2005, that the "United States and its partners ... dealt the death blow to a project to build two light-water atomic reactors for North Korea to entice it into dismantling its nuclear weapons program, officials said. The decade-old light-water reactor project had been mothballed for the last two years, kept barely alive in case North Korea showed signs of resuming International Atomic Energy Agency inspections and liquidating its ambitious self-proclaimed nuclear weapons program." Though there was no formal statement, the U.S. delegate, Ambassador Joseph DiTrani, said after the meeting that the board members the United States, South Korea, Japan and European Union had agreed on the ``termination'' of the light-water reactor project.)


Monty Wolvertons (Jun 2003)

On 28 Oct North Korea at a meeting of the Inter-Korean Economic Cooperation Committee asked the South to provide it with raw materials for 60 million pairs of shoes, 2 million formal suits (30,000 tons) and 200 million bars of soap (20,000 tons). That is enough to wash and dress the North’s entire population of 23 million. In return, Pyongyang proposes to let the ROK mine its underground resources and take minerals -- not much of a deal, since Seoul has to supply all the mining and transport equipment. The rice and fertilizer the South supplied this year alone are worth over W1.4 trillion (US$1.4 billion). The complaint is that like the rice, once you start giving the clothes and shoes, you have to keep giving them year after year. (Source: Choso Ilbo , 30 Oct 2005.)

According to the report on the management of inter-Korean cooperation funds, the Unification Ministry said it seeks to secure over 2.63 trillion won (US$2.53 billion) for its inter-Korean projects in 2006, up 110.3 percent from little over 1.25 trillion won this year. he report was submitted to the parliamentary committee on unification, foreign affairs and trade, along with the ministry's request for next year's budget, which was set at little over 100 billion won, up 13.2 percent from this year. The government also requested a 78.8 percent increase for a total of some 1.26 trillion won in its special account for inter-Korean cooperation, which provides funds for various joint economic projects as well as humanitarian aid to the poverty-stricken North. The Unification Ministry said it will require more than 657 billion won next year, up from 178 billion won this year, for its projects to promote exchanges and cooperation between the Koreas, as well as some 54 billion won for building the necessary infrastructure in the pilot industrial town of Kaesong in the North. The report said the government will provide 108 billion won worth of fertilizer to the communist country, along with 32 billion won of aid via international organizations and 37.6 billion won of food to the North. (Source: Yonhap News Agency , 3 Nov 2005.) (SITE NOTE: The World Food Program will pull out in Mar 2006 from North Korea by the North Korean request leaving the South stuck in an uncomfortable position of continuing rice supplies -- and allowing the North to bypass the problem of WFP inspections of food distribution. On 23 Dec 2005 the National Assembly's budget committee agreed on cuts of 150 billion won ($149 million) from the 2.6-trillion-won ($2.5 BILLION) allocation for inter-Korean cooperation in the administration's budget proposal. The funds are allocated to the Unification Ministry for joint projects and foreign aid to North Korea. The committee, minus the Grand National Party members, agreed to the cuts. The opposition party has been boycotting the Assembly's work since Dec. 11 out of anger at the passage of unrelated legislation. The cut is slightly less than 6 percent of the requested funds. The redlined funds included 120 billion won for the doomed light-water nuclear reactor project in North Korea. Another 34 billion won was dropped from programs to promote person-to-person exchanges.)

However, monetary experts state that ROK monetary assistance to help the DPRK transform its economy will be wasted unless the DPRK regime wants to reform. Johannes Linn said that whether or not the DPRK government is willing to adopt substantial market reform is the key to a successful economic transition. "Surely putting money in from South Korea is a good idea if it helps incentivize a peaceful transition in North Korea," said Linn. "But one has to be very careful to think about how that money is actually applied and not to have too high expectations that the money itself will buy an efficient transformation process."

The Forum for Inter-Korea Relations, a coalition of civic groups focusing on inter-Korean economic exchanges, said most of the 1,000 ROK companies that forged business deals with the DPRK had either declared bankruptcy or given up mid-venture. Most of the failed businesses were small, low-tech enterprises involved in textile-making and rudimentary housewares. "North Korea's attitude is extremely disappointing," said Nam Sung-wook, an economics professor at Korea University. "The North has no respect for basic business ethics and, by threatening Hyundai Asan, it made a bad bet. It may see short-term gains, but in the long term, no one will want to do business with it." According to the Washington Post on 23 Nov 2005, a rift between the Hyundai Group and North Korea over the company’s dismissal of Hyundai Asan vice chairman Kim Yoon-kyu shows that “doing business on the Cold War's last frontier can make bad business sense.” Offended by the dismissal over corruption charges, North Korea in Oct 2005 declared all agreements with Hyundai null and offered one of its tour programs to another South Korean firm. “The actions by North Korea raised serious questions about the wisdom of investing there,” the Washington Post said.

However, the biggest question people are starting to ask is, "What is South Korea getting in return for its aid money?" Though all South Koreans believe in reunification as a worthy goal, there are questions as to what is the ROK gaining in return for the ever-increasing investment in the North. However, these much publicized aid projects and investment programs are a drop in the bucket to all the future programs to provide the North with electricity and food. South Korea will need at least 6.5 trillion won ($6.3 billion) and perhaps as much as 11 trillion won over the next decade to meet its obligations for energy aid to North Korea if Pyongyang honors its pledge to end its nuclear programs -- but many feel this estimate is unrealistically low. On 2 Nov, it was reported that the government wants to give North Korea another W5.25 trillion (about US$5.25 billion) in aid over the next five years. Under a Unification Ministry proposal, the government plans to spend W445 billion next year, W1.2 trillion in 2007, and W1.19 trillion in 2008, 2009 and 2010 to aid the North. The Korean people need to hold the Ministry of Reunification accountable for the money that is being given away to the North without obtaining anything tangible in return.

On 29 Dec 2005, the Joongang Ilbo ran an editorial, "Aid to North rises with little to show in return." It stated:

Recently publicized material by the South Korean Unification Ministry revealed that a total of 340.6 billion won ($324.3 million) was spent on inter Korean cooperation projects from January until November this year, ranging from supporting the North Korean national soccer team to sending fertilizer aid to the North.

A total of 157.3 billion won was spent on fertilizer and rice aid to the North, making up almost half of the total aid given to Pyongyang, while the rest was spent on projects aimed at facilitating more exchange of personnel between the two Koreas. The countries are still technically at war since an armistice in 1953 ended the Korean War.

These projects include the Mt. Kumgang tours and expansion of the Kaesong industrial complex, which cost 2.2 billion won and 10.6 billion won, respectively.

For the cash strapped North, aid was also extended on the sports field as a total of 400 million won was given to the North in order for its national soccer team to travel to and play at international events staged in the South.

A total of 53 civic organizations supporting the North received 5.7 billion won. Oh My News, an Internet news service that sponsored a marathon competition in Pyongyang, received 80 million won. Nevertheless, an international conference on North Korean human rights held recently didn't receive any government aid. Also, an inter-Korean railroad system on which the government has spent 126.4 billion won has not been opened, due to the North's refusal to cooperate.

Civic organizations have criticized the government for its "kid glove" handling of the human rights situation in the North despite the heavy annual aid that Seoul has given in recent years. Fearing to antagonise Pyongyang, Seoul has continuously sidestepped this issue.

North-South Military Cooperation Talks in Jeopardy Though the ROK is rushing ahead with many economic agreements, the terms cannot be met because the DPRK and ROK militaries cannot agree on the disputed areas on the maritime demarcation line (MDL) and DMZ. For example, the ROK-DPRK agreed to jointly fish in areas of the West Sea, but the ROK-DPRK military cannot agree on the MDL line location in the disputed areas. MDL which was arbitrarily set up by the UN at the end of the Korean War and is disputed by the DPRK.

Other agreements on the railway and telecommunications links via land routes across the DMZ have also been hampered. The DPRK stated in Nov 2005 that the military accords signed by the Koreas to control overland exchanges across the heavily fortified border were close to "dead." The overland route via train has become a symbol of reunification. In 2002, the two Koreas, still on truce since the end of the 1950-53 Korean War, created joint administration areas (JAAs) through which they have built two cross-border roads. Under a 1953 armistice, the United Nations Command led by US troops has direct control over the southern part of the 250-kilometer (155-mile) inter-Korean buffer zone. Though the DMZ area in Panmunjon was turned over to the ROK by the USFK in 2005, a small contingent of USFK troops remain as part of the UN presence.

On 30 Nov, the DPRK threatened to sever military ties with South Korea, accusing Seoul of allowing US troops to flaunt their presence in two border areas used for inter-Korean exchanges and tourism. In an unusual statement carried by Pyongyang's official KCNA news agency, the North's military said South Korea's "servile" attitude to the United States was putting inter-Korean military relations in jeorpardy.

In the Dec 2005, inter-Korean ministerial talks in Jeju Island, Seoul asked the North to confirm the whereabouts of abductees and prisoners of war but received no acknowledgement from the North. The two sides could only agree to hold the next military talks "sometime" next year. The military talks seem to be stalled -- and along with it many of the "unification" projects..

North and South Korean Unified Team In the 2004 Asian Games, the Koreas marched together in the opening and closing ceremonies -- though they competed separately. On 2 Nov 2005 South and North Korea reaffirmed that they would field a united team for the the 2006 Asian Games and the 2008 Beijing Olympics . South and North Korean athletes marched together at the opening ceremonies of the 2000 and 2004 Olympics and at the 2002 Asian Games but have competed separately since the division in 1953. People are wondering when the ROK will get around to signing a peace treaty -- or even an armistice -- BEFORE it engages in this sports unification.

North Korean Spy Release while Abductees and POWs Remain in North An interesting side note is that there have been seven DPRK agents arrested in the past five years -- the latest being in 2004. The espionage efforts highlighted the use of the internet to transfer sensitive information to the DPRK. Recent evidence has shown that DPRK agents are using China as a base in 2005 to hack into South Korean data bases -- while expanding their agents there because of the growing ROK business presence. Now the ROK is considering repatriating the North Korean spies as a gesture of goodwill in hopes that the DPRK will return of the 542 ROK POWs from the Korean War (that the DPRK refuses to acknowledge) and 247 fisherman (that the DPRK states are there of their own free will). The repeated spy repatriations after Sep 2000 have yielded nothing and expectations are that this move will likewise result in the same.

As of Nov 2005, the 247 abducted ROK fishermen and 542 POWs remained abandoned by the Roh administration. The Roh Administration position on abductees is illustrated during the 12th Reunion for Inter-Korean Separated Families from November 8 to 10 at Mt. Geumgang. During the orchestrated meeting of one of the abducted fisherman and his family, the journalists used the term "abducted" and the North protested. A Unification Ministry official handling the journalists stated that they should apologize to the North for the "provocation" which only added to the journalists' fury. Donga Ilbo reported, "North Korea deterred South Korean journalists from broadcasting and covering the event by calling into question the expression of “North Korea’s abduction” in the family reunion report of one of the Dongjinho’s crew, which was kidnapped by North Korea in 1987."

North Korea Human Rights Issue and South Korea's Abstention from Vote On the topic of human rights violations by the North, the ROK has consistently "abstained" from voting for fear of offending the North. On 2 Nov, 25 member countries of the European Union introduced a resolution before the UN General Assembly saying, “In North Korea, wide-ranging human rights abuses such as torture, public executions, and illegal detention are going on. North Korean defectors who are caught and repatriated to the North against their will are tortured or punished with death.” The South Korean government was again expected to abstain from voting on a resolution regarding North Korea's human rights violations, but for the first time conservative groups in the ROK were starting to publicly voice their concerns. Within Korea, aged defectors and former POWs who escaped from North Korea, along with veteran groups, denounced the Roh Administration. Some international community members criticized the ROK and claimed that it was applying double standards to the human rights issue.

On 14 Nov, the Uri Party blocked a GNP resolution from being submitted to the National Assembly to urge government support for a resolution urging North Korea's human rights improvements to be voted on by the UN General Assembly. (NOTE: A spot Chosun Ilbo survey (800 people) in Nov showed 53.3 percent supported voting on the resolution while 22.2 percent against. For the first time, college age conservatives are speaking up over South Korea's stand human rights issues in the North. Though relatively small -- total conservative student groups size estimated at 10,000 -- it is a growing movement.)

In the end at the UN, eighty-four members voted for and 22 voted against the resolution at the assembly's Third Committee, in which all 191 U.N. member states have a seat. Sixty-two abstained, including South Korea. The UN General Assembly adopted a DPRK human rights resolution that expressed serious concerns about human rights conditions in the DPRK, citing abuse of human rights, torture, public execution, prison camps of political prisoners, prostitution, infants killing and kidnapping of foreigners. It urged the DPRK to guarantee its people human rights and basic freedom. It also called on the DPRK to provide humanitarian organizations and groups such as the World Food Program and non-governmental organizations with free access to every part of the nation.

The EU had submitted similar resolutions at the U.N. Human Rights Commission every year since 2003. However, this marked the first time that such a resolution had passed in the U.N. General Assembly. South Korea abstained from the vote in 2004 and in 2005 and was absent from the vote in 2003. Siding to vote against the resolution were such sterling examples of human rights as Venezuela, Cuba, Malaysia, Belarus and Sudan -- countries with their own problems with human rights.

South Korea viewed the vote in a different light stating that 84 votes were for but 84 total against, absent or abstaining indicated that there were still nations that felt that the issue should be handled cautiously. Condemned by the GNP, the Uri Party called any vote on human rights in the UN "counter-productive." The Roh viewpoint is that any condemnation will upset all progress made so far. However, to many Koreans, the progress seems to be one-sided with the North gaining all the points -- and the ROK footing the bill.

The resolution is not legally binding but it will deal a diplomatic blow to North Korea. (NOTE: However, international politics builds first with a non-binding resolution such as was done with the condemnation of Iraq prior to the Iraq War. The stage is now set for any calls for an official censure resolution.)

On 16 Dec 2005 the UN General Assembly officially adopted a resolution criticizing human rights abuses in North Korea, with 88 votes for, 21 against and 60 abstentions. The plenary vote was the final step to formalizing the resolution approved in November by the assembly's third committee, which mainly deals with human rights issues. This was the first time the General Assembly had passed a resolution on the matter. The resolution calls for an end to torture, public executions, forced labor and the violation of rights of refugees repatriated to North Korea. It urges the Stalinist country to grant international human rights groups free access to the country to monitor whether the basic human rights and freedoms of North Korean citizens are respected.

During the 8-11 Nov 2005 conference on DPRK human rights held in Seoul, the ROK treaded softly fearing an adverse reaction from the North. The ROK attempted to steer clear of the privately organized event. As expected, the human rights activists and government officials from around the world called for an immediate halt to human rights violations in North Korea and also sought a more active role from the South Korean government in pursuing the universal goal. U.S. special envoy Jay Lefkowitz called on South Korea and the international community to work together on calling attention to human suffering in North Korea. But former President Kim Dae-jung and the Uri Party said gradual reconciliation, not coercion, is the only way to resolve the human rights problem.

(SITE NOTE: The Korean National Human Rights Commission (NHRCK) was unusually silent during the entire proceedings faced with the national policy that the North Korean situation should be handled "gently" so as not to disrupt the six-nation talks. Other nations did not view it this way nor did the UN in its vote in 2004 against the human rights abuses in North Korea. Then when the international attention focused on Seoul with the international convention on Human Right held in Seoul in Nov 2005, the NHRCK again remained silent reflecting the views of the Unification Ministry to not upset the apple cart. However, a month later the NHRCK did come out to make a ruling the the riot police used "excessive force" against farmers who were attacking them with steel pipes -- and in which 218 riot policemen were injured. This forced the Police Commissioner and Seoul Police Chief to resign -- and showing that the NHRCK is nothing more than a political tool of the Roh Administration and Uri Party.)


Steve Breen, Asbury Park Press (Apr 2003)

North Korea and Six-Party Nuclear Talks Contentions In Sep 2005, the six-party talks were "saved" from the brink of failure and sending the issue to the UN Security Council by a PRC proposal whereby the DPRK agreed to give up all its nuclear weapons and programs, rejoin the NPT, and embrace IAEA safeguard regimes in return for normal diplomatic ties with Washington and energy and other assistance from other parties. The participants in the six party talks agreed to respect the DPRK's right to use nuclear energy peacefully and to discuss the provision of light-water reactors at an appropriate time. The "win-win" statement, in the words of US chief negotiator Christopher Hill, puts in writing the ROK's pledge to provide the DPRK with 2000 mw of free electricity, with other parties also pledging energy aid to the DPRK. The US also offered reassurances that it had "no intention to attack or invade the DPRK with nuclear or conventional weapons." Japan also pledged to continue work towards normalizing its relationship with the DPRK. However, the joint statement fails to resolve the debate over whether the DPRK will get energy aid and security guarantees before or after it dismantles its nuclear programs. It also left unresolved DPRK's demand for a light-water nuclear reactor, a subject the parties agreed only to discuss at an "appropriate time."

Soon after the accord, the DPRK said it would return to the NPT AFTER it gets a light-water reactor from the US, and the US is muttering the opposite. The US stated it would talk about a light-water reactor AFTER the North dismantled its nuclear weapons in a "verifiable" manner. (NOTE: On 22 Oct 2005, North Korea vowed to allow the United States and other countries to participate in managing light-water nuclear reactors according to New Mexican governor Bill Richardson (D) who visited North Korea. This is NOT the official stance of the US negotiators which state -- the North can NOT be trusted with nuclear reactors based on its past track record.)

It is being reported that the negative view toward Seoul's role in negotiations with Pyongyang is widespread in Washington. The common view is that Seoul is siding with Pyeongyang. The U.S. is reluctant to give in to North Korean demands for a light-water reactor, but South Korea says such civilian nuclear facilities are no problem provided Pyongyang complies with the Non-Proliferation Treaty and gives IAEA inspectors full access. (SITE NOTE: This flies in the face of the unified stance agreed upon previously.) North Korea promised to do so once the U.S. builds it a reactor. Seoul and Washington also disagree on other issues, including whether North Korea's dismal human rights record should come up in negotiations. Seoul and Washington lacked coordination and their alliance was under stress.

The Korea Times on 31 Oct 2005 reported that Minister of Foreign Affairs and Trade Ban Ki-moon has indicated that if the North raises the issue of inspection and verification of nuclear disarmament in the South, including the facilities of the USFK, the ROK would "cope with it rationally by utilizing the 1992 inter-Korean joint declaration, which contains the principle of mutual inspection." The only problem is that the USFK has already stated that it would occur only if Washington OK'd such a move and a serious diplomatic row with Washington could occur as the US has sovereignty over its military installations in the ROK.

The fifth round of six-party talks was held on 9 Nov 2005 at the Diaoyutai State Guest House in Beijing, China. In the plenary session, North Korean Deputy Foreign Minister Kim Gye Gwan, the chief negotiator of North Korea, took issue with the recent remarks of U.S. President George W. Bush again calling Kim Jong Il a “tyrant.” U.S. Assistant Secretary of State for East Asian and Pacific Affairs Christopher Hill, the chief U.S. envoy to the six-party talks, made it clear that the U.S. would NOT accept North Korea’s demand that “light water reactors be provided first and the North will abandon its nuclear weapons subsequently.” The US position has solidified now around the North showing some "substantive action" towards resolving the nuclear issue. Thus the six-party meeting ended before it actually started -- with no dates on when it would be reconvened. (NOTE: On 18 Nov, Christopher Hill rejected the five-step plan laid out recently by Pyongyang to achieve this aim. Mr. Hill said the North needed to stop operations at its Yongbyon reactor immediately, adding that the United States would not succumb to pressure on this issue. Mr. Hill said Pyongyang needed to declare all nuclear material and equipment for verification before dismantlement begins. He warned the North would receive a "heavy blow," if it conducts a nuclear test or transfers material abroad.)

The US is also cutting off the food aid to the North in Nov 2005 stating it was because of the DPRK expulsion of the UN WPF -- and had nothing to do with the nuclear talks. The point is that the US is moving to cripple the North WITHOUT the aid of the South. Though it knows the chances of the North imploding economically is slim at this time, it is the start.

Bush would seek unity with Asian allies on how to persuade the DPRK to move ahead with its agreement to dismantle its nuclear weapons program -- while the ROK continues to be a fly in the ointment. Bush would stick to the US position that the DPRK would get no aid until it dismantles its nuclear program. Bush also wants the DPRK to get specific about a process to reveal its nuclear program and dismantle it in a verifiable way. Japan has already tightened the noose on the exports from Japan and inspects all North Korean ships for "safety." The interdiction on the high-seas may also start occurring to inspect for the exporting of weapons of mass-destruction and drugs. The next step was to convince China to create a "refugee camp" for North Koreans in Mongolia to further isolate the North when President Bush met with China and Mongolia in Nov 2005 after the APEC summit in Pusan. (NOTE: The US does not want to be stuck as the North Korean refugee dumping grounds and started to refuse North Korean defector requests for "political asylum.")

However, the US and North agreed to continue "bilateral" meetings over the issue -- though US officials declined visiting the North. The bilateral meetings cuts the South out of the process. The US Ambassador to Korea said the USA is willing to open an office in Pyongyang if the DPRK takes concrete steps to dismantle its nuclear weapons programs. The move could be a step towards normalizing relations but will only proceed if "North Koreans will do their part in building confidence." However, by December 2005, the US was clarifying its use of the term "bilateral" because it wanted to narrow the diplomatic scope of the talks. Sec of State Rice stated in Nov 2005 that there will be no negotiations on the North's printing "other people's money." The US called these meetings "low-level briefings" by US Treasury and Justice Department personnel on the legal basis of its crackdown. This has led the North to state that the US has "reneged" on its agreement on sanctions talks. It demanded negotiations, but U.S. refused to negotiate on what it said was a law enforcement issue.

There have been unsubstantiated reports that the US would be willing to sign a separate "peace treaty" with the North to end its involvement in the Korean Conflict. It was reported on 30 Nov that the US ambassador to the ROK, Alexander Vershbow, said, "It remains to be seen whether North Korea is truly prepared to eliminate its nuclear programs, and to do so in a prompt and verifiable manner," Vershbow said if the DPRK was ready to move forward on ending its nuclear ambitions, the US was ready to respond by looking at items such as striking a peace treaty to replace the armistice that ended the 1950-1953 Korean War.


Ambassador Alexander Vershbow

The US has urged the South open negotiations to sign such an peace agreement with the North that would end the Korean Conflict -- as the South never signed the Armistice Agreement. However, the ROK is reluctant to do so as it would open the door to a multitude of problems -- especially the fact that the North is a one-economy nation based on its war footing. The ending of its conflict with the South and a peace agreement might cause the North to implode if not supported financially by the South -- OR even worse, it might bankrupt South Korea if tried to support the North financially.

During the Nov 2005 APEC Conference in Pusan, George Bush met with Japanese Prime Minister first in Tokyo and then Roh Moo-hyun in Kyongju to discuss the nuclear issue and mutual defense pacts with each respective country. After the APEC Conference, Bush traveled to China and Mongolia. (NOTE: Bush proposed Mongolia as a "refugee camp" for North Korean defectors detained in China -- instead of deportation to North Korea where human rights allegations of executions are supposed to occur. Mongolia is also a supporter of the Iraq coalition and Bush thanked them for their support.)

In Nov 2005, the US, Japan and ROK agreed to end the KEDO project to build a light-water reactor in the North. (SEE KEDO Finally Dead) The North demanded unspecified compensation from the US, while Japan has written off its investment, the ROK is weeping that it lost $1.1 billion as the prime contractor to build the reactor.

However, the US resolve may have hardened on the toppling of the DPRK regime after there were reports in Nov 2005 that Iran had offered the DPRK oil in exchange for nuclear weapons development help. German weekly magazine, Der Spiegel, reported that Iran has offered the DPRK oil and natural gas as payment for help in developing nuclear-capable missiles citing unidentified Western intelligence sources. A senior Iranian official traveled to Pyongyang during the second week of October to make the offer. It was unclear what the DPRK response was. The Korea Times reported that the Iranian Foreign Ministry rebuffed Western media reports alleging a cooperation proposal to the DPRK stating the news was "fundamentally incorrect."

In the past, the US has revealed that the DPRK has supplied Iran with semi-submersibles and SCUD missiles. The US has previously issued a warning to the DPRK that it would not tolerate any export of technology for weapons of mass destruction. Latest reports from Germany state that North Korea provided Iran with the advanced BM-25 missiles were being purchased from Pyongyang in the form of kit sets. The mobile missiles, which are based on the Russian SS-N-6 missile for submarine launch, will have a nominal range of 2,500km, but can be upgraded to hit targets up to 3,500km away -- making central Europe vulnerable.

The support of Iran by North Korea in attempts to become a nuclear power would be construed as supporting the proliferation of weapons of mass destruction -- a message that the US warned would would bring about world-wide sanctions. An IAEA report released to its member states on 10 November 2004 showed that Iran has, in a series of contraventions of its safeguards agreement over 22 years, systematically concealed its development of key techniques which are capable of use for nuclear weapons. In particular, that uranium enrichment and plutonium separation from spent fuel were carried out on a laboratory scale. Iran has admitted to the activities but says they are trivial. The report says that to date no evidence of a weapons program has been found, but that it will take some time before the IAEA will be able to conclude that Iran's nuclear program is exclusively for peaceful purposes. (Source: UIC.com, Nov 2004.)

In Nov 2005, Iran began converting a new batch of uranium at a key nuclear facility, rejecting international pleas to suspend such work and dismissing a new offer -- sponsored by Russia -- that was designed to ease tensions over the country's nuclear ambitions. Iran has said the program was designed to produce nuclear energy, not bombs. But the scale of the program and its clandestine nature have fueled suspicions that Tehran is using it to conceal a weapons effort. Russia continues to block sending the matter to the UN Security Council. The Bush administration and several key allies have said they want Iran to forgo plans to complete a uranium enrichment facility, the most sensitive aspect of the nuclear fuel cycle, because it would give Iran the capacity to produce bomb-grade uranium. The Iranians have said they will not give up that part of the program, which they are allowed to have as signatories to the nuclear Non-Proliferation Treaty. (Source: Washington Post, Nov 16, 2005.)

German intelligence authorities believe Iran has now bought 18 longer-range missiles from Stalinist North Korea, giving Tehran the capability to attack targets in central Europe, the German daily newspaper Bild reported on 16 Dec 2005. The study written by the foreign intelligence service BND said that the advanced BM-25 missiles were being purchased from Pyongyang in the form of kit sets. The mobile missiles, which are based on the Russian SS-N-6 missile for submarine launch, will have a nominal range of 2,500km. However it was possible to upgrade them to hit targets up to 3,500km away, the Munich-based BND said. Iran already possesses the Shehab-3 missile that has a range of 1,300km.

Bild quoted the BND dossier as saying: "Germany and other parts of central Europe could be affected in the medium to long term by the Iranian missile program." It added: "With longer ranges possible in the future, combined with the apparent concerted efforts to obtain nuclear warheads, Iran would be in a position to reach all of Israel and other parts of central Europe." (Source: Taipei Times, 17 Dec 2005.)

In 1998, the National Intelligence Service (NIS) were certain that North Korea was circulating counterfeit notes -- but this was before Kim Dae-jung made his historic journey to the North in 2000. The National Intelligence Service, in a 1998 report titled "A New Threat in the 21st Century: Realities of and Responses to International Crimes", said North Korea forges and circulates US$100 bank notes worth $15 million a year, and that the counterfeiting is carried out by a firm called February Silver Trading in the suburbs of Pyongyang.

The NIS said in reports to the National Assembly the same year and the next that the North operated three banknote forging agencies, and that more than $4.6 million in bogus dollar bills were uncovered in circulation on 13 occasions since 1994. "That North Korea is a dollar counterfeiting country was common knowledge among intelligence officials," said a former senior NIS official. (Source: Chosun Ilbo editorial, 25 Dec 2005)

The Korea Exchange Bank on 24 Dec 2005 that it had found an increased number of counterfeit $100 "supernotes" in this country so far in 2005. The bank said 835 of the 842 fake U.S. bills it caught during the first 11 months of the year were the high-quality forgeries that Washington has accused North Korea of producing. The face value of all counterfeit U.S. notes it has found so far in 2005, nearly $84,000, is about three times the value of counterfeits found in all of 2004. U.S. officials have charged that North Korea began making counterfeit U.S. dollars in 1989, and has circulated more than $50 million worth so far. The Bank of Korea said separately that it had found 889 supernotes, including some of those found by Korea Exchange Bank, during the first half of the year. (Source: Joongang Ilbo, 25 Dec 2005)

Though South Korean currency experts agree it is "highly likely" that intricately forged US$100 bills are made in North Korea, it claims it needs "definitive" proof before it can confront the North. To complicate matters, in April 2005, a large stash of the "supernotes" -- so called because they are 90 percent identical to the real thing -- was uncovered in South Korea showing that the ROK can become the next target for money laundering operations. Washington was to send a large team of State Department officials and agents to Seoul in January 2006 to provide new and detailed information on North Korean counterfeiting, including its purchase of special ink and printing equipment.

The US pointed out that in Apr 2005, a large amount of these counterfeit supernotes were confiscated in South Korea. The police arrested Lee (49) for allegedly exchanging 1,400 high-precision counterfeit $100 bills brought from China last April and arrested three others without physical restraint for circulating counterfeit currencies. (NOTE: South Korean government says it cannot be determined where the supernotes found here come from. Korean police who uncovered the 1,400 supernotes here in April say they asked for cooperation from China in the investigation, acting on information that the bills came from there, but were unable to pinpoint where they were made.) The National Intelligence Service announced in June that 17 $100 bills brought by a Korean from the tour to Indonesia were newly forged supernotes. "Undoubtedly we do have enough evidence and undoubtedly South Koreans have far more information than we do," David Asher, former senior adviser on East Asian and Pacific Affairs at the U.S. State Department, told Radio Free Asia in Washington in Dec 2005.


Funny Money

In Dec 2005, Ambassador Alexander Vershbow said South Korean law enforcement officers unearthed a large quantity of North Korean counterfeits earlier this year, and that he believes North Korea is still circulating the forged dollars. Vershbow called for the South to cooperate in stopping the North's illicit activities. Ambassador Vershbow reiterated his government's position that it has "forensic evidence" that North Korea produces counterfeit U.S. bills and even knew of instances when North Korean diplomats were caught depositing the counterfeit notes. Ambassador Vershbow quickly has been vilified by the North for his comments of them being a "criminal regime" by their comments that he is the "most bitchy and malignant diplomat in history" and a "tyrant" -- to the applause of the supporters of his out-spoken style.


Ambassador Alexander Vershbow

A U.S. government official supposedly made an allegation that North Korea has counterfeited Chinese yuan, Japanese yen, and Thai baht in addition to U.S. dollars. He added, "If North Korea can forge U.S. dollars, which are known to be the most safeguarded from counterfeiting, perfectly, why wouldn't it want to do the same for other currencies of neighboring countries." He made clear that currencies of neighboring countries including Thailand have been counterfeited. “That’s the reason why the country could be isolated even further. North Korea has been paying both in cash and commodities in its trade with foreign countries, due to its lack of cash. It can’t trade on credit. But it paid some countries with counterfeit money. If it is widely known that the North has been counterfeiting many foreign currencies and using them for trade, who would want to involve themselves in business dealings with the North? Trading partners will end up having to verify the authenticity of money paid by the North. If North Korea undermines the very fundamentals of economy in this way, what does the future hold for a nation whose is currency suspected by the world and an economic system based on such currency?”

On 28 Dec 2005, the Yomiuri Shimbun quoted several diplomatic sources from the U.S. and China that said, “The U.S. government is secretly investigating a Chinese bank for laundering illegal North Korean money.” However, the Japanese newspaper added that the details of the Chinese bank, such as its name and location, were unknown. In addition, the paper reported that ever since counterfeited North Korean $100 bills (supernotes) were discovered at the end of 1989, the volume of supernotes seized by the U.S. over the last 16 years currently stands at $45 million, and that $13 million was confiscated last year in Taiwan alone.

North Korea's government has produced more than $45 million in high-quality fake $100 bills since 1989 and is the world's only state-sponsored producer of the so-called "supernote." The recent arrest of Sean Garland, head of the communist Workers Party of Ireland, provided the first confirmation of the Pyongyang government's links to the supernote or superdollar. Treasury Department sanctions imposed in Sep 2005 on the Banco Delta Asia in Macao for its role in North Korean counterfeiting and money laundering. The Macau bank had provided financial services to the North Korean government and its front companies for more than 20 years. As such, the US started calling North Korea a "criminal regime." Ambassador Vershbow also used the comment "criminal regime" and drew the ire of the North who called him the worst ambassador ever and Uri Part lawmaker Kim Won-ung called for the recall of the U.S. ambassador. However, state department officials state that Vershbow's remarks reflected U.S. policy toward North Korea. The North called him the "most bitchy and malignant diplomat in history" and a "tyrant" -- to the applause of the supporters of Vershbow's out-spoken style. Rep Henry Hyde applauded the U.S. ambassador for his straight-forward remarks and appeared to criticize Seoul for siding with the North. "Those who would make apologies for such a regime are no friends of America or her people," Hyde said in the letter referring to Ban Ki-moon, minister of foreign affairs and trade, who criticized that Vershbow for not being more careful with his words.

(SITE NOTE: Our opinion is that Washington has ended its rhetorical truce with North Korea because assurances have been exchanged, but nothing seems to have happened. Secretary of State Clayton Powell was strong on offering the carrot backed up with military might. Washington attempted the "carrot" technique but was undermined at every turn by the South. Washington is using the stick, not the carrot under Secretary of State Rice. South Korea wants to read into it that it is blameless for this impasse, but the conservative newspapers are now pointing out that the South has given everything to the North, but received nothing -- except family reunions which turned political. The South wished to be a mediator, but the truth is that the North has no intention of every letting the South become an intermeNotebook. It wanted direct talks with the US -- and hoped to drag things out to its advantage. The North saw how India and Pakistan by dragging out the negotiation process became nuclear powers -- and finally recognized by the US. The North wants the same and is attempting the waiting game -- using the South as the fool who keeps giving in hopes of receiving rewards later that never come.

An unnamed US government source stated in a Dec 2005 interview, “North Korea attacked the U.S. currency. Dollars, one of the world’s key currencies, are the foundation for bolstering U.S. military power and promoting liberal democracy. North Korea has made a fatal strategic mistake in undermining the U.S.’s source of power. The U.S government’s patience is running out. On a scale of ten, the U.S.’s commitment to punish the North was rated at ‘2’ five years ago. Now it is 4. If it rises to 6 or 7, it would be unbearable for North Korea.”)

The US implemented Section 311 of the Patriot Act to shut down the North's financial accounts. Pyongyang then asked the South Korean company Hyundai Asan, which handles tours into the North, to pay fees for its sightseeing groups into a bank in Austria. The U.S. Treasury Department warned the U.S. banking sector that North Korea might look for banking services elsewhere, after the Banco Delta Asia in Macau froze its accounts following U.S. charges that the bank was laundering funds for Pyongyang.

(SITE NOTE: On 16 Dec 2005 in an embarrassing defeat for President Bush, the Republican-led Senate failed to renew the anti-terrorism law known as the Patriot Act, which expires at the end of December. The new compromise bill was feared it did not go far enough in protecting citizen rights. However, the impacts to the North's situation as the financial sanctions were levied under Section 311 of the Patriot Act is yet to be seen. A group of bipartisan Senators introduced legislation to extend the current law by three months to give lawmakers more time to craft a revised bill with greater civil liberties protections. But Senator Majority Leader Bill Frist and the White House, who are hoping to blame Senate Democrats for scuttling the Patriot Act, oppose that measure. On 21 Dec, the Senate ignored the bipartisan majority of the House, a majority of the Patriot Act House-Senate conferees, by choosing to punt the issue to next year (3 Feb 2006) by passing a six-month extension of the Patriot Act that contains none of the important civil liberties safeguards carefully negotiated by House and Senate conferees and included in the Patriot Act conference report.)

The counterfeiting operation began a quarter-century ago (1989) at a government mint built into a mountain in the North Korean capital. Using equipment from Japan, paper from Hong Kong and ink from France, a team of experts was ordered to make fake U.S. $100 bills, said a former North Korean chemist whose job was to draw the design. Before long, sheets of 30 bills each were rolling off the printing presses, and by 1989, millions of dollars worth of high-quality fakes were showing up around the world. U.S. investigators dubbed them "supernotes" because they were virtually indistinguishable from real American currency. The flow of forged bills has continued ever since, despite a U.S. redesign intended to make the cash harder to replicate.

For 15 years, U.S. officials suspected that North Korea's political leadership was behind the counterfeiting of U.S. $100 bills, but they revealed almost nothing about their investigations into the bogus bills — or their efforts to stop them. Now though, federal authorities are pursuing at least four criminal cases and one civil-enforcement action involving supernotes. U.S. authorities have unsealed hundreds of pages of documents in support of the cases in recent months, including an indictment that directly accuses North Korea of making the counterfeit bills — the first time the U.S. has made such an allegation in a criminal case. The documents paint a portrait of an extensive criminal network involving North Korean diplomats and officials, Chinese gangsters and other organized-crime syndicates, prominent Asian banks, Irish guerrillas and an ex-KGB agent. (Source: Seattle Times)

In the indictment and in interviews, U.S. authorities said Sean Garland, chief of staff of the Official Irish Republican Army, or Old IRA, ultimately teamed up with Old IRA members, street crooks and an alleged member of the KGB, the Soviet intelligence service. The indictment accuses Garland and six other men of buying, selling and circulating fake U.S. $100 bills during the 1990s. Authorities say they passed up to $28 million worth of currency. From 1997 to 2000, the group bought, sold and circulated the counterfeit bills in Russia, Belarus, Poland, Denmark, the Czech Republic and Germany, the indictment says. It alleges, in detail, how couriers made frequent ferry trips to Ireland loaded down with real cash to pay Garland for the counterfeits. Authorities said Garland did much of his business with North Korean suppliers at their embassies in Moscow and, later, Minsk, Belarus, using his status as a Workers' Party official

Besides the Garland case, U.S. officials say three other criminal cases currently being pursued by the Justice Department offer evidence that North Korea is intensifying its efforts to churn out fake U.S. money and conspire with organized-crime groups to smuggle the bills and other counterfeit drugs and products into the United States. None of those cases explicitly mention North Korea, but they do refer to "a foreign country" that several U.S. sources say is North Korea. One of those cases involves supernotes, drug trafficking and three suspected members of a Chinese crime syndicate arrested in Saipan last year. In the two other cases, more than 87 people have been arrested or indicted in New Jersey and California on charges of smuggling or conspiring to smuggle at least $6 million of counterfeit cash, counterfeit Viagra, brand-name cigarettes and weapons into the United States from "Country A" and "Country B." Several U.S. officials said those countries were North Korea and China, and that the money was made by the North Korean government. Stuart Levey, a top Treasury Department official, said that North Korea "quite recently" began churning out improved versions of U.S. bills. (Source: Seattle Times)

An advisory by the US Treasury's Financial Crimes Division tells American financial institutions to "take reasonable steps to guard against the abuse of their financial services by North Korea, which may be seeking to establish new or exploit existing account relationships for the purpose of conducting illicit activities." It calls on financial institutions worldwide to take similar precautions. Pyongyang asked the South Korean company Hyundai Asan, which handles tours into the North, to pay fees for its sightseeing groups into a bank in Austria.

On 20 Dec 2005, it was reported that a key North Korean enterprise had moved its base of operations to mainland China. It has been confirmed that Jogwang Trading Co., which virtually represented the DPRK in Macau, had withdrawn from Macau. The company, which was situated in the building complex in front of the transportation agency of the Macau security police, moved its office. Hence, DPRK employees had stopped coming to the site, and the signboard of the company was removed. It was reported that the Jogwang Trading Co. moved its office to Zhuhai, a Chinese territory near Macau, at about the same time that the US announced that a Macau bank had engaged in money-laundering for the DPRK. It was also reported that quite a few DPRK enterprises have also moved their offices to mainland China. (SITE NOTE: This latest move could turn out to be a source of friction between the US and China if the extensive Chinese trade outlets are used in North Korean operations of drug smuggling, money laundering or shipping of weapons of mass destruction originating in North Korea.)

US and ROK Military Alliance in Big Trouble Throughout this whole fiasco with the ROK refusing to pay for its "share" of its defense and openly supplying aid to the North, both the ROK Foreign Ministry and Ministry of Defense continued to maintain the relationship was strong. However, the fact is that there is indeed some deep problems as the ROK under Roh Moo-hyun continues to move towards the left and attach itself to the North. The crux of the problem is that the ROK in supporting the North has negated the very reason for the existence of the USFK. The ROK has continued to push for a self-reliant defense with the ROK having authority of its forces in case of a war. In Oct 2005, Donald Rumsfeld announced that the US would no longer be a "patron" of the ROK military, but rather become a "partner" in the relationship. In other words, the US was NOT going to pay for the massive upgrade programs that the ROK needed to undertake to become "self-reliant," but would remain a "partner" -- under the Mutual Defense Treaty -- to "support" the ROK in case of hostilities. With the rising anti-Americanism in Korea, the public opinion in the US is turning against the ROK and now US congressmen are openly questioning the US-ROK alliance. (See Military Events: US-ROK Alliance on Shaky Ground.)




Pohang Landing FOAL EAGLE 2004

ROK "Self-Reliant Defense" in BIG Trouble The WRS munitions issue is unresolved as the reductions are part of the elimination of providing munitions for the ROK -- which they still haven't announced how they are going to resolve this problem. As far as we know, the ROK still is operating with only 30 days WRSM instead of the normal 90 days supply. Some news reports state it is only a 10 days supply. The US stopped the WRSA (War Readiness Supply Allies) program in Dec 2004 that provided munitions for the ROK.)

According to an editorial in the Donga Ilbo on 8 Nov 2005: "Recent reports have revealed that in June, the South Korean Ministry of National Defense (MND) asked the U.S. to conclude an agreement for new quick logistic supply between both countries, but was rejected.

The Critical Requirements Deficiency List (CRDL) between Korea and the U.S., a logistical planning tool for a possible war, was abolished late last year, and the U.S. War Reserve Stocks for Allies (WRSA) program will be terminated at the end of 2006. In light of these two programs ending, the U.S.'s refusal to conclude a new military logistics agreement with South Korea is the equivalent of notifying Korea that it will be on its own in the initial stages of any conflict on the Korean peninsula.

The costs of the Self Reliant National Defense program pursued by the Roh Moo-hyun government are becoming true. Most of the supplies provided by the CRDL and WRSA programs consist of ammunition. Nevertheless, the Korean military still only possesses enough ammunition to wage war for about 10 days. The self-reliant defense budget estimate of 621 trillion won, which will be needed through 2020, doesn't factor in additional ammunition costs. In the end, the government will have to acquire wartime ammunition reserves through additional budget funding.

Even if the government takes on the ammunition supply costs left by the termination of the WRSA program, which are estimated to be about five trillion won, there is a high possibility the U.S. will try to shift additional defense burdens to Korea. Two years ago, the U.S. notified Korea that it would re-evaluate the number of reinforcements it would send in case of a wartime contingency on the Korean peninsula.

The implication is that the U.S. is increasingly unwilling to make additional sacrifices for Korea, which itself is growing distant from the alliance. If the American security umbrella shrinks, the vacuum left by it will have to be filled by the government that is advocating self-reliant defense, and the bill will have to be paid by the Korean people.

The government's deceptive attitude is also a problem. When Dong-A Ilbo reported in April about U.S. plans to terminate WRSA, the MND boasted, "If WRSA is abolished, there will be no negative effect on the Korean military's war fighting capability." In reality, however, two months later, it asked the U.S. for a new agreement. The MND's ambivalence of assuring the people on one hand, and depending on the U.S. on the other, only makes people more anxious about security.

The Roh government should stop its unsubstantial self-reliant defense ballad and try to quickly reconsolidate Korea's weakening alliance with the U.S. If it continues on its current path, national security will weaken and the Korean people's burdens will only increase.

According to Korea Times on 7 Nov 2005: "Under the U.S. Arms Export Control Act promulgated in 1976, the U.S. government is required to get Congressional approval to sell its key weapons and military technology to foreign countries.

Congressional approval is required for the sale of a weapons system worth $14 million or more and a combined sale of weapons worth $50 million or more. But NATO member countries and the three favored nations _ Japan, Australia and New Zealand _ that jointly develop weapons systems with the U.S., are exempt from the law.

The favored countries only need a U.S. Congressional endorsement for purchase of a weapon system worth $25 million or more and a combined purchase of weapons worth $100 million or more. In addition, the U.S. law charges non-NATO member countries more with a contract administration services fee (CAS), as they are required to pay 1.7 percent of the total weapons price, compared to between 0.2 and 1 percent for the favored nations. (SITE NOTE: The ROK was notified that the US would be its "partner" but NOT its "patron." The attempt to become a "favored country" would mean that the US will return to being its "patron." After all the abuse and missteps that the Kim Dae-jung (with its Sunshine Policy) and Roh Moo-hyun's continuation of aligning itself with the North, there does not seem to be much support for the ROK in this area in the US Congress foreign affairs and military defense committees.)

The request for improving the country’s status as a weapons buyer came as South Korea is pushing for a military plan centered on the modernization of its weapons systems toward building a self-reliant defense capability. Under the 15-year plan, the ministry seeks to boost its military spending by 6.2 percent per year to deploy high-tech weaponry in the armed forces. The ministry estimates that about 272 trillion won (some $259 billion) is needed for the procurement of weapons systems. This accounts for 43.8 percent of the total 621 trillion won (some $591 billion) for the Defense Reform 2020. (SITE NOTE: To believe that the ROK will increase its defense spending to 6.2 percent PER YEAR is to believe in the tooth fairy. Even last year, the ROK promised to increase its military spending budget by 2.9 percent of GDP, but ended up in reality delivering on 2.8 percent of GDP. Under Kim Young-sam, the military spending was 8 percent of GDP and since Kim Dae-jung, the military spending has decreased progressively. It is in the third year of a recession with a non-viable society due to a birth-rate below 1.2 percent. Its tax base in the future will be shrinking, its rapidly aging population is increasing rapidly and by 2018 it will be in big trouble...BUT it is still promising a Defense Reform 2020 plan. This is unbelievable.)

About 120 nations are purchasing sophisticated U.S. weaponry, and South Korea is still largely dependent on U.S. arms sales in line with the U.S. troop presence here. (SITE NOTE: The ROK has attempted to purchase weaponry from other countries -- such as submarines based on German designs, Aegis-systems from the French which turned into a fiasco, Russian armaments that simply did not integrate with US armaments causing a separate brigade to be formed for them on the DMZ. Overall, the ROK attempts to seek weaponry elsewhere have proven to be ill-thought out and executed.)

The National Defense Committee of the National Assembly (Chairman: ruling Uri Party lawmaker Yoo Jay-Kun) pointed out yesterday that Seoul should prepare for any emergencies in Pyongyang on the judgment that even if the North Korean nuclear issue is resolved through an agreement at the six-party talks, it will not lead to a peace accord on the Korean peninsula through its report related to North Korea.

In a National Defense Committee report titled, “The measures to control crisis in preparation for any emergency in the North,” exclusively obtained by Dong-A Ilbo yesterday, the committee insisted that South Korea needs to prepare for any emergencies including the possible event of North Korea’s state of emergency triggering a crisis in South Korea’s security and the breakup of alliance between Seoul and Washington.

In the report, the committee took issue with the “Measures for Unification I, II” which were reportedly drawn up by the South Korean government in the late 1990s in preparation for the North’s internal war and mass North Korean defectors, saying that the measures were based on the judgment that Seoul can control those possible emergencies, even if a state of emergency occurs in Pyongyang, but reality could be a far cry away.

The committee also said that Seoul could have so far dealt with Pyongyang’s emergencies thanks to the firm alliance between Seoul and Washington, but given the current situation in which it could be impossible for South Korea and the U.S. to jointly cope with possible emergencies due to the recent internal controversy over ideologies and rifts between South Korea and the U.S., the measures for unification should go into the melting pot.

The report explained that serious ideological discord in South Korea could be the biggest stumbling block in countering the North’s state of emergency, calling the dispute between conservatives and reformists over controversial Professor Kang Jeong-gu an internal war without guns. (SITE NOTE: Chosun Ilbo on 29 0ct reported that Professor Jeong-gu Kang stated the Koreans were "US slaves" which brought a demand for his prosecution (See Joongang Ilbo), but the Justice Minister directly intervened to prevent his arrest. The Chief Prosecutor then resigned over this flap. In the end, Professor Kang was investigated by the Prosecutors' Office -- without detention -- to see if he violated the National Security Law starting on 25 Nov. He was indicted without physical detention for violating the NSL after writing a series of columns and papers glorifying the 1950-53 Korean War and supporting the communist state. 60-year old Kang Jeong-koo, a sociology professor at Seoul's Dongguk University, has been at the center of an ideological rift in the country since he openly argued the fratricidal war was a justifiable civil war for reunification by the DPRK -- posted to the internet. On 26 Dec 2005, Dongguk University decided to suspend Kang, saying he abused his position at the school with his controversial remarks that some claim are pro-North Korean and marred the image of the university.. The prosecution indicted Kang last month for the violation of the National Security Law. While acknowledging that Kang had the right to speak his mind, university authorities proceeded with his suspension, stating that he abused his academic position for non-educational purposes that eventually damaged the school’s image. Korean law covering private educational institutes grant privately owned schools the authority to suspend or dismiss faculty members facing criminal charges. If Kang is cleared of charges, he can be reinstated in the University -- as happened after his suspension before his 2001 trial over his visit to North Korea.)

Regarding the issue of handover of wartime operational control, the report pointed out that Seoul should not be in a hurry, and that although the incumbent government has tried to retrieve it in terms of very abstract and political aims under the banner of cooperative independent defense and dismantling the Cold War structure on the Korean peninsula, it is a very important issue capable of overthrowing the security system on the Korean peninsula on the part of the North.

The experience of the largest shareholder of SK Corp., Sovereign Asset Management, a private equity fund established in New Zealand and now based in Dubai, showed that fighting the "chaebol old-boy" network was futile. Though Sovereign's subsiNotebook Crest Securities, a Monaco-based equity investment firm, held a 15 percent stake in SK Corp in 2003, it was unable to block SK Corp from propping up its ailing affiliate SK Global, the trading arm of the SK Group, which had amassed 1.5 trillion won ($1.3 billion) in debts through dubious accounting practices in 2001 -- including doctoring its books to overstate its profits -- and illegal cross-lending amongst affiliate banks. SK Global had its accounts manipulated to hide $5.6 billion of losses. (Source: Corruption: Korea, 1 Oct 2003.)

Sovereign questioned the right of the SK Group to urge the oil refiner to participate in the bailout plan as the SK Group was NOT a shareholder of SK Corp. and it was NOT even a legal entity. Sovereign tried to block the move. It failed.

The battle over whether majority shareholders had a financial right to control the destiny of a chaebol-controlled company was lost by Sovereign when the domestic and foreign shareholders of SK Group approved the bailout plan -- and the decision was backed by the Korean courts. Creditors rescued the company from bankruptcy through massive debt-equity swaps. In July 2003, a settlement was reached between the domestic and foreign creditors that set forth that the company was to be normalized through joint supervision by both creditor groups. After SK Corp.'s board formally approved 850 billion won ($720.3 million) to bailout SK Networks in late 2003, it formally approved 143 billion won bailout of SK Shipping, in which has a 48% stake and sale of 10.4 percent stake to Hana Bank and other SK allies.

It was at this point that Sovereign Asset Management started its bid for a hostile takeover of SK Corp, the holding company for the nation's third largest conglomerate (chaebol). The Korean press immediately jumped on the bandwagon warning of foreign takeovers. However by Dec 2003, domestic banks had joined forces to prevent Sovereign Asset Management from undertaking the hostile takeover. Hana Bank, Shinhan Bank, Korea Development and a few other domestic banks agreed to buy 13.2 million shares in SK Corp., held by the company, or 10.41 percent of SK Corp. in cooperation with several other institutional investors friendly to them. In Dec 2003, the Korean courts rejected Sovereign's injunction to prevent SK Corp. from selling stakes to allies.

Since 2003, Sovereign had sought to oust Chairman Chey Tae-won, who was convicted of accounting fraud and insider trading in 2003. Sovereign Asset Management, which held a 14.96-percent stake, denounced Chey, saying the chairman's conviction in June 2003 had devalued the top refiner. At the time of his arrest on 24 Feb 2003, Chey was vice-chairman of the SK Group and chairman of SK Corp, which owns South Korea's largest refinery and mobile phone carrier. He was arrested on charges he illegally swapped stocks in subsidiaries to increase his control of the SK Group.

The chairman was convicted of involvement in a US$1.2 billion fraud at affiliate SK Networks Co., formerly SK Global Co. Chey's appeal on 30 March 2003, upheld his conviction. Chey, the son-in-law of former South Korean president Roh Tae-woo and nephew of the founder of the SK group, was one of 10 directors convicted in June of wide ranging malpractice within SK Group. The most serious fraud involved SK networks, the trading company previously known as SK Global, which had its accounts manipulated to hide $5.6bn of losses. Sovereign tried to force Chey into resigning, but failed while Chey remained free on bail pending his appeal in Mar 2003. The conviction was upheld in Jun 2003 and Chey entered prison in July 2003. Despite his conviction, Mr Chey kept his position as chairman of SK Corp. However, after only three months he was released from jail on bail pending his appeal -- and after a short hospital rest, he reentered management in his old position.

Sovereign accused Chey of failing to deliver shareholder value and of misallocating funds by bailing out weak SK affiliates. The oust attempt failed, but it was apparent the "old boy" ties were at work as other firms bought into SK Corp to give the Chey and the board of directors a stronger hand in the elections. It sent a strange signal to the outside world as the leader of Korea's business community is a convicted criminal who is released from jail after three months and re-entered management despite his malpractice conviction. One of Mr. Chey's subordinates, Song Kil-seung, was also convicted on charges of inflating profits by $1.7 billion, yet retained his position as chairman of the related SK Group. All of this would be unthinkable in any other industrial nation. (Source: Wall Street Journal, 23 Mar 2005.)

Sovereign requested a special shareholders meeting in 2004, but it was turned down by SK's board. Sovereign's appeal to a Seoul court to overturn the board ruling was also rejected. The shareholders voted to reinstate the two internal directors the board had recommended -- Chey Tae-won and Kim Joon-ho, a former prosecutor for the Ministry of Justice.

In March 2005 the Joongang Ilbo reported, Sovereign Asset Management tried to turn the annual meeting into a referendum on SK Corp. Chairman Chey Tae-won. Sovereign's position was that the investment community would be watching to see whether the SK Corp board seeks to nominate the most competent and ethical candidates available as of the nomination of the incumbent, Chey Tae-won, "would display a breathtaking contempt for international standards of corporate governance by the board." Sovereign attempted to wield its nearly 15% stake as a lever to force out current management and improve corporate governance at the annual general shareholders meeting. Sovereign attempted to force a dramatic makeover of the company and its articles of incorporation. Sovereign already has received a boost from other international investors who have bought up large chunks of the company recently. Foreign funds now own 53% of SK Corp., compared with about 25% a year ago.

SK Corp held 45.6 percent by domestic investors and 54.4 percent by foreigners. Floating local shareholders held a 10 percent stake. Foreign investors, excepting Sovereign, had a combined a 40 percent interest. Although Chey holds just a 0.9 percent of SK stock, Mr. Chey is a controlling shareholder. Shares held by Mr. Chey, immediate family members and SK-affiliated firms total 15.6 percent. Shares of institutional investors who have recently announced their support for the company's position, raise the level to about 35 percent. These include Samsung Electronics, Pantech & Curitel, and 36 out of 38 institutional investors, including firms such as Korea Investment Trust Management (3.6 percent) and Chohung Investment Trust Management (2.5 percent). Sovereign, on the other hand, holds 14.9 percent, and has the support of Prudential Asset Management (0.2 percent) and some other minority shareholders.

On 11 Mar 2005, it was announced that the scandal-tainted head of SK Corp. won a fresh shareholder mandate, surviving a second attempt to unseat him from the top post of South Korea's largest oil refiner. Shareholders reappointed Chey Tae-won as a board member at an annual meeting, voting down Sovereign Asset Management's bid to oust him. The reappointment supposedly came from 60.63 percent of the shareholders.

In Jun 2005 the Seoul Court of Appeals granted probation on Chairman Chey Tae-Won's three-year sentence on his appeal of his June 2003 lower court conviction. Though it reaffirmed the stock manipulation conviction of Chey, the reason for probation given was: "The court recognized that the events that led to the charges against Mr Chey occurred in the process of trying to resolve problems from the past that he inherited when he became chairman. The court believes that Mr. Chey did nothing motivated by self interest." (Source: SK Newsletter.)) However, others viewed the court reasoning for granting probation as absurd. Chey traded off his shares in the Sheraton-Hilton at inflated prices to garner a $60 million dollar profit and traded equity shares to consolidate his control of the SK Group -- the key point in his conviction. If that is not "self-interest" than nothing is. As to the problems being "inherited" by Chey, he was chairman for seven years when most of the fraud took place.

Chey's probation made it apparent that two systems of punishment existed in Korea -- one for the rich and powerful, and one for the masses. In May 2005, President Roh Moo Hyun pardoned top executives at Samsung Corp., LG Corp. and Hyundai Motor in an amnesty to mark Buddha's birthday. Also pardoned were four Daewoo executives convicted earlier this year of hiding losses during the conglomerate's collapse. The Korea Times stated on 6 Dec 2005, "Chey Tae-won, who received a very kind and timely get-out-of-jail-free-card just last week from an appeals court. Despite upholding Chey’s original conviction of accounting fraud in the order of 1.5 trillion won, the court decided he will never have to serve any more jail time as long as he keeps his nose clean. He did three months of a three-year sentence before being freed on bail and, according to the court, has since made sufficient ``efforts toward a more transparent management’’ of his company as to warrant this second chance."

Sovereign was very bitter over the defeat. It stated, "The windfall of record profit margins in the refining industry may flatter SK Corp's management, but the decline in the SK Corp stock price, in contrast to the rest of the Korean stock market this year, continues to demonstrate that the investment market retains a justified lack of confidence in Mr Chevy's leadership. The broken trust between SK's management, and its shareholders who own the company, remains. The return on investment in S-Oil over the last 12 months has been four times greater than that of SK Corp."

James Fitter, Chief Executive Officer for Sovereign, said: "The absence of meaningful change at SK Corp over the last two years is a national tragedy. Good corporate governance is synonymous with national prosperity. Without adherence to internationally accepted standards, SK Corp is perpetuating the Korean discount. The absence of accountability by the SK Corp leadership has not only done a disservice to its employees and its shareholders, but also to the advancement of Korea's national prosperity." (Source: Sovereign Asset Management Press Release) Foreign investors complain of inadequate corporate governance. "Indicted people should step down from management...that's blindingly obvious," Henry R. Seggerman, president of International Investment Advisers in New York.

The outcome of this battle between Sovereign and Mr Chey sent a negative message to foreign investors that they do NOT have any more power than South Korea's courts and the Roh administration to challenge the country's mighty chaebol. In Jul 2005, Sovereign Asset Management sold off its entire 14.8-percent stake in SK Corp., ending a two-year attempt to change the company's management. Of course, Sovereign made a massive profit on the transaction, which the press immediately pounced on to show how foreign investors were simply in Korea to make a quick profit. Sovereign is estimated to have earned an 800 billion won profit from the sale. It reportedly sold 19 million shares to mostly foreign investors for about 49,000 won a share. (Source: Money, Jul 2008.)

This test case has now appeared in every financial newsletter throughout the world. It is used as a textbook example of how shareholders -- the real owners of the company -- are cut out of the decision making processes by the Korean board of directors and their "old boy" network. The lesson learned in Korea is that even if you defraud a company of millions of dollars for your own personal gain, you can still evade punishment and remain on the board of directors. The failure of the ROK government's frequent claims to ensuring corporate transparency are shown to be cosmetic and lacking in substance. In addition, it has shown that there are two standards of justice under the Roh administration egalitarian reform policoes -- the rich like Chey Tae-won and poor are NOT equal in the eyes of Korean law.

EPILOGUE: In Dec 2005 it was reported by the Korea Stock Exchange that the foreign ownership of local shares fell in 2005 as the foreign portfolios reduced investment in Korea. Foreign investors held 40.47 percent of all shares listed on the main stock market, down from 42.12 percent at the beginning of the year. Our expectations are that the foreign investors will only look at Korea as a profit-taking opportunity -- not a long-term investment area. The self-interest of the chaebols and inter-linked affiliations lacking transparency makes Korea a risky investment proposition.

Rice Market Opening Creates Turmoil The WTO agreement a decade ago in the 1993 Uruguay Round for the opening of the rice market has now come to haunt Korea's rice farmers. Instead of actively promoting the switching of the farmers to specialty crops, the government continued to buttress the rice price support system until the last moment because it was a political hot potato.

The warehouses were overflowing with surplus rice as the government continued to buy rice that the people were not buying. There was a change in tastes as people ate less rice and the drops in per capita rice consumption could be plotted yearly starting in 1990. Then the Kim Dae-jung government came up with the solution by shipping the surplus rice to the North as "humanitarian aid" during the severe North Korean famine -- and this cleared out warehouses. Unfortunately, the government continued this practice of shipping rice to the North at the public's expense without resolving the problem of weaning the rice farmers away from rice into specialty crops. In addition, the North has come to EXPECT these shipments to continue and in Aug 2005 told the UN World Food Program (WFP) to leave Pyongyang while "requesting" 500,000 tons of rice in the future from the South. The North likes this supply of food aid from the South because the ROK does NOT conduct spot inspections at distribution points as the WFP does.

Finally the official rice purchasing system -- buying at high prices and selling to the public at low prices -- was abolished in 2005. The price of locally produced rice was four times higher than the international price in 1993, when the Uruguay Round ended; now it is said to be five to six times higher. Currently the government is buying as much rice as in 2004 (five million bags) by introducing the Public Rice Reserve System in place of the previous one. However, the current problem is price. The price of rice fell from 160,000 won for an 80kg bag of rice to 136,000 earlier this month. The purchase price offered by Nonghyup and the price for Public Rice Reserve System has been 130,000 won, short of the 160,000 price level last year. Though the government has renegotiated the WTO deal to give it more time for full-market opening, the impact now is that many rice farmers simply cannot afford to sell low and expect to make ends meet.

Farmers have staged major protests in the past that have clogged the freeways as farm vehicles slowed down traffic on the freeways and staged violent protests in front of the National Assembly building. In 2005 there have been recurring protests throughout the rural areas of the country. The government slashed or scrapped interest on farmers’ debts of W5.9 trillion (US$5.9 billion) and extended the repayment period to attempt to alleviate some of the burden from the farmers. However, this has not alleviated the problem of falling rice prices -- which has caused farmers to be unable to make ends meet. In recent months, at least three farmers have committed suicide by drinking herbicides because of their indebtedness. On 15 Nov 2005, a clash between farmers and police during a protest rally at Yoido, more than 100 people were injured and three police cars burned as 15,000 members of the Korean Peasant League, Korea Women Peasants Association and six other farmers' associations clashed with police while attempting to march on the National Assembly. The farmers burned a large painting showing US President George W. Bush thrusting a knife into a rice bag, and threatened to disrupt the APEC forum if lawmakers ratified the rice deal.


Farmers Rice Protest over Suicide (20 Nov 05) (Tongil News)

The agreement from the Uruguay Round trade agreement, which Korea has already ratified, allowed Korea to delay opening its market to rice imports for ten years but required it to import just under 4 percent of its annual rice consumption at normal tariff rates. The new renegotiated pact is a 10-year extension of the original deal, raising the low-tariff imports to about 7.96 percent of consumption but allowing the rest of the market to stay closed until 2014. In other words, the ROK gets to keep its markets relatively closed, but opens it an an increased percentage of annual consumption. However, the bill to approve the renegotiated agreement with WTO nations became a political hot potato. On 23 Nov the ROK passed the bill to ratify the agreement. It passed with 139 in favor, 61 against and 23 abstentions. South Korea also signed a minimum market access (MMA) accord, under which it has to import 225,000 tons of rice by the end of this year.

Following ratification, the government and Uri Party met to decide compensation for local farmers, who had been protesting for days saying cheap imports will put them out of business. The saga isn't over as 1,000 farmers were expected to protest at the WTO meeting in Hong Kong in December -- and the Hong Kong police visited Korea in preparations for the violent-type of Korean demonstrations. The violent protests continued in Korea and one farmer died on 29 Nov as a result of brain-damage suffered during a confrontation with riot police on 15 Nov and another succumbed later allegedly from the same incident. (SITE NOTE: The protestors took these deaths to the Human Rights Commission which ruled the riot police had used "excessive force." This was a blatant use of the commission by President Roh to force the resignations of the National Police Commissioner. President Roh went on television to apologize for the incidents and the "excessive use of force" by the police. He, however, stated he did not have the power to reprimand the Police commissioner, but immediately the Uri Party and DLP called for his resignation. President Roh had NEVER apologized for a civil event -- and only apologized publicly for the numerous scandals of his aides. This was the first time. Given that the Human Rights Commission has been silent over the abuses of North Korea, but suddenly render a ruling on the injustices of two farmers injured while their forces were attacking riot policemen with steel pipes makes it seem suspicious -- especially since Roh is a member of the Commission. The Human Rights Commission was created by Kim Dae-jung in 2001 with a political agenda. The Seoul Police Chief and the Police Commissioner resigned. (See Police Commissioner Resigns after Human Rights Commission Ruling for details.)) On 9 Dec thousands of workers and farmers took to the streets Friday, demanding greater rights for non-regular workers and the repeal of an agreement to wider opening of the rice market. The protesters marched in downtown Seoul, causing more than five hours of traffic jam, but there were no major scuffles between them and police.

South Korea, like Japan, is caught in a trap. From an economic standpoint, the defense of agriculture appears to makes little sense. As major trading nations both South Korea and Japan have a big stake in the WTO's free trade agenda. In South Korea, for example, merchandise trade accounts for nearly 70 percent of gross domestic product while farmers, only five percent of the population, bring in not much more than three percent. The South Korean government is pushing an aggressive line at the WTO for the reduction of trade barriers to its exports, making common cause with the United States and other advanced economies.

But when it comes to farmers, Seoul digs its feet in. The reason is partly political, and partly cultural in this rapidly industrialised country where average citizens still identify with their agricultural roots. Also, the farmers are backed by strong lobby groups and have powerful friends in the National Assembly. "Basically if the Korean government is asked to choose between agriculture and manufacturing, they would select agriculture, ignoring the manufacturing sector, because politically, agriculture is quite powerful," said Kang Moon-Sung, head of the WTO research team at the Korea Institute for International Economic Policy. Japan and South Korea both belong to the Group of 10 food importing countries who reject liberalization of the farming sector. Lack of agreement on agriculture is the key stumbling block to the success of the WTO's meeting in Hong Kong, whose goal is to agree the outlines of an international accord to cap the Doha Round of negotiations launched in 2001. (Source: Channel Asia.)

The Korean "peasant farmer" group in Hong Kong on 12 Dec were joiined by other countries groups with the slogan on the banners read "WTO OUT OF AGRICULTURE." About 1,500 Korean farmers and activists began a round of demonstrations in the city, clashing with riot police who used pepper spray to disperse them. Chanting "No to WTO," one group marched from Victoria Park to Wanchai, where about a kilometer (half a mile) of water separated them from the convention center where the negotiations were opening. About 130 life vest-clad demonstrators jumped into the ocean and began to swim toward the center, chanting all the way. Most of them returned to their starting point after about an hour, but some had to be rescued by the semiautonomous Chinese city's sea patrol.

Though Hong Kong has been the site of large scale demonstrations, they are usually peaceful -- thus the antics of the violent Korean farmer protests have captured the Hong Kong attention. Hong Kong TV and newspapers covered the protest as if it were sporting event. The Wen Wei Po newspaper even printed a box score that compared the police and protesters in terms of their numbers, weapons, strategy and results. The item gave the victory to the police, who wore down the protesters by rotating fresh forces. The Oriental Daily News' front page said "Korean war erupts" in a bold red headline. It also ran a big photo showing a crowd of farmers ramming against police officers in riot gear on 12 Dec 2005. Around 20 militant Korean farmers tried to force their way through police lines near the WTO conference venue, resulting in scuffles. The protesters managed to tear away several police riot shields before they were forced to retreat by pepper foam and a baton charge. The protesters ducked their heads to avoid streams of brown, foamy pepper spray fired by police. (Source: Canoe News.)

Comically on the same day, a delegation of South Korean civic groups held a press conference vowing to hold peaceful protest rallies against the WTO meeting. "To say that we will do non-violent protests is not mere talk. It's a basic guideline for the protesters," said the delegation. "We will abide by Hong Kong law and will not clash with the Hong Kong police." However, people who knew Korean farmer protests didn't believe a word of it.

On 18 Dec 1001 South Korean activists were arrested in Hong Kong on Sunday after they staged vehement protests against World Trade Organization (WTO) talks. Organizers said 7,000 took part in the demonstrations, while police tallied the turnout at 5,000. About 1,500 South Korean protesters deviated from a predetermined protest route and tried to head towards the conference center, but were met by 2,000 Hong Kong police who used tear gas, fire hoses and pepper spray on the South Korean protesters. In the melee, 84 people were injured, including 14 Hong Kong police officers, as protesters wielded bamboo sticks and steel pipes and lit fires in the streets, attempting to break through security perimeters. Hong Kong's news media described the protests in the Wan Chai area, where the WTO ministerial meeting took place, as a ``riot.''

Hong Kong police arrested 1001 protestors on 18 Dec, but freed 838 South Koreans detained for taking part in the street protests following the release of 150 South Korean women and a child on 19 Dec. 11 Koreans were were charged with destruction of public property and assaulting police officers. Hong Kong police vowed to deal severely with those protestors who committed violent acts. The Korean consul and Vice Foreign Minister Lee Kyu-hyung pleaded with officials for leniency. Hong Kong’s law on public order is considered rather strict. People who joined illegal rallies and damage buildings could be sentenced to up to 14 years of imprisonment. Donald Tsang, chief executive of the Hong Kong Special Administrative Region, said on Sunday that the demonstrations were ``unacceptable’’ and pledged to prosecute those involved within 48 hours.

In the end, trade ministers from 149 countries around the world approved on 17 Dec a comprehensive agreement that gradually scraps farm export subsidies by 2013 and lowers global trade barriers modestly. The WTO member states agreed to set a new deadline of April 30 next year to reach a full agreement on the Doha round of global trade talks that focuses primarily on lowering tariffs on a wide range of industrial and agricultural goods and services. The agreement also called for all export subsidies on cotton in developed countries to be abolished in 2006. For the world's poorest countries, the declaration proposed rich nations open their markets to 97 percent of their markets from the so-called Least Developed Countries (LDC) by 2008. However, the agreement failed to reach a compromise on so-called nonagricultural market access (NAMA), which aims to allow greater market opening in manufactured goods and non-farm products. The major stumbling blocks ahead remain unresolved is the trading gap between the US and EU over agricultural and non-farm products.

Small and Mid-size Korean Companies Setting up Overseas The 2005 Joint Academic Conference for Economics in Feb 2005 said the incumbent administration resulted in economic stagnation because of its focus on changing Korea's political and social climate rather than on energizing the economy, and as a consequence Korea's joining developed economies has been delayed substantially. According to Chosun Ilbo on 25 Nov 2005, "Based on statistics as of July last year, the World Bank this year ranked South Korea 48th in the world