Sun, Apr 28, 2002 page11

• Hyundai's ferryboat diplomacy may have its day

  • By Patrick Smith / BLOOMBERG
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  Poor old Hyundai Asan Corp, you might have said just a couple of months back.

  A year ago the resort subsidiary of the large, crumbling South Korean industrial group was poised to play a big role in President Kim Dae-jung's "sunshine policy" toward his estranged northern neighbor. Then all seemed to come to naught overnight.

  Washington mixed blustery winds with Kim's sunbeams, and you didn't hear much about Hyundai Asan anymore. The resort it erected in the mountains 200km east of Pyongyang seemed destined for weeds and white-elephant status.

  Suddenly, it isn't quite over yet. A remarkable thaw between Seoul and Pyongyang began earlier this month, ending a five-month freeze in relations. Even the Americans are talking about talking.

  So Hyundai Asan, it seems, could yet have its day as another of those business-as-diplomacy deals Asians seem to prefer these days. Myself, I foresee an initial public offering and more of those Middle Eastern subsidiaries the Koreans used to go in for, only this time it's resorts in enemy territory instead of construction.

  In truth, things are not terrific at Hyundai Asan. It sometimes resembles a bit of flotsam in the rough seas created by the breakup of the group's larger units. A couple of months ago, Hyundai Heavy Industries returned 10 percent of the resort unit's stock for free so that Heavy could meet legal requirements attaching to its separation from the group.

  The Kumgang Mountains resort, intended to bring North and South Koreans together in a setting conducive to friendship, still requires considerable subsidies from Seoul. The crowds from the South are thin, and the four river ferries that used to carry visitors to the resort have been cut back to one.

  But never mind all that: These are not late days anymore but early. So it has seemed since Lim Dong-won, Kim Dae-jung's special envoy, spent four days in Pyongyang, during which he met with North Korean leader Kim Jong-il. Lim went home with an agreement to restart talks between Seoul and Pyongyang and a statement from the North that it would receive a US envoy.

  The day Lim arrived, North Korea promised to resume talks on its nuclear facilities with Washington and internationally recognized inspectors. Four days later Seoul and Pyongyang agreed to revive their all-but-abandoned effort to reopen road and rail links between the two sides of the peninsula. Two days after that, North and South announced their intention to resume their family reunion program.

  And now, hallelujah, American officials are scheduled to restart their own talks with Pyongyang. I guess you can be evil and still be worth talking to -- a comforting thought for those who do not consider open conflict across the Asian continent as an answer to the world's current tensions. In Washington last week, Choi Sung-hong, South Korea's foreign minister, urged the US administration again to stay with the program and start talking with the North Koreans instead of at them.

  It has all come a piece at a time, but it adds up to a potentially significant turn in the North-South drama. Fresh from his miscalculated "axis of evil" speech, President George W. Bush was preparing just a month ago to confront Pyongyang over the nuclear question.

  Now it looks as though Kim Jong-il, whose commercial envoys have been roaming the world in search of investments and aid, may be preparing to look outward.

  We'll have to wait and see, but it could be an interesting summer and autumn.

  There is debate in Washington now as to whether this quick shift in atmosphere reflects the Bush administration's tough talk or whether Seoul's sunshine policy is having its intended effect.

  Temperamentally, I confess I prefer the latter theory, though it is likely that an indeterminate combination of both Seoul's carrot and Washington's stick has been at work.

  Washington's stance, we ought to recognize, has not even been all stick. Pyongyang agreed to restart talks on its nuclear-power program only after Washington said it would respect the Agreed Framework of 1994, under which it is supposed to be building two safe reactors for the North in exchange for Pyongyang's agreement to drop a nuclear-power program that has worried proliferation experts. These reassurances are something Washington ought to have offered long, long ago.

  Among the most interesting aspects of this new spate of diplomatic activity is that it seems to put Koreans in the lead -- a position this column has argued numerous times they ought to have occupied from the start of the sunshine era. No one in Washington will acknowledge this. But it looks as if, with their typical perspicacity, the Koreans have redeemed the Kim approach even as conservatives in both Washington and Seoul did all they could to bury it. Again, we'll have to see.

  Personal contacts, commerce, family reunions, tours, and all the other unofficial ways estranged people connect have an important place in this exercise. They are a kind of basso ostinato for the diplomats who gather and gab.

  I'm not much for group resorts in the Confucian style, especially as the tradition is interpreted north of the 38th parallel.

  But those subsidies Seoul doles out for Hyundai Asan's resort are worth every won they cost South Korean taxpayers.

  Patrick Smith is a former correspondent in Asia. The opinions expressed are his own.
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