Created: 5/11/1972

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The Two Koreas


The following intelligence organizations participated in tho preparation

The Central Intelligence Agency and the intelligence organizations of theot State and Defense, and the NSA.


Director of Central Intelligence

of Intelligence and Research; Deportment of State

Defense Intelligence

National Security

General Manager, Atomic Energy Commission


Tho Assistant Director, Federal Bureau ot Investigation, and the Special Assistantlo the Secretary of the Treasury, the subject being outside of Iheir jurisdiction..

This material contains information affect! ngNw National Defense ct the United States within tho meaning of tho espionage laws, TrnoiHL USC,, thoOt rsveiotlofl of which in any manner la anNipaulhariied person is prohibited.






I. koiika and the powers


Tbe Chanpiii* Iiitrni-ti'inal rCuvuonnmit Tin- Vic* from Siotd jik! Pyongyang


North Konu

Smith Korea


'.-nci and in', m-

NuilhtTn Capabilities lot Infiltration andou






A. All four of the major powersUS, the USSR, Japan, and most recently China- have (aritly acceptedthe. existence of "twon effect abandoning ihe idea of reunification, hut they differ in their perceptions el ihr pioblrm and hence on modalities. The Soviets appear to have concluded that, in the absence of any real hope for peaceful unification,1 course in Koreaegotiated accommodation between North and South, hut the USSR must move cautiously to avoid antagonizingThe Japanese seem quite ready lo accept some form of gradual reconciliation of the two Koreas, provided it is orchestrateday that docs not disnrpt Tokyo'sefforts toodus vivcndl with Peking. China, concerned to prevent the growth of Soviet influence in North Korea, is greatly interested in achieving some kind of explicit agreement, but must not get out ahead of Pyongyang, which still wants to unify Korea under its control. Thus, any negotiated arrangement formalizing theivision is difficult tn foresee.

H. Pyongyang and Seoul,rudent effort to prepare fornew international alignments emerge in Rast Asia, are presently talking to one another at several levels. Open negoiiaiions in the Red Cross talks were initiated in the latter paristensibly to open the way for reuniting the many Korean families separatedhere are also covert discussions, hut these are mainly exploratory

and meaningful progressolitical settlement would seem to bo sunn: time away.

rival Koreas are approaching one another withand different scenarios iu mind. The North has beentoward expansion of the current Red Cross discussions,that its new conciliatory tactics will complicate Southrelations and ultimately lead lo dissension in the Southcan exploit, This has been coupled with andrive abroad seeking certain other intermediatewithdrawal of US troops from the South; limitation ofthere; and recognition of North Korea's legitimacy bycommunity. The South, on the other hand, istlte domestic effects of any amelioration in North-Southand concerned as well over the possibilityomplete USwithdrawal. The Republic of Korea is acting cautiously. Itmove onlyery deliberate pact! and to keep the public

prospect is for the Red Cross talks to be prolonged.there is nervousness on both sides, domestic andpressures from their allies, and the momentum generatedtalks themselves may lead to agreements on divided families,exchanges, and even trade. Progress on these issues, in turn,reduce fears and suspicions on both sides and lone downcontent of the negotiating atmosphere.

issue likely to arise soon is the future UN position onwants an unconditional invitation to this fall's UNand an end to die present UN involvement in Korea.strongly opposed to inviting the North Koreans and wishes todebate at least for another year.

If the North-South negotiations break down, or if political upsets occur in either Korea to arrest trends toward political accommodation, the rivals could return to theituation of politicalThis might bring about something of an upsurge in armedalong ihe Demilitarized Zonet worst, Pyongyang might return to harsh tactics pursued

C. Another Korean War is not on tlie horizon, but incidents along the tense, heavily defended DMZ will occur and could al some point (escalate to open hostilities. Northern responses in such circumstances

would depend heavily on Pyongyang's perceptiontK its own allies' support and (ha US military commitment to the South.imatcly, therefore, the question of war or peace in Korea would come to rest, as before, on the decisions of the US, the USSR, and China. If these powers continue to limit military supplies and generally toestraining influence over their clients, war will continue to be unlikely.



The probleme two Kerens" cannot he treated in isolation; dim external poweis luivc important intercuts in tlie pouinsululate in Hs future. Indeed, the tragedy of Korea In modem times hasicrocosm of the impact of great-power rivalries on weaker stales. In tlie age ofwhich begun in Northeast Asia inorea wasone of contention between China and Japan,ocus of Kussiau andivahy. I'hi* Kussinits sought Ice-free harbors; the Japanese won: impelled by fear ofagger pointed .tt the heart" and, later,elt needridge to the continent By Us vielnries over China5 and Hussianblished coniplttcof the; peninsula, from which it did indeed support the subsequentandof..

The end of World War II found the Allies with no workable plan for restoring Korean

iniM jiniil,

bisected Ibe country for purposes of military occupation niJ. as in Ceroiany, the division hardened under the pressures of the cold war. In Korea, however, foreign troops were soon withdrawn, opening the way for Soviet-sponsored, North Korean armies lo invade the South. The war lasted three years, involved in- .tdfori's. mill cost some two inillion casualties overall. Ail ami bt ice ratified the battle lines on tlieand I* maintained to the present day by inoidinately large iudigcitous armies backed by the defense pledges of theirforeign patrons. Meanwhile, relationsthe two Korean regimes have beenby confrontation on the military level and hostility on the political.

The Changing International Environment

iiiM. Over the past year or two. the Korean glacier In* begun to show signs of thaw. Externally, the chief new factor is the changing Chinese perception of thelthough there is also some evidence that Soviet views haveince3 Korean armistice, all die concernedthe US, tht?hina, and


lit avoid another war on Hiet Peking hus >it times seemed more willing than Hit: othero approve Ihc use ol -nilitunt tfioticn by hi clienthina's -Ul'tndc was Tint mulct! In any strong desire toa communist takeover in Southlow priority itini no [Yklng'-iin it* concernhe continuing Americun militaryr, thr South and, morea ila&iir to xihancc it* status in IVongyang

4 IkpiiiiiiiK hi th. fall ofarding Kiinn seemed loiatinsiltV-atiou ol China'sithat tliat time and sulwrncnlly tlieot* US military retn-iirlirneiit in Laitled Peking Id wantourceiictMni betweentbr US Peking may also havealert ti.with the

South Koreans and llculuily hi the light

nf (In l..

lo quash any Japanese: scnti-mi'nl fin assuming ii security role in the(Sato hail staled Hat "the smutty of the Republic of Korea was evsimliul to Japan's own sccurily.")

China's <li.inu.idV mter.ilrs >mr dbteiicr.- Military-t I'..ii.ii In an Au-

gustv.itli James It* stun Cbou En-lai said that tic eaisling armistice shouldicaty ol -scacc, and vpccilMullv inenHoncd the MACnitalile place for <Ii.sumiihi* on tlie subject- Chou lias sincen stress to Americantinn Peking of ain Korea.

IJ. Such moves, however, limy be lessthan China'* apparent willingness to undertake tlie dellcute task nf encourjgitig the Pyongyang leadership toward moderation. Chan's visit to North Korea inucceeded in repairing much of the do-tiasc done to bilateral relations daring China's Cultural RirvohrUon (when eitrr-mbl esentents in Peimc puhlicry degradedhe subse-(ueiit nsumptkia of Cbi->irv comwnje andld lo North Korea save sulto Chou* vvords. We have since .wen Pyongyang liKrniungly willing to sop-port Chinese foreign pulley Initiative*,tlie move toward detente with tbe.In cnnlrait, for example, with extremelyNorth Vietnamese mictions. And China, iu turn, ha* been the strongest supporter of Pyongyang's recent entry into negotiations withthhe so-called Red Cross talks. Wliilc Pyongyung is doubtless aware that China is acting In its own Interests,North> stem willing to work with Peking lor whatever sJkwI term advantage may accrue.

t may be argued tliat Peking'* present posture is (U'lgmil simplv toore sophisticated approachongyang to such intermediate olsjcrtivts as weakening theol Korea (HOKJ/US alliance, tin' ROK's inleniational standing, undhesion of the South Kurciiri people generally. Clearly, how-ever, rnoent moves by Peking with regard to Korea have Iiecn made in nispoiise to Chinese security concern]is thehere, of courae, Intensely cuttccrnccl about the security of their utrategic Doitheasf-tia flank and the posaible risks which might ensue from any new turmoil in ibe Korean I'-iK'U-U. In ihli iiis cs'cn be some question of IV-kiuglat thisiiirl. ti t'S muitaiy wiuVlnnval hum South Korea. While ibe Cbm.<se no doubt desireeneralo see US forees out uf alli China'smibt that there is any scimc ol urgency regarding Soulh Korea, svhere the prospect lor dinx-t


political gain* would, in any case,Indeed, for Ihe Chinese, anya US troop Irtiinnin ll. lurm ot(rum Pyongyang, Aside from the asmforces, however, Slno- North Koreaniu foreignolid basealfluitius. including hostility"revision ism" mid latent fears oftii in

he USSR. Despite Nortli Korea's heavy economic nlid mllii ny dependence oa the USSR, thin- remain distinct differences of view between tin- two governments. Iu addition to long-sbnding ilisiilcauirc wilh Moscow's em iihasis oo "peacefulyongyang nvnU the Hi mi an'" Uirgioamg friendship with tht Japanese matevidence of tli.ii willingness to develop contacts with theeans.

here may evenstrong suspicionvili.o the presence ol Aiueiiean troops in the Smith There is no direct evidence tlut Ihi*bc Soviei attitude but. In our view, such suspicions are iirnbuhU well (minded. Ilic ri-lativWyS force pose* little threat to the USSR. It help! leep both North and South Korea from rialy jdvcnttins It actsonstraint on Climcae military planning in an area adjacent In the strategic MaritiiiH' I'rwvinccs of the USSR. Kuilhurmyrc, itan area of polenllal Iriclion helween China and the US. Of course, one advantage Moscow tniglil see In any US militaryfrom South Korea would be theimpact of the movevui.u'v skeptical uf the vahie of the OS aUlaucr-

ins is not hi say ihat Moscow isto hi tlie Korein situation sunnier. The tluuiaus appi'ar to have concluded thai the best coinse iu thethe altsence oi any realistic hope for peacefulegotlalcd uccoinniodatloii bolwceuSouth. Some Soviet diplomats havethat Soviet policy Inward themay come lo resemble Sovietrespect to the two Germanics. Thisimply tho cnnchistou of anormalization of relations UtwmKoreas, and inter national recognitionlegitimacy ot larihin the UN. Moscow probablythisestablishment of its ownwith Seoul. The Soviets probablythis process Is likely toengthythat they would have to moveto as to avoid damaging their

t. lation. with Northgiving open-rags to the CluneSr.

Japan. Tlie Japanese deriveadvantage from the lualntenancetrong USa militarySouth Korea: it miligatcs the South Koreans' extreme seiivilivily loof Japan's economic and political influ encc; and it provides an important degree of security for Japan's southwestern flank. On the other hand, the presence of US support bases on their soil has always nude theertrrraeH apprrhciuive during periods of instalMlity or lemumthr peninsula: and despite the present calm, theyersistent potential for tlareups so long as the North-Soulh conflictnresolved.1

Japan's longer range InturustS,would seem to be best servedecou-

flus iilo tay thatimiiaci-IvniiiUtc lakiiU! mi"fvuiilywilli lefliinl In South Kwta In the eventi tfiiao'cte (JS limnAt leatt tnliouifhi tmlccdokyo* view, any sinli iiivoKvuii-ntt only be pruwlyliy Kiwrnni. Smith a, wvll Nuilh, Imtriii'iiki; I'.lliit ;mtlhe

uWrfolMWilt ufjp.-uirM> icktlftix).


uf the twoor Tokyo, tbe main issue may lie imc nl timing and lech-nit|iii'. Japan's constinlivc leaders would not relish the Ideanmplefo withdrawal of US force* fnim Sonlh Koumi two or three years hence, japan would he eoneerned over the uns* (thug etlict onil itself uf .my such abrupt US troop withdrawal, a* well as the broader implications for the US defense enni-mstmi'iit to the areabus. tbe Japanese would prolioliryoore deKK-rate process of iNXurniitodatiun ssilh th. (iimmuuists on the Korean issue, one that could betheir full partki-pahno-ay that would assist Japan's overall effort too.lutwith Peking. Indeed, lor tin Japnn-m- any surprise on thent to what they call the "Nixon si nick" in Si no-Americun relation* would lie sociiharp diplomatic setback.

The View from Seoul and Pyongyang tu the possibility lh.itmight again seek In dictate theirboth Koreas have come Iu .seciri'-un. directml', nlNorth Korean lead* rship almostcom mi tied tn unit lent ion nfconst rmiust rule. lint it hasthe judgment that diplomacytftr Iseil tmiftm- of adik-sing certainNtsrth Korean ubfcvtivcs: theof US truufis from tbe South;Japanese inflm-ncc there, andNorth Korea's legitimacy by theni lYimgyung undoubtedly

ht-isc. that such dcvclu|niniits will shake South Korean fuilh iu the IIS alliance, andSouth Korea* relation* with Japan,ultimatelyemoralization exploitable by communist piopugaudisls and agents.

may ulso be goingPeking's new line lor want oferiod against theand against tlie US presence as well- -provedjvi 'Ihe people of Southwere antagonistic tn corntiiunistand the myth of 'people's war" in Korea on tbe VieiTiaavv pattern was kvkl to rest. Moreover, cowmnast wtkais resuhrd not only iu strengthenedln iiippurt for the Pak Choug-hui government, buto an increased US militarythe form of additional US uircrafl based in the South and stepped-op US deliveries oli in.o ROK lotccs.

espite such tangible reassurances, the ROK leadership Is reluctant to move as far as Pyongyang In responding tu recent sliifts in the interniitkin'il riiviinume nl. Scnul hasome llexiblllty In deahug with th? communistil now categorizes certain communist states as "twin-hostile" and tleals svilh them. Ihe Pal gosi-rmucnl ii still more comfortable, however, ssith the rigidly anti-eiimmnntst formulas upon whldi il ban baseduppnit and wluth. in its view, c'li.ipri'e thi- bedrock nl Smith KoreancuImImm) It is unuilhng to shed thisst-. tiK>ecause il feels poorlycomparison with tlie Ninth Koreanmonitor and control tin* effects of any unteli oration iniHoiis, Ihe South Koreans alsosuspicious nf Pyongyang's intentions and those of Peking us well, and In light of history, dubious nf arrangements engineered bypowers. For Senul, the US sccurily com-nuiiiieiil,he presence of US troops, remains the must effective deterrent to another commenist effoil to take the South by force.

onctbek-svf growing ArMTkan sentUiH'nteduction ofin the legion, the ROK leadership inieted to oticii talks with the North Korean Government througli Red Cross chan-


on Ilic emotionally charged issue ofdivided families. Sensing Seoul's di lemmaiceiving openings for broadand diplomatic gains, Pyongyang quickly accepted Ihe South Korean offer and, in their many talks lo date, has persistently sought to broaden the range of topics. The North and South have also entered into secret talksut least in Seoul's view,est of Ihe opponent's willingness to negotiateand in good faith. Meanwhile, on its own. Pyongyang hasiplomatic offensive to gain greater acceptability and, iuosition of equality with die South In the cyo> nf Ibe UN membership. The latest element In Pyongyang's campaign is an offereace agreement with the South, for the first time nor conditioned on prior withdrawal of US forces.


the Korean parties gmpcnew way of living with one another,political instability in North oroccur at some point lo delayho stereotype of theis that itonolith on thepattern, withightly controlledStructure which gives itadvantages in any competitionHOK. Soulh Korea, despiteprogress, is often pictured asplagued by economicon US guidamv, and henceto North Korean threats,TIk*.si* stereotypes aroI here ;ne potentiallyfactors at wink in the North, andofhe South.

North Korea

Regime Kim Il-soug and hisWorker's PartyP) liavc given North

Korea continuity of leadershipemurk-ahly stable govemment for more than acentury, desplb; rampant intrjparty fac-tionlism and Ircquenl purges, Kim has just turned OH, not particularly old as lifespans are reckoned in Korea, and younger than the leaden of most of Korea'i neighbors. Thomust that he will survivehile longer, and continue to keep party and government reins tightly in his this stage, Kim's ideology andcuk permeatesector of national life and every level ol tbc pohtical process, and his closest supporter! control the main levers of authority In tlie army, the party, and the bureaucracy. We do not ltcUcvc, then fore, that any seuintnt of North Korean society,the military, presently lias the power to uuxut Kim.

ut this is not to say that Kim's policies are unassailable or his views unquestioned. Kim does have crilict: of his nepotism and egoistic stylo of leadership; hi* hard-linepolicies; his dangerously provocative [nsturo toward ihe US ami the ROK inM9o9 period; ami perhaps also withto Pyongyang's milling relations with the I'SSIt and China Factionalism and purges, arising frnm mch internalave uerifieid some of the jkilh needed to meet North Korea's economic and trchuiciil needs, and placed heavy strainsartyopulace Ins willing than Kim to reach for unattainable goals

2D. Wc have observed, too. that while Kim seems to be the prime mover in settingpolicy, other domestic infhtcjues are present and contribute lo pressures for change when his strategic* seem ineffective or risky. Pur one thing, wo are reasonably certain that criticism by the North Korean militaiy hasroblem for Kim In tho past. As an example, the sustained purges of the high command in IOCS-cented to indicate-


willi Kim's high-risk militaryngi insl Soiilh ami the US. Kiln's

i. 'h i. .1 ii': iii i1.

his policy wan lottwndniicd al the Partv CtafpYtl in JlWO. Ho siiecccilcd, how-cvvr, in pin.n'iiies and making them thelor hb failures.

There have also hceu mdkations that Kim'she KWP miglit not be absolute, and that he Im continually had to cone with critics there as well. 'I heto ii"an) ol lite goals ol tlie last Seven Year Pland ti by Ihtee yean, mast have been an ernluiravsmcnt lo Knn lie admitted at0 Party Congivs* that tin defense buildup,Undent with altcrrrpU ul nuuomic Iscllcr-ment. was uchievi iliy large and dearnd that Nurtli Korea was dertlncderiod nf iclrenchiueiit and consolidation; spending on nutiunal defense, he conceded, hud been "loonrden foruch remarks suggest lhat Klin had In dike account ol critical vlewa nu both economic andiiiatlers, with Ihc result that Pyongyang is now placing less etupliusti on buildingand otherwise preparing lor the "liber-at ion" nf the South.

7ht Sucersakm. Although be is onlyimnugs Ikm llh |HohIems could rernove him from the scs-ne He wasor isiLrgctiMnt of the heart and for high blood |Mearlier forkidneysuffered heart attack*7ne possfluc successor is Kim's younger brotlnr. Kim Yon. I, who hasatapulted Irom forty-first to sixth in jkiily rank> over tin |iasl decade and heads

the KVYT'k key Organization and Guidance Department. Another is Klin II. third-ranking member on ihe Polilical ami CentralFirst Deputy Premier, and an nldcolleague nl Kim llsong, lleyomi these Isvo. the succession picture Isocomes murky.

and even if either Kim has already received the nod, there Ls no assurance that thewould be respected by others of tbe inner circle. Indeed, some formersipresently in ellipse might return to the scene,ounger leader presently unknown to us could accede to power. Finally, some form uf collegium,ariety ofpolitical tendencies, might become the successor regime.

lie Chinese or (lie Soviets might try to assist sonic favored North Korean candidate to Ihe top. although we liavc no evidence that either has any particular favoritesis time. Indeed, if the succccdou to Kim were not swift and clear, these powers might be tempted tu some kind of invert roanipukltisc effort to safeguard their icspei-tjve interests. However mounted, attempts by foreignto ini]he succession coulddamage political stability in the North und load to Itsrime focus nf Sino-Snvlet rivalries

2ti. Lacking Kim's prestige and anlhonty, il would be logical to xuppnscuccessor regime in Pyongyang would he somewhat weaker and less confident than the present leadership, at least raltlalty. Kan's long dorni-nation of the country, in itself, could mean difficulties fur his successor in maintaining control. Uncertainty at the top could easily translate into inaction, tn iiitrausigetKe,on major foreign policy themes- -nowhat advice svav proffered by Moscow or Peking. If one of Kim's close associates took overirutractrxl power struggle, he would probably continue Kim's current coir CasfaaDiy line as the best available vehicle for j.ariety of current North Korean objcctisTS. domestic as wsdl as foretgu.

conomk' ami Peh/> velo]MDnil in North Knrea sluwed coiisidcr-ahly in the, due lo substantial diver-

sion of resources to mililary modcnuKuioii, Ilic disruption ul aid from{ and China, and unrealistic economic planning. With the levelitii! of) of mililary expenditures lale in the decade and tin renewal of foreign aid. however, economic cspatisiou rcgaiuod'yongy'u'fis) plan docs not vary significantly fromneml ili'.iK nul investment program seem more realistic:.will coutiiiuo lo he placed on heavy industry and defense.

The prognosis for the Norlh Korean economy overl live years is forgrowth, hut with living standardsaustere. The dilemma for Iheis to pursue ixuiioniic pulieiesausterity, industrialization, and relatively high defense expenditures while givingreer hand to the economic planners inwith problems of lahor productivity,shortages, and rising popular uxpecta-tions.

Of major importance to the degrco of economic progress; achieved by North Korea is its access to fonigu markets and assistance from abroad. Total trade1 ran0 million (compared4 million'1 more lhan SO percent with the USSlt, China, and Eastern Knrope. This pattern seems likely to continue, at least for several more years, because Soviet and Chinese economic aid will helprowing level of trade with the communist slates. North Korea has also been successful in establishing access totrade sources in Western Europe and Japan; it has recentlyumbcr of completeonthese sources- Future trade increases with Western Europe anil Japan are expected. But theof any negotiation with non commutrist partner will continue to depend on theof North Korea to increase its exports and on the willingness of oon-commimtst couutrics to grant credit.

We do not detect in current North Korean economic policies or trends anylikely to upset the oouutiy's polil stability'. Economic gains should beto prevent growlh in publicwith tho regime and to enable Ihe gov. cmaicut to retain tight control. Ifut this view is predicatedonsiderable extent on

' Compmulive Smith Koreanrade4 hilliiin iap& million

levi'b ol iirodwlin' activity in North anal South Komi for ItJTO tire;



pijtxli.-! .

Thousand lom

pr'nlutttun cutci

It.trlc piswrt



Thoibiind imut





. inetert


vehicle tin**





Iriali ;

Million US AJIars


osture ol modera-liiMiis theensure unintcr-ioptixl aid fiomMI and China, and to retain ami expand trade with Japan andI- - ;-

South Korea

unit SlalrilHijdilemma, mi dltoot contacts withbegin, is to ruconcllo thethedeny openings to North Korea.offensive coupled with theSino-Antes lean detenteto President1

toation-wide state of rrmsgcocy- which innairu in farce. Pak was cinieemc'l that campus distuiiianccs and other evidences of opposition to hi% domestic poHcies mij;ht sonicliow weakeniritical moment in South Korea's affairs. Ilic declaration, however, was but the most obvious munifcitation of theincreasing unwiHiugiiess to tolerate dis siiit from any source,ver the past year, by demonstrating its belief that it must esircise tight control fur an indefinite time over matters broadly defined as nationaltbeope* to strengthen it* hand in dc-aling* with Nmth Korea. Dornes-tieally, tlie effect lias been to narrow lite limits of political pailicipatloti and to oltscure die line between dissentnwith the relative freedom pe)milled Lu the past, the government has now thoroughly intimidated the National Assembly, cowed the press, stifled student dissent, and told labor in no uncertain term* not to cause trouble.

limitedability to bring pnuwe on thea inajurity of South Korean* seelii ot l'.ik. and there isamong the jiowerful militaryto the govern men I's present course.the ItOK political stmcturc seems resilient ennugh toodest amount of buffeting front discontented elements.most important. FVk himself lias usually dcrnomtratrd understanding of the limits of popular tolerance for hiteasures aud an abllily to maiawer for hit purposes within (hose limits; he will probably continue to exercise his emergency powers judiciously.

evere test may arise as the UOKore deeply involved in talks With North Korea ftohlems could arise forIn connection with the proposed visits of North Korean envoys to Seoulthe Bed Cross plenaiyal is expected to crack down hard on any domestic dissent at that time. In any case. If Pyongyang continues toenign face toward Seoul, the maintenance of repressive controls will behard to justify, especially among sectors of die ROK populacehat even the present kvel of coot rub iiOrtaudy, how the government exercises its cvtrsordirury powers iu the next several yeMis in dealing tvith changing |Hibliewill,arge extent, determine the Level of trim <iiiility of HOK public life.

The Economic Prognosis. Another test which Seoul might face is an ocononuewhich could adversely affect political stability. Over tbc past decade. South Korea has complied one of thegrowth ncords of all the developingaverage annual rise in real GKFhere are areas ufAmong these arc heavy dependence ou borrowed funds to finance economicontinuing inflation, and inequalities in the distrilMitHMi of income.

.TV The gin-erntncat bas made an effort to relieve inflation and debt oblicatioo problems liy adopting ceilings ou local credit expansion and tnllow* of loietgu Capital However, Its


hi slow down the overheated economy is limited, because of Koreau businesses' heavy dependence on borrowing, rather than equity capital, ercdil rwlriclions have caused some local linnsefault on debts and go into bankruptcy. These failures have produced out-erics by politically influential businessmen who have been able lo constrain Seoul in cniiying out economic measures. The govern-

l In ill.' llllll I'

i'lim's, which weed oiil marginal firms, run the risk ofave of business failures which would bring On or exacerbate an economic slow down. In tltc foreign sector, any prolonged slow down ingrowth would make it difficult for South Korea lo meet payments on Its external debt, Ihus impairing it* ability to obtain the private foreign financing necessary to importand capital goods.

n an effort lo solve its economicSeoul has sought increased amounts for aid from tbe US and Japan. This aid would lielp provide the foreign financing the South Korean economy depends on bul, bctiuisc nf concessional terms, would not seriously impair the Korean external debt position. Kven wilh aid, the debt problem will remain. What is critical is continued access to world marketstable donn^lic political situationloteady inflow ofoug-tenn solution to recurring financial problems will require expanded effmtv to raise domestic savings and reform trade practices, as well as less ambitiousspending.

he Su.iv.atvn Issue. This,

drawslose inis public promise in the cloving days of tbe lflfl campaign that be would not run again has already triggered jockeying for power within the ruling IJemo-cralit-Republican Party( DltP j. Pak has given no public indication that be ititcnds to rescind this promise; nevertheless, he may conclude eventually that he ought to continue in oHiee. Recently, trial balloons have been raisedigh DltP official and others closely associated with Pak for extending both Presidential and Assembly men's lenns from four to six years or for selecting tlie President by vote of the National Assembly rather than by popular vote- Additionally, under oneof the 1VOK Constitution, PaV could seek two additional terms without any amendment.

hough awaie of how Mice tell from powerong and honored career, Pak is relatively)trong sense uf destiny, bo may find if very difficult to bring hinisell lo become ihe first modem Korean leader to give up power voluntarily. Moreover, be can probablybe all-im|>'ilunt support of lop ROK Army leaders, his closest associates in the South Koreant this juncture, we believe that Pak will try to hang onut that this will stir up widespread andopposition particularly Irom students and elements of the urban population who will accuse l'uk of seeking litctimc tenure, and oven from many younger generals and colonels in the army who seem opposed to another term for him. Someercent of the electorate voted against him last time and only landslide support from his nativeprovided the margin of victory.

If Pak does run again wc believe he willood chance to win with thegovernmental machinery enlisted in his support, including the resources uf the army and the ROK Centralcll-lunded DRP Elections during Piik's rule have been managed to Ins advantage and would probably be again.

Excluding Ihe unlikely possibility.i. -InA *ln. .its to Pal's continued tenure arc the possibility


assassination ami In- health prublenis. Pak wuraid ine worries about another attempt on his hie, and takes elaborate pn* raiitiom Pak abo sutli is fnau ihr cnntiunallfiee. wind have in the paM(lisahl'iig einsridc* of stomach and liver Inmhlrs, and those mold laxome serious.

here is somehillty, too,34 Pakieutenants may de-cidc thai Ik' hasolitical liability;ourth-term by might cause inch strains as loreakdown in tbc political (iroonu. In this case, an heir within tliewould lie deMttnaleel to run for ihe presiriYiicy. Prime Minister Kim Chung-pil is the foreinusl candidate al this time, and,ou11overs!al figure, he wouldwin the election If be retainedand army support. Oencrally. we would not cancel Kbit's policies to differ greatly from PakV He rrwtht. however, prose somewhat more fleailde than Pak Im.

here seems little rluuae of the oppos: lionDemocratic Party coining to power iniven tlie prisunl stale olay in its ranks, We also tend to discount tbe possibilitynilltury coup as an eh im ill in tin- succession issue. Some highofficers may harbor political ambi tt-no. ami marry senior officii* seem to oppose

and the high-level corruption he has con-

dom-el Ry and large. Imwes-er. wc think key

Anny commanders have loo iimeh stake

in the Mains quo to risk upsetting it. beyond eyuiclsin and self interest, time also seems Inrowing aversion in the officer corps to overturning an electedn situationtrvmc political instability, like that of I'it'I. should again occur.


eliberate initiation nf large-scale bos-tilities in Korea on the pattern0 is highly unlikely in the foreseeable- future. Weestimate partly on the lielicf thatcould get backing fur such an efhnt'.irvcit

the two Koreas face each otherone and hcatily defraided borderccidental oroccur atWe cannot entirely rule out the possi-bdity ul armed incidents of this sort escalatingmhtaiy confrontation.

Capabilities ond mfenlions'

'm virile years. iTcspitc threats and fears on bothneither Korea has fell able tollllaiy attack on tlie otlier to achieve "unifl catbis has been due largely to the restraints imposed by die principal powers on both Koreas. The ROK is heavily dependent on the US for major items of militaryawl the US retains tight toiitrul over I'M. supplies and ammunition stocks in tlie South Virtually all North Korean POI. sup-plica must abo be imported, as well asartillery, armor, and heavy- ammunition, tlrmgli North Korea dors produce small arms, including nxirtars. While lx>th North and South undoubtedly have the capacity to launch major at lack* on the otlier, neither could carry on sustained large-scale operations without heavy support from its cliief allies.

oviet attitutbs on pnmdinj; military aid to the Ninth have been marked by con sidciable caution. Onh anniversary Of the 1WI1 Soviet-North Korean mutual defense trealy, the Russians noted that the pact pru-sided for "cuordiuatcd actions againsta thinly veiled liint that theyany North Korean adventures. On the whole, the Soviets would prefer to avoid an arms tare in Korea, but this does not mean that tl*yprepared to engage in taIVsimit aims deliveries to the North. Ilrcaute ol

'Sre MIDtnry Aura*

(lie uiilurc uf ih uiiiiiitctUlim wiih Peking,itt view nlnew willingness to increase its levels ul support. Moscow will remain under continuing pressure toongyang well aimed. But It may hr iitfcrrcd from tlw USSR* past ptactloa that tlie Soviets willwish to contribute to any distnrtuncc o* Ihc ex sting military bruanee, ursd are likely to eontiiasi- their tijhl ioiiln>ls over slii]im>sitt of major hatdwaic ilcnu, spare parts,I. to Pyvmgyanil

hina Ion has shown eautiou in supply -inj; imistanse to I'vougyang. Public exchanges ls>4woen Chinese ami North Korean leaders, Mime in cunmsiiliMi with the militaryuggest Uutt while China lcmain* willing tn honor itsuhligation to North Korea. It will ao* suniimt North Korean attacks un the South.

Korea could hiTuinc I'll' vis ni* ul an "arms race' in Iheseveral yeais. hi South Korea, (lie US Inn 'nil. i'. Iii liveiiodcriii/ution program lor the ROK Armed Forces. This will be implemented throughassumingre forthcoming)ombination of grant military assistance and the transfer of excess US military equipment at no cost to the ROK

n North Korea, where MhPeking supply militaiy hardware,competition re|sre>ents the greattn limiting the krnds andcut upon of lumislixd to Pyongyang'sNorthay well eipluil itsto jitcs* fur coiuidctahly greaterof sveu]ions than aid is necessary In offset USol the ROK hirers. 'Ibe recentaircraft from the USSR and Chinatlie Annex) wen* |iiuhahly ihslgiied lo 1 forhe airis the KOK and tbe US.

here aio no foreign military units in North Korea. US military strength in the South now stands at one infantry division and ouc air vcing. plus other supporttotal of0orthern responses to the declining US force posture in South Korea (and elsewhere in Ana) will depend on Pyongyang's percept inns of Ihc continuing US commitment to Sixml, the nature of the drawdown itself, and overall US capabilities fur retalialion. With US Irnop strengthor removed entirely from the ROK. Kim ll-song might believe that he coulda successful attack against the South and gain support for it from China or the USSR, or lhat they would come lo his rescue if hemiUtary assistance.resent cir-cuinstinces. neither ally would appear likely tolessathus ruafur North Korean attacks arcto occur unless there are verychanges, in Chinese or Soviet policy in East Asia.

Northern Capabilities lor Infiltration and Subversion

4S. Inliltration mid subversion, rather than conventional warfaie, are the more likelyto be exercised if the North Korean regime elects to returnolicy of active hostility. Although such tactics have failed in the post, Pyongyang might be tempted toto them again il it saw an opportunity to exploit any developing uiitest in tbe Sooth. There areotions about theto which North Korea it maintaining the sort of insurgency force which surfacedo. Agents coming Inmi tlie Nurth during (he past two years liavc hivn civilians with a

"llii* ftivnsth will lili-Iy uinaiii tliiiiuzhut islam Imivmi.i1 Unit date are wit linn.


minion of political iiifillrutiou,tin-re ure reports thai sjMii.ila*th Army Unit and theBrigade may hem size, or disbanded, there areiitt reused North Korean InliUlRnaI raining activity. Thereo tin-root Iseeonnaivsanee Station*nowlight infantry) and

Hie lleet of agent boats which supporteflorlx against tlie South, foils whoso wartime mission is to oi>erate hehind enemy lines, such as the expanding ulrhorno and light uif.iniiy units, could function as uncon-ventiunul warfare fonts if the North should choose to revert to Ustactics. Die a* pamliMi of these units may beuflransfer or rcek-sicr-ation of some oldtr un-lonseiitiinal warfare org ani/at inns In any case. North Korea loulinucs tooten tid fo* imcunventional waif ate *


loia Anssv toJnrUi t4 bardoji-mintitil in iiixmvriiuijaal wailm--Rstlnr.

uulli hi-hirm llie

1 when*vtsniM I) lustm naxl iik.ismi1 lind un- luoimihe nd

Ihe Seoul government hasomprehensive cuunFeriulittration defense nver Ihe past few years. It includes themilitary forces, the Homelandhe National Point, and an extrusive Internal sioiriry apparatus. While the systetB Isas not Iscra fully tcsttd aisilhas manyt has nor* thek-xsftetisx* in coping with North Korean infiltrationlie fact thathas nut tried to repeat thecast eoasl guciTJlla raid or its tcmulst attacks of that year is une uje.mnc of Ihe general nf-fectiveiies* of the HOK io discouraging suchIhe failure of Pyongyang's efforts can be attributed mainly to the prevailingsenUmcnt among the South Korean people; most ol ihe MHIS inUltrators forwere turned in by villagers as soon as possible.


Sn The Red Crxsu TaOn. Preliminary talks on relieving tlie phght of divided families, inaugurated inave reached thelage. Neither siilc. for aof reasons, wants the talks to break down; in parlliului, tlie competition forapproval provide*powerfulfm keeping them going- Considerableattention has been focused on the talks in the South, nnd presumably In file North as well, lutause nl (be emotional content of the divided family issue and Ihc number ofwho mighlillion Koreans ate believed to be members of families separated tints- Kurea's division

te wide and significanthi how tin- two sides vfew the Red Cross iik-Hiitgs. Seoul elmseave the talks start largely because of its loncefii not lo be leftot shifting intcmatlomil alignmcnls iu Easti'i- Icw.iiilsecondarily, lo satisfy existing domestic pressures lor movement In contacts with the North. Thus, the South has tried tn keep the public agenda limiud to thethe titration and reunion of missinggenerally to slowic of theroul'i plans arevague, ahhougb the existence of the secret talks suggests It may be prepared toariety ofxchanges ot mail and newsmen; cultural exchanges, intenhunge of technical and com-nioicial itiforiiialion, and trade. The ROK is obviously interested iu playing for time,and will move with extreme caution tn


committing (Full to dealing on more

til inn i- . i ii-.'. therr

Is. loactivity in the field ot secrot talks.

North Koreaar different scenario, witheraatH-tial ovrrtoma. Pyong-yang has proposed mitmibatetfrnl negotiations unplyingould initiallya mutual rcnnnciatioo of force agn-erociit to heven iM-liirc withdrawal ol US hoops trutn the HOK. Kim Hsong has also seemed to hack away from one of hisfor improved North Korean-Japaneseabrogation of Japans friendship treaty with South Korea. And Pymigyang has hinted nt the povubility ofrelations withtlie beads of the Southlnally. Kim is eOLSMb-riiii', allernatises to the North Koreon ap|aiMih torisc lor UN m< ml icr strip.

UUviwdloh Sleiu.acebetween North Korea's push tor early political talks and South Korea'sto move cautiously from humanitarian to other non-political in got ia lions, North-South contacts will naive forward. Willun the next year or so. some family visits will probably lake place and progress iri some iiori-puhucal issues may also occur. 'Ihr ROK will derive somefrom swell exchanges; tbey will open op North Korea'* hermetically sealed society to an allernate source of Korean life. On the other hand, tin initiation of people-lo-permle contacts seems useful to Northpresent strategy nt quiet sul've-rsiOu tn

oth sides are nervous, hut domestic and international public opinion, pressures from their ma|or powernd Ihe internal momentum of dieunder ssay may lead to agreements on divided families,even trade. Meaiurable progress on one or two at these mailers, in turn, could lielp rodiicc mutually hostile KO' nvati uttltiidcs and lone down the prupuganda eoulenl of (he negotiating environment.progress on political issuesanother matter, however, ibe lift ernes* of the Korean conflict still pervades the generation In power tn both North and South. .And on both sides, the- leadership, the military, and the hurraocra-cies have vested uitcrrrf* in continuedindeed, Ihe tundamental policies ol each arcpon the existence of "thicats" horn Ihe other.

Slncor even meaningful steps lowaid it, seem out of the question,n store for Korea in? En route to Ihe tacit lecitiiniaation of theii It seems hlcely lhal the two stalesl cvohe out of the stagr of pohtko-rnilllary confrontation into oneccfnlnd eventually perhaps to some lorm ofcompelilioii and collnhoration.

Th' Koreas find Ihe UN. Developments in Ihe UN may play an important rolo intho peninsula toward some kind of "two Koreas' solution.heof Ihe UN arc altering Ihe way it looks at Koreanany countries, im haling such friends of thend (auiada. arc tired of the ritualisticUN debate and convinced the UNon Korea is unrealistic, ifdetrimental

of popular dissent to ROK Government policies. Pyongyang's; efforts so far have not succeeded and are unlikely lu Nevertheless, Ihcy will continue toource uf reallo Sum I.

there is, consequently, grossing sentimentequal treatmenl of the two Koreanwhich, combined with IheNorth Korea expected from China in- it uiili'.ely that tin-

UN willillxclude Nwth Korea from ull UN forum*.

Nroth Koreans urc lobbying lorimitation In this autirrnn'sAm<tiiIJy sessiontodebate Kominihe dissolution ol tbe pcraeiitsh ut iu Korea, specifically Ihenf (In- Uniled Nations Coumunion RelubiUluuun ofand ibo UN Command, andrepeal of UN resolutionsuggies*ois in the Korean conflict,expect Chinese su|lpoit andUN atmosphere to result inUN actkm on at least sucne ol'Ihc IIUK. aware of new factorslo its IN standing, seeks todebate for at least another year;lo slick to die traditional formulaNnitri Korea lo accept the UN'slo deal with the Korean ivvnc Ifno- invited to the UN debate Ibis"would contribute to Pyongyang's effortsSeoulMiitical dialogue.I how flesible HOK leadersabout changing the terms of theit hccianc evident dial neilhiTi>or tla-ir traditional position can

inthis year.


uf the two Kdiooasurf oteo mi nodal inn could,lie upset hy any one ofneteakdown of IhcRed Cnsvs talks. This might conn-North Koira comJisded Unit noposailslc at this time anddjiu-lf with nulkuig ROK olsduracyprup.igaiula value. South Koiea iniglilil il divided that the talks weieUlucsl. ll is even conceivable thatboth inighl come tu feel that the talksmilitary support hit In heTcniiinatioii uf the negotiations could return Korea In theituation ofcoulrnntatioa, and there might boof an upsurge in aimed Incidents along the DMZ. At worst. Pyongyang might return to Ibe harsh tactics pursued

e believe, however, thai substantial changes wuuld have to occur in Nmth Korea, and probably in China as well, before the current policies of detente would Ik- discarded in favorostile stance. Such shifts would probaUy take place first in Pyongyang. If US troops appealed Set to remain in ttte ROK indefinitely, fur etample, and there aorined little progress otherwise tnwanl North Korean goals in ths* South, Pyongyang might conclude that tbe string with China had Imx-ii played nut, that there was no longer much point in foilii" Peking's guidance. Such Iriistrations might propel North Korea back Inward an attitude of open hostility to Scoot, and tn airti-US action* too if the chanceasype of incident. Kimrrationahties offet nu coirvfort in this regard, As for China, in Ihe Una) analysis il would probably opt to restrain North Korean hostility unless It became eoovineed that only by loudly supporting Pyongyang in its rc-nexved vendetU could it forestallrowth of s. Met influence in the North. In any case, wc can forever nu possibilityajor North Korean military attack on the South merely in response In disappointments in Pyongyang with tbe effectiveness of its current diplomatic

here is ime other contingency which might change Ihc Korean situationA near-complete US militaryfrom thn pcsunsula at any tunc over the next severalmatter howalmost certainly unsettle the Suuth Kute-uis and raise new doubt* indi av lo Ihe validity ol US securityTim Ninth wuuld be tempted lo take iid-


l 1nervousness andS tolerances under the changed circuntstanccs. Pyongyaug mightin concert with Peking- -In encourage sentiment in the South for bowing to Iho "inevitable" and makingeace" with the communist world. Pyongyang's prospects in this respect would be improved If the US troop removals came about in the contextloset Siuo-Ainerican.


Korean (pound forces,Marinearger thangf fcnr* an esti-

< number oispecUd lo in- reduced to Iheevel ofnfantry wilh the irtuni of two ravinou* from Vietnam.

terms <if pci-wiil oooixl forceicvcU, Ihr Northargeranti-aircraft artillery, awliiiiKUfiit kii.m- Ihris lannchiili.illi offsetasset* of one battalion of Nikeand Ihe equivalent ol throeHawk missiles Tlie North has one orItotkolOver-Cruund (FROC)by HOK Honest John holdings.armor equina ton! hit hidesukss, someew JS-ls or JS-2s) und up toand Its* capahlehethe greater munlier of tanks, and Ihemodeml/atiou progiain aims atmore than half of thelank forte in ihe two exist inc.ami pros* brig them -with acapability. NKorea liasadvantage io helditinlkuiit number ofgmu and the US plans loHOK force structure by fdling alllur iikniiui hnwit/cis.ivisMin hdantiy force isincrease hy three or four as Ihat number ol


infantry brigades isf the tankinereaSCS, the tanks, will probablyIho old assault guns in the one aimorcd division and the sin independent armoredNorth Korean tactical doctrine now calls lor light infautry units to harassami logistical lines to cause lor-moil in ROK areas, while the remaining North Kmean conventional forces advance lothe situation. This doctrine is not much different from Ihat employed iu Ihe early days of the Korean War.

he naval forces of each are small and primarily lor coastal defense. The ROK Navy-would beactical disadvantage inagainst the North Korean Navy which] W" class submarinesnided-missilc patrol boats (OSAs and KOMARs) armed with STYX missiles.North Korea is buildingDEs which may also carry the STYX missile.modernisation plans of the ROK call for acquisitionestroyers with tlie Sea Spanow SAM system and the installation of similar missile unitsxisting destroyers.

I. North Korea still has an advantage over tiki ROK in air power. Modernization will gradually replace thefiss andesserUs, but for the foreseeable future, the ROK Air Force will be

' Itituiitry hrieadit tiA tlx' armor ami artillery sUPPrtitliviiinn.

only partiiilly capable of countering enemystrike, Pyongyang's ground attack capability ha* recently been enhanced by the receipt ofilterla.-rs from the Soviets. 'Ihe lighter buce has also been upgraded by ihe receiptrom China, lu the future, the North Korcm Air Force may receive morend/or Mig-2ls bum the L'SSII and


ntcrccptois probablyrmed wilh A'l'OLl. air-to-air missiles. II Ihe current buildup of air power on both sides of the DMZ is considered an "armsne qualifying factor is significant: if US aircraft are not con-sidercd, the balance of air power dearly favors the North.


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