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Cablegate: Seoul - Press Bulletin; December 17, 2009

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UNCLAS SECTION 01 OF 04 SEOUL 001965

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV MARR ECON KPAO KS US
SUBJECT: SEOUL - PRESS BULLETIN; December 17, 2009

TOP HEADLINES
-------------


Chosun Ilbo
Plane Impounded in Thailand Contains
Taepodong-2 Missile Parts

JoongAng Ilbo, Hankook Ilbo, All TVs
Court Issues Warrant to Arrest Former Prime Minister

Dong-a Ilbo, Seoul Shinmun
17 Killed in Tourist Bus Crash near Gyeongju

Hankyoreh Shinmun
Blue House Effectively Rejects "Three-Way Meeting" between Leaders
of Ruling and Opposition Parties and President Lee
to Resolve Budget Impasse

Segye Ilbo
Gas Rates to be Linked to Global Oil Prices


INTERNATIONAL NEWS
------------------

According to a diplomatic source in Washington and foreign media,
President Barack Obama sent a personal letter to North Korean leader
Kim Jong-il that was delivered last week when Special Representative
for North Korea Policy Stephen Bosworth visited Pyongyang. (All)

According to Reuters, Thai investigators searching cargo seized from
a plane from North Korea that landed in Bangkok have found weaponry
that includes unassembled Taepodong-2 missile parts. (Chosun,
Dong-a, Hankook)

A high-ranking Thai government security official said: "Given that
North Korea has developed the Taepodong-2 missile in cooperation
with Iran, some experts believe that the seized weapons (were
destined for) Iran." (Chosun, Dong-a, Hankook)

According to a source in Seoul, North Korean leader Kim Jong-il
ordered the November currency revaluation in his country to get a
better handle on the North's economy. The source said that the North
Korean leader issued a directive in early September saying that the
North's planned economy and the market economy, which developed
after an earlier economic reform, could not coexist. (JoongAng)

According to a source well-versed in North Korean affairs, North
Korea's arms exports this year have reached nearly $200 million,
twice the amount of last year's. (Dong-a)


MEDIA ANALYSIS
--------------

-N. Korea
----------
All ROK media covered yesterday's foreign media reports that
President Barack Obama sent a personal letter to North Korean leader
Kim Jong-il, which was delivered last week when Special
Representative for North Korea Policy Stephen Bosworth visited
Pyongyang.

Conservative Chosun Ilbo noted Washington's unwillingness to make
public the existence of the letter, and said that there is
speculation that President Obama may have made "bold" promises (to
North Korea), such as a bilateral summit, if the North's
denuclearization proceeds smoothly.

Conservative Segye Ilbo quoted Foreign Minister Yu Myung-hwan as
telling reporters yesterday: "(I am) aware that North Korea conveyed

SEOUL 00001965 002 OF 004


to Ambassador Bosworth, who traveled to the North from Dec. 8 to 10,
that the U.N. sanctions on the country are unreasonable. This is
nothing new. (The claim) is similar to the North's insistence that
the U.S. drop its hostile policy toward the North before it returns
to the Six-Party Talks."

Most media replayed a Dec. 16 report by Reuters that Thai
investigators searching cargo seized from a plane from North Korea
that landed in Bangkok have found weaponry that includes unassembled
Taepodong-2 missile parts. A high-ranking Thai government security
official was widely quoted as saying: "Given that North Korea has
developed the Taepodong-2 missile in cooperation with Iran, some
experts believe that the seized weapons (were destined for) Iran."

Conservative Chosun Ilbo, in a related development, gave attention
to a Dec. 8 report by Japan's Sankei Shimbun claiming that North
Korea is assisting Iran in developing a cruise missile. According
to the Japanese daily, an unnamed diplomatic source claimed that the
missile under development is capable of carrying a nuclear warhead
and could lead to technical improvements in Middle Eastern and North
Korean missile technologies.


FEATURES
----------

NORTH'S KIM MOVED TO END MARKET ECONOMY
(JoongAng Daily, December 17, 2009)

By Reporter Jeong Yong-soo

North Korean leader Kim Jong-il had ordered the November currency
revaluation in his country in September to get a better handle on
the economy, the JoongAng Ilbo has learned.

A source in Seoul said yesterday that Kim issued a directive in
early September to officials handling the economy saying that North
Korea's planned economy and the market economy, which developed
after an earlier economic reform, could not coexist.

"The currency reform was designed to restore order within, and
strengthen, the centrally planned economy," the source said,
referring to the economic system managed directly by the state.

The central government makes all economy-related decisions.

Relaying a message from a high-ranking economic official in
Pyongyang, the source added, "The new economic policy line,
reflecting Kim Jong-il's wishes, is expected to be included in his
New Year's Day editorial in newspapers on Jan. 1."

Soon after the revaluation began on Nov. 30, exchanging old bills
for new ones at the rate of 100 to 1, various sources said the move
was aimed at curbing inflation following the economic reform
measures from July 1, 2002.

The North in 2002 introduced some market economy aspects, raising
wages, expanding corporate incentives and gave companies leeway to
set their own business plans. The side effects have been inflation
and a widening gap between the rich and the poor.

The Seoul source also said Kim Jong-il asked the economic officials
to attract more investments from the Western world, including the
United States.

"North Korea tried to draw investment through special financial
districts in 1993 and 2002, but had little success," the source
said. "This time, the North (plans to) expand those special
districts and will try to bring in foreign capital to other areas,
too."

Professor Chin Hee-gwan of Inje University's unification studies
program said the North has in effect acknowledged the failure of the
July 1 measures.

SEOUL 00001965 003 OF 004

"The expanded market economy had a spillover effect on the planned
economy, and internally, the North has admitted its mishap," Chin
said. "The North's economy now appears to be on the upswing, and it
must be confident about supplying goods through its ties with
China."

A North Korean expert at a state-run research institute said Kim
Jong-il had already hinted in his June statement that economic
change was imminent. Kim at the time said the North Korean people
should strive to achieve "self-reliant economic revival."

"Stressing self-reliance essentially meant doing away with the July
1 measures," the expert said. "I can just picture Kim agonizing
over what to do with the side effects from July 1."


IS NORTH KOREA TAKING A POSITIVE ATTITUDE AFTER BOSWORTH'S VISIT DUE
TO OBAMA'S PERSONAL LETTER?
(JoonAng Ilbo, December 17, Page 10)

By Correspondents Choi Sang-yeon and Kim Dong-ho

U.S. Special Representative for North Korea Policy Stephen
Bosworth's visit to North Korea produced much more positive results
than expected. On December 11, one day after Ambassador Bosworth
wrapped up his visit, a North Korean Foreign Ministry spokesman said
that the two sides reached a series of common understandings on the
need to resume the Six-Party Talks and the importance of
implementing the September 19 Joint Statement. The U.S. said that
this statement signals a good start.

Even though North Korea stopped short of pledging to return to the
Six-Party Talks, it is the first time the North mentioned the
resumption of the Six-Party Talks and the implementation of the
September 19 Joint Statement since it vowed never to return to the
multilateral forum in April. Therefore, this represents a
significant change in North Korea's attitude.

U.S. experts on North Korea viewed this change (in the North Korean
attitude) as somewhat unexpected. North Korea and the U.S. had no
discussions on follow-up talks. Moreover, Ambassador Bosworth's
visit did not include a meeting with North Korean leader Kim
Jong-il. Therefore, diplomatic sources in Washington speculated
that "something" is behind the change in North Korea's attitude. It
turns out that the change was apparently driven by President Obama's
personal letter which Ambassador Bosworth delivered to Kim Jong-il.

A presidential letter is not diplomatically binding but generally
contains polite requests from a state leader. A presidential letter
is often kept under wraps and remains undisclosed. This time again,
the Obama Administration reportedly stressed to the other Six-Party
nations that the fact should not be disclosed. The ROKG is
maintaining the position that "Ambassador Bosworth did not talk
about the personal letter, and we do not know about it" or that "It
is not appropriate to mention it."

The problem is the contents of the letter. Up until now, the Obama
Administration has reiterated that it will not withdraw sanctions
against North Korea or provide other incentives in order to persuade
the North to rejoin the Six-Party Talks. Assistant Secretary of
State for Public Affairs Philip Crowley noted, "Ambassador Bosworth
and the team made clear to North Korea, should they come back to the
Six-Party process, should they take affirmative steps in the
denuclearization process, then a range of other possibilities open
up for North Korea." In this regard, Japan's Yomiuri Shimbun quoted
a USG official as saying on December 16, "When Ambassador Bosworth
visited Pyongyang, the North asked him to provide it with a
justification for returning to the Six-Party Talks." The daily
added, "The official presumed that the lifting of the economic
sanctions is the justification."

Former U.S. Presidents Bill Clinton and George W. Bush also sent
their personal letters to North Korean leader Kim Jong-il. However,

SEOUL 00001965 004 OF 004


President Obama's letter is unusual in the sense that the missive
was sent after intensive diplomatic efforts. Former President Bush
wrote in his letter sent in late 2007, late in his term, "We can
have normalized relations on the condition that North Korea fully
discloses its nuclear plans."


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