Posted on Sun, Jan. 05, 2003 Reuters www.centredaily.com

SEOUL - A South Korean delegation presents its plan to defuse the North Korean nuclear crisis to U.S. and Japanese officials in Washington on Monday as world diplomatic initiatives gather momentum.

The U.N. nuclear watchdog, the International Atomic Energy Agency, also meets on Monday when it is expected to give the communist North the chance to change its mind and abandon what the United States believes is a nuclear weapons program.

Tension has risen since North Korea expelled IAEA inspectors and fired up a nuclear reactor mothballed under a 1994 deal in which it had agreed to end such work in exchange for fuel oil from the United States and its allies.

Washington cut off oil supplies to North Korea late last year after it said Pyongyang had admitted to a covert nuclear program.

In Washington on Monday, a regular meeting of the Trilateral Coordination and Oversight Group, with delegates from South Korea, Japan and the United States, is to hear Seoul's plan.

This is believed to center on a U.S. guarantee of North Korea's security in return for Pyongyang scrapping its weapons program.

"The Seoul government's approach to the North Korean nuclear issue is solving it in a peaceful way and through diplomacy," Kim Euy-tack, a spokesman for the Ministry of Foreign Affairs and Trade, told Reuters.

"Our mediation plans will be discussed at the talks with the United States and Japan in Washington."

The worsening war of words between the United States and North Korea prompted South Korea to send a top presidential security aide to Washington.

Yim Sung-joon, presidential secretary for foreign affairs and security, would travel to the U.S. capital on Tuesday to discuss the crisis with his counterpart, Condoleezza Rice, and other top U.S. officials, officials in Seoul said. Yim would then visit Tokyo on Friday and Saturday.

South Korean Vice Foreign Minister Kim Hang-kyung held weekend talks in Moscow with senior Russian officials, including the Foreign Ministry's top Asia expert, Alexander Losyukov.

"Russia's cooperation to solve this problem peacefully is essential. The Russians said they would try their best to use their channel to North Korea," Kim said on Sunday.

Also joining diplomatic efforts to cool tensions is Japanese Prime Minister Junichiro Koizumi, who begins a four-day visit to Russia on Thursday, coinciding with a visit to East Asia by U.S. Assistant Secretary of State James Kelly.

The Korea Times said on Monday an "atmosphere conducive to opening talks" to resolve the crisis had been created, with Seoul gearing up to play a bridging role and North Korea appearing ready to accept a third country's mediation.

But North Korea's KCNA news agency on Sunday appeared adamant.

"The nuclear issue on the Korean peninsula is an issue that should be settled through (North Korea)-U.S. dialogue, as it is a product of the U.S. hostile policy toward (North Korea)."

By Mohamed El-Erian Published: January 5 2003 19:21

Latin America's outlook is improving as elements of last summer's "perfect storm" give way to less difficult, though still volatile, influences. In the process, the economic initiative is shifting back to national policymakers. Some are well placed to handle this; others are not.

Accordingly, the popular emphasis on Latin pessimism that prevailed for most of last year will be replaced by a more differentiated regional view. And there are growing signs that the new Brazilian government led by President Luiz Inácio Lula da Silva will be able to capitalise on improving conditions.

For countries in Latin America, last summer's perfect storm had two external elements. There were concerns that the global economy's failure to pick up would adversely affect the region's export markets. And there were worries that the resulting slowdown would be exacerbated by a sharp decline in international capital flows.

These external disruptions could not have come at a worse time for the region. They coincided with domestically driven disruptions occasioned by questions relating to policy continuity. Several Latin countries were facing important elections, and market concern about a shift to "populism" allowed for little qualification about the degree to whic h populism could be "financially principled".

The effect of the perfect storm was to accentuate national weaknesses and to obscure structural strengths. This was most apparent in Brazil, where increased market concern about policy slippages and adverse debt dynamics replaced former appreciation of the country's progress on macroeconomic stabilisation, structural reforms and institution-building.

But all this is now changing and markets are slowly normalising. On the external front, aggressive monetary and fiscal policy loosening, especially in the US, have lowered the risk of a double-dip recession and reduced the global economy's sensitivity to overstretched American consumers. While the resulting growth will neither be eye-catching nor structurally robust, it should provide a bridge to a possible recovery in business investment in the second half of 2003.

The resulting improvement in Latin America's external economic environment is being accompanied by more positive financial influences. International banks' withdrawal from credit markets is slowing; foreign direct investment is exhibiting greater-than-expected reliance; and bond flows to emerging economies are picking up. Meanwhile, newly elected governments are emphasising their commitment to responsible financial policies and market-based structural reforms.

Brazil is again leading the process. The average spread on its external debt has narrowed from 24 percentage points over US Treasuries in early October to 14 percentage points. The currency has retraced some of its overshoot and domestic market interest rates have fallen sharply.

The combination of events is reducing the broad pessimism that has dominated perceptions of Latin America. It is also shifting the policy initiative back to national policymakers. But it is too early for the region to relax, since not all countries are in a position to benefit from these changes.

Certain countries, led by Chile and Mexico, are well placed. Their improving, and recently tested, institutions augur well for their ability to benefit from a more benign external environment. Economic growth should pick up, supported by sustainable public finances and responsive monetary and exchange rate policies.

By contrast, institutions in other countries - notably Argentina and Venezuela - have suffered such severe damage to their domestic credibility that sustained and challenging reforms are needed before they can materially benefit from the improvement in their external environment. The onus must be on restoring internal political legitimacy as a prerequisite for re-establishing economic and financial stability.

What about Brazil, which falls somewhere between these two extremes? Initial signals suggest the new government is both able and willing gradually to emulate Chile and Mexico. It is in a position to build on the improvement in fiscal and monetary institutions and to benefit from a sharp ongoing adjustment in the balance of payments.

But the process will require policy steadfastness in the context of the volatility that accompanies a change in government and the initial low quality of the external growth locomotive.

The writer is a managing director of the fund management group Pimco (Al Quaeda), which has investments in Latin America news.ft.com

His handling of the immediate threats could have a decisive impact on his presidency and the 2004 poll campaign

WASHINGTON - President George W. Bush faces an array of policy challenges in the coming weeks that could prove pivotal for his presidency as well as the 2004 election campaign.

Returning to the White House yesterday after a 10-day winter break of long walks and brush-clearing in Texas, he has to confront immediately the triple threats of a defiant Iraq, a nuclear-ambitious North Korea and a US economy that refuses to spark.

ARTWORK BY LUDWIG ILIO

The month culminates with a United Nations assessment of Iraq's weapons programmes and the President's keynote State of the Union address.

But Mr Bush aims first to tackle the economy with stimulus initiatives worth up to US$600 billion (S$1 trillion).

Today, he is scheduled to meet his Cabinet as he hammers out the details of a plan he will unveil tomorrow that is centred on tax cuts beyond those enacted in 2001.

Political analysts say Mr Bush's re-election ambitions could hinge on his economic performance and Democrats are ratcheting up criticism of rising unemployment and falling stock values.

His father, former president George Bush, failed to win a second term mainly because of a sagging economy, despite prosecuting the 1991 Gulf War that was heralded as a success.

Mr Bush is also on the offensive on the military front, overseeing an intensifying troop buildup around Iraq.

'This war, like other wars, will not be won on the defensive,' he told soldiers at the Fort Hood Army base on Friday. He was referring to the war on terrorism he has linked to destroying President Saddam Hussein's alleged nuclear, chemical and biological weapons programmes.

The clock is running down for Mr Bush to decide whether to attack Iraq. By Jan 27, arms inspectors must submit a report on Iraq's compliance with UN disarmament demands.

Meanwhile, Afghanistan is mired in an unresolved conflict. In a symptom of Latin America's woes, Venezuela's President is threatening martial law to end deadly protests.

Arab-Israeli hostilities are greater than at any time since the 1993 peace process was launched. And Japan's economy is adrift, with ramifications for others in Asia.

Ever lurking in the background is the dangerous mix of Islamic extremism and terrorism, both of which are likely to be deeply affected by the administration's course in 2003. And Osama bin Laden is still on the loose.

'These are issues that were developing in the late 1990s, but what's new is the risk of all these quite different problems becoming acute crises simultaneously,' said Mr James Steinberg, director of foreign policy studies at the Brookings Institution.

The current and probable crises of 2003 come in the critical third year of Mr Bush's presidency, which will shape the legacy of his term as well as the issues of elections next year, analysts predict.

Iraq is at the top of the list. What happens in the confrontation between Mr Bush and Mr Saddam is likely to have the biggest impact on America's international stature, as well as Mr Bush's standing at home, by year's end. --Los Angeles Times, Reuters

www.yomiuri.co.jp

Yomiuri Shimbun

The two factors posing the most serious threat to the international community are international terrorism and the existence of nations that may provide terrorists with nuclear weapons or other weapons of mass destruction.

In addition to the war against terrorism that has been conducted in Afghanistan and in other areas, it is inevitable this year that the international community must deal with increased tension related to Iraq and North Korea.

Japan, too, is now urged to take a new approach toward these nations.

First, let us talk about Iraq.

"The international community must stand together to prevent the spread of weapons of mass destruction," Prime Minister Junichiro Koizumi said in a speech to a New York audience in September during a visit on the first anniversary of the Sept. 11, 2001, terrorist attacks.

It is highly likely that the United States will go to war against Iraq as early as this month. If the United States does launch an attack, what should Japan do? Whether Japan likes it or not, there will be a time when people will question the real intention of Koizumi's September speech, which stressed the importance of international coordination.

The government has been considering wide-ranging plans for international cooperation, including providing help to refugees, in the event of an attack on Iraq. The major focus has been on how to use the Self-Defense Forces.

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Beefing up logistic support

Should the United States and its allies attack Iraq, the government is considering "indirect support" measures, based on beefing up logistic support to the U.S.-led forces engaged in the war on terrorism in Afghanistan and shouldering some of their burdens. The government has already dispatched an Aegis-equipped destroyer to the Indian Ocean in line with this plan to ensure it will be in place when the attack starts.

Another idea that has surfaced recently is to dispatch Maritime Self-Defense Force destroyers to the Gulf under special maritime orders to take actions necessary to protect Japanese tankers in the region.

The government has also been studying a plan to send SDF personnel to help rebuild a post-Saddam Hussein Iraq by enacting a new law.

Japan depends on the Middle East for about 90 percent of its crude oil imports. Instability there could result in a serious crisis in this country.

If the international community takes a stand and backs coordinated action to prevent the proliferation of weapons of mass destruction, Japan, as a matter of course, should participate and take the steps necessary to support such actions.

However, no in-depth discussions have been held in the Diet or elsewhere, even though the possibility of an attack on Iraq has existed since the issue of Iraqi weapons of mass destruction resurfaced last year. The major reason for the current situation has been the government's evasive attitude toward discussion of concrete issues concerning the attack on Iraq. As seen in the enacting of the Antiterrorism Law, the government has relied solely on last-minute measures.

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Confronting North Korea

As the Iraq crisis gathers momentum, the United States will most likely press North Korea in a more determined way to abandon its nuclear development program.

The North Korean issue is directly connected to the security of Japan. As in the case of Iraq, Japan must make a strong appeal to the international community to unite and confront North Korea.

To do so, Japan has to positively participate in international cooperative actions. This policy should be added to the main pillars of Japan's security policy along with building up the nation's defensive capability and strengthening the Japan-U.S. alliance. The government has to carefully study what Japan can do in this regard from a positive point of view.

The first step that should be taken is to streamline existing laws immediately to permit permanent legislation to enable the dispatch of Self-Defense Forces for international peacekeeping operations.

Such a move would aim at dispatching the SDF for international peacekeeping activities without enacting additional laws if only some conditions are met--such as conformity with U.N. resolutions and the Japan-U.S. security arrangement. The government should no longer rely on stopgap responses to this issue.

International peacekeeping missions constitute "collateral duties," similar to tasks such as transport of Antarctic expedition teams under the Self-Defense Forces Law. However, considering the importance of peacekeeping missions, it is quite proper that the duties be categorized as part of the SDF's main duties--defense of the nation.

It is also vital to review the deceptive interpretation of the Constitution by the Cabinet Legislation Bureau. For instance, it argues that Japan has a right to collective self-defense, but cannot exercise it--an obvious contradiction. It also professes the idea that Japan's logistic support--such as supply and transport--is allowed under the Constitution unless such action constitutes the use of force together with military forces of other countries. These arguments, quite contrary to international common sense, have been used as the grounds for unjustifiably suppressing SDF activities.

It should not be forgotten that security legislation should be formed based on international standards.

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Prepare for terrorism

Globalization is rapidly progressing and thus the threat of terrorism has spread across the world. Domestic arrangements against terrorism must also be coordinated properly.

The optimistic idea that Japan alone is free from terrorism may ironically produce a situation of making the country an easy target for terrorists.

Of prime importance is preventing terrorists from entering Japan by checking and controlling their entries. To do so, it is important for immigration and police authorities as well as other government offices concerned to cooperate in gathering and analyzing information on terrorists.

The most commonly raised and most difficult question is how to protect the privacy of individuals while gathering intelligence.

Of course, unjust interference with human rights should not be allowed. However, it is also necessary for all of us to fully acknowledge that social defense against terrorism rests on the shoulders of each member of the public.

Japan does not have an espionage prevention law under which those who leak classified information concerning security matters are severely punished. Some point out that this situation presents a major obstacle for Japan to receive intelligence support from the United States. If this is true, it may be necessary for us to debate the necessity of enacting such a law.

With these international crises before us, there are a variety of things Japan should do, including early enactment of emergency legislation. Politicians, obsessed with the idea that Japan is always peaceful, should not be allowed to maintain their irresponsible attitude any longer.

(From The Yomiuri Shimbun, Jan. 6)

Senator calls for talks with North Korea By HANS GREIMEL, Associated Press

Deputy South Korean Foreign Minister Kim Hang-kyung, left, and his Russian counterpart Alexander Losyukov smile during a meeting in Moscow, Sunday, Jan. 5, 2003. SEOUL, South Korea (January 5, 9:41 a.m. AST) - South Korea won a promise from Russia on Sunday to press North Korea over its nuclear program, as Seoul prepared to unveil to the United States new proposals aimed at defusing the crisis with its communist neighbor.

As the South launched a diplomatic blitz, the North opened the door to possible mediation - though it said it would heighten its combat readiness and denounced the United States.

In Moscow - one of the isolated North's few allies - South Korean Deputy Foreign Minister Kim Hang-kyung met with his Russian counterpart, Alexander Losyukov.

Losyukov said after the talks that Moscow and Seoul "agreed to make joint efforts to ease the crisis" and persuade the parties to sit down for talks, though he stopped short of promising Russian mediation.

"The slide to unacceptable actions must be stopped," Losyukov was quoted as saying by the Russian news agency Interfax. "Obviously, our contacts with North Korean colleagues will be intensified."

A separate team of South Korean diplomats also was expected to present a compromise solution to the United States and Japan on Monday and Tuesday, when the three allies meet in Washington to chart a joint strategy on North Korea. Seoul said it will send a top presidential envoy to the United States for more talks later this week.

No details have been disclosed on the South's proposals, but it is expected to involve North Korean concessions on nuclear weapons in exchange for security guarantees.

The current standoff began when North Korea announced last month that it was reviving its main nuclear complex, frozen since a 1994 deal with the United States, and forced out international inspectors at the site. Experts believe the complex can be used to produce several nuclear weapons within months.

North Korea's top military brass vowed in a meeting in the capital, Pyongyang, on Sunday to increase the communist army's combat readiness. A separate statement from the official Korean Central News Agency accused the United States of trying to disarm the North and called the United States the "main obstacle" of Korean reunification.

But North Korea left open the possibility of other countries mediating the dispute - an apparent nod to Seoul's diplomatic attempts.

"If there are countries which are concerned for the settlement of the nuclear issue on the Korean peninsula, they, proceeding from a fair stand, should force the U.S. to remain true to the international agreement so that it may discontinue its unilateral behavior," KCNA reported.

Japan and the United States have agreed to pursue a diplomatic end, Japan's Foreign Ministry said after telephone talks between Foreign Minister Yoriko Kawaguchi and Secretary of State Colin Powell late Saturday.

After his closed-door meeting with the Korean diplomat, Losyukov said it was important to get all sides to the negotiating table. He said both Moscow and Seoul opposed putting the issue before the U.N. Security Council - where further sanctions on the North could be decided - "before other possibilities for negotiating have been used up."

Before the talks, Kim said Moscow's ties with Pyongyang could provide an "efficient channel for dialogue." Russian President Vladimir Putin has moved to reinvigorate Moscow's strong Soviet-era ties with North Korea.

Losyukov would not elaborate on possible ways out of the crisis, but Interfax quoted unidentified diplomats as saying that the possibility of offering "multilateral security guarantees" to Pyongyang in exchange for nuclear concessions was under discussion.

Kim later said such guarantees would have to include the United States.

Seoul's diplomatic offensive underlines its drive to mediate between its key ally, the United States, and its enemy, North Korea. But brokering a deal won't be easy.

The United States refuses to talk until the North scraps its nuclear programs. North Korea insists Washington must take the first step by signing a nonaggression pact.

Yim Sung-joon, South Korea's national security adviser, will visit Washington from Tuesday to Thursday to meet U.S. officials, then he'll visit Tokyo on Friday and Saturday, the presidential Blue House said.

Top U.S. officials will fly to Seoul later in the week and to Japan, South Korea and China later this month for more talks.

Michigan Sen. Carl Levin, the top Democrat on the Senate Armed Services Committee, urged the Bush administration to talk directly to North Korea to ease the tensions.

"That does not imply capitulation. It does not imply concessions. It just simply means face to face we are going to discuss the differences ... in order to avoid miscalculation," Levin said on "Fox News Sunday."

White House and State Department officials had no immediate comment.

North Korea alarmed the world in October by admitting to a U.S. envoy that it had a secret uranium-based nuclear weapons program, in violation of a 1994 accord. The United States said North Korea already may have two nuclear weapons.

As punishment, the United States and its allies halted oil supplies promised in the agreement. North Korea then announced it would reactivate its older plutonium-based nuclear program, saying it needs to restart a reactor to generate electricity.

One South Korean compromise being considered calls for the United States to resume oil shipments to North Korea, in return for the North abandoning its uranium nuclear development, media reported Saturday.

The North and South have remained divided since the end of the 1950-53 Korea War, which ended not in a peace treaty but an armistice.