News

South Korea-United States nuclear envoys discuss North Korea

Andrew Jung

Last week, South Korea’s top nuclear envoy Lee Do-hoon, who serves as special representative for Korean Peninsula peace and security affairs, visited Washington to meet his United States counterpart Stephen Biegun, the U.S. Special Representative for North Korea. On June 19th, 2019, both Lee Do-hoon and Stephen Biegun participated in Washington think tank Atlantic Council’s East Asia Foundation Strategic Dialogue.

Stephen Biegun disagreed with the view that the Hanoi summit between U.S. President Donald Trump and North Korea’s leader Kim Jong-un was a failure as it ended without an agreement on denuclearization. Biegun admitted that the United States and North Korea don’t have a consensus on complete, verifiable, irreversible denuclearization. He also said both countries need to continue working-level talks but pointed out that the North Korean negotiators are not empowered to negotiate on denuclearization, and only Kim Jong-un has the authority. Biegun expressed hope that the United States and North Korea will resume nuclear talks, that the United States is not setting preconditions, and that the North Korean negotiators must be able to discuss denuclearization at the working-level talks.

Lee Do-hoon used his time to urge North Korea to hold a summit with South Korea’s President Moon Jae-in before U.S. President Trump’s visit to Seoul on June 28-29 after both U.S. President Trump and South Korea’s President Moon Jae-in participates in the G20 Summit in Osaka, Japan. Lee Do-hoon also confirmed South Korea’s support for sanctions against North Korea but only as a tool to encourage negotiations on denuclearization. On June 20, 2019, when speaking with the media, Lee Do-hoon views Kim Jong-un’s recent diplomatic outreach, such as his letter to President Trump and hosting the state visit of China’s President Xi Jinping as a “positive trend”. He hopes such overtures can lead to resumption of nuclear talks between the United States and North Korea, as well as future summits among the three countries.

While Lee-Dohoon and Stephen Biegun were speaking about their respective governments’ stance towards North Korea, United States and South Korea already took various actions. After Stephen Biegun spoke at the Atlantic Council conference about the Trump administration’s hope for resumed dialogue with North Korea that does not require preconditions, the U.S. Treasury Department implemented new sanctions that targeted a Russian financial firm accused of supporting North Korea’s nuclear activities, and warned against any attempts to circumvent the sanctions to provide North Korea access to the global financial markets. This can be perceived as the U.S. government messaging their two-track approach of sanctions and dialogue simultaneously, which is rare. On June 21, 2019, U.S. President Trump extended existing sanctions against North Korea for an additional year. Read the White House statement here.

On June 21, 2019, South Korea’s government expressed hope that the North Korea-China summit that was also happening that week will lead to resumption of denuclearization talks. The Unification Minister Kim Yeon-chulmentioned that South Korea has urged North Korea to hold an inter-Korean summit before U.S. President Trump’s visit to Seoul, calling it “necessary and desirable”. According to him, while there are no communications between North Korea and South Korea to prepare for the summit, liaison officers from the two Koreas are in touch. Kim Yeon-chul considers the outcomes of the North Korea-China summit and the G20 meetings where China’s President Xi Jinping will meet with U.S. President Trump as setting conditions to resume the denuclearization talks with North Korea.



South Korean Government Faces New Arbitration from U.S. Real Estate Developer

Jaemin Baek

On the heels of Elliott Management’s arbitration against the Korean government late last year, U.S. real estate developer Gale International submitted a notice of intent to file for arbitration with Korea at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) to pursue damages from what Gale claims are illegal actions by the Korean government that harmed Gale’s investments and profits from its Songdo International Business District development project. Gale claims that the actions of the Korean government cost it more than $2 billion in damages. Gale must engage in a 90-day period of forced negotiations with the Korean government before it can begin procedures for arbitration.

Gale was originally invited by the Incheon Metropolitan Government to build a new city on approximately 1,500 acres of reclaimed land in 2001. In 2002 Gale formed a joint venture (JV) with Korean construction company POSCO E&C to begin planning for the project with Gale owning 70 percent of the JV. The JV broke ground in2005 and construction continued until disputes with its partner, POSCO E&C, over profit and cost sharing agreements eventually halted construction. The Korea Board of Audit and Inspection would eventually find that the JV was unable to attract overseas investment in 2010 and improperly received $179 million from the JV in dividends. Following the Korea Board of Audit and Inspection’s findings, the Incheon Metropolitan Government ordered the JV to sell land back to the city and later POSCO E&C would, what Gale claimed was improperly done, sell Gale’s investment in the JV to two Hong Kong-based companies.

The Moon administration is now facing four separate major international arbitration cases seeking damages from actions made under previous administrations. Schindler, a European maker of elevators, is claiming that the Korean government illegally approved efforts by Hyundai Group to dilute Schindler’s voting powers while Elliott Management, a U.S. activist investor, claims that the Korean government illegally ordered the National Pension Service, Korean state-owned corporation which was one of the largest owners of Samsung E&C shares, to approve a merger by Cheil Industries and Samsung E&C. Mason Management, another U.S. activist investor who held a minority share in Samsung E&C, is also seeking damages from the Cheil Industries-Samsung E&C merger.



Xi Jinping’s First Visit to North Korea Raises Many Questions, Few Answers

John Seymour

Chinese Leader Xi Jinping conducted a two-day visit to North Korea this past week to meet with North Korean Leader Kim Jong-un. Though Kim has visited China four times previously, including in January, 2019, Xi’s trip to Pyongyang ended a conspicuous lack of official visits by Chinese leaders to the country whose relationship with China Mao Zedong once described as “as close as lips and teeth.” A Chinese head of state last visited in 2005, when then-President Hu Jintao travelled to the country to meet with erstwhile North Korean leader Kim Jong-il.

The two leaders focused their discussions on bilateral relations between their two countries, and they each made several outward gestures towards the improvement of Sino-North Korean ties. Before the visit, Xi wrote an article that appeared in the Rodong Sinmun, North Korea’s primary newspaper. In the article, Xi wrote that China and North Korea will “strengthen our strategic communication” and expand relations across many civilian sectors, such as education and sport. As for the North Korean side, they welcomed Xi with an estimated crowd of 250,000 people and held festivities in the visiting leader’s honor.

Xi and Kim each entered their talks with distinct goals related to Sino-North Korean relations. With an upcoming meeting with U.S. President Donald Trump at next week’s G-20 Summit in Osaka, Japan, Xi could have viewed improved ties with the North Korean regime as leverage in negotiations with the United States as the trade war continues. As for Kim, the breakdown in U.S.-North Korean dialogue following the end of February’s failed summit meeting between Trump and Kim in Hanoi could have encouraged him to turn to China for sanctions relief and humanitarian aid as North Korea deals with its worst drought in decades.

Finally, this trip could have reverberations south of the 38th parallel as well. Xi emphasized the need for renewed discussions between U.S. and North Korean leaders, stating that he hopes that such talks would “get results.” Given the increasing frequency of Xi-Kim meetings, perhaps Xi is aiming for China to act as the middleman for U.S.-North Korea negotiations, a role oft taken by South Korea in recent years.



This Week in History: United States President Truman orders U.S forces to South Korea

On June 27, 1950, United States President Harry Truman ordered U.S. forces to South Korea to repel an invasion from communist North Korea. His reasoning was that the United States will enforce the United Nations resolution calling for an end to hostilities after North Korea invaded South Korea earlier on June 25th. Truman also announced that the United States also wants to prevent the spread of communism to Asia and his decision had the backing of most of the U.S. Congress and the American public. Read Truman’s statement here.



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