A Thesis Submitted for the Degree of PhD at the University of Warwick Permanent WRAP URL: http://wrap.warwick.ac.uk/78614 Copyright and reuse: This thesis is made available online and is protected by original copyright. Please scroll down to view the document itself. Please refer to the repository record for this item for information to help you to cite it. Our policy information is available from the repository home page. For more information, please contact the WRAP Team at: [email protected] warwick.ac.uk/lib-publications South Korea's Sunshine Policy, 1998-2002: Domestic Imperatives and Private Interests by Jeong-yong Kim A thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Politics and International Studies University of Warwick Department of Politics and International Studies (PAIS) May 2002 Contents Detailed Table of Contents iii Abstract VI List of Tables vii Declaration ix Glossary x Introduction 1 Chapter 1. The theoretical framework: Beliefs and economic engagement policy 12 Chapter 2. Conceptualising the North Korean security problems in the 1990s 59 Chapter 3. South Korean policy change: Consistent engagement with North Korea under the Kim Dae-jung government 116 Chapter 4. The impact of international and domestic factors on Kim-Dae-jung government's policy shift 150 Chapter 5. Impact of President Kim Dae-jung's beliefs on North Korea policy 188 Chapter 6. Case study of Hyundai Group's North Korea business: Centred on the Mt. Kumgang project 223 Conclusion 272 Reference list 287 ii Detailed Table of Contents Introduction 1 1. The theoretical framework: Beliefs and economic engagement policy 12 1.1 Global security conceptions 13 1.1.i Political realism and the Cold War era 13 1.I.ii International security agenda after the Cold War 15 1.1.ii.a Domestic instability and the limitations of military power 15 1.I.ii.b Economic engagement as an alternative security approach 18 1.2 Economic interdependence and national security 20 1.2.i Literature review on the relationships between economic interdependence and national security 20 1.2.ii Types of economic security policy 24 1.3 Business-track diplomacy 28 1.3.i Prerequisites of business-track diplomacy 31 1.3.i.a Economic capability 31 1.3.i.b Policy-making will 32 1.3.ii Policy-making will and foreign policy analysis (FPA) 34 1.4 Theoretical approaches in FPA 35 1.4.i International system approach 35 1.4.ii Domestic level approaches 36 1.5 Defining the beliefs approach 40 1.5.i Basic assumptions of the beliefs approach 41 1.5.ii Three types of impact of beliefs on foreign policy 43 1.5.ii.a Beliefs as road-maps 44 1.5.ii.b Beliefs as information screens 45 1.5.ii.c Beliefs as decision-making rules 49 1.5.iii Shortcomings and methodological concerns of the beliefs approach 50 1.6 Methodological framework on South Korean policy-making towards North Korea: International system approach towards a synthetic approach 53 Conclusion 57 2. Conceptualising the North Korean security problems in the 19905 59 2.1 Military security policy of the Korean Peninsula during the Cold War era 60 2.l.i Division of Korea 60 2.1.ii The security environment of Korean Peninsula in the Cold War period 61 2.1.ii.a International security structure 62 2.1.ii.b Inter-Korean competition during the Cold War 66 2.1.ii.c. The impact of military security on the domestic politics of the two Koreas 68 2.2 Military tensions on the Korean Peninsula in the post-Cold War period 72 2.2.i Nuclear crisis 72 2.2.ii Continued military tensions and instability on the Korean Peninsula 79 2.3 The causes of military crises: North Korea's total insecurity in the 1990s 81 2.3.i North Korea's loss of major allies 81 iii 2.3.ii North Korea's economic insecurity 85 2.3.ii.a Food sector 85 2.3.ii.b Energy sector 88 2.3.ii.c Trade sector 90 2.3.iii North Korea's survival strategies 94 2.3.iiLa Pyongyang's 'southern' and tongmibongnam policy 94 2.3.iii.b Pyongyang's military provocation and brinkmanship 99 2.3.iv North Korea's economic insecurity: vulnerability and opportunity 102 2.4 Post-Cold War South Korean security and North Korea 104 2.4.i North Korean threats 105 2.4.i.a South Korea and military threat 105 2.4.i.b South Korea and political and social threats 107 2.4.ii Security strategy 112 Conclusion 114 3. South Korean policy change: Consistent engagement with North Korea under the Kim Dae-jung government 116 3.1 Roh Tae-woo and Kim Young-sam governments' policies towards North Korea 116 3.l.i Recognition of the importance of the economic engagement approach 116 3.1.ii Limited engagement policy: Jeongkyungyeonkae principle 120 3.1.iii Domestic politics: sources of inconsistent economic engagement policy 126 3.2 Active and consistent engagement with North Korea under the Kim Dae-jung government 132 3.2.i Economic cooperation 132 3.2.ii Socio-cultural exchanges 140 3.2.iii Internationalisation of the engagement approach towards North Korea 144 Conclusion 148 4. The impact of international and domestic factors on Kim-Dae-jung government's policy shift 150 4.l External factors 151 4.1.i North Korean factor 151 4.1.i.a Continuation of tongmibongnam policy and military aggressiveness 151 4.l.i.b Signs of North Korea's stability and economic reform 155 4.l.ii US factor 157 4.1.ii.a Soft-landing policy 157 4.1.ii.b Difficulties in execution of the engagement policy towards North Korea 158 4.l.iii Japan factor 165 4.1.iii.a Support for the soft-landing policy 165 4.l.iii.b Japan's immobilism and US-Japan security arrangement 166 4.2 Domestic factors 171 4.2.i Democratisation 171 4.2.ii Financial crisis 174 4.2.iii Ruling party and 'shared government' 176 4.2.iv Opposition party 178 iv 4.2.v Media 181 4.2.vi Business community 183 Conclusion 185 5. Impact of President Kim Dae-jung's beliefs on North Korea policy 188 5.1 Origin of Kim Dae-jung' s "sunshine policy" 188 5.l.i Kim Dae-jung's "three-stage unification plan" in the Cold War era 189 5.1.ii Recognition of the three-stage unification plan in the 1990s 193 5.!.iii Sunshine policy as a "causal belief' 195 5.l.iii.a Establishing the framework for the sunshine policy 196 5.1.iii.b Use of the term "sunshine policy" and the logic of historical analogy 198 5.2 Kim Dae-jung government's sunshine policy 202 5.2.i Views on North Korea and the international security environment 202 5.2.ii Flexible reciprocity: operational strategies 209 5.3 Control over the decision-making system 215 5.3.i Structure of the National Security Council (NSC) 215 5.3.ii The behaviour of related ministries on North Korea Policy 218 Conclusion 221 6. Case study of Hyundai Group's North Korea business: Centred on the Mt. Kumgang project 223 6.1 Mt. Kumgang project before the Kim Dae-jung government 224 6.2 Actor's will oflaunching the Mt. Kumgang project 226 6.2.i Hyundai Group and Chairman Chung ]u-young 227 6.2.ii North Korea's business will 230 6.2.iii Kim Dae-jung government 233 6.3 Impact ofMt. Kumgang tourism on engagement with North Korea 238 6.3.i Enlargement of inter-Korean cooperation 238 6.3.i.a Private sector 238 6.3.i.b Public sector 242 6.3.ii The effect on public support for engagement policy 244 6.3.iii Confidence-building between the two Korean governments 248 6.4 Financial crisis of the Mt. Kumgang project 251 6.4.i Hyundai Group's financial woes and disintegration 252 6.4.ii Profitability ofMt. Kumgang tourism 255 6.4.iii Efforts to save Mt. Kumgang tourism 257 6.4.iii.a Hyundai Asan's requests 257 6.4.iii.b South and North Korean governments' efforts 260 6.5 South Korea's limited economic capability for pursuing business-track diplomacy 263 Conclusion 270 Conclusion 272 Reference list 287 v Abstract The end of the Cold War has brought both uncertainty and opportunity for states interested in designing their own security policies. Alternative methods, other than military solutions, should be exploited to prevent insecurity and instability. This study is concerned with South Korea's security approach towards North Korea in the post-Cold War era and in particular how South Korea can use non-military tools to prevent military conflict in the Korean Peninsula and to build mutual confidence between the two Koreas in the long-run. This thesis also presents an analysis of both the need and the opportunity for South Korea to adopt a comprehensive economic engagement strategy towards North Korea in the post-Cold War era in order to achieve these goals. It argues that South Korea's implementation of economic engagement with North Korea requires its policy-makers' strong policy-making will for an active and consistent engagement posture. Then, this study demonstrates the important role of President Kim Dae-jung's strong causal beliefs about the necessity of engagement measures to address the post-Cold War North Korean security problems on the Kim Dae-jung government's policy-making in favour of comprehensive engagement with North Korea.