NORTHEAST ASIA PEACE AND SECURITY NETWORK ***** SPECIAL REPORT ***** January 29 1998 The following is the complete transcript of remarks made by Stephen Bosworth, US Ambassador to the Republic of Korea, to the Korean-American Society and the American Chamber of Commerce January 23, 1998. Bosworth discussed the present and future course of US-ROK relations, particularly in regards to the current economic crisis. He also discussed developments in relations with the DPRK, saying that the US would welcome direct ROK-DPRK dialogue. ------------------------------------------------------------ TRANSCRIPT: 1/23 REMARKS BY AMB. BOSWORTH ON U.S.-KOREA RELATIONS "The Korean-American Relationship: Continuity and Change" Remarks to the Korean-American Society and the American Chamber of Commerce by The Honorable Stephen W. Bosworth Ambassador of the United States of America Seoul, January 23, 1998 Professor Song. Mr. Brown. Ladies and gentlemen. I am very pleased to be here today. I am also very pleased to finally be in Korea. This is my first public speech since my arrival a few short weeks ago, and I can think of no more appropriate audience than the Korean-American Association and the American Chamber of Commerce. As the United States Ambassador to Korea, I have one primary mission: to maintain and strengthen the relationship between our two countries. This mission is, of course, particularly important and challenging today in a time of wrenching change in Korea and indeed elsewhere in East Asia. Nonetheless, the main point I want to stress today is that the fundamentals of the Korean-American relationship, our deep friendship and our commitment to each other, have not changed and will not change. The shared values and common interests which have bound us together for fifty years continue to keep our alliance strong and healthy now and will do so in the future. I have, of course, arrived here at a particularly difficult time. Korea now faces what may be its greatest challenge since the miracle on the Han began to lift this country out of poverty into prosperity. The economic miracle of the past thirty years earned Korea the respect and admiration of the world, and Korea grew to become the eleventh largest national economy in the world. Koreans have justly taken pride in this tremendous accomplishment, perhaps the greatest economic success story in history. We can understand, therefore, the sense of loss and anxiety Koreans now feel when that success seems threatened. But Korea's past accomplishments have not suddenly evaporated. Korea remains a vibrant country with a vast net worth and rich human resources. Korea has a large stock of productive assets, modern plants and equipment, a skilled and dedicated work force and an enviable national ethos of saving and hard work. All this makes me confident that Korea will not only overcome this current crisis but will actually emerge from it stronger, healthier, and more competitive internationally. Because this is such an important time for Korea, it is also an important time for the United States and for the Korean-American relationship. I want to talk today about our relationship and its constancy and continuity, not withstanding the profound changes now underway in Korea and the rest of the world. First, the Korea-U.S. security alliance. The United States is committed to the stability of the Korean peninsula and to the security of the Republic of Korea. This commitment is clear, firm, and unchanged. 37,000 men and women of the U.S. Armed Forces serve in the Republic of Korea as a concrete manifestation of the American security commitment. These forces and other American forces in the region are dedicated to help deter aggression and, together with the Armed Forces of the Republic of Korea, to defend Korea if necessary. The security of Korea is essential to stability and security in East Asia and the Pacific. It is a vital national interest of the United States. The situation on the Korean peninsula -- what one might call the correlation of forces between North and South -- has changed dramatically over the past several years. The long period of intense competition between North and South Korea is essentially over. By all standards of measurement -- economics, politics, and international standing -- South Korea has won. Meanwhile, North Korea is under great stress. Since the loss of support from the former Soviet Union and a reduction of assistance from China, the North Korean economy has been in an extended decline. Agricultural production has fallen sharply, not simply because of bad weather, and the North Korean people do not have enough to eat. Industrial production has declined drastically. There is a severe shortage of energy, and electricity blackouts and unheated buildings have become the norm. But North Korea remains a closed, opaque society. It is very difficult to predict developments within North Korea or to be confident of how the regime will ultimately respond to its growing economic and societal crisis. The North Korean military threat remains real, and we must remain alert and militarily prepared. There are some small, tentative signs of promise. The Four Party Talks have begun. We do not expect rapid process, but it is important to have this mechanism for dialogue. The Agreed Framework between North Korea and the United States remains in place, and the North Korean nuclear threat remains frozen. KEDO, where South Korea plays a central role, has broken ground on the Light Water Reactor project. More than one hundred South Koreans are now living and working at the LWR site in North Korea, and thousands of South Korean engineers and workers are scheduled to follow in coming years. For its part, the United States continues discussions with North Korea about soldiers missing in action from the Korean War and about the opening of liaison offices in Pyongyang and Washington. Business contacts between the Republic of Korea and the North have been taking place on a limited scale. So, there is perhaps a small measure of positive change or at least the possibility of change. Clearly, the Republic of Korea and the United States must continue to work hand-in-hand in dealing with North Korea. We must continue to be completely open with one another in regard to our dealings with North Korea. The United States must remain sensitive to the fact that while we have important interests with North Korea, the issue of how to deal with the North is for South Korea at the very heart of fundamental questions concerning the future of the peninsula and the Korean people. The United States recognizes that the reunification of Korea is the ardent aspiration of all Korean people. We support this aspiration and peaceful efforts to attain it. We are agreed that it is important to offer North Korea an opportunity to emerge from its self-imposed isolation if it chooses to do so. We must continue to hold out to the North Koreans the prospect of their constructive engagement with the international community in return for concrete reduction of their military threat and responsible international behavior. The United States would welcome Pyongyang's willingness to engage in direct, bilateral dialogue with South Korea. In the meantime, our security alliance is solid, and the Republic of Korea and the United States are both determined to keep it that way. We can afford to be patient. The second element of our relationship is economic. In economics as in security, ours is a relationship formed by mutual interest that provides mutual benefit. Our economic ties have evolved greatly over the years. What was once a relationship of aid has become a relationship of trade and investment. With maturity have come complexity, competition and at times even friction. The friction does not, frankly, worry me very much as long as we handle it properly. It is inevitable that we will have occasional disagreements over trade and market access. But we must treat these as disagreements between friends. As friends, we have the obligation to discuss our disagreements openly and honestly in a determined effort to resolve them under the international rules and standards to which we are both committed. In this same spirit of friendship and in a context of our common interest, the United States has sought to play a helpful role in Korea's effort to overcome the current economic crisis. Let me say clearly that our preeminent interest is to do all we possibly can to assist Korea in regaining financial stability and economic health as soon as possible. We act from a deep sense of friendship, but we also have enormous economic interests in Korea that would be threatened by protracted financial instability here. American exports and American jobs are at risk. We also recognize that a strong, dynamic Korean economy is crucial to the stability of the entire region. We have deliberately not tried to take advantage of the current crisis to advance our bilateral trade agenda on autos, agricultural products or other issues. Our concerns in these areas have not gone away, but our immediate goal is that Korea overcome this crisis as rapidly as possible. We also believe that achievement of the new goals of Korean economic policy -- openness, transparency, and efficiency -- will not only bring great benefit to the Korean people but will also have the effect of reducing, even eliminating, some of the barriers to imports here which have been sources of friction in our trade relationship. Korea's road back to economic vitality is a road paved with change: the restructuring and opening up of the financial system, reform of current practices of corporate governance, and much greater transparency at all levels. These are words we have all heard frequently in recent weeks. Most importantly, they are words being spoken not just by foreigners but by Koreans. I am confident that Koreans, including of course the President-elect, have made these words and the program of financial stabilization and economic reform their own. Indeed, we are impressed that Korea seems determined to go beyond the commitments embodied in the IMF program, to move further and faster in a determined effort to advance down the road to a rapid resumption of balanced economic growth. Korea has begun to make progress in regaining the international confidence that is so essential to financial stability. But further steps are clearly needed. In particular, Korea must move expeditiously in its discussions with international banks to put in place arrangements to extend the maturity of short-term foreign loans falling due in the next several months. Beyond these immediate moves, Korea must continue its longer term efforts already launched of economic reform, restructuring, and liberalization. Progress in all these areas is crucial if foreign investors, particularly direct investors, are going to view Korea as an attractive place to do business. I realize that for reasons of history the prospect of greater foreign investment here is a cause of concern for some Koreans. I believe such concern is unfounded in the present international economic environment. To the contrary, a greater presence of foreign firms in Korea, providing employment for Korean workers, forcing Koreans companies to become more efficient, and helping to sell Korean products here and abroad, will be a great source of strength for the country. Let me take just one example. Late last year, just before the crisis erupted, an American firm, Procter & Gamble, decided to buy through a friendly merger and acquisition a controlling interest in a Korean company, Ssangyong Paper. This decision was clearly a good one for the American company. But what is good for Procter & Gamble is also good for Korea. Not only will Procter & Gamble continue to upgrade the company it bought with new technology from abroad, but P&G has also made Ssangyong Paper part of its global production and marketing network, preserving Korean jobs and giving Korea a new source of exports to Asian and other markets. This is just one example of how foreign direct investment can help make Korea more competitive internationally and accelerate Korea's recovery. Similar direct investments by foreign financial services firms in Korea should also be welcomed, again as a way of improving efficiency and aiding in the development of efficient Korean capital markets. The need for these and other changes is not unique to Korea. Many other countries, including my own, have found in recent years that the economic policies of the past and our old ways of doing business do not work in the complex, highly competitive global economy of the 1990s. Such changes, particularly when they must be made rapidly, bring dislocation and anxiety, and I do not want to minimize the human costs involved. Indeed, Americans have still vivid memories of the pain involved in our own economic adjustment. It was not long ago that the United States was suffering from surging inflation, a level of unemployment higher than at any time since the great depression, and a loss of our international competitiveness. Adjustment and restructuring were not easy. But the result has been extremely positive as Americans now enjoy the fruits of a long, stable economic expansion. Again, I am confident that Korea can do the same. The third element of our relationship is philosophical -- our shared commitment to democratic values and democratic practice. As Korean democracy has developed strongly in recent years, democracy has become in a real sense the cement of the overall relationship. The economic crisis of the past several weeks has tended to overshadow Korea's enormous political success of this same period. At a time of severe national stress the Korean people went to the polls and chose a new president in a free, open, and closely contested election. As a result of this election, presidential power in Korea is now being smoothly transferred to the former political opposition, to an individual whose entire political life has been spent in the determined pursuit of democracy, often at great personal risk and cost. It is interesting to me that before the election, some observers cited the political uncertainty surrounding it as a major source of financial instability. Since December 18, that same election is widely seen as a great source of stability. The United States congratulates President-elect Kim Dae Jung on his victory. We also congratulate the other candidates for their willingness to participate in an open democratic process. Free choice among competing candidates is the vital essence of democracy. Most of all, we congratulate the Korean people for their determined commitment to the democratic process. There is a very clear connection between the continued success of Korea's democracy and the country's newly emerging capability to overcome economic adversity. I believe that political health and economic health are closely related, indeed interdependent, at all times. That is particularly true during times of economic difficulty. Without the support and approval of an informed people, without the democratic transparency that enables people to understand the causes of economic duress, political leaders cannot hope to lead a nation through the change and reform necessary for renewed economic growth and prosperity. In this same context of democracy, I also want to say a brief word about the media. A strong, free press and broadcast media are the life blood of democracy. Without a free and responsible media, citizens cannot be well informed and government cannot be held accountable. Korean media played an important, constructive role in the presidential election campaign. The media were also instrumental in recognizing the severity of the economic crisis and pointing the way to a solution through reform. This was not an easy task because some of the necessary changes challenge broadly held ideas in Korea. One notable series of editorials in a leading daily in December began under the headline, "We Can Do It!" I am sure that this series and similar commentaries in a number of other leading papers provided a sound understanding of the problem and helped the country's political leaders to address the crisis in a constructive fashion. Let me conclude on a personal note. My wife, Christine, and I have only been in Korea a short while. Although we had earlier connections with this country through KEDO and even before, we are only now settling in as residents in our new role. A great deal has been going on since we arrived. We feel rather as though we have stepped onto a moving train, a rapidly moving train. Although I would hope the pace of developments will slow somewhat, it probably will not. But at least we can be confident that life here will never be boring. We will continue to discuss security, economics, and politics in meetings like this and over our own dinner table with Koreans and Americans. Increasingly, however, the Korean-American relationship transcends security, economics, and high politics, though they remain of vital importance. Our rich and different cultures have much to offer each other. And although we have had a strong bilateral relationship for many years, we are still learning about one another as peoples and as cultures. Christine and I hope to learn as much as we can about Korea while we are here, and we also hope to add to the understanding that Koreans have of the United States and Americans. Let me thank the American Chamber and the Korean-American Association for your hospitality today. I look forward to other occasions like this in the future. ---------------------------------------------- End of Transcript