Seoul sees opportunity in Pyongyang crisis

By Bill Tarrant

SEOUL (Reuters): South Korea President Kim Dae-jung seems to be mindful of an old Confucian proverb when it comes to dealing with North Korea: "There is much confusion under the heavens; the situation is excellent".

Kim told a National Security Council meeting this week that now is the time to press ahead with his "sunshine policy" of reconciliation with Pyongyang, despite rising tensions over its suspected underground nuclear project and missile program.

"Let's make an opportunity out of this crisis," he told the meeting.

Some analysts here and abroad fear a major security crisis could erupt on the Korean peninsula because of North Korea's missile tests and suspicions it is secretly reviving its nuclear weapons program.

The twin developments have been accompanied by bellicose rhetoric from Pyongyang's official media and a series of North Korean infiltrations into South Korean waters.

And North Korea has underlined the military basis of its regime by appointing the reclusive and enigmatic Kim Jong-il chairman of the National Defense Commission and making that post the highest in the state.

All this has transpired since President Kim offered an olive branch to the North when he took office last February.

His sunshine policy seeks to ease tensions on the world's most militarized border by promoting contacts through business and cultural links and postponing the issue of reunification.

The North's lukewarm response to his initiative has led some to believe that key elements of North Korea's powerful military are trying to thwart it.

This theory says the military fears Kim's "sunshine" will eventually undermine the basis of its power and privileges in a country whose economy is shattered and whose people are starving.

Kim's policy has also come under fire from conservatives in the South who say it seems to be backfiring by rewarding North Korean misbehavior.

But Kim -- who for years was portrayed as overly-sympathetic to Pyongyang when he was a pro-democracy dissident under South Korean military rulers -- seems to be drawing on Korea's Confucian tradition to find strategic advantage in the crisis.

He has put forward a "package" of proposals aimed at breaking a diplomatic stalemate with North Korea and fundamentally altering the state of war that has existed on the peninsula for the past half-century.

The package proposes the United States lift trade sanctions and start the process of opening ties with North Korea.

South Korea and the United States would pledge food and development aid and deliver on promised nuclear reactors and fuel oil supplies under the so-called "Agreed Framework".

Under that agreement, which defused a confrontation in 1994 that diplomats say took the peninsula close to a war, North Korea gave up its nuclear program.

But the impasse over Washington's demands to inspect the vast "hole in the ground" that North Korea is digging near the site of a mothballed Soviet-era reactor is threatening to unravel the Agreed Framework.

The U.S. Congress will cut off money for the vital heavy fuel oil supplies by May 1 unless the Clinton administration reaches agreement on inspecting the site.

That could lead North Korea to repudiate the agreement, overtly revive its nuclear weapons program and resume testing missiles that could deliver them.

From its now shut-down Soviet reactor, North Korea could produce "enough plutonium in a matter of months to build several nuclear weapons", U.S. ambassador to South Korea Stephen Bosworth said in a speech last week.

Some experts in Seoul do not rule out the possibility that Washington could order a "surgical strike" against the North's suspected sites if the scenario deteriorated that far.

President Kim's "package" is basically a restatement of proposals he has made in the past but is being put forward at a time of intensified diplomacy on the peninsula.

Kim's proposals could get an airing at four-party talks in Geneva on Jan. 18 among the two Koreas, China and the United States.

The talks aim to replace a now-fraying truce, which halted fighting in the 1950-53 war that pitted Chinese-backed North Korea against U.S.-led United Nations forces, with a permanent peace agreement.