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UNCLAS SECTION 01 OF 06 SEOUL 000881 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV MARR ECON KPAO KS US
SUBJECT: SEOUL - PRESS BULLETIN; June 4, 2009 
 
TOP HEADLINES 
------------- 
 
 
Chosun Ilbo 
Obama Administration Presents "Four Principles 
of N. Korea Policy" 
 
JoongAng Ilbo 
China Reconsidering N. Korea Policy 
after the North's Nuclear Test 
 
Dong-a Ilbo 
Fake N. Korean "Super Notes" Smuggled Into ROK 
 
Hankook Ilbo, Seoul Shinmun 
Prosecutor General Lim Offers to Resign 
 
Hankyoreh Shinmun 
Professors Demand Lee Myung-bak Administration "Uphold Democracy" 
and Apologize for Death of Former President Roh 
 
Segye Ilbo 
President's Brother Vows to Stay on Sidelines 
 
 
DOMESTIC DEVELOPMENTS 
--------------------- 
 
ROK foreign affairs and security officials and a U.S. delegation led 
by Deputy Secretary of State James Steinberg held a series of 
meetings in Seoul yesterday (All) and agreed to seek a "five-way 
meeting" with China, Russia and Japan to work out a response to 
North Korea's nuclear test. The aim of the envisioned meeting will 
be to end North Korea's recent run of provocations and bring the 
country back to the dialogue table. (Chosun) 
 
According to a source in Washington, North Korea has produced 
counterfeit $100 bills, known as "supernotes" for their high 
quality, since U.S. financial sanctions were lifted against it in 
2007, and part of the forged "supernotes" have been smuggled into 
the ROK. (Dong-a) 
 
According to the Washington Times, North Korean Gen. O Kuk-ryol, a 
confidant of the North's leader Kim Jong-il, has been identified by 
U.S. and ROK intelligence agencies as a key figure in the covert 
production and distribution of high-quality counterfeit $100 bills. 
(Chosun, JoongAng, Dong-a, Seoul) 
 
 
INTERNATIONAL DEVELOPMENTS 
-------------------------- 
 
According to AP, President Barack Obama yesterday telephoned Chinese 
President Hu Jin-tao to ask for Chinese cooperation in working out a 
new resolution on sanctions against North Korea. (Chosun, JoongAng, 
Segye) 
 
The Obama Administration, meanwhile, in a June 2 forum in Washington 
hosted by Chosun Ilbo and the U.S. Center for Strategic and 
international Studies (CSIS), presented four principles of North 
Korea policy: First, the U.S. goal of a complete denuclearization of 
the Korean Peninsula will remain unchanged; second, the U.S. will 
not recognize North Korea as a nuclear state; third, the U.S. will 
not tolerate the North's transfer of nuclear weapons or materials 
(to other countries); and fourth, the U.S. will do its best to 
defend its allies in East Asia. (Chosun) 
 
According to a Chinese government source, China has begun 
overhauling its appeasement policy toward North Korea following the 
North's nuclear test. This overhaul has been prompted by an order 
from high-ranking government and party officials, including 
 
SEOUL 00000881  002 OF 006 
 
 
President Hu Jintao. (JoongAng) 
 
On June 2, the State Department expressed reservations about ROK 
news reports that North Korean leader Kim Jong-il picked his third 
son, Jung-un, as his successor. Deputy State Department Spokesman 
Robert Wood was quoted: "We have seen speculative reporting 
concerning leadership succession in North Korea, but are not in a 
position to confirm any such reports." (Chosun, Hankook, Hankyoreh) 
 
 
MEDIA ANALYSIS 
-------------- 
 
-North Korea 
------------ 
 
- Deputy Secretary Steinberg's Visit 
All ROK media covered yesterday's meetings in Seoul between a U.S. 
delegation led by Deputy Secretary of State James Steinberg and ROK 
foreign and security officials. 
 
Conservative Chosun Ilbo reported that the ROK and U.S. officials 
reached agreement to seek a "five-way meeting" with China, Russia 
and Japan to work out a unified response to North Korea's nuclear 
test.  The report went on to say that the aim of the envisioned 
meeting will be to end North Korea's recent run of provocations and 
to return it to the dialogue table.  The report quoted a senior ROK 
official as saying, apparently mindful of China, which may be 
unwilling to isolate or annoy Pyongyang: "The five-way meeting will 
not seek a separate and permanent dialogue channel but will be 
temporary within the framework of the Six-Party Talks to promote 
their resumption." 
 
Right-of-center JoongAng Ilbo, noting the inclusion of Under 
Secretary of Treasury for Terrorism and Financial Intelligence 
Stuart Levey in the U.S. delegation, speculated that measures for 
the ROK and the U.S. to block the flow of money into North Korea 
will likely take concrete shape during this visit by the U.S. 
delegation. 
 
- Aftermath of North Korea's Nuclear Test 
Citing a Chinese government source, right-of-center JoongAng Ilbo 
front-paged a report that China has begun overhauling its 
appeasement policy toward North Korea following the North's nuclear 
test, under orders from high-ranking government and party officials, 
including President Hu Jintao.  The report quoted the Chinese 
source: "The Chinese government is especially upset that the nuclear 
test has created a sense of anxiety among its citizens ... over 
possible exposure to radioactivity," and commented that Chinese 
leaders have now had to realize that the nuclear problem is now in 
their backyard. 
 
-  Fake N. Korean "Supernotes" 
Conservative Dong-a Ilbo gave front-page play to a report citing a 
source in Washington that North Korea has produced counterfeit 
100-U.S. dollar bills (also known as "supernotes" for their high 
quality) since U.S. financial sanctions were lifted against it in 
2007 and that part of the forged "super notes" have been smuggled 
into the ROK. 
 
The source was quoted: "Seoul and Washington have conducted a joint 
investigation since police have arrested those who attempted to 
circulate super notes in the ROK in November last year.  We've kept 
a close eye on the North's forgery, since it is likely to affect 
both inter-Korean ties and relations between Washington and 
Pyongyang." 
 
Dong-a Ilbo editorialized: "Counterfeiting U.S. dollars, a key 
currency, and circulating them is a crime disturbing the world's 
economic order and a serious infringement on (the nation's) 
sovereignty.  If it is true that North Korean Gen. O Kuk-ryol, an 
influential figure in the North Korean regime, has led this 
activity, it is a state-perpetrated crime that has wide-ranging 
repercussions.  The situation is so serious that Under Secretary of 
 
SEOUL 00000881  003 OF 006 
 
 
Treasury Stuart Levey, who had led a freeze of North Korean accounts 
at Macau-based Banco Delta Asia, has come to Seoul as part of the 
USG delegation to discuss countermeasures against North Korea's 
nuclear test.  North Korea's production and distribution of fake 
dollars ... could be related to the nuclear and missile development 
of North Korea, a nation on the verge of collapse." 
 
President Obama's Visit to the Middle East 
Conservative Chosun Ilbo, in an inside-page article entitled 
"Obama's Visit to the Middle East... A First Step toward 
Reconciliation?," observed that the atmosphere in the Arab world 
toward Obama's visit is favorable but that if he fails to address 
the "issue of Israel" (conflicts between Israel and Arab nations), 
Obama's words will become just rhetoric. 
 
 
OPINIONS/EDITORIALS 
------------------- 
 
NORTH KOREA'S FAKE U.S. DOLLAR BILLS 
(Dong-a Ilbo, June 4, 2009, Page 31) 
 
Suspicion about North Korea's dollar counterfeiting has once again 
emerged.  The Washington Times recently reported that North Korean 
General O Kuk-ryol, the Vice Chairman of the country's National 
Defense Commission, (has and) continues to play a key role in 
producing and distributing counterfeit $100 bills. Additionally, it 
was also recently confirmed that 9,904 $100counterfeit U.S. notes 
were found in Busan last November.  The notes found in Busan are 
called supernotes, which are so carefully produced that even 
counterfeit money detectors at banks cannot tell them apart from 
real U.S. banknotes. 
 
North Korea has long been suspected of being behind the production 
of supernotes.  North Korea's (alleged) forgery of U.S. dollars 
prompted the U.S. to freeze $25 million of North Korean funds at the 
Macau-based Banco Delta Asia (BDA).  In 1994, the U.S. arrested a 
North Korean who deposited $250,000 worth of fake dollars at BDA, 
and in 2005, it froze all North Korean accounts there.  Although the 
U.S. returned the BDA funds to the North in order to resume the 
Six-Party Talks, it has not relaxed its monitoring of North Korea's 
illicit activities. 
 
Counterfeiting U.S. dollars, a key currency, and circulating them is 
a crime which disturbs the international economic order and acts as 
a serious infringement into the sovereignty (of the United States. 
If it is true that North Korean Gen. O Kuk-ryol, an influential 
figure in the North Korean regime, has led this activity, it is a 
state-perpetrated crime that has wide-ranging repercussions.  The 
situation is so serious that Under Secretary of Treasury Stuart 
Levey, who led the freeze of North Korean accounts at BDA, has come 
to Seoul as part of the USG delegation to discuss countermeasures 
against North Korea's (second) nuclear test. 
 
North Korea's production and distribution of fake dollars is 
directly linked to ROK security.  It could be related to the nuclear 
and missile development of North Korea, a nation on the verge of 
collapse.  The U.S. Congressional Research Service said in 2005 that 
North Korea used money made from illicit industries, such as 
trafficking drugs and counterfeiting dollars and cigarettes, for its 
nuclear and missile development.  It is also suspicious how the 
North secured the money needed to prepare a third hereditary 
transfer of power.  Cash flows to the North through the Kaesong 
Industrial Complex would not be enough to bolster the North Korean 
economy, which is still in dismal condition. 
 
Fortunately, those who attempted to circulate fake dollars in the 
ROK have been arrested.  (The ROK) should track down who 
manufactured and provided these fake banknotes through a joint 
investigation with the U.S.   And we should actively cooperate with 
the U.S. to strengthen the country's monitoring system and (help it 
to) block the flow of the raw materials (needed to produce)  fake 
dollars into North Korea so that the source of money used to sustain 
the Kim Jong-il regime can be cut off. 
 
SEOUL 00000881  004 OF 006 
 
 
 
FEATURES 
-------- 
 
CHINA RECONSIDERING NORTH POLICIES AFTER NUCLEAR TEST 
(JoongAng Daily, June 4, 2009) 
 
By Reporter Chang Se-jung, Yoo Jee-ho 
 
A Chinese government source told the JoongAng Ilbo yesterday that 
China has begun overhauling its North Korean policy following the 
North's nuclear test last week. 
 
The source said he believes Chinese President Hu Jintao wielded some 
influence on this change of course.  Hu is also the chair of the 
Foreign Affairs Leading Small Group, a Communist Party organ that 
handles foreign policies of the country. 
 
Xinhua News reported that Hu spoke to U.S. President Barack Obama by 
phone to discuss North Korea, and the agency said the U.S. wanted to 
"boost coordination and cooperation with China on a broad range of 
major issues."  China has for decades maintained a soft line on 
North Korea but has slowly started turning its back after Pyongyang 
carried out its second nuclear test. 
 
Following the test, a government source said, "The Communist Party's 
international liaison department, the Defense Ministry and the 
Commerce Ministry have begun reviewing their North Korean policy." 
The source added that regional governments of Jilin and Liaoning 
Provinces, the two areas directly affected by the nuclear test, were 
also part of the general review.  Jilin borders North Korea to the 
east and Liaoning to the southeast. 
 
"The result of their discussions will be reported to Hu Jintao, and 
the party's politburo standing committee will determine the final 
direction," the source said.  "There's no guarantee this review 
process will end any time soon, but it will likely have a huge 
impact on China's mid- to long-term North Korean policy." 
 
A diplomatic source in Beijing said he has detected a change of tone 
among Korean experts in China. 
 
"In the past, those experts just regurgitated the official Chinese 
position on North Korea," the source said.  "But recently, they're 
also incorporating views of foreign analysts on China's North Korean 
policy, and they're providing the local media with diverse 
perspectives. 
 
"This change has been due to an order from the Communist Party's 
Propaganda Department and other high-ranking officials." 
 
According to Reuters, Zhan Debin, an expert on Korea at Fudan 
University in Shanghai, wrote in the paper Global Times that North 
Korea is a "strategic burden" for China. 
 
"If this continues, China will not be able to stall international 
expectations by saying that North Korea doesn't listen or that we 
have no influence," wrote Zhan. 
 
"If Pyongyang continues raising the international stakes," Zhan 
added, "war cannot be ruled out, and North Korea will either 
continue to be trapped in a Cold War (mentality) or will swiftly 
disappear." 
 
The diplomatic source said the Chinese leadership "was quite angry" 
with North Korea because it gave China only 29 minutes' notice "and 
proceeded with the test before China could prepare its official 
stance." 
 
In the immediate aftermath of the test, Xi Jinping, China's vice 
president and vice chair of the Foreign Affairs Leading Small Group, 
strongly condemned the test during his Beijing meeting with ROK 
Defense Minister Lee Sang-hee. 
 
 
SEOUL 00000881  005 OF 006 
 
 
The source added that the Chinese government is especially upset 
that the test has created a sense of anxiety among its citizens, 
especially those in Jilin Province, over possible exposure to 
radioactivity.  In short, Chinese leaders have had to realize the 
nuclear problem is now in their backyard. 
 
 
STEINBERG CALLS FOR NORTH KOREA TO RETURN TO NEGOTIATIONS FOR 
DE-NUCLEARIZATION 
(Hankook  Ilbo, June 4, 2009, Front page) 
 
By Reporter Jeong Sang-won 
 
During a June 3 meeting with First Vice Minister Kwon Jong-rak, U.S. 
Deputy Secretary of State James Steinberg reaffirmed that the U.S. 
will not continue to reward North Korea in order to bring it back to 
the negotiating table, and it also will not rush to enter into 
negotiations with the North. 
 
Referring to (possible) financial sanctions on North Korea, 
diplomatic authorities said that (the U.S.) intends to review 
whether to take additional measures after considering the results of 
discussion at the UN Security Council. 
 
After the meeting, the Deputy Secretary said, "Now is the time for 
North Korea, rather than continuing to take more dangerous and 
provocative actions, to get back on the path of negotiations towards 
de-nuclearization."  He added, "If North Koreans are prepared to 
change course to enter an effective dialogue, that will really lead 
to the complete and verifiable denuclearization of the Peninsula." 
First Vice Minister Kwon said that both countries shared the view 
that China could play a great role in reversing the course of North 
Korea. 
 
Deputy Secretary Steinberg arrived in Korea on June 2 and joined 
Foreign Minister Yun Myung-hwan for lunch after his meeting with 
First Vice Minister Kwon.  Steinberg also made a courtesy visit to 
Defense Minister Lee Sang-hee.  On June 4, the Deputy Secretary will 
also pay a courtesy visit to President Lee Myung-bak, and will join 
Unification Minister Hyun In-taek for breakfast.  He will also have 
a discussion session with Seoul National University students.  The 
U.S. delegation led by Deputy Secretary Steinberg will depart for 
China on June 5. 
 
U.S. Special Representative for North Korea Policy Steven Bosworth 
met separately with the ROK's Chief Delegate to the Six-Party Talks 
Wi Sung-lac.  During the meeting, Bosworth said that President Obama 
has supported dialogue and negotiations from the beginning.  He 
added that in the end, North Korea will realize that dialogue is 
beneficial for the country. 
 
In an interview with France's LeMonde newspaper, Wi said that (the 
international community) should respond strongly to North Korea's 
provocations and sanctions must follow.  He added, however, that the 
door for dialogue (with North Korea) should remain open and that 
(there is room for) dialogue to resume even after imposing 
sanctions. 
 
 
ROK AND U.S. SEEK FIVE-WAY MEETING ON NORTH KOREA 
(Chosun Ilbo, June 4, 2009, Page 6) 
 
By Reporter Lim Min-hyeok 
 
The U.S. and the ROK are intensifying international efforts to 
sanction North Korea in the wake of its second nuclear test and 
ultimately bring North Korea back to the negotiating table. 
 
ROK foreign affairs and security policymakers and the U.S. 
delegation led by U.S. Deputy Secretary of State James Steinberg had 
a series of meetings in Seoul on June 3.  The two sides agreed to 
seek a five-way meeting involving the ROK, the U.S., China, Russia 
and Japan.  The aim of the envisioned meeting will be to end North 
Korea's recent run of provocations and to return it to the dialogue 
 
SEOUL 00000881  006 OF 006 
 
 
table. 
 
According to the Associated Press news agency, ahead of the UN 
Security Council's adoption of a resolution sanctioning North Korea, 
U.S. President Barack Obama called Chinese President Hu Jintao to 
ask for China's cooperation.  Diplomatic sources in Beijing noted 
that even though details are not known, Obama requested 
understanding and cooperation from the Chinese leadership over the 
UN Security Council's sanctions on North Korea.  A Chinese newspaper 
agency cited President Hu as saying during a telephone conversation 
that both countries have more frequent exchanges at all levels and 
strengthened cooperation in all areas. 
 
An ROK official said that in the five-way meeting, chief negotiators 
from five countries, excluding North Korea, will gather to address 
the North Korean nuclear issue with a long-term strategy.  The 
official added that the five-way meeting will be less formal. 
 
A similar five-way meeting was previously proposed when the 
Six-Party Talks were in a stalemate, but this is the first time it 
is actually being pushed for.  Through consultations by the 
abovementioned five nations, the regional partners could urge North 
Korea back to the Six-Party Talks and (encourage it) to stop 
conducting nuclear tests and launching missiles, all while putting 
pressure on North Korea more directly than the UN Security Council 
resolution. 
 
The ROK, the U.S. and Japan show support for the five-way meeting 
but China's position is critical.  China has been opposed to the 
five-party meeting, saying that it is not desirable to isolate or 
annoy Pyongyang.  Some people in China have raised concerns that 
this (five-way meeting) may undermine the authority of China as a 
presiding country of the Six-Party Talks. However, diplomatic 
observers believe that now that North Korea has conducted another 
nuclear test, China will not voice its opposition (to the five-way 
meeting) as fiercely as before. 
 
Apparently mindful of China, a senior ROK official said that the 
five-way meeting will not seek a separate and permanent dialogue 
channel but will be temporary within the framework of the Six-Party 
Talks to promote their resumption.  Another ROK official said that 
while China may disapprove of the five-way meeting, the strong 
desire on the part of the ROK, the U.S. and Japan to undertake this 
option may prompt China to more actively exert its influence on 
North Korea. 
 
 
 
 
STEPHENS