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RUEKJCS/SECDEF WASHINGTON DC//OSD/ISA/EAP// PRIORITY

C O N F I D E N T I A L SEOUL 000903 
 
SIPDIS 
 
SIPDIS 
 
FROM AMBASSADOR VERSHBOW TO THE DEPUTY SECRETARY 
 
E.O. 12958: DECL: 04/30/2018 
TAGS: MARR PARM PREL PGOV PINS KN KS CH JA
SUBJECT: SCENESETTER FOR THE DEPUTY SECRETARY'S MAY 7-8 
VISIT TO SEOUL 
 
Classified By: AMB. ALEXANDER VERSHBOW.  REASONS 1.4 (b/d). 
 
------- 
SUMMARY 
------- 
 
¶1. (C) Your visit to Korea falls between the April 18-19 Camp 
David Summit and the Secretary's expected stop in Seoul at 
the end of June.  Secretary Gates will also be coming for the 
U.S. Forces Korea (USFK) change-of-command ceremony on June 
¶3.  These visits will be followed by a second U.S.-ROK summit 
in Seoul in mid-July, after the G-8.  So much high-level 
attention to South Korea by senior U.S. officials is both 
warranted and wise given the opportunity presented by the 
election of pro-American President Lee Myung-bak and the 
victory of his party, the GNP, in last month's National 
Assembly elections.  We have an excellent chance of 
revitalizing bilateral relations as well as setting the 
course for an expanded "21st Century Strategic Alliance" with 
a country that is both a long-standing friend and 
strategically placed ally. 
 
¶2. (C) I was at the Camp David meetings, and can attest to 
the fact that the two presidents really connected, both 
personally and substantively.  Together, they began to set 
the direction for the restoration and upgrading of U.S.-ROK 
relations.  Above all, they agreed to work together to 
strengthen the relationship in four key areas: 
 
-- Ratification of the Korea-U.S. Free Trade Agreement during 
2008; 
 
-- A coordinated approach to dealing with North Korea, with 
closer synchronization of the Six Party Talks and 
inter-Korean relations than was the case under Roh Moo-Hyun; 
 
-- Upgrading of the U.S.-ROK Alliance to a "21st Century 
Strategic Alliance," that is increasingly oriented toward 
addressing global and regional challenges alongside its 
traditional mission of keeping the peace on the Peninsula; and 
 
-- Korea's accession to the Visa Waiver Program by the end of 
this year. 
 
¶3. (C) This message focuses on what we currently need to do 
to advance those goals and how your visit will serve to 
enhance those efforts.  Given your planned focus on the North 
East Asia Peace and Security Mechanism (NEAPSM), we have 
incorporated some insights into their thinking.  We also 
offer our perspective on the new Administration's approach to 
China and Japan, and possible areas for discussion on those 
subjects.  We conclude with an update on the domestic 
political landscape, which -- despite some stumbles by the 
new President and his team -- has become far more favorable 
to U.S. interests than at any time in the last ten years. 
END SUMMARY. 
 
------------- 
THE KORUS FTA 
------------- 
 
¶4. (C) A key focus of Lee's five-day visit and the Camp David 
meetings was passage of the Korea-U.S. Free Trade Agreement 
(KORUS FTA).  President Lee understood that resolving the 
beef issue would be a tangible demonstration of his support 
for President Bush's trade agenda, and that it was essential 
for the FTA to have any chance of passing the Congress. 
Thus, he took the courageous decision to approve an agreement 
on the eve of the summit that resolves this five-year-old 
dispute in a manner that is fully consistent with OIE 
scientific guidelines.  He is taking some flak for this 
decision domestically, but shows no sign of wavering.  Lee is 
now trying to secure the earliest possible ratification of 
the FTA by the ROK National Assembly. 
 
¶5. (C) Many Korean legislators will, however, keep an eye on 
our Congress, because they will not want to expend any 
political capital if there is no chance of Congressional 
action this year.  Your Korean interlocutors will, therefore, 
 
be looking for reassurance that Congressional ratification is 
doable and that their tough political decision to resolve 
beef was not in vain. They were encouraged by the President's 
statement that we will try to ratify KORUS "in parallel with 
the Colombia FTA," rather than sequentially, and by Susan 
Schwab's public comments that each FTA is on its own track. 
 
¶6. (C) Obviously, it is hard to predict the outcome of the 
U.S. trade debate with any certainty in a presidential 
election year, but as the most commercially significant U.S. 
FTA in 15 years, KORUS has a broad base of very active U.S. 
business support.  Over 500 companies, organizations and 
communities have joined the "U.S.-Korea FTA Business 
Coalition" in the U.S. -- the largest advocacy group for any 
U.S. FTA ever.  That support is equally spread among 
manufacturing firms, service sector companies, and 
agricultural interests, and contains a lot of communities and 
local chambers of commerce that understand the benefits that 
KORUS will bring to their economies.  You may wish to point 
to some of that support as reassurance to the ROK officials 
with whom you meet. 
 
¶7. (C) The debate in the U.S. has thus far been dominated by 
opponents of the agreement (particularly in the autos sector, 
despite the FTA's strong provisions to pry open the Korean 
market) and of free trade in general.  But we need to put 
that in perspective for the Koreans.  For virtually every FTA 
the U.S. has ever concluded -- particularly those with 
important trading partners -- the opponents of the agreement 
have been active and vocal early on, but we have in the end 
ratified every FTA we have signed.  We don't need every vote, 
just a majority in each house of Congress. 
 
------------------ 
NORTH KOREA POLICY 
------------------ 
 
¶8.  (C) During the past decade, the gap that opened up 
between Washington and Seoul over North Korea policy was 
perhaps the single greatest problem in our alliance 
relationship.  Although we managed to stick together in the 
Six Party Talks, there were sometimes disconnects when it 
came to North-South relations.  President Lee has largely 
closed that gap by advocating a very pragmatic policy toward 
Pyongyang that emphasizes denuclearization of the DPRK as the 
precondition for any significant economic assistance, as well 
as the principle of reciprocity of benefits in inter-Korean 
relations. 
 
¶9. (C) While this is good news for us, Lee Myung-bak has 
incurred the wrath of Kim Jong-il, whose media have launched 
a barrage of hysterical rhetoric and ad hominem attacks on 
Lee personally, souring the North-South relations at least 
for the present, and potentially raising tensions on the 
Peninsula.  You may want to praise the Koreans for their 
steadiness in the face of the North Korean propaganda 
campaign (which so far hasn't fazed the South Korean public), 
and assure them that we won't let Pyongyang drive a wedge 
between us.  We want to maintain the closest possible 
coordination with Seoul as we move forward together in the 
Six-Party process and in our wider engagement with the DPRK. 
 
¶10. (C) In addition to the North East Asia Peace and Security 
Mechanism (discussed below), the Koreans may be interested in 
discussing food aid to the North.  Up until now, they have 
said that North Korea needs to request aid, and that they 
will not maintain Roh's policy of routine quarterly rice and 
fertilizer shipments that amount to a subsidy to the North's 
economy, unrelated to genuine humanitarian needs.  With 
global food prices at an all-time high, they have also 
expressed doubt about whether they can afford to provide 
substantial rice aid even if asked.  But with reports that 
the U.S. may soon resume food aid talks with the DPRK, they 
are becoming nervous that they will be perceived as callous 
to starvation in the North, and may want to coordinate more 
closely with us on this subject. 
 
-------------------------------- 
21ST CENTURY STRATEGIC ALLIANCE 
 
-------------------------------- 
 
¶11. (C) At Camp David, President Bush and President Lee 
called for upgrading the U.S.-ROK security alliance to a 
"21st Century Strategic Alliance."  What this will mean in 
practice, however, is still a work in progress.  We 
deliberately did not press for early decisions on extending 
the Korean troop commitment in Iraq or joining the 
Proliferation Security Initiative -- opening the beef market 
was a heavy-enough lift for a newly elected Korean president. 
 But it was agreed that we would aim to put more flesh on the 
bones in time for the July Summit, at which time the leaders 
could issue a "Vision Statement" about the alliance and 
announce additional deliverables. 
 
¶12. (C) The two leaders did decide at Camp David to halt the 
drawdown in U.S. forces on the Korean Peninsula at the 
current level of 28,500 (rather than reducing to 25,000 by 
the end of 2008 as previously planned).  Although it has not 
been officially announced, President Lee also agreed to send 
ROK trainers to the new Afghanistan police academy near 
Kabul, in addition to the civilian medical personnel and 
police escorts the ROK has previously agreed to send to 
operate a hospital at Bagram.  The ROK also currently has 350 
troops in Lebanon (UNIFIL), recently sent an observer team to 
Sudan, and is considering legislation to establish a standing 
peacekeeping force for future contingencies. 
 
¶13.  (C) President Lee hinted that, after the new National 
Assembly is in place in June, he will consider seeking an 
extension of the dispatch of the ROK's 600 troops serving 
very successfully in Northern Iraq.  He also indicated that 
other non-combat contributions might be possible in 
Afghanistan.  The Koreans are sensitive, however, about media 
allegations that the "21st Century Strategic Alliance" really 
means acceding to more of Washington's demands, rather than 
serving both countries' mutual interests.  And when it comes 
to military action, they seek at all cost to avoid suffering 
any casualties. 
 
¶14. (C) Upgrading the alliance also means completing the 
transformation of today's Combined Forces Command -- which is 
headquartered in the middle of Seoul with a U.S. general 
leading combined Korean and American troops in war -- to 
tomorrow's KORCOM -- the U.S. Korea Command that will operate 
from a new base south of the Han River in Pyongtaek, and will 
provide support to a new ROK Strategic Command after transfer 
of wartime operational control (OPCON) in 2012.  While the 
North Korean threat commands the most attention, the 
day-to-day reality of the U.S.-ROK Alliance revolves more 
around issues relating to the presence of our troops on the 
Peninsula and all the attendant problems that go along with 
that. 
 
-- The good news is that we have three agreements to 
appropriately transform both our military footprint and 
military mission in Korea.  They are the Yongsan Relocation 
Plan to move the USFK headquarters to Pyongtaek, the Land 
Partnership Plan to consolidate what used to be over 100 USFK 
facilities in Korea into two key strategic hubs, and the 
Strategic Transition Plan for the transfer of wartime OPCON 
to the Korean military in 2012.  The shorthand is YRP, LPP 
and STP or simpler still:  "Alliance Transformation." 
 
-- The bad news is that change is hard and implementing all 
three agreements will in the end cost tens of billions of 
dollars.  It is therefore troubling to see that the Blue 
House has called for a 10-percent budget cut across the ROK 
Government, including the Defense Ministry; it was troubling 
enough that President Bush urged President Lee to "give his 
military enough money" at Camp David. We are also worried 
that the Koreans will get wrapped around the axle on a new 
defense cost-sharing agreement (SMA) and on the terms for the 
return of nine closed USFK camps and bases, as occurred 
during the Roh Administration. 
 
¶15. (C) It would therefore be helpful if you underlined our 
position during your visit that Alliance Transformation 
should be fully implemented and fully funded in keeping with 
 
Korea's obligations under those agreements, and that we need 
to prevent the politicization of issues like SMA and camp 
returns.  The goal should be a healthier, smooth-running 
security relationship that lives up to the new mantra of a 
"21st Century Strategic Alliance." 
 
------------------------ 
ROK ACCESSION TO THE VWP 
------------------------ 
 
¶16.  (C) Finally, hopes for Korean entry into the Visa Waiver 
Program (VWP) by the end of 2008 are running high in the ROK 
in the wake of the signing of an MOU in Washington on April 
17 by Foreign Minister Yu Myung-whan and DHS Secretary 
Chertoff.  Your Korean interlocutors will likely push for 
quick U.S. action on the VWP requirements that the USG has 
yet to fulfill, including DHS development and implementation 
of the Electronic System for Travel Authorization (ESTA) and 
a system for verifying the exit of travelers who enter the 
U.S. on the VWP. 
 
¶17.  (C) Equally, the ROKG is eager to know what additional 
implementing arrangements under the MOU might be required, 
particularly with reference to any request for release to the 
USG of individual Koreans' criminal records that are 
ordinarily protected under Korean privacy laws.  Aside from 
these implementing arrangements, the ROKG believes it has all 
but fulfilled its requirements for admission to the VWP. 
E-passports are now being issued to officials and diplomats 
and the general public will start receiving them in August. 
You definitely don't need to wade into these  details, and 
can point to a DHS visit to Seoul scheduled in mid-June as an 
appropriate forum for further bilateral discussion of these 
matters.  That DHS team is coming to conduct a formal 
assessment on the effect that Korea's entry into the VWP 
would have on security, law enforcement and immigration 
interests of the United States. 
 
---------------------- 
ROK THINKING ON NEAPSM 
---------------------- 
 
¶18. (C) You can count on the ROK to be a strong supporter of 
the Northeast Asia Peace and Security Mechanism concept, 
based on South Korea's strong internationalist traditions, 
President Lee's pragmatic desire to improve relations with 
China, Japan and Russia, and the considerable credibility 
that the Six-Party Talks process enjoys here.  Here are the 
main threads of thinking on this issue that we have picked up 
from our discussions with relevant ROKG officials and leading 
Korean regional security experts. 
 
-- INTERNATIONALIST TRADITIONS:  As the "shrimp between two 
whales" (China and Japan), Korea has historically favored 
international groupings that give Seoul a seat at the table 
and contribute to regional stability.  This has led Seoul to 
be an active player in the ASEAN Regional Forum, 
ASEAN-Plus-Three, and APEC.  President Lee plans to increase 
the ROK's international aid profile, and there is 
considerable pride at having a Korean as UN Secretary 
General.  Correspondingly, South Koreans are enthusiastic 
supporters of NEAPSM, especially as a means for pursuing 
confidence-building initiatives.  At the same time, history 
has taught them not to invite too many regional powers to the 
Peninsula, and this is why they want to keep NEAPSM separate 
from peace regime negotiations, and thereby exclude Russia 
and Japan from the latter. 
 
-- PRAGMATIC REGIONAL VIEW WITH U.S. IN THE PICTURE:  In 
early comments about the ROK's relations with the two 
"whales," President Lee signaled that his government would be 
forward-looking and pragmatic, a shift from the 
historical-grievance mindset of his predecessor, Roh 
Moo-hyun.  In his inaugural speech in December, Lee said: 
"We will seek peace and mutual prosperity with our close 
neighbors, including Japan, China and Russia."  He has since 
announced the resumption of "shuttle diplomacy" (yearly 
leaders' visits in each direction) which he began with his 
April stop in Japan on the way back from Camp David.  Since 
 
Lee has also made it very clear that strengthening the 
"strategic alliance" with the United States is his highest 
priority, we need not be concerned about the ROK leaning 
toward regional arrangements that marginalize the U.S. 
 
-- SIX-PARTY EXPERIENCE BODES WELL FOR NEAPSM:  From the 
outset, the ROK has been an active and helpful player in the 
Six-Party Talks.  Behind the scenes, the Koreans have helped 
keep the wheels turning by conscientiously chairing the 
Economy and Energy Cooperation Working Group.  The NEAPSM 
Working Group, though chaired by Russia, has also benefited 
from ROK input.  For example, MOFAT officials ghost-wrote a 
concept paper that the Russian chair later circulated among 
member delegations.  Thus, the Koreans can be expected to 
pull their weight when a NEAPSM is established as an 
institution. 
 
¶19. (C) However, as for what such an institution might 
actually accomplish, Korean thinking often stops at the 38th 
parallel.  During the late Roh Administration, there was a 
naive hope that an end to the Korean War could be declared 
even before denuclearization, leading North Korea to feel 
secure enough to drop its nuclear program, thereby opening 
the road for regional peace.  The ROK public never bought 
that approach and the Lee Administration's view is far more 
sober, putting the denuclearization horse back in front of 
the peace regime cart.  The upshot is that the ROK sees 
broader peace in Northeast Asia as a long-term process 
because of North Korea's recalcitrance, and will be skeptical 
about what NEAPSM can realistically do, at least in the near 
term.  You may therefore want to start off by exploring with 
ROK officials the idea of getting NEAPSM off the ground with 
small confidence-building measures, such as the joint 
search-and-rescue operation that the South Koreans proposed 
at the first NEAPSM Working Group meeting in March 2007, or 
perhaps a coordinated NAEPSM approach to providing food aid 
and farming technology to North Korea. 
 
--------------- 
REGIONAL ISSUES 
--------------- 
 
¶20. (C) Tokyo is among the biggest beneficiaries of the 
change in the South Korean political climate.  President Lee 
has already met PM Fukuda twice.  In Tokyo just last week, 
Lee and Fukuda vowed to build a "new era" of improved 
relations.  They agreed to cooperate closely on North Korean 
nuclear and abduction issues, address global issues such as 
global warming and development assistance for poor countries, 
and enhance economic ties.  Also significant is their promise 
to each other to make frequent -- at least once a year -- 
reciprocal visits.  All of this is greatly helped by the 
gradual warming up of the South Korean public view of Japan, 
a significant departure from the Koizumi-Roh era when history 
and territory controversies put an enormous strain on 
Seoul-Tokyo ties.   You will certainly want to highlight -- 
and encourage -- the improving ROK-Japan relations, which is 
also an opportunity for enhanced trilateral cooperation on 
regional and global issues.  At Camp David, the President 
proposed a three-way, US-ROK-Japan, summit in Peru, on the 
margins of the APEC summit. 
 
¶21. (C) The Lee Myung-bak government's position on China is 
more nuanced.  Historically South Korea's protecting power, 
and now its biggest trading partner, China represents 
enormous opportunities and risks for Seoul.  Lee has chosen, 
quite wisely, what he calls "pragmatic diplomacy" with China. 
 That is, he wants to see economic relations prosper and 
political relations continue on a "friendly" basis.  This is 
easier said than done, because most Koreans are quite 
concerned, even intimidated by the rapid growth of Chinese 
influence in the region.  The most recent reminder was the 
Olympic torch relay in Seoul during which Chinese students 
violently attacked a group of South Koreans protesting 
China's position on human rights in North Korea and Tibet. 
South Koreans vocally condemned Chinese intimidation and were 
especially angry at Korean law enforcement for being too 
scared to control the Chinese.  Another source of underlying 
tension is that China is the ROK's foremost competitor for 
 
economic and political influence on North Korea.  Lee, like 
his predecessor Roh, is worried that Chinese trade and 
assistance dominate North Korean economic life, and that its 
investment is beginning buy up large parts of North Korean 
productive capacity.  Given these limits on Seoul-Beijing 
ties, I recommend that you assure the Koreans that Washington 
welcomes Lee's brand of pragmatic diplomacy with China; that 
we believe Seoul's strong alliance relationship with us is 
compatible with friendly Seoul-Beijing ties. 
 
---------------------------------- 
THE SOUTH KOREAN POLITICAL CLIMATE 
---------------------------------- 
 
¶22. (C) The collective political hangover from the recent 
Presidential (December 2007) and National Assembly Elections 
(April 2008) has yet to clear off, meaning the present 
domestic political situation is murky.  Although the 
conservatives won big in both elections, they won't take 
their National Assembly seats until the end of May.  In the 
meantime the country is wondering what Lee Myung-bak will do 
to fulfill his campaign pledge to revive the economy in the 
face of a global economic downturn.  The fate of his pet plan 
to build a network of canals across the Korean Peninsula is 
also uncertain.  Even before Lee's inauguration three of his 
cabinet nominees had to step down because of questions about 
their finances, and at the end of April a Blue House senior 
secretary resigned amid controversy surrounding possible 
 
SIPDIS 
ill-gotten wealth.  While some have used that opportunity to 
criticize him, in general Korean politicians of all stripes 
still appear to be feeling their way around with regard to 
how they should relate to the new president. 
 
¶23. (C) The 18th National Assembly convenes on May 29, but 
both the ruling Grand National Party (GNP) and the main 
opposition United Democratic Party (UDP) will change their 
leadership via party conventions in early July, likely 
getting in the way of any serious business getting done until 
mid-July.  President Lee called an unprecedented lame-duck 
special session (currently underway) in the Assembly that 
leaves office on May 25.  While some hold out hope the KORUS 
FTA will be passed during this session, most of our sources 
say there is little to no chance the outgoing assembly will 
give the new president (or the USG) that plum.  Political 
observers have commented that Lee's biggest challenge as 
President will be in learning how to work with the National 
Assembly and build public consensus for his initiatives -- 
skills he did not need in his previous incarnations as the 
powerful mayor of Seoul and a can-do corporate executive. 
The true test will come in late summer, when the new National 
Assembly is finally ready to get down to business.  The 
conservative-dominated assembly augurs well for Lee, but he 
will have to find a way to work with his critics both within 
the GNP and in opposition groups in order to accomplish his 
goals. 
 
¶24. (C) Right now the political planets are properly aligned. 
 In beef, Lee has shown that he is capable of delivering the 
goods.  In less than two months, he will be endowed with a 
much more friendly legislature.  But above all, the South 
Korea public continues show again and again that they support 
a closer relationship with the United States.  This coming 
series of high-level USG visits, which you kick off, is an 
opportunity to elevate our presence in the most strategic 
piece of real estate in northeast Asia. We look forward to 
seeing you on May 7. 
VERSHBOW