American Enterprise Institute

February 19, 2008

[Edited transcript from audio tapes]

10:15 a.m.	Registration
10:30	Introduction:	Michael Auslin, AEI
	Panelists:	Bruce Bechtol, Marine Corps Command and Staff College
		Marcus Noland, Peterson Institute for International Economics
		Charles L. Pritchard, Korea Economic Institute
	Moderator:	Nicholas Eberstadt, AEI
12:00 p.m.	Adjournment

 

Proceedings:

Michael Auslin:  My name is Michael Auslin from AEI working on Asian issues.  I would like to welcome you this morning to our panel on “U.S.-South Korean Relations:  A New Era of Cooperation?”

We woke up this morning to news that change is afoot in the western hemisphere; there is change afoot in the eastern hemisphere.  We think it is a particularly propitious time to stop and try to assess what will likely come about starting next week when Lee Myung-bak becomes president of South Korea, what this means not only for South Koreans but for Korea’s allies around the world, for relations with the United States, relations with Japan, relations with China, the economic scene and the like.

As you can tell, we have put together an extraordinary panel this morning, and I am going to leave it at that and turn it over to my colleague here whom all of you know, Nick Eberstadt, who will doing more formal introductions, and then we will move right into presentations.  Thank you.

Nicholas Eberstadt:  Thank you, Misha.  Bruce, Marc and Jack, thank you all for coming here.  You can see you have been quite a draw.  We have an eminent audience and I think a very well-placed audience for an interesting conversation after your presentations.  Let me briefly introduce our distinguished panel here.  Each of our presenters is an author of a recent book.  Each of our presenters also has a distinguished service in the U.S. government.

Going across the panel, Professor Bruce Bechtol who is now at the Marine Corps Command and Staff College; in a previous incarnation, was in distinguished service in military intelligence for the United States.  He is the author of the recent book, Red Rogue, which some of you may have already purchased.  Those of you who have not are encouraged to go out and do so.

Marcus Noland from the Peterson Institute is author of more books probably than I can count, but I think probably the most pertinent one here is the book he has recently co-authored with Stephan Haggard on Famine in North Korea.  Marc also has done service on the Council of Economic Advisers for the President of the United States.

Ambassador Charles L. Pritchard, who we have to call Jack.  Ambassador Pritchard is now the president of the Korean Economic Institute of America.  Before that, he served as ambassador for the Korean peace process.  Is that correct?

Charles L. Pritchard:  It is close.

Nicholas Eberstadt:  Well, the peace process is not close but maybe the title is close.  Before that he served on the National Security Council and, for a number of decades, in the U.S. Military.  You are retiring as a colonel.

Jack is also the author of Failed Diplomacy : The Tragic Story of How North Korea Got the Bomb, which we encourage you also to purchase and, perhaps, even read.

I thought, maybe, if it is all right with our panelists, we might begin with Marc Noland to give us an assessment of the economic outlook and some of the economic issues on the bilateral agenda, and then Bruce Bechtol, and as clean-up batter, on with Ambassador Pritchard.  So Marc, take it away.

Marcus Noland:  Thank you very much.  It is a great honor to be here, and I’m very honored to be on this panel with such serious people whom I hold in such high regard, and I see many friends in the audience.

Today, I will frame my remarks around three issues - the outlook for the South Korean economy, its relationship with the United States, and then the relationship among South Korea, the United States and North Korea.

It goes without saying that South Korea may be the premier success story of the 20th century.  Between 1963 and 1997, the economy averaged six percent real per capita growth every single year, and the economy at that time with the country when it started that period was poorer than Ghana or Bolivia or Mozambique, ended up that period richer than Greece or Portugal.  And as spectacular as the economic development has been, the political development in the country has arguably been even more impressive.  In a single decade between 1987 and 1997, the country went from military dictatorship to an elected but handpicked military president to a centrist civilian president to a political dissident [sounds like].

So the country has obviously been one of the true success stories of the 20th century.  Yet, since the financial crisis of 1997 and 1998, there has been a sense that the state-led economic development model that had served the country so well starting in 1963 was really no longer appropriate, but a new approach had yet to be formulated.  Such concerns contributed to the election victory of president-elect Lee Myung-bak, who is seen as the economics candidate.

Lee has started a very ambitious plan called the 747 Plan, which consists of raising the growth rate to seven percent a year from its current level on the order of four-and-a-half to five percent, which, if achieved, would imply a doubling of the country’s per capita income over a period of a decade to US$40,000 and would raise the country to the seventh largest economy in the world.  It goes without saying these are extremely ambitious goals.

Economists normally think of economic growth in the long run as being a function of labor force growth augmented by the educational and skill level of the labor force, known as human capital, together with the accumulation of physical capital through investment augmented by productivity growth.  So you have labor growth, capital growth and productivity growth.  South Korea faces real headwinds on the first two, and its ability to accelerate the third, productivity growth, is uncertain.

With respect to the labor force, South Korea has a rapidly aging labor force.  Under current trends, within a decade the dependency ratio - that is to say, the number of people who are not working relative to the people who are working - will begin rising.  And by 2030, population size will begin decline following below its current level by 2040.  So this is an economy that has a slowing labor force growth and will start to have a rising dependency ratio in the relatively near future.

Capital investment has never re-attained its pre-crisis level, though this is not unique to South Korea; other countries in Asia have exhibited the same pattern and one could argue that the pre-crisis level of capital accumulation may have been excessive.  Nevertheless, this is not an economy over the last 10 years that has been accumulating and investing a lot of capital.  So under these circumstances, maximizing productivity is really essential. 

And it is tempting to think of spurring productivity growth in terms of technological upgrading.  South Korea’s technological progress has been astonishing, especially in parts of the IT or information sector.  But technology, narrowly defined, may not even be among the most important contributors to increases in productivity.  Financial, labor and market reforms, for example, may improve the efficient use of these inputs more than bringing in a particular technology would.

You can conceptualize productivity advance as having two components.  One is to encourage the emergence of new sectors or activities while at the same time terminating or improving practices in existing activities.  When you look at the data for South Korea, where it really falls behind is in the service sector.  Estimates by the International Monetary Fund indicate that while total factor productivity growth in the South Korean economy has been rising at a rate of three to four percent a year for a number of decades outside the service sector, within the service sector for the last 25 years, total factor productivity has actually declined.  That is to say that on a dollar-for-dollar basis, Koreans are getting less bang for the buck in the service sector now than they were in the 1970s.

It is hard to measure these things, and I would not take these figures to the bank, so to speak.  But whatever the specifics are, there is considerable evidence that South Korea faces real problems with the service sector productivity, and the importance of this problem is going to grow.  With the rise of China, it is likely that the manufacturing share of the South Korean economy will decline.  And as the population, which is -- elderly people demand services so it is likely that over the future, service sector, which is the lagging sector of the economy, will play a bigger and bigger role in the South Korean economy.

Finally, on top of these challenges, South Korea faces the issue of North Korea, the world’s largest contingent liability.  In this context, the proposed free trade agreement between the United States and South Korea can be seen as a mechanism for trying to shine the light of competition in all sectors of the South Korean economy, including the service sector; increasing competition; raising efficiency, and in a sense acting as an economic hedge on the contingencies involving the North.

Relations with the United States -- economic integration between the two countries is rising.  Merchandise trade is rising slowly; it is now about US$80 billion; it is highly concentrated in electronics and autos.  Service sector trade is rising; it is now almost 20 billion.  So together, merchandise and service trade, about US$100 billion between the two economies.  Direct and portfolio investment is rising.  Indicators of technological exchange, things like technology licensing, they are rising as well.  However, the relative importance of the two economies for each other is less clear.  South Korea accounts for less than three percent of U.S. trade.  U.S. trade share of South Korean trade is obviously much larger but the United States is now, at least in the merchandise trade category, in third place behind China and Japan.

The United States is a post-industrial economy, and its importance to South Korea is much more important in the service sector, in terms of investment, in terms of technology transfer.  So the United States is still very important to South Korea, but it may not have the same political salience as those easily observable numbers merchandise trade have.

In the interest of time, I’m going to skip over the interests of the two countries in the global trade negotiations in the Doha Round and in regional initiatives and go straight to the Korea-U.S. free trade agreement, or KORUS, for short.

An FTA would benefit both countries in the aggregate, though attempts to formally model these benefits suggest that they could be small, and though it is the case that formal models tend to underestimate the beneficial impact of free trade agreements and the results were uncertain.

From a South Korean perspective, the real gain from KORUS is not the elimination of a 2.5-percent tariff on automobiles.  Rather, it is the introduction of competition into the South Korean market, especially in the service sectors in the pursuit of greater economic efficiency and prosperity and as a hedge against contingencies in the north.  Basically, KORUS would help South Korea strengthen its economy so that it would be in a better position to deal economically with a variety of outcomes that might obtain with respect to the north, while at the same time politically binding the United States, the world’s largest economy and the world’s sole superpower, more tightly to South Korea in preparation for what might happen involving the north.

Nevertheless, neither national legislature has ratified this agreement and the political debate has really centered on a couple of issues.  One of those is beef.  In the case of beef, tariffs are not the issue; South Korea has agreed to phase out its tariff on U.S. beef.  Rather, the issue is a health issue having to do with a 2003 outbreak of BSE or bad cow disease here in the United States, and subsequent or fitful attempts to manage to reach an agreement in which South Korea would open its market, yet the United States would guarantee the quality of the beef.  There has been a partial opening of the market, which has run into problems when U.S. beef packers shipped beef that did not meet the standard, and the recent recall of millions of pounds of beef in California probably is not going to make reaching a final agreement on this issue any easier.

Automobiles are a continuing source of friction.  South Korean imports are extremely low, but it is hard to disentangle how much of that is due to current policy, how much of that is due to past policy that probably cannot be fully undone, and how much of that is just pure competitive advantage.  If one looks at the share of the American producers in the American market, it has been falling even relative to production of transplants here in the market.  That suggests that it is not purely a border barrier market access issue.

Moreover, frankly speaking, the competitiveness issues with respect to the American manufacturers deeply involve legacy issues having to do with healthcare and pension policies that are not going to be addressed in the context of a free trade agreement.  Failure to implement KORUS may result in decreased U.S. exports to South Korea if South Korea and the EU successfully complete their deal.

Timing.  I was looking at the newspaper again this morning.  It is hoped, but it is, frankly, unlikely that the South Korean National Assembly will vote on KORUS before the elections in April.  There is some thought that, perhaps, the lame duck session of the national assembly could vote on this in May before the new national assembly takes office in June. Interestingly, a similar political calendar might obtain here in the United States. 

We are, obviously, in our own electoral cycle; we have three leading candidates who have three distinct positions on KORUS.  Hilary Clinton has come out strongly against it.  John McCain supports it.  And Barack Obama is in favor of free trade with South Korea; he is just not in favor of the specific agreement that has been negotiated, a stance that is, interestingly, reminiscent of candidate Bill Clinton’s stance on NAFTA in the 1992 electoral campaign.

If public opinion polls are to be believed - and if any year they may not be believed, it may be this one - then the prospect is for a more Democratic and trade-skeptical Congress in 2009.  That means it may be difficult to pass KORUS in the United States even if McCain were elected because you would have a Republican president facing a distrustful Democratic-dominated Congress.  Yet, it might be in either Clinton or Obama’s interest to see the issue resolved this year before they take office rather than having, at least in Obama’s case, to face an unpleasant political dilemma shortly after taking office.

So assuming that either Obama or Clinton - I think we have to assume Obama in this case - can establish themselves as the presumptive nominee in the late spring or early summer, this may actually be the best moment from their standpoint for the Congress to take this issue on.  They will be feeling the most secure and they can vote whichever way they want to vote without raising a big ruckus as we get closer to November.  Obviously, this will become more difficult.  So the two governments, I would argue, have a window that it is plausible to ratify this agreement over the next four to five months, and then prospects for ratification, implementation become considerably more problematic.

On the economic side, Lee Myung-bak’s election has meant a more conservative president in South Korea and will result in subtle changes in Seoul’s strategy towards Pyongyang, though I do not believe it will change, fundamentally, a strategy towards engagement.  The rationale from a South Korean standpoint for engagement is quite straightforward - to encourage sufficient evolution in North Korea’s internal practices and external behavior, to provide a meaningful basis for national reconciliation and, ultimately, eventual unification.

That said, Lee Myung-bak has emphasized both in his campaign and since his election that he would ground North-South relations more firmly in the principles of reciprocity.  Here, the nuclear issue is going to be in the center, and I will leave this to Bruce and Jack to take on more directly.  As in the case of South Korea, Lee Myung-bak has outlined a very ambitious plan for North Korea, called the 3000 plan, which envisions North Korea growing at an annual rate of 15 to 20 percent for a period of 10 years, thereby raising its per capita income to US$3,000.  But to implement this plan and achieve this goal, North Korea is going to have to denuclearize.

In conclusion, the U.S. and South Korea have gone through a difficult patch in the last several years, and the change in government in Seoul and the upcoming change in government here in Washington present an opportunity to improve the relationship.  However, KORUS, the single most obvious manifestation of cooperation on the economic side, is in real political trouble and its passage and implementation is by no means assured.  Given South Korea’s astonishing rise over the last two generations and the U.S.’ role in fostering that rise, a failure to cement this relationship with the free trade agreement would be a bitter blow indeed.

One can only hope that the strengths that South Korea has exhibited during that period of rapid economic and political development in the past will be equally as evident as it deals with its future challenges, both internally in dealing with its relationship with the United States, and in dealing with its relationship with North Korea as well.  Thank you.

Nicholas Eberstadt:  Marc, thank you very much.  Bruce, the floor is yours.

Bruce Bechtol:  Thanks, Nick.  I, too, am honored to be sitting on this panel with such distinguished panelists.  I would also like to thank Misha and Nicholas Eberstadt for inviting me to this panel today.  As most of you who know me know, my specialty is the North Korean military and the ROK military, so I’m going to address military issues in the ROK-U.S. military alliance. 

When it comes to military issues on the Korean Peninsula, certainly one of the most important issues when it comes to the ROK-U.S. military alliance is the transformation of ROK military forces with a goal for complete modernization estimated to cost about 164 trillion won by 2020, and with enough independent capability to operate under separate wartime command from the United States forces by 2012.

Under the Roh administration, there were many issues involved with the transformation of the ROK military that are likely to have a negative impact on the readiness and capabilities of forces that served as a deterrent against what is currently the fifth largest armed force in the world - North Korea.  These North Korean forces are equipped with a nuclear capability, ballistic missiles and asymmetric capability that has evolved since the mid-1990s, and large forward deployed conventional units that are poised to exploit vulnerabilities opened up by asymmetric forces in the early stages of any conflict.

As the Lee Myung-bak administration transitions into power, in my view they will need to focus on two key issues that the Roh administration seems to have moved away from in its efforts to build an “independent capability.”  One, the North Korean threat as it is and not as many would wish it to be, and, two, and very importantly, a renewed pursuit of interoperability with U.S. forces that will still be extremely important even as this independent capability eventually comes to fruition.

So let’s talk about the North Korean threat and why it remains so important for South Korea.  While the North Korean military conventional capability, as seen in its artillery armor, mechanized and infantry forces, has declined because of a dip in field training that has existed since the early 1990s when the Soviet Union ceased to subsidize them.  And I would say it has declined, if you look at most figures, somewhere between 13 and 20 percent.  Despite this, the Pyongyang regime has quite cleverly adjusted.  Since the mid 1990s, the North Koreans have increased the capabilities of their missile forces in sophistication, numbers, and command and control.

In addition, since the late 1990s and continuing into the New Millenium, the North Koreans have greatly increased the number of long-range artillery systems deployed along the DMZ.  There are now probably close to 900 of these systems deployed along the DMZ today with up to 300 of those systems capable of targeting the Seoul Metroplex.  These artillery systems are considered a threat not only because of the fact that they are forward-deployed and could, thus, attack Seoul with little or no warning, but because some or all of these systems are likely to be equipped with chemical weapons.  The U.S. Department of Defense estimates reportedly assess that up to 250,000 people would die in an artillery barrage from these systems.  The ROK Ministry of National Defense has a slightly lower estimate; that is about 210,000 people in the first barrage.

Finally, North Korea continues to maintain a highly-trained cadre of 80,000 to 100,000 special operations forces, the world’s largest, and a force capable of attacking key nodes within the South Korean land mass as well as creating havoc and disrupting command and control behind enemy lines in any conflict.

The first problem with transformation of the ROK military under the Roh administration has been their refusal to acquire missile defense systems capable of defending South Korea from the more than 600 Scud missile systems that are in North Korea’s inventory, now augmented by the more accurate DPRK version of the Russian SS-21 called in U.S. circles and ROK circles the KN-2.  Under the Roh administration, South Korea has projected a purchase of 48 secondhand PAC-2 patriot missile systems from Germany.  But these systems will be sadly lacking providing missile defense against the missile systems that I just mentioned, the Scuds and the SS-21s that North Korea has aimed at key nodes in every single region of South Korea. 

As it stands right now, the only system on the Korean Peninsula that is truly capable of addressing the threat of a large-scale North Korean missile attack is the PAC-3 patriot missile system.  Washington has 64 of these systems deployed in South Korea, all of which are manned, maintained and operated by U.S. army personnel.  One has only to look at recent developments in the Japanese missile defense systems for an example of the direction that the South Korean military needs to take. 

In December of 2007, the Japanese successfully tested the naval SM-3 interceptor missile.  In addition, the Japanese are building a two-tier missile defense system in close cooperation with the United States.  The SM-3 system will be launched to intercept missiles at high altitudes from Japanese Aegis-class ships supported by the PAC-3 system that will intercept missiles and coming at lower altitudes.

The South Korean military has neither system despite the fact that the ROK land mass is under greater threat from North Korean missiles than Japan is.  Seoul has reportedly scheduled a purchase of PAC-3 missiles some time after 2012, but there is no purchase scheduled currently for a system like the SM-3 for their own Aegis class ships, which, as many of you know here, are called the King Sejong-class ship. 

To make matter worse, South Korea to date, unlike Japan, has not agreed to join the U.S. missile defense system, a carryover from the Kim Dae-jung administration.  The reason for the South Korean government’s failure to immediately begin purchasing a modern capable missile defense system and integrating it with the U.S. missile defense system with the ability to realistically defend against North Korean attack are decidedly not because United States officials have advised the Roh administration not to do so.

Quite to the contrary, please allow me to quote General B.B. Bell a few months ago:  “The Republic of Korea must purchase and field its own TMD system capable of full integration with the U.S. system.  The regional missile threat from North Korea requires an active ROK missile defense capability to protect its critical command capabilities and personnel.”  Reportedly, aides to Lee Myung-bak have stated that the incoming government may reconsider the no-government stance on missile defense.  In my view, this is extremely important.  Building a credible modern and fully integrated missile defense system will be vital to the security of South Korea and an important deterrent, just as importantly, against attack from the north.

When it comes to the second pillar of the North Korean asymmetric threat I mentioned earlier, the long-range artillery, the biggest issue that the South Korean government has inadequately addressed under the Roh administration has been the acquisition of a robust joint integrated C4I system - command, control, communications, computers and intelligence.  This is particularly important now.  Why?  Well, because until recently, the ground base mission of providing counter-battery fire against North Korean long-range artillery deployed along the DMZ belonged to the Army Second Infantry Division, no more.  They were in 2005 as part of the ongoing shift of defense responsibilities on the Korean Peninsula between South Korean and U.S. forces, the responsibilities for this mission shifted to the ROK army.

Integration of these newly-assigned units into a modern C4I system is extremely important.  Why?  Because, otherwise, they are just guns that cannot react to or rapidly target North Korea’s systems and protect allied forces.  Artillery used in counter-battery mode, which is the primary mission of these artillery near the DMZ, must have a quick reaction time in order to grasp the location of North Korean artillery units with radar and destroy them in case the systems have just been fired or, more importantly, are about to be fired.

This issue becomes exacerbated when one considers the important issue of integrating counter-battery artillery fire with allied air power.  Without a modern C4I system and a system that is fully capable of being integrated with U.S. forces, the South Korean artillery forces’ capability to target the deadly North Korean long-range artillery systems is greatly degraded.

During Lee Myung-bak’s election campaign, he pledged to turn the South Korean military into an efficient, high-tech force by establishing a network-centric capability.  This will be extremely important in coming years.  Thus far, initiatives aimed at establishing C4I networks in the ROK military have been either experimental or test-bed [sounds like]; for example, the advanced digital network in the Fifth Army Corps where [indiscernible] had five civil military satellites.  In fact, to date, South Korea continues to depend on the United States for most of their strategic information.  Indeed, ROK forces are also heavily dependent on U.S. systems for much of their tactical battlefield information.

It will be important for Lee’s defense team to develop plans to significantly upgrade systems and sensors that will give the South Korean military enhanced independent capabilities and the ability to fully integrate with U.S. systems and systems that would deploy to the peninsula in war or times of crisis.

The third pillar of the asymmetric threat that I discussed earlier is the special operations forces capability that Pyongyang brings to bear with its large well-trained and highly motivated cadre of troops who fall into this category.  Much like combatting the long-range artillery threat from North Korea, C4I will play a vital role in the ROK-U.S. counter-SOF mission.  But there is another aspect to this as well, and that is South Korea’s ability to counter the North Korean threat as it relates directly to the airlift of Seoul’s own Elite Special Forces and Airborne Brigades.

There are currently seven Special Forces Brigades for airborne operations and the Army has five independent brigades- two infantry and three counter infiltration, along with other airborne assets.  This is a very large well-trained force in its own right but it is also a force that needs to be airlifted during a conflict.  To lift this huge amount of troops, the ROK Air Force has 10 C-130s and some other smaller aircraft.  Thus, in order to bring the counter-SOF capability of ROK forces up to modern independent and integration-capable standards, the Lee administration will have to make important investments in both C4I and air power initiatives that his predecessor was unwilling to commence.

There are many other issues and challenges relating to South Korea’s military development, cooperation and integration with the United States military, but let me discuss just a couple more.  The first one is the Proliferation Security Initiative.  The reason this is important is because of the threat that North Korea poses to volatile regions outside of Northeast Asia through its proliferation, particularly ballistic missiles, particularly to places like Syria and Iran. 

Under the Roh administration, South Korea has been extremely hesitant to join any activities of PSI.  And the main reason appears to be the fear that joining PSI as an active member would hurt efforts at reconciliation with the North.  According to press reports, Lee Myung-bak’s aids have said that he may reconsider Seoul’s stance on PSI once he assumes the presidency, especially if North Korean nuclear provocations intensify.  If this occurs, it will also be an initiative long overdue in my view and most welcome in Washington.

The final issue -- wartime operational control or wartime OPCON.  The issue of wartime OPCON is one that has been extremely sensitive to most conservatives since the year 2012 as the date for a change in wartime OPCON.  It was pushed forward during the early years of the Roh administration and continuing with the eventual signing of the agreement by Secretary Gates and Minister Kim in 2007 that finalized the date of de-establishing combined forces command as April 17, 2012.

Throughout the process and after the signing of the final agreement, most retired generals and retired senior military officials in South Korea, and I might add the United States, were openly critical of the change in wartime OPCON largely because they felt and continue to feel that the date is premature.  United States officials, including the ambassador to Korea during December of 2007 have stated that postponing the date for separate war fighting commands and, ultimately, the end of combined forces command is not in the cards. 

In my view, while complete ROK independent wartime command may be a noble goal to push for in the long run, the initiatives required in order for the South Korean forces to effectively carry out this goal will simply not be completed by 2012.  In fact, like many issues, the position taken by the Lee government may be based on the behavior of its neighbor to the north.

Please allow me to quote a colleague of mine, Senior Research Fellow Bruce Klingner, who works at the Heritage Foundation.  Here is a suggestion he wrote in December of 2007:  “Although it would be counterproductive for President Lee to formally reverse the OPCON decision, the negative effects could be mitigated by careful bilateral planning in coming years.  The U.S. could announce that the planned 2012 transfer date is contingent on both a sufficient reduction in the North Korean threat and satisfactory progress in improving South Korean military capabilities, and that it is open to discussion as to the feasibility of transfer by the currently agreed-upon date.

Thus, while the issue of wartime OPCON remains important to the security of South Korea, in coming years, perhaps the best way to broach it would be to base delays on two things - the capabilities of the ROK military and the continued presence of the North Korean threat.”

So, please, allow me to conclude here.  In this short presentation, I have made some observations regarding mistakes made during the Roh administration that have negatively impacted the alliance, and I have offered some suggestions and assessments that will, hopefully, be useful for the Lee Myung-bak administration as it takes power and brings the ROK-U.S. alliance, and, especially, the ROK-U.S. military alliance, into a new era of cooperation and transparency.  If one boils this down to basic aspects of cooperation that Lee Myung-bak can and is likely to initiate, it adds up to four pillars that will not only improve ROK-U.S. military cooperation, but enhance the readiness and capabilities of the ROK military.

The first pillar is closer technical logical cooperation which should involve bigger, more powerful long-range combat communications and intelligence systems.  Government and business joint ventures must be initiated that will enable quality-focused programs designed to continually upgrade defense capabilities and surpass threat systems while mitigating vulnerabilities that would likely occur as CFC is dissolved.

The second pillar is closer intellectual cooperation that focuses on renewed and continued development of combined doctrine, combined training and combined education.  The third pillar is closer ideological cooperation that would involve government to government compatibility in core areas - democracy, human rights and free market economies that can be accomplished through mutual commitments to security on the peninsula, the region and around the world.  The fourth pillar is, perhaps, the most important.  This is a fiscal commitment to support the cooperation pillars I just listed.  This can be accomplished by defense budget appropriations that enable realistic, threat-based acquisition of important systems and training of service members.  I think I’ll leave it there.  Thank you.

Nicholas Eberstadt:  Bruce, thank you very much.  Jack, it is your show.

Charles L. Pritchard:  Well, like my colleagues, I would like to thank AEI, Misha and Nick for inviting me here.  It is a great pleasure to be on this panel.  I thought I would start first by trying to rectify a wrong that has been done to North Korea.  North Korea over the past year has been trying to shed its avis [sounds like] like quality of being number two.  Unfortunately, Mr. Castro usurped the headlines that, otherwise, you would have seen in today’s newspapers.  I’m glad Mr. Castro has stepped down, but I’m a little ticked off with the timing.  Otherwise, we would have been here talking about Kim Jong-il is now number one in the top 10 dictators in the world. 

For the last couple of years, he has been stuck in that number two position.  Like avis, he has been trying harder, and he has finally reached the pinnacle of being number one.  This will have some impact on U.S.-Korea relations, and it is my segue into what I’m going to actually talk about.  But I thought I would just bring that to your attention.  If you did not read the Parade Magazine, the Sunday magazine -- if not, you need to get a copy of that and frame it.  Let me talk about the inauguration of Lee Myung-bak and what that means to the U.S.-ROK relationship.

Under normal circumstances, we would be talking about, as each of my colleagues have, the distinct characteristics that Lee Myung-bak will bring to his presidency, what it means for the relationship.  But you first have to do this by a comparison, and that is contrasting where he is.  You could not ask for a better position to be in.  When you come into a job, it is best to follow someone who has not succeeded.  So the public perception both, I think, in Korea and, certainly, among Americans who watch the Korean relationship is that the current president, Roh Moo-hyun, has done some damage to the U.S.-Korea relationship.  That may not have been intentional but it certainly has been the outcome.

So President Lee automatically goes straight up to the head of the chart when it turns to the U.S. perception of what it means to the relationship.  This can be seen almost immediately if you take a look at how President Bush first encountered his counterpart, Kim Dae-jung, and then later, Roh Moo-hyun; how those state visits and how those summit meetings proceeded.  We do not even have one yet between Lee Myung-bak and President Bush but, already, there is talk that the White House is seriously contemplating that the visit will take place at Camp David. 

Those are very special signals to be sent.  I do not know what is going to actually turn out but the fact that the staffs are talking in that mode now suggest that the U.S. administration is looking forward to the 25th of February with a great deal of anxiety, if you will, looking forward to the day that Roh Moo-hyun is no longer there.  It is probably not fair to make that characterization in so stark terms because a lot of my friends and colleagues in the South Korean government -- over the last couple of years, as I have asked them they said, “The relationship on the professional side between the South Koreans and the United States has never been better.”  I think that is probably true. 

On the military side, the State Department, the interaction at the NSC at the White House, the people-to-people interaction really has been very significant and very genuine.  A number of people will then point out, “Well, you cannot short-change the accomplishments that have been created during Roh Moo-hyun’s watch.”  They point out to some of the strategic dialogue that has taken place between the militaries.  But I would suggest to you that when you take a look at that, it was a bumpy road to get where we finally are.  As an example - I’m doing this by way of comparison - when the initial decision was made to downsize the military to 25,000, the decision was that Richard Lawless would go to South Korea and then he would tell the South Koreans that that is the decision of the United States.  We are going to downsize. 

Best that we could, we could not -- those in the administration and State Department and others convinced him that it was not a wise move.  There have been no consultations; this is not going to well received and it was not.  It ultimately ended up with a commitment to negotiations and strategic dialogue that came to a conclusion and acceptance of what the U.S. wanted to do.  But we put the cart before the horse. 

So one of the things that I would point out that, I believe, will occur right off the bat is a more transparent cooperation between the United States and South Korea.  That there will be less fear that we just simply have to reach a conclusion unilaterally presented as a fait accompli to the other side, that there will be a transcending of this concern that will take the well-connected machinery of government below the president’s level, will turn that in the atmosphere into a better model.  And each of the different departments will begin a process in which we will no longer surprise each other, and surprise is, I think, the watch word at the presidential level during the Roh Moo-hyun and George Bush errors.

So let’s go back and take a look as an example -- one of the things that bothered the people most in the United States were some of the rhetorical comments that came out of Roh Moo-hyun, particularly when he traveled.  It was as though when he went to France or London or Poland or some place else that as he talked -- what appeared to be some very critical terms about the relationship with the United States, it was as though it was in a cocoon and that information would not be transmitted back to the United States. 

Of course, it was, and as a consequence the president of the United States did not look forward to his meetings with President Roh Moo-hyun.  That should not come as a shock to anybody, but that is just the way it is.

One of the other things that has worked against President Roh that I think we have seen indications in the run-up to the inauguration -- and that is President Roh’s own relationship with the table in front of me - the Korean press.  He has done a remarkable job of alienating the Korean press, and in doing so I think the Korean press has found each and every opportunity to highlight every single stumble that Roh Moo-hyun has made, particularly in the relationship with the United States.  President-elect Lee has already indicated that he is going to address and fix some of these problems.  So that is going to be welcome news.

One of the other things that you have by contrast as an example -- Lee Myung-bak comes in with a suggestion that his primary emphasis, certainly, in terms of foreign policy is an emphasis on the United States.  Well, if you look back about how most people perceived the start of the Roh Moo-hyun administration, it came in in an anti-American way, if you will.  That may not actually be correct but that is the perception that we have that the president of South Korea began - and those around him that he trusted and worked with came in - on an anti-American platform. 

The exact opposite is happening now.  Lee Myung-bak is coming in on a pro-American platform.  Those around him are signaling, “Do not worry.”  Cabinet nominees, people that will be working in the Blue House, “Do not worry.  We have a pro-American attitude.”  That is going to be a significant difference.  So what it does is it signals the end of the mismatch of administrations.

We have had a particular view within the United States and the George Bush administration of how to deal with North Korea, with South Korea, and it has been in contrast to what the Roh Moo-hyun administration and, before that, Kim Dae-jung believed how they should deal with North Korea and, as a consequence, how they actually dealt with the United States.  We have an opportunity for that to change, at least for this period of the remainder of 2008.  2009 is a different story.  It will depend exclusively on who is elected president of the United States.

But Lee’s approach has been characterized as pragmatic, and I think that is a welcome tone by most in the United States.  As my colleagues have pointed out, Lee Myung-bak has taken a look at his view of North Korea and he has put it both within the context of his own economic plans for South Korea; he has put it in the context of his relationship with the United States, and he has come up with his own policy of how to deal with North Korea.

On the one hand, he says, “We are not going to cut off humanitarian aid to North Korea.”  That is completely understandable.  On the other hand, he says, “I’m going to take a look at the outcome of the summit meeting between Roh Moo-hyun and Kim Jong-il and determine which of those promises make sense economically, politically and otherwise.  And I’m going to put it back into the context of saying there is a linkage between inter-Korea progress and largesse, what the South Koreans will provide to the North Koreans a direct linkage to progress in solving the nuclear crisis as we are now viewing it through the lens of the Six-Party Talks.”

That is extraordinarily welcome news to this U.S. administration.  It is in contrast to shortly -- I mean just months ago when you had the assistant secretary of the United States, Christopher Hill, issuing a warning in advance of President Roh Moo-hyun’s trip to Pyongyang saying, “Do not get out of step with the Six-Party process.  I hope whatever you promise is done within the context of the Six-Party promise.”  That is an astonishing thing for an assistant secretary to tell a president of a country, but it represented the views of what the United States was fearing and what they viewed was actually going to take place.

So Lee Myung-bak, as has been pointed out, has this Marshall Plan for North Korea.  But it is so tied into, at this point, the perception of actual progress in the Six-Party talks that the United States for the first time is saying, “This is what has been lacking in our view --” I’m speaking on behalf of the administration, not myself at this point, but what they would say -- “This is what has been lacking in the last number of years in our collective policy towards North Korea.” 

China has leverage and has not used it.  South Korea has leverage through its economic relationship and its programs with North Korea and they are doing it without consideration of progress in Six-Party Talks and, therefore, undercutting the possibility of making significant progress.  So when you back up and take a look at a pragmatic approach by Lee Myung-bak in dealing with North Korea, it is absolutely music to this Bush administration’s ears. 

Now, there is a downside to this because with some exception, that exception being we do not yet know the results of the meeting between Assistant Secretary Chris Hill today in Beijing with the North Korean Head Negotiator, Kim Kye-gwan.  Maybe, the Six-Party Talks will be back on track.  Who knows?  But there is the possibility that the United States will become extremely frustrated out of a lack of progress in the remaining months of the George Bush administration.  There exists, however small, the possibility that there are remains in the administration, those that would advocate a return to a more harder-line policy towards North Korea because of this lack of progress that we are now seeing.

The problem becomes, though, you have a new administration with Lee Myung-bak who comes with a prepared policy towards North Korea.  He will have new ministers and new people that will be looking to implement the President’s policies in his guidance.  That is going to take time.  I do not care what administration and what country.  When you have a new policy that is relatively and significantly different from the previous administration’s policy in terms of what Roh Moo-hyun is doing, it is going to take some number of months to put that fully into effect. 

What you cannot have now is a backtracking of the U.S. position in terms of an engagement strategy with North Korea and playing out the Six-Party process with a newfound partner in the Lee Myung-bak administration on how they will deal in a more reciprocal approach to North Korea.  You cannot undercut the Lee administration; they have to be allowed to let that policy run its course for some number of months. 

Now, the obvious problem is that you may come to a conclusion right before the U.S. election that the Lee Myung-bak policy is not going to work or that the U.S. administration is so frustrated that, regardless of what the relationship is with Lee Myung-bak, it is going to do something different on its own.  We then could have a problem.  I hope that is not the case.

The other thing to take a look at that all falls into this -- a number of people will have asked within South Korea:  What can we do to better our relationship with the United States regarding the region?  The answer is you are already doing it and that is you are reaching out to Japan.  President-elect Lee Myung-bak has indicated, “I do not intend to ask the Japanese.”  It was a question, not a statement of policy but in response to a question.  “I’m not going down that road again.  I’m not going to ask the Japanese to make yet another formal apology for the history that has done that.  I need to move beyond this.  I need to establish a working relationship.  Japan is a critical partner whom I’m going to do that with.”

It is not because of this but the consequence, though, of a selection of this next foreign minister who happens to be the Ambassador to Japan now; Yu Myung-hwan will contribute to a rejuvenation of regionalism, if you will, in a positive sense that the South Koreans will cooperate unlike that they have under the Roh Moo-hyun administration with Japan.  They will increase their cooperation with China and you have the opportunity of some version of the TCOG, the Trilateral Cooperation Oversight Group, that really disappeared under the George Bush administration that was set up and was so successful for the last two years of the Clinton administration.  The opportunity for true coordination between the United States, Japan and South Korea on a unified view of how to deal with North Korea - those are all to the plus side.

The other part here that is a slight change, that is a welcome opportunity, is the distinction of how the Lee Myung-bak administration looks at a peace regime.  Now, the Roh Moo-hyun administration looked at this most likely as a Hail Mary in the last days of its administration:  Let’s force the issue.  Let’s move straight to a peace regime with North Korea.  The Lee Myung-bak administration has put this in the context of, “Let’s enhance the relationship with the United States.  Let’s fix the North Korean nuclear problem and then that will lead to a peace regime.  It is not the other way around.”

So let me wrap up.  What I would say in conclusion is I would take a look at the Lee Myung-bak administration and say there is an opportunity and it will occur for rejuvenation of the U.S.-R.O.K. relationship.  The opportunity for regional cooperation is strong and transparency and how we deal with each other and to remove the element of surprise will be there.  So as long as the United States does not act out in terms of frustration with its own North Korea nuclear policy and allows Lee Myung-bak the opportunity to put into play his view of how best to deal with North Korea in a cooperative manner with the United States, you will find that 2008 will be a significantly rejuvenated year in terms of the U.S.-ROK alliance.

Now, there is one caveat here, and that is we have not yet talked about and we do not yet have the time and it will come that this is all in absence of a North Korean reaction to the Lee Myung-bak administration.  They have not said word one in terms of his proposals, in terms of his inauguration of any significance at all. 

But there will come a point in time after his inauguration as he begins to put into effect his policies, the North Koreans will probe; they will test.  And then the test will come to the Lee Myung-bak administration:  How do you deal a recalcitrant North Korea?  Do you stay the course?  Do you implement your policies?  Do you let them know that Lee Myung-bak’s martial plan is, in fact, going to stay on the table?  It will not be altered because of North Koreans’ bad behavior? 

Or is he going to decide that the North Koreans’ reaction has a negative impact on the economic well-being of South Korea in terms of foreign direct investment and his own plans?  And will he modify this?  Then we begin to have a different question.  With that speculative - that is the future - we have to wait for North Korea.  But I’ll end on a positive note to suggest that all the signs are there for a much more cooperative and realistic approach to U.S.-South Korean relations under a Lee Myung-bak administration.

Nicholas Eberstadt:  Ladies and gents, I think you will appreciate that you have just heard some really comprehensive and discerning assessments of the outlook and I know we have got a lot of questions from a very well-informed audience.  Before getting around to that part of our session, I would like to use my prerogative as moderator to ask our panelists an introductory question.

Guys, our session is called “U.S.-South Korean Relations: A New Era of Cooperation?” with a question mark at the end of the phrase.  It seems to me that the expectation in both capitals is that we are heading towards a new era of cooperation that, in Washington certainly, the new team that seems to be indicated; there are people who are trusted and quite familiar.  The designated Minister of National Defense who is a fellow over at Brookings, the designated Foreign Minister was DCM here in town. The designated Security Adviser has a Harvard degree and a degree from Philips Andover like our own President. 

So the level of atmospheric trust in personalities seems to be quite high.  But could I challenge each of you to speculate just for a moment about what some of the unexpected problems or wild cards lying in front of us over the years ahead might be?  What are some of the things that our policy makers in both countries should be paying special attention to to allow us to take the question mark off the end of our session here?  Could I ask each of you in turn that you spoke, Mark, Bruce, Jack?  Speculate if you care to about some things that should be on our radar screen?

Marcus Noland:  Well, I think number one is, obviously, the outcome of the U.S. election.  I guess, I would in some very crude sense characterize South Korean and U.S. politics in the following sense: The outcome that would probably be -- result in maximal overlap and being in phase is probably center-right or GNP government in Seoul and Democrat government in Washington.  The one that has the least overlap and the maximal out-of-phase is the current configuration at least for the next week.  So I think it is almost by definition that there is going to be improved cooperation.  Depending on how the U.S. elections go, that could be greater or lesser.

Secondly, I just want to reiterate if the KORUS Free Trade Agreement is not ratified -- I mean if it gets rejected by one or the other of the national assemblies, which I think is a possibility, then this, obviously, is a blow to the relationship regardless of who is sitting in the blue [sounds like] and White House is.

Thirdly -- and one thing I, honestly, sitting here, think this panel did not take on very well is how the denuclearization is going to play out.  I mean, we have had now failure on the December 31st deadline and I think that as long as the North Koreans basically do not come clean, as long as you do not get a nuclear declaration that we can all live without the North Koreans, I think that this is going to be a constant and ongoing irritant because it is going to create tension between the South Korean instinct to move forward with economic engagement against a political or security instinct to pull back. 

If the North Koreans do not only not fulfill their obligations under the series of Six-Party agreements that have been reached over the last couple of years but were to do something really provocative, like a second nuclear test, I think this would just reinforce this.  So I would see those as the three kinds of things that could be real jolts to the system over the next year or so.

Nicholas Eberstadt:  Bruce, any thoughts?

Bruce Bechtol:  Well, if you are going to talk about the ROK military, I think there are really two key things.  And the first one is fiscal and the other is really political, although it should be, in my view, more about national security and politics.  The fiscal outlook is you heard that the initiatives that I described in my paper, I think if you talk to many South Korean citizens that are military experts, they would tend to agree with me, including Lee Sang-hee, who, as you know, is now designated as the Minister of National Defense.

The problem that has been created over the past 10 years, if you look at it in terms of numbers and capability, in the past 10 years since Kim Dae-jung and Roh Moo-hyun have been presidents, the North Korean missile inventory has grown; it has become more sophisticated and it has developed its own commanding control.  That is in these two administrations - the Roh and the Kim administrations.  If you look at the long range artillery threat that came down during the Kim Dae-jung administration; that was when the North Koreans moved a large majority of those artillery guns down in the DMZ facing many of them, about a third of them facing Seoul. 

Why do I say this?  Because the key agenda of these two administrations when it came to foreign policy was, first, the Sunshine Policy and then the Policy of Peace and Prosperity where we give these things to North Korea and it means that they make moves that are reciprocal; it just has not happened.  Instead the North Korean threat, particularly, a symmetric threat has increased in ways that it should not have.

And I think you guys may have seen in the Chosun Ilbo last week that NIS just acknowledged that they knew and have known since 2005 that much of the food aid, particularly rice, going to North Korea was going directly to the military; that is just shameful.  You can expect that to end under the Lee Myung-bak presidency, but the problem is to get their military up to the independent capability that it truly needs to be at and not just talk rhetoric about the threat but truly face it is going to be very expensive, that may be problematic to get through the National Assembly.  I really do not believe - and we could talk about this, of course - that they will have that done by 2012; I think they will be moving in the right direction by 2012.

And that moves to the next issue and that is going to be wartime OPCON.  We have some people in the audience who probably disagree with my views on wartime OPCON and that is okay because this will be talked about over the next couple of years.  But, that said, this issue is not going away because the ROKs who are coming into power right now are very serious about their national defense and they do not believe that their country will be ready to stand on its own independently with its military by 2012.  Again, those are going to be the two issues - the fiscal constraints that it is going to take to build that independent capability and not having that ability by 2012 and what that means for wartime OPCON.

Charles Pritchard:  Well, let me be brief because I think Marcus has really captured each of the three things that I would point.  I would just go to one of those, particularly, when he talks about the outcome of the U.S. presidential election.  Of the three candidates, I think because of the emphasis that Lee Myung-bak has placed on how to deal with North Korea, this is probably akin to Kim Dae-jung’s long period of thinking of how to deal with it.  This is not something, I believe, he is going to abandon. 

So my own view is if John McCain were elected president, it would be an absolute disaster in terms of trying to reconcile a McCain presidency approach to North Korea and a Lee Myung-bak approach to North Korea.  So that, hopefully, is not a problem that we will see on the future.

Nicholas Eberstadt:  With that, we have got about 20 minutes for discussion and conversation with the audience.  Let me remind of our house rules here:  First, when you are called upon, could you please identify yourself.  Even if we all know you as friends on this panel, our internet and video audience will not, so please identify yourself.  Secondly, please end your question with a question mark; it makes it so much easier to have a discussion that way.  So questions are welcome. Eric please, over here.   Please identify yourself when the mike comes to you.

Eric McVadon:  Eric McVadon, the Institute for Foreign Policy Analysis.  Professor Bechtol, I would like to ask you a question about missile defense because I get asked this question in Taiwan, in Korea frequently.  It is, essentially, that missile defense does not work well enough.  In other words with Taiwan facing the arsenal of the mainland that it does -- that it is a drop in the bucket.  The complaint that I have heard in Korea is, “Look, it does not do anything with respect to the artillery threat.”  And you suggested that, maybe, there is a solution now and that what really happens is missile defense begins to look like a poke in the eye to China if South Korea gets it.  What do you say to those arguments?

Bruce Bechtol:  Well, let me not talk about China for a minute; let me first address the missile threat.  And then I’ll address the artillery and then I’ll talk about China and I’ll keep it very short.  The missile defense that Japan has is very important.  They understand that North Korea has about 200 No-dongs and that a minimum of those missiles come equipped with a chemical warhead.  So it is not an idle threat.  Can they shoot them down, all or most of them, with that two-tiered system, the SM-3 and the PAC-3s?  By the way, the PAC-3s that they have in Japan, they bought -- their Japanese military guys are using them, not just our guys as you probably know.  That just happened this last year, thanks to the 2006 missile firings, many people believe.

Anyway, Japan is under less threat to missiles than South Korea is.  North Korea has 600 scud missiles B, C, D and extended-range missiles.  Extended-range has an 850-kilometer range.  They can literally target every inch of the South Korean land mass.  And they have the KN-02, which is like the old Russian SS21, which has a range of 120-160 kilometers, very, very accurate and much more mobile than the scuds.  And that will probably be used to target places like Osan and Camp Humphreys, et cetera.  So missile defense is very important to them.

Regarding the Chinese reaction, right now there are 64 systems, PAC-3s, already on the Korean land mass.  They are already going to buy PAC-2s.  A PAC-2 is like throwing a rock at a missile; it is not going to succeed in shooting those scuds down.  They need PAC-3s.  And the SM-2 that the ROK Navy is planning on buying is a far less effective missile; it is really designed for air defense not for anti-missile defense.  Then the SM-3 that the Japanese are buying.  The ROKs are also talking about buying an SM-6 later, which is essentially an upgraded SM-2, not an SM-3.  They really need to get that SM-3 and the PAC-3 to be able to shoot down those scuds and the KN-02s.  And more importantly, this serves as a deterrent factor against North Korea because it makes them rethink their planning.

Now, if we are going to talk about the artillery, the mainstay for the artillery is two-fold, really, and I talked about that briefly in my paper.  That is having effective counter-battery fire.  Although I used to be an intel guy in the Pentagon with DIA; I will tell you, we used to argue about this all the time.  What is the warning for those 240-millimiter long-range systems and the 170-millimeter long-range systems?  What is the warning time for that?  We used to argue it is at 24 hours, at 48 hours.  There is no warning.  They could pull those things out and fire them like that and there is no way we could know about it.

So it is very important that you have good counter-battery fire that is interconnected with air power.  Really, the ROKAF does not have the air power to take those things out and the armored and mechanized forces that North Korea has.  So that is going to be a lot of American air power, too.  That is not going to be anti-missile defense.

Eric McVadon:  [Inaudible]

Bruce Bechtol:  You mean the missile defense?

Eric McVadon:  [Inaudible]

Bruce Bechtol:  Yes.  And, again, the very important thing -- I’m a former Marine and when I first came in the Marine Corps, I used to see guys talking on PRC-77 radios or VHF radio.  Now, they have computer screens and they are tied in to air and they are tied in -- that is the kind of C4 the ROK artillery needs in order to quickly answer the North Korean artillery threat tied in with their power.  Does that make sense to you, sir?

Nicholas Eberstadt:  Thank you.  We have a question in the back of the room.

Male Voice:  My name is [indiscernible].  I’m working for Chosun Ilbo in Washington, D.C.  I would like to ask questions to Mr. Bechtol.  You suggested South Korea’s participation in MD and the PSI.  To a certain degree, I agree with your idea.  But, unfortunately, in South Korea those two concepts transform very badly.  Some South Koreans think that supporting PSI and MD is a problem of supporting war while supporting peace.  Many South Koreans - and, actually, there are numerous demonstration they are indirectly indicating that if South Korea participated in their PSI in MD, it will provoke North Korea.  So do you not think that the Bush -- the United States should give time to the newly-inaugurated Lee Myung-bak administration to consider their MD and their PSI and the newly inaugurated Lee Myung-bak administration have power in Congress?

Nicholas Eberstadt:  With your permission, I would like to ask all of our panelists to respond to the questions, important question.

Bruce Bechtol:  Let me talk about TMD and then PSI first.  You talked about supporting war or supporting peace; I would look at it a third way - supporting deterrence.  That TMD is important.  Right now, the only thing that deters North Korean scud attack is called the United States Army.  The United States provides those PAC-3 systems.  That is the only thing they have on peninsula that is capable of shooting down those missiles.  And if South Korea truly wants to have an independent capability, they need to buy those systems.  And if they wanted to be effective, they need to integrate those systems with U.S. theater missile defense.

The second thing, PSI, I would call that more symbolic than deterrent, obviously.  I mean, PSI as we all know here who studied Korean, and that is most of us, PSI has a mixed record of success.  But it does send an important message to North Korea and that is its neighbor to the south is not going to tolerate proliferations of weapons of mass destruction.

Marcus Noland:  Well, I feel like I have been through a graduate seminar in weapons systems so far this morning in which my knowledge is expanding exponentially from extremely low base.  I would simply say that with respect to PSI, the discussions about some kind of South Korean participation in some form have been emanating from Lee Myung-bak’s advisors, not from demands placed by the United States as far as I know.  So perhaps, his advisors are a little bit ahead of the Chosun Ilbo in this regard.  Thank you.

Charles Pritchard:  [Audio glitch] PSI from a slightly different point of view and that is on tone and atmosphere and for what I believe, it will be a change in the current Roh Moo-hyun administration when the subject came up some several months ago and there was a discussion within the ROK government of joining PSI and at the 11th hour there was a decision, “Well, we cannot do it all,” and that is fine; it is national decision. 

But the distinction that I would make is the announcement out of the Roh Moo-hyun government was, “This is what we will not do in terms of PSI.”  Rather than a simple straightforward statement that says, “We are joining and are going to be able to participate in the following aspects of PSI,” they issued a negative statement rather than a positive statement.  I would anticipate with Lee Myung-bak, as Marcus has pointed out, they are already thinking themselves about this.  But if nothing else, whatever they decide will probably be done in positive terms rather than negative terms.  That in itself will be much appreciated by the United States.

Nicholas Eberstadt:  Any additional questions?  Yes, I see Professor Kil over here.

Jeong Kil:  My name is Jeong Kil, currently with the Georgetown University Asian Studies Program as a research fellow.  I would like to focus on two questions of domestic politics of South Korea.  Election is coming up in April and how do the panelists assess that forthcoming political dynamics in South Korean politics as to the future of U.S.-Korea relations?  And, also, if I may I would like to ask a question of Lee Myung-bak as a CEO-type of presidency experience help or hinder especially in terms of strategic vision and the grand strategy that I do not see on the horizon.  Maybe he has all the brilliant advisers who may come up with that, but so far there is a lack of vision and strategy as I see it.

Nicholas Eberstadt:  Why do we not, with your permission, ask all of our panelists to address that question?  Jack, would you like to take first crack at it?

Charles Pritchard:  Now, there are a couple of things.  One, the April 9th general election, the election for the National Assembly in South Korea, the domestic aspect has a lot to do with KORUS FTA.  I had the good fortune two weeks ago to meet with president-elect Lee Myung-bak and what he was looking for and I think what he said public was the KORUS FTA is a legacy issue of Roh Moo-hyun.  It would be much to his credit if he would actually get the thing done, to include, finish off the issue on beef and then move the issue in the National Assembly to have it voted on up or down.  That is not going to happen - either one of those - and it is precisely because of the November 9th election.

So the reality of no one wants to step forward, either Roh Moo-hyun or Lee Myung-bak, prior to the 9th of April to risk losing a seat or two by forcing an unpopular decision in some sectors, the agricultural sector as an example.  You know, that is politics.  [Audio glitch] The question, though, is how quickly will Lee Myung-bak move after that to resolve the beef issue, to push for a ratification of the KORUS FTA?

With regard to the CEO status, there is one minor point that I would share with you that I was kind of impressed on, the debate over teaching English language there in which the transition team, I think, got way out ahead of Lee Myung-bak.  And Lee Myung-bak had no problem as president-elect of simply grabbing the transition team and saying, “No, that is not what we are doing.  That is not what we talked about.”  So this is a CEO in action.  So whether I can translate that into examples of strategic thought, it gives me the sense that he is a person who will make detailed decisions on his own.

Nicholas Eberstadt:  Mark?

Marcus Noland:  Well, unlike Professor Kil, I am not Korean; I am not a political scientist, and I did not stay at a Holiday Inn Express last night.  So I will refrain from commenting on the National Assembly elections and go straight to the second question.  I think that one of the things that made Lee Myung-bak an attractive candidate to the South Korean people was he has a demonstrated track record for getting things done. 

The South Korean presidency gives the South Korean president a lot of political power.  So in that sense this would fit with a fairly hands-on kind of guy setting the agenda and pushing things through.  He has obviously thought deeply about these issues; he has a deep team of advisors.  So all those things are positive signs about the success of his presidency, especially if he faces a National Assembly that is dominated by his own party.

The only things that would give me pause are that some of his announcements seem to have set expectations quite high.  As I tried to suggest in my opening remarks, seven percent growth annually for 10 years for South Korea would be completely historically unprecedented for an economy at that level of maturity and, quite frankly, is unlikely to be achieved; even seven percent a year for five years, which is the length of his term is unlikely to be achieved.

So if you set expectations high and then fail to achieve them and then perhaps get entangled in some political scandals, then you could see a real change in atmosphere and tone around his presidency and the deterioration of relations, for example, with the press that we see under the current president you could imagine happening in his presidency as well as people feel, like, somehow they have been cheated and they have not gotten what they voted for.

Bruce Bechtol:  Well, unlike Marcus, I am a political scientist and Jeong Woo Kil and I are both former Marines, so we are kind of brothers that way as well.  But I do not know if many of you know this about him; he was an 18-year-old ROK Marine at Inchon in 1950.  So I have got a lot of admiration for Jeong Woo Kil.  But anyway, regarding to your second part of your question, Dr. Kil, the CEO status, I think in my opinion, there will be changes in not just style but substance as well. 

The thing I have been following with extreme interest has been the changes that his transition team wants to make to the cabinet, reducing the number of cabinet level posts and the wall they ran into in the National Assembly thus far.  But we are going to see what happens when they actually get a majority if that happens in April.

Obviously, as an international relations political scientist, I was very interested in seeing that they wanted to do away with the Ministry of Unification, or at least fold it in the Ministry of Foreign Affairs and Trade.  Although many would argue the reason that they want to do that is because those of us who know about the cabinet-level post know that the Ministry of Unification has a reputation for having almost exclusively Far-Left ideologues working there right now, which some believe is the reason for wanting to have that done.  But I’m going to follow that with a lot of interest.

Nicholas Eberstadt:  I think we have got time for one more question.  This will be our last question from this young lady in the back.  If you could wait for the microphone please.

Eun Jung Cho:  Hello, I’m Eun Jung Cho with the Voice of America.  I’m interested in Ambassador Pritchard’s comment in the latter part of his presentation.  He said that Bush administration’s frustration over the lack of progress in the Six-Party Talks could undercut the Lee administration’s new policies.  What could be the possible scenario that could play out and why are you making this comment?

Nicholas Eberstadt:  Jack, let me ask you to respond to this and also we will offer closing or concluding comments you might have and Mark and Bruce.  We will wrap the session at that.

Charles Pritchard:  Well, I’m not predicting it.  What I said was this is an area that could become a problem.  We have seen over a number of years as the efforts on denuclearization run up to obstacles that the Bush administration has tried both positive and negative approaches to North Korea.  That was evident in the over-year-long stalemate from June of 2004 until July of 2005 that [indiscernible] a two-track approach to North Korea.  But it is one in which if the administration does not see sufficient amount of progress because this is the year -- 2008 was Phase III, dismantlement.  Now, we have not even gotten through Phase II, disablement. 

So for the administration to leave office, having repaired the damage that it allowed to occur, allowing the North Koreans to reprocess on two occasions, spent fuel in the extraction of plutonium for which they now have between 8 and 10 nuclear weapons’ worth of plutonium, they need action; they need progress.  So it is quite possible that lack of progress would force them to take additional steps that may not be compatible with Lee Myung-bak’s administration.

So my point is, as I stated earlier, every new administration, Lee Myung-bak needs a period of space in which to implement his policies to see if what he has proposed can affect change in North Korea.  If it does, terrific, and then the administrations will get along fine.  If it does not, then you may have a little bit of a problem on the North Korea issue.  I do, as the panel heading suggests -- do see an era of cooperation.

Marcus Noland:  I would just conclude by saying the U.S.-South Korea relationship has been enormously beneficial for both countries.  And as we have outlined this morning, that relationship faces a number of challenges and a variety of dimensions.  But I’m quite confident that the trend is towards closer and more effective cooperation in surmounting those challenges that we will face in the future.

Nicholas Eberstadt:  Bruce, last word.

Bruce Bechtol:  I think the future is very bright for this alliance, for the cooperation we have.  My personal opinion, my personal views are rather different than Jack’s; I do not think the North Koreans have any intention of ever completely dismantling their nuclear program.  So I think that his whole process is destined to have problems and I think that they will work with us on those issues and the good thing about that is I think that there will be close cooperation and more transparency as they do.  Thank you.

Nicholas Eberstadt:  Ladies and gentlemen, please join Misha and me in thanking our presenters.

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