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UNCLAS SECTION 01 OF 08 SEOUL 000930 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV MARR ECON KPAO KS US
SUBJECT: SEOUL - PRESS BULLETIN; June 12, 2009 
 
TOP HEADLINES 
------------- 
 
Chosun Ilbo, Hankyoreh Shinmun, Segye Ilbo, Seoul Shinmun, All TVs 
¶N. Korea Wants Wages in Kaesong Quadrupled 
 
JoongAng Ilbo 
Wednesday's Commemoration Rally Fizzles Out, Despite Concerns; 
Police Estimate Participants at 20,000, Much Fewer Than Organizers 
Expected, and No Major Clashes Occur between Protesters and Police 
 
Dong-a Ilbo, Hankook Ilbo 
¶N. Korea Demands Four-fold Increase in Wages and 31-Fold Increase in 
Land Use Fees 
 
 
DOMESTIC DEVELOPMENTS 
--------------------- 
 
North Korea, during yesterday's second inter-Korean talks at the 
Kaesong Industrial Complex in the North, demanded that the ROK raise 
the monthly wage for North Korean workers to $300, a four-fold 
increase from the current $75, and pay $500 million for the use of 
land at the complex. The North also called for wage increases of 10 
to 20 percent a year. (All) 
 
The ROK, meanwhile, called for the North to release an ROK worker 
detained in the country and to grant a meeting with him, but the 
North rejected the request. (All) 
 
The two Koreas will meet again on June 19 for further discussions. 
(All) 
 
Kim Young-tak, a senior Unification Ministry official in charge of 
the inter-Korean talks, was quoted as saying after returning from 
Kaesong: "I expect the two sides to reach a compromise after 
extended negotiations. North Korea repeatedly expressed its 
willingness to develop the industrial complex during the talks." 
(All) 
 
INTERNATIONAL NEWS 
------------------ 
 
Kurt Campbell, the Assistant Secretary of State for East Asian and 
Pacific Affairs-designate, in a June 10 Senate confirmation hearing, 
said that the U.S. is ready for negotiations with North Korea. 
(Hankyoreh) 
 
 
MEDIA ANALYSIS 
-------------- 
 
¶N. Korea 
 
- UNSC Resolution 
----------------- 
Commentary continues to flow in the wake of the UN Security Council 
(UNSC)'s agreement on a new resolution against North Korea. 
 
Right-of-center JoongAng Ilbo's Senior Columnist Kim Young-hie 
opined: "International society's sanctions on North Korea will 
operate fairly well in general.  Dangers arise only when the 
sanctions and the ROK's hard-line stance anger North Korea to the 
extent that it explodes.  In that case, the ROK will be the first 
outlet for the North's rage. ... Sanctions are tools, not goals. 
Sanctions against North Korea have the effect of isolating the 
communist state.  We must not forget the paradox that as North Korea 
becomes more isolated, its missiles will become more numerous and 
sophisticated." 
 
Moderate Hankook Ilbo editorialized: "The main issue is the degree 
to which North Korea will resist (the UN sanctions.)  North Korea 
has long declared that it would consider cargo inspections on the 
 
SEOUL 00000930  002 OF 008 
 
 
high seas an act of war.  Observers say, however, that chances are 
low that sanctions would immediately lead to naval armed clashes. 
...  Given that the U.S., conscious of China's concerns, agreed in a 
compromise agreement to stop short of making the high seas 
inspections of North Korean ships mandatory, the U.S. is expected to 
avoid military action.  In this regard ... the UNSC resolution seems 
to be more like a political message urging the North to change its 
attitude." 
 
Left-leaning Hankyoreh Shinmun's editorial argued: "As outside 
pressure becomes harsher, North Korea will put greater efforts into 
developing nuclear weapons... This is why we should put greater 
emphasis on creating an atmosphere conducive to getting North Korea 
to give up its nuclear ambitions.  In particular, the U.S., which 
holds the key in negotiations with North Korea, should establish a 
framework to fundamentally resolve the nuclear issue.   UN sanctions 
are meaningful only when they are used as the groundwork to resolve 
the nuclear issue." 
 
- Inter-Korean Talks on Kaesong Industrial Complex 
------------------------------------------ 
 
All ROK media gave top play to North Korea's demand yesterday that 
the ROK raise the monthly wage for North Korean workers to $300, a 
fourfold increase from the current $75, and pay $500 million for the 
use of land at the complex. 
 
The ROK media also noted the North's demand for wage increases of 10 
to 20 percent a year, reporting that under current agreements, wages 
cannot be raised by more than 5 percent annually. 
 
Most ROK media, citing ROKG officials and local experts, viewed this 
"unacceptable" North Korean demand as a bargaining chip for future 
negotiations.  Kim Young-tak, a senior Unification Ministry official 
in charge of the inter-Korean talks, was widely quoted as saying 
after returning from Kaesong: "I expect the two sides to reach a 
compromise after extended negotiations.  North Korea repeatedly 
expressed its willingness to develop the industrial complex during 
the talks." 
 
The two Koreas agreed to meet again on June 19 for further 
discussions, according to media reports. 
 
Newspapers carried the following headlines: "North Korea Demands 
Four-fold Increase in Wages and 31-fold Increase in Land Use Fees... 
Companies: 'It Amounts to Telling Us to Leave'" (conservative Chosun 
Ilbo, right-of-center JoongAng Ilbo); "N. Korea Makes Unacceptable 
Demands... Kaesong Industrial Complex on the Verge of Collapse" 
(moderate Hankook Ilbo); and "North Korea's 'High-stakes Betting'... 
ROKG Views It as Designed for Future Negotiations" (left-leaning 
Hankyoreh Shinmun) 
 
Conservative Chosun Ilbo editorialized: "Increases in wages and land 
use fees should not be discussed without resolving the issue of a 
guarantee for the safety of ROK workers at the Kaesong Industrial 
Complex. ... Furthermore, the wage hike demand presented by the 
North ... is exorbitant." 
 
Conservative Dong-a Ilbo's editorial argued: "If Seoul accepts 
Pyongyang's wage demand of $300, all ROK companies in the complex 
will be forced out.  One entrepreneur has decided to withdraw from 
the complex because of losses and fears over employee safety. ... 
Seoul must reject this 'outrageous' bill from Pyongyang and make the 
North clearly realize that unless the detained ROK worker is 
released, (South Korea) will not engage in negotiations. ... The UN 
Security Council is responding to North Korea's nuclear and missile 
provocations with a strong resolution.  This is not the time to give 
a raise to North Korean workers ... and grant $500 million in 
additional rent." 
 
Right-of-center JoongAng Ilbo's editorial echoed Dong-a's views, 
saying:  "The aim (of the UNSC financial sanctions against North 
Korea) is to cut off as much cash flow to the North as possible.  In 
this situation ... North Korea's demand is surely unacceptable for 
 
SEOUL 00000930  003 OF 008 
 
 
the ROK, which should join in the UNSC sanctions against North 
Korea." 
OPINIONS/EDITORIALS 
------------------- 
 
DON'T SUCCUM TO N. KOREA'S DEMANDS 
(Dong-a Ilbo, June 12, 2009, page 31) 
 
The reason why North Korea began complaining over the Kaesong 
industrial complex last year is now clear.  The North yesterday 
demanded that monthly wages for North Korean employees at the 
complex be raised from an average 75 dollars to 300 dollars, and an 
additional 500 million dollars for rental of the property. 
 
Money is the reason behind the North's offensive that started in 
March last year, with the expulsion of 11 ROK officials at the 
Inter-Korean Exchanges and Cooperation Consultation Office.  As part 
of its scheme, Pyongyang has detained a Hyundai Asan Corp. employee 
for 75 days.  This is tantamount to holding a hostage for an 
outrageous ransom. 
 
As in the first working-level meeting between the Koreas May 21, the 
North yesterday talked only about money, ignoring the plight of the 
detained employee.  This is the real face of the North, which refers 
to "our people" whenever it wages an offensive against the ROK. 
Pyongyang's behavior is unacceptable even from a humanitarian 
perspective. 
 
The Kaesong complex has begun to collapse due to the North's 
continued offensive.  A fur company Monday announced plans to leave 
the complex, a first among ROK enterprises there.  Their exports in 
the first four months of the year fell 56.1 percent year-on-year, 
and production decreased 6.6 percent.  The number of employees in 
the complex has dropped 43 percent over the last three months. 
 
Researcher Cho Bong-hyeon of IBK Economic Research Institute in 
Seoul warned that if the North asks for an average salary of 200 
dollars per month in the complex, an amount equivalent to that of 
China, only three of some 100 companies in the complex can survive. 
If the North seeks 150 dollars, around 30 companies can continue 
there.  If Seoul accepts Pyongyang's wage demand of 300 dollars, all 
ROK companies in the complex will be forced out. 
 
One entrepreneur has decided to withdraw from the complex because of 
losses and fears over employee safety.  If the detained employee is 
not released and the North does not promise to detain ROK staff 
again, jitters will remain at ROK companies in the complex. 
 
Seoul must reject this "outrageous" bill from Pyongyang. The ROK 
must make the North clearly realize that unless the detained ROK 
worker is released, (South Korea) will not engage in negotiations. 
Seoul said, "The detention of the employee is the essence of the 
issue related to the Kaesong Industrial Complex," so it could make 
this a precondition for resuming inter-Korean talks June 19. 
 
The U.N. Security Council is responding to North Korea's nuclear and 
missile provocations with a strong resolution.  This is not the time 
to give a raise to North Korean workers as the North demands, and 
grant 500 million dollars in additional rent. 
(This is a translation provided by the newspaper, and it is 
identical to the Korean version.) 
 
 
COOL HEADS VITAL IN FACING THE NORTH 
(JoongAng Ilbo, June 12, 2009, page 39) 
 
By Senior columnist Kim Young-hie 
 
As we fight, we must remember that we are the first outlet for North 
Korea's anger should it decide to take military action. 
 
One feels terrible when his brother is criticized by others or 
beaten up. When one receives criticism and beatings along with his 
brother, it is even worse.  But if one's brother breaks the rules of 
 
SEOUL 00000930  004 OF 008 
 
 
decency in the community, one feels obligated to join the mob and 
condemn his brother. 
 
The United Nations Security Council has decided to adopt a 
resolution to put pressure on North Korea, which has conducted two 
nuclear tests and launched missiles like a kid playing with 
fireworks, threatening the peace of the neighborhood.  While we 
welcome the move by the Security Council, we do so with a heavy 
heart. 
 
The United States and Japan drew up a draft, the ROK supported it 
fully and China and Russia weakened it a little because of their 
traditionally close relations with North Korea.  The resolution is 
so powerful that we cannot possibly hope for more under the current 
circumstances.  If UN members faithfully abide by the resolution, 
North Korea will lose nearly all of the channels it uses to get cash 
from outside the country.  If the communist country cannot engage in 
financial transactions it cannot export weapons, the country's thin 
lifeline, and that will make it difficult for the country to earn 
vital dollars. 
 
According to the resolution, a vessel suspected of containing North 
Korean weapons may be inspected on the high seas when the government 
of the country to which the vessel belongs issues a permit to do 
so. 
 
Because of China's stubbornness due to its long-standing friendly 
ties with North Korea, the word "decide" has been toned down and has 
been changed to "call on."  But really, how many countries would 
refuse to cooperate with inspections for any reason other than to 
become a nuisance to the United States?  The biggest merit of the UN 
resolution is that it has all the force of international law, citing 
Article 41 of Chapter XII of the Charter of the United Nations. 
 
What is worrisome is North Korea's possible resistance once the 
resolution is adopted.  Within days, something else could arise to 
aggravate North Korea further.  At a summit meeting between Seoul 
and Washington scheduled for June 16, the United States will 
reaffirm its nuclear umbrella for the ROK.  The Rodong Sinmun, the 
North Korean state-run daily, warned on June 8 that if the United 
States were to offer its nuclear umbrella to the ROK in writing, the 
danger of nuclear war would increase accordingly. 
 
The background to the North Korea issue, including the country's 
nuclear tests, has changed.  Once the UN resolution is adopted, 
North Korea is likely to cling to its current policy against efforts 
to get it to denuclearize.  Meanwhile, the ROK has declared its 
participation in the Proliferation Security Initiative. 
 
Although it is more of a symbolic move, the ROK has decided to 
impose sanctions on three North Korean weapons exporters and has 
reported the decision to the UN Security Council Sanctions 
Committee.  These moves are powerful enough to make North Korea 
tremble in fear. 
 
International society's sanctions on North Korea will operate fairly 
well in general. Dangers arise only when the sanctions and the ROK's 
hard-line stance anger North Korea to the extent that it explodes. 
In that case, the ROK will be the first outlet for the North's rage. 
 There are plenty of ways for it to take out its rage over the 
sanctions on us, such as making threats toward the Kaesong 
Industrial Complex and along the truce line in the Yellow Sea. 
 
The defense minister of the ROK said that once North Korea attacks 
the ROK, the latter will attack the North in return, in accordance 
with the rules of engagement.  His words are not prudent.  What if 
North Korea attacks a vessel in the Yellow Sea with guns on the 
shore?  If we do as the defense minister says, our vessel would need 
to mount an attack on North Korean territory.  That scenario is too 
appalling even to think about. 
 
While leading the call for a UN resolution, the U.S. sent messages 
through Stephen Bosworth, the special representative for North Korea 
policy, that the door to dialogue with North Korea was open. 
 
SEOUL 00000930  005 OF 008 
 
 
Dialogue between Washington and Pyongyang may start with 
negotiations over the release of two female American journalists 
detained by the North. 
 
We need to set clear objectives to prevent physical clashes, 
maintain the Kaesong Industrial Complex and tourism on Mount Kumgang 
and resume dialogue between the authorities of the ROK and North 
Korea.  Bearing these goals in mind, we need to restrain ourselves 
from using provocative words unless it is absolutely necessary. 
Cooling periods and explicit incentives are vital, not for the grand 
goals of reunification or peace in Northeast Asia, but for the 
urgent objective of preventing another war. 
 
Sanctions are tools, not goals. Sanctions against North Korea have 
the effect of isolating the communist nation.  We must not forget 
the paradox that as North Korea becomes more isolated, its missiles 
will become more numerous and sophisticated. 
 
(This is a translation provided by the newspaper, and it is 
identical to the Korean version.) 
 
 
CAN THE KAESONG COMPLEX SURVIVE? 
(Chosun Ilbo, June 12, 2009, page 31) 
 
North Korea is demanding that the ROK pay North Korean workers at 
the Kaesong Industrial Complex US$300 a month and is asking for an 
additional $500 million for the land lease, but it is refusing to 
discuss the fate of the Hyundai Asan worker who had been held 
captive for 74 days. 
 
Following the arrest and detention of the man, known only by his 
family name Yoo, the security of ROK workers at the complex has 
emerged as the top priority for the businesses operating there.  But 
North Korean officials will not address this issue and are simply 
demanding more money, making it impossible to engage in constructive 
negotiations. 
 
The safety of ROK staff at the Kaesong complex is guaranteed in an 
agreement which the two Koreas signed in January 2004.  But North 
Korea is treating that agreement like a piece of trash as it 
continues to detain Yoo. Article 10, Clause 3 of the agreement 
stipulates that North Korean authorities will respect the basic 
rights of an ROK employee undergoing investigation, and it is common 
practice for a suspect to be appointed a lawyer and be given 
visiting rights.  But the North is ignoring this internationally 
recognized procedure.  If even the basic agreement cannot be 
observed, the 600 to 800 ROK people in Kaesong are virtual hostages. 
 
 
The government should put top priority on securing Yoo's release and 
looking for concrete ways to strengthen Article 10.  According to 
the agreement, North Korea and ROK officials are to form a joint 
committee to deal with problems involved in Article 12, Clause 2, 
governing entry and sojourn.  But a joint committee has yet to be 
formed.  This needs to happen as soon as possible. 
 
The issue of wages and lease can be discussed once the safety of ROK 
workers is assured or at the same time as the safety issue.  But 
increases in wages and land use fees should not be discussed without 
resolving the issue of a guarantee for the safety of ROK workers at 
the Kaesong Industrial Complex. Furthermore, the wage hike demand 
presented by the North, which is four times more than the present 
rate, is exorbitant, even if it may have been exaggerated to get the 
most out of the negotiations.  The ROK has already paid $16 million 
to use 3.3 million sq. m of land for 50 years according to the 2004 
agreement.  North Korea's demand for a 31-fold increase is 
unacceptable. 
 
North Korea's true intentions will come to light in further 
negotiations.  But by scrapping the existing agreement altogether, 
North Korea seems to be demonstrating that it is unwilling to 
continue with the project.  The ROKG should focus on the next round 
of talks next Friday, and be prepared to pull out of the Kaesong 
 
SEOUL 00000930  006 OF 008 
 
 
Industrial Complex if talks fail. 
 
(This is a translation provided by the newspaper, and it is 
identical to the Korean version.) 
 
 
SANCTIONS CANNOT SUBSTITUTE FOR RESOLUTION OF THE N. KOREA NUCLEAR 
ISSUE 
(Hankyoreh Shinmun, June 12, 2009, page 23) 
 
The five permanent members of the United Nations Security Council 
(UNSC) and representatives from the ROK and Japan have agreed to a 
draft resolution regarding sanctions on North Korea.  It currently 
contains tough provisions, including an expansion of the arms export 
ban, an expansion of financial sanctions, and authorizes searches of 
ships on the high seas suspected of carrying contraband cargo. 
 
The fact that the draft took two and half weeks from the time of 
North Korea's second nuclear test shows that the process did not go 
smoothly.  In particular, China and Russia worked hard to lower the 
level of sanctions and soften the language.  Despite this, the 
agreement for stronger provisions than those in Resolution 1718, 
adopted after North Korea's first nuclear test in October 2006, was 
due to a strong international consensus of concern about North 
Korea's unilateral behavior.  If these sanctions are properly 
carried out, it would impossible for North Korea not to feel 
considerable pressure. 
 
North Korea must seriously consider the significance contained in 
the resolution soon to be adopted.  North Korea has been diverting 
the blame for the arbitrary measures it has taken over the last 
several months in order to increase the potential threat to world 
security.  This attitude, ultimately, will not win the support of 
the international community.  If North Korea continues to stubbornly 
pursue its own path, its conflict with the international community, 
too, will only intensify.  North Korea has pledged that it would 
respond to UNSC sanctions with long range missile tests and uranium 
enrichment.  This is not an advisable move for North Korea. 
 
Concerned countries, too, must break from the sole focus on 
sanctions. North Korea's nuclear test was largely about securing the 
regime by boosting its nuclear capacity and strengthening its 
bargaining power with the outside.  As outside pressure becomes 
harsher, North Korea will put greater efforts into developing 
nuclear weapons.  Unless this vicious cycle that has repeated itself 
for the last 20 years is broken, the North Korean nuclear issue will 
not be resolved.  This is why we should put greater emphasis on 
creating an atmosphere conducive to getting North Korea to give up 
its nuclear ambitions.  In particular, the U.S., which holds the key 
in negotiations with North Korea, should establish a framework to 
fundamentally resolve the nuclear issue.   UN sanctions are 
meaningful only when they are used as the groundwork to resolve the 
nuclear issue. 
 
The ROKG has shown a preference for strengthening sanctions on North 
Korea and, in the process, inter-Korean relations have deteriorated 
to their lowest point.  In order to make progress towards a 
resolution of the nuclear issue, the government must change its 
attitude.  Issuing a response for the sake of responding without a 
long view towards resolution will only cause both the nuclear issue 
and inter-Korean relations to become worse. 
 
(This is a translation provided by the newspaper, and it is 
identical to the Korean version.) 
 
 
OUTRAGEOUS N. KOREAN DEMANDS 
(JoongAng Ilbo, June 12, 2009, Page 38) 
 
During yesterday's second round of inter-Korean talks at the Kaesong 
Industrial Complex, North Korea demanded that the ROK raise the 
monthly wage for North Korean workers to $300, a four-fold increase 
from the current $75.  North Korea also called for the ROK to pay 
$500 million for the use of land at the complex, which is a 31-fold 
 
SEOUL 00000930  007 OF 008 
 
 
increase from $16,000,000.  This is such an outrageous demand.  We 
are very concerned about North Korea's motive for making this 
unacceptable and preposterous demand. 
 
ROK companies have invested in the Kaesong Industrial Complex due to 
(the potential for) economic benefits despite political instability 
in North Korea, not for charity purposes.  The minimum wage for 
North Korean workers at Kaesong was initially set at $50 a month but 
has been increased twice so far to $55.125.  This amount, when 
combined with social insurance fees, stands at $70 and is, in fact, 
still cheaper than the monthly wage of $120 to $150 in China or 
Vietnam.  Therefore, it may be reasonable to increase the monthly 
wage for North Korean workers to some extent.  However, the North's 
sudden demand for a four-fold increase in wages is like telling ROK 
companies to quit their businesses.  Few ROK companies would survive 
in the Kaesong Industrial Complex if they had to pay a monthly wage 
of $300 to workers.  One of the key points in the UN Security 
Council's resolution sanctioning North Korea over its additional 
nuclear test is financial sanctions.  The aim (of the UNSC financial 
sanctions against North Korea) is to cut off as much cash flow to 
the North as possible.  In this situation, North Korea is calling on 
the ROK to pay land use fees of $500 million and to adjust the 
salaries upwards significantly.  North Korea's demand is surely 
unacceptable for the ROK, which should join in the UNSC sanctions 
against North Korea. 
 
It is frustrating that North Korea is making an absurd demand 
without even mentioning an ROK's Hyundai Asan employee who has been 
detained for 75 days.  Negotiations do not work one-sidedly and any 
results may not be produced until the end of extended negotiations. 
However, if North Korea insists on this (outrageous) demand, there 
is a high possibility that the Kaesong Industrial Complex will be 
closed.  The ROKG should propose an appropriate amount in the 
next-round of inter-Korean talks scheduled for June 19 after 
consultation with companies operating in the complex in order to 
reach a compromise.  However strained the inter-Korean relations 
have been, it is mutually beneficial for both Koreas to keep the 
Kaesong Industrial Complex in place. 
 
 
NORTH KOREA SHOULD ACCURAGELY READ UNSC'S INTENTION IN ADOPTING 
TOUGHER RESOLUTION 
(Hankook Ilbo, June 12, 2009, Page 35) 
 
The UN Security Council (UNSC) will adopt a resolution imposing 
sanctions against North Korea as early as today.  The resolution, 
which was adopted by the five permanent members of the UNSC plus the 
ROK and Japan the day before yesterday after intense negotiations 
over sanctions against North Korea after its second nuclear test, 
contains an unprecedentedly strong message urging North Korea to 
abandon its nuclear programs.  Under the resolution, provisions for 
cargo inspections, arms embargoes and financial sanctions, in 
particular, are more expansive than the provisions in the previous 
resolution, which was adopted after North Korea's first nuclear 
test.  Although (the adoption of the resolution) may arouse 
Pyongyang's vehement resistance and heighten tension, we expect it 
to lead to the North abandoning its nuclear programs in the end. 
 
The key provision in the resolution calls upon UN member states to 
inspect North Korean vessels or airplanes at their ports or airports 
whenever cargos en route to or from North Korea are suspected of 
carrying banned weapons, including weapons of mass destruction 
(WMD).  Shipments on the high seas may also be inspected with the 
consent of the flag state (the country in which a ship is 
registered).  The embargo was also expanded to include a ban on all 
weapons except for small arms.  In addition, all financial 
transactions related to development of WMD are banned. 
 
This toughening of measures is focused on preventing North Korea 
from exporting weapons, a major source of foreign currency for 
Pyongyang.  In other words, it is designed to pressure the North by 
tightening the flow of money to the communist state.  This is also 
why (the UNSC) has expanded its ban on financial transactions with 
waivers for humanitarian aims.  The U.S., which led the efforts to 
 
SEOUL 00000930  008 OF 008 
 
 
impose strong sanctions, believes that those sanctions are expected 
to deal a serious blow to North Korea. 
 
The main issue is the degree to which North Korea will resist (the 
UN sanctions.)  North Korea has long declared that it would consider 
cargo inspections on the high seas an act of war.  Observers say, 
however, that the chances are low that sanctions would immediately 
lead to naval armed clashes.  Given the fact that the U.S., 
conscious of China's concerns, agreed in a compromise agreement to 
stop short of making the high seas inspections of North Korean ships 
mandatory, the U.S. is expected to avoid military action. 
 
In this regard, as it was previously, the UNSC resolution seems to 
be more like a political message urging North Korea to change its 
attitude.  As of now, it appears that North Korea has no choice but 
to listen carefully to this message. 
 
 
STEPHENS