U.S. pressures chaebol on North

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U.S. pressures chaebol on North

Washington has contacted four major South Korean conglomerates that sent representatives to Pyongyang last month for the inter-Korean summit to put the brakes on economic cooperation with the North, confirmed a Blue House source Tuesday.

“The U.S. Embassy in Seoul is known to have directly called key companies to discern the status of the cooperation projects discussed during their visit to the North,” a key Blue House official told the JoongAng Ilbo Tuesday.

Executives from the four major conglomerates - Samsung, Hyundai Motor, LG and SK - accompanied South Korean President Moon Jae-in on his three-day summit in Pyongyang in September.

This source confirmed that these companies were among those contacted by the embassy, and added, “It appears that the U.S. government, along with the objective of grasping the situation in regard to North Korea-related projects, is attempting to synchronize the speed between the South and the United States ahead of North-U.S. denuclearization negotiations.”

This follows the U.S. Treasury Department holding teleconferences with seven major South Korean banks over sanctions enforcement in late September. That move was seen as an indication of Washington’s worries that inter-Korean relations appear to be advancing quicker than denuclearization talks - and as a warning against any sanctions relief for the North.

The latest move is seen as Washington reaching out to the South Korean private sector to control the speed at which inter-Korean economic cooperation progresses since the Sept. 19 Pyongyang Declaration.

It is rare for Washington to communicate directly with companies on sensitive issues without the Blue House or Korean Foreign Ministry as a mediator.

Through its embassy, the U.S. government not only reached out to the South Korean corporate sector but also contacted agencies in charge of joint cooperative projects pushed by the Sept. 19 inter-Korean Pyongyang Declaration, such as the Korea Forest Service.

The agency has earmarked 113.7 billion won ($99.7 million) in next year’s budget for restoration and modernization of North Korea’s forests. It is expected that Washington has expressed concern that the joint forestry project could possibly violate sanctions.

The Korean corporations are admitting confusion amid conflicting signals from the South Korean and U.S. governments on inter-Korean cooperation.

“We received a phone call from the United States, but we cannot confirm the details of the conversation,” a source from one of the four major Korean conglomerates said. “From the corporate perspective, as we depend on exports, we cannot reject the U.S. request, but at the same time, we cannot ignore the intentions of the South Korean government.”

This source continued, “Some companies have set up an emergency response team to prepare for retaliation from the United States to avoid ‘secondary boycotts.’”

Most companies replied they were not able to confirm that they had such a call from the United States.

One source from an economic organization said, “It appears that the U.S. Embassy is contacting not just the four major conglomerates but also going around making additional calls to other companies that visited Pyongyang. They are prioritizing those who have concrete projects with the North or have such potential.”

There were 17 businessmen that accompanied Moon to Pyongyang for his summit with North Korean leader Kim Jong-un.

North Korea is likely to depend on South Korean investment for the development of its 27 special economic zones.

The North persistently requested expedited investments during the business delegation’s visit to Pyongyang last month, said a source from the finance sector.

Stephen Biegun, the U.S. State Department’s special representative for North Korea, met with Chung Eui-yong, the South’s national security adviser, on Tuesday at the Blue House. Chung, the director of the Blue House National Security Office, has played a key role as an interlocutor in denuclearization talks, serving as President Moon Jae-in’s special envoy to Pyongyang and Washington.

Biegun also met with South Korean Unification Minister Cho Myoung-gyon, who is in charge of inter-Korean affairs, earlier that day. The previous day, Biegun met with Im Jong-seok, the presidential chief of staff, as well as South Korean Foreign Minister Kang Kyung-wha and Lee Do-hoon, South Korea’s special representative for Korean Peninsula peace and security affairs.

One South Korean diplomatic source requesting anonymity said, “The United States does not trust our government when it says that it will improve inter-Korean relations while abiding by sanctions on the North and the U.S. Embassy and Treasury are contacting related departments in the private sector directly.”

A Blue House official said that Biegun initially requested to meet Im on Tuesday during his meeting with Chung, but readjusted the meeting because of scheduling conflicts, leading to the meeting on Monday.

This is seen as an indication that Biegun’s objective during the Seoul visit was to ask Im about the direction of inter-Korean cooperation.

Responding to speculation that Biegun’s visit came in response to disagreement between Seoul and Washington over inter-Korean cooperation, a government official said, “Biegun met with Im separately to accurately hear our government’s intention on inter-Korean cooperation.”

BY KANG TAE-HWA, WIE MOON-HEE and SARAH KIM [kim.sarah@joongang.co.kr]
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