EAST ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A002200060002-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 12, 2016
• Document Release Date: July 13, 2001
• Sequence Number: 2
• Publication Date: November 18, 1975
• Content Type: NOTES

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op Secret
NOFORN
rrLEE JED1TE
East Asia
Top Secret
November 18, 1975
SC No. 00543/75
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Warning Notice
Sensitive Intelligence Sources and Methods Involved
(WNINTEL)
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
DISSEMINATION CONTROL ABBREVIATIONS
NOFORN- Not Releasable to Foreign Nationals
NOCONTRACT- Not Releasable to Contractors or
Contractor/Consultants
PROPIN- Caution-Proprietary Information Involved
USIBONLY- USIB Departments Only
ORCON- Dissemination and Extraction of Information
Controlled by Originator
REL... - This Information has been Authorized for
Release to ...
Cleaslfled by 010725
Exempt from general declassification schedule
of E.O. 11652, exemption category:
458(1), (2), and (3)
Automatically declassified on:
Date impossible to Determine
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NOCONTRACT/ORCON
This publication is prepared for regional specialists in the Washington com-
munity by the East Asia - Pacific Division, Office of Current Intelligence,
with occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
November 18, 1975
Tokyo and Pyongyang:
A Gradual Shift . . . . . . . . . . . . . . .
South Korea: Closeup
on Energy . . . . . . . . . . . . . . . . . . 10
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Tokyo and Pyongyang; A Gradual Shift
Relations between Japan and North Korea have
undergone gradual but important changes since 1971.
Over the past four years, a private, official dip-
lomatic channel has been established; political and
semi-official contacts have increased; and trade
and travel between the two countries have grown
markedly. At this point, formal relations could be
established quickly. Pyongyang would be willing,
7 but Tokyo has no compelling reason to move this far
at this stage. Indeed, relations between the two
countries are not likely to improve at the same pace
as the past four years without further forward move-
ment in the overall pattern of detente. Tokyo is
unlikely to allow events to move in any inexorable
upward trend that could result in formal relations
with Pyongyang prematurely. Even so, interaction
between Tokyo and Pyongyang, based on the level of
contacts already established, could be an important
factor in North-South developments on the Korean
Peninsula.
Changing Perceptions
The mutual desire of both countries to improve
ties flowed from the emergence of detente in Asia
in 1971. At the outset, Pyongyang--perhaps because
of prior discussions with Peking--moved more rapidly
and vigorously than Tokyo in pursuit of its inter-
ests in the new climate. In 1971-72, North Korea
turned to the non-communist world as a major source
of technology and capital goods, opened a dialogue
with South Korea, and undertook a major drive for
diplomatic support among both Western and nonaligned
states. Japan figured importantly in the North's
plans--as an economic power, a key political sup-
porter of Seoul, and an important element in the
power equation arrayed against Pyongyang. North
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Korea hoped at the outset to move as far and as fast
with Japan as possible in order to strain Tokyo's
ties with both Seoul and Washington. Japan, on the
other hand, surprised by the Sino-American under-
standing of 1971, entered the new era uncertainly
with no precise plan in mind. Indeed, Tokyo initially
could do little more than feel its way until the pace
and scope of detente became more clear. With respect
to North Korea, Tokyo exercised special caution be-
cause of Japan's basic interest in stability on the
Korean Peninsula and its security relationship with
the US.
Opening Moves
Pyongyang made its first significant gesture
in 1971, two months after the surprise announcement
of President Nixon's pending visit to China and a
month after the opening of Red Cross talks had in-
t:-oduced the climate of detente to Northeast Asia.
In an interview with the Asahi Shimbun on September
(i 27, Kim Il-song called for an expansion of techni-
cal, economic, cultural and press exchanges with
Japan, expressed interest in visits by members of
the ruling Liberal Democratic Party (LDP), and
talked of turning to Tokyo as a major source of in-
dustrial imports. Throughout late 1971 and early
1972, the North Korean president used interviews
with visiting Japanese to raise the possibility
of establishing relations.
Tokyo officials were more cautious at this
juncture. Surprised by the Sino-American announce-
ment, their immediate concerns were directed more
at Peking than Pyongyang. Tokyo did, however, an-
nounce a phased liberalization of restrictions on
travel to and from Pyongyang, while denying requests
for Export-Import Bank financing of whole plant ex-
ports to the North.
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In January 1972, a suprapartisan delegation
of Japanese legislators visited Pyongyang and signed
an agreement urging:
--the expansion of bilateral trade to
$500 million by 1976;
--Japanese acceptance of deferred pay-
ment terms;
--technological cooperation;
--the exchange of official trade
offices.
The delegation probably hoped that the agreement
would develop along the lines of the Liao'-Takasaki
agreement negotiated ten years earlier. That agree-
ment--covering Sino-Japanese trade--led to the es-
tablishment of semi-official Memorandum Trade Offi-
ces in Tokyo and Peking, and served as a channel for
a phased buildup of political relations. Since 1972,
however, both Japan and North Korea have agreed that
such trade offices are unnecessary. Pyongyang has
never demanded--as Peking did--that trade be restricted
to designated friendly firms. Tokyo for its part,
later opted for a more official, direct channel of
communication.
July 1972 Watershed
Tokyo's major response to detente--improving
relations with all Asian Communist states---came
with the installation of the Tanaka government in
July 1972. Within days, Japanese diplomats in Mos-
cow privately established official contact with their
North Korean counterparts. Contacts were elevated
to the level of embassy minister by December of that
year and have continued, albeit sporadically, ever
since. North Korean officials visiting Tokyo in
q_1
October 1972 and again in October 1974 also held pri-
vate talks with Japanese officials, but the Moscow
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channel remains the only known venue for consistent
private exchanges.
North Korean public commentary on Tanaka was
innediately favorable. In July 1972, Kim Il--now
premier--delivered a forthright speech that sig-
naled a new positive official attitude toward Tokyo.
North Korean propaganda portraying Japan as a mili-
tary threat was drastically reduced, and it was prob-
ably about this time that Pyongyang withdrew anti-
Japanese themes from its school curriculum.
Both governments also facilitated a considerable
increase in travel and trade, which on Tokyo's part
included the use of Export-Import Bank credits be-
ginning in October 1973. From a modest total of
$58 million in 1970, Tokyo and Pyongyang increased
the annual trade volume to $150 million in 1973,
and to $368 million in 1974. Meanwhile, yearly visi-
tors moving in both directions increased from 43 in
1970 to more than 1,400 last year.
The Past Year: Changes in Atmosphere
In the final months of the Tanaka government
last year, Tokyo's deteriorating relations with Seoul
began to complicate the process of increasing ties
with the North. Tensions between Japan and South
Korea had begun to build in 1973 with the abduction
of Kim Tae-chung from Tokyo by the ROK CIA, and in-
creased markedly a year later when a Korean resi-
dent of Japan assassinated Madame Pak Chong-hui in
Seoul. Despite these problems, Japanese Foreign
Minister Toshio Kimura persisted in calling for bet-
ter relations with the North--thereby exacerbating
frictions in the Japanese - South Korean relationship.
Political forces favoring the shoring up of re-
lations with Seoul finally became ascendant in Tokyo
when Miki replaced Tanaka as prime minister in Decem-
ber. At that time, party Vice President Shiina
forced Miki to replace Kimura with Kiichi Miyazawa,
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who quickly adopted a more sympathetic attitude to-
ward Seoul. Developments in 1975 have generally fa-
vored Tokyo's relations with Seoul over Pyongyang:
--in the spring, Tokyo canceled Export-
Import Bank credits for trade with
Pyongyang as a result of North Ko-
rean defaults on prior obligations;
--later in the spring, communist vic-
tories in Indochina generated concern
in Tokyo about stability on the Ko-
rean Peninsula. As a result, Prime
Minister Miki during his August visit
to Washington reiterated the essential
linkage of Japanese and South Korean
security, and--probably more damaging
in Pyongyang's view--reaffirmed the
need for US troops to remain in
South Korea;
--in September, the Japanese participated
in a long-postponed ministerial con-
ference with South Korea, agreed to
continue economic assistance, and
thereby "normalized" relations with
Seoul. Tokyo also agreed to co-
sponsor and lobby for the US-ROK
resolution in the UN.
With Japan - South Korean relations on the mend,
Tokyo did feel somewhat more free to make some com-
pensating gestures toward Pyongyang. In July, Tokuma
Utsonomiya, an LDP Dietman who has long been known
for his pro - North Korean sympathies and is a con-
fidant of Prime Minister Miki, held another of his
well-publicized conversations with Kim Il-song.
Shortly thereafter, the first all-LDP Diet delegation
visited Pyongyang. And in early September, Tokyo
further liberalized restrictions on the travels of
officials from Chosen Soren (the pro-Pyongyang federa-
tion of Korean residents in Japan) to North Korea
for political purposes.
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Also in early September, when North Korean
forces killed two Japanese fishermen on the Shosei
Maru near North Korean territorial waters, the over-
whelming reaction in Tokyo was to stress the need
for better communications with Pyongyang in order to
prevent this sort of accident in the future.
North Korean propaganda was surprisingly harsh
on Miki at the outset of his administration. It has
since leveled off somewhat, but still criticizes Miki
and Miyazawa by name and contains little of the opti-
mism about relations that characterized Pyongyang's
commentary during the early Tanaka period. In Oc-
tober, presumably annoyed by Japanese efforts to
strengthen ties with Seoul and by Tokyo's reaffirma-
tion of the need for US troops in South Korea, Kim
Il-song made an unusual attack on the US-Japan Mutual
Security Treaty.
Pyongyang: At a minimum, Kim's criticism of the
mutual Security Treaty reflects his mixed feelings
about the policy of pursuing better relations with
Japan. Having long viewed Japan's security ties with
the US as a major stumbling block to his ambition of
reunifying the peninsula, Kim must find it galling
that, after four years of detente and North Korean
efforts to improve bilateral ties, Tokyo has once
more reaffirmed the need for US troops in South
Korea. Kim is probably also disturbed by the fact
that Seoul and Tokyo were able to dissipate the fric-
tions that threatened their relations last year.
Kim may be tempted to resort to a harder line
against Japan, try to manipulate the Japanese fear
of becoming embroiled in another Korean war, and
hope to force Tokyo to abandon its military alliance
with the US. But Kim is also aware that he--and
Peking--unsuccessfully pursued this line for over
twenty years, and he cannot be optimistic about his
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own chances at this juncture. Indeed, it would be
difficult to adopt a "cold war" attitude toward Japan
without seriously complicating his overall posture of
detente.
It is far more likely that Kim will continue
to walk a fine line between wooing and pressuring
Tokyo. The psychological advantage, vis-a-vis the
South, of the modest political advances already reg-
istered in Japanese - North,Korean contacts is of
considerable value to Pyongyang. In economic terms,
Japan has now surpassed the USSR as the leading ex-
porter to North Korea. Kim has also openly expressed
his interest in cultivating ties with conservative
leaders of the LDP, is apparently willing to deal
with any prime minister, and has set no pre-conditions
for the normalization of relations. Despite Japan's
concern to maintain South Korean security, he would
apparently welcome the immediate establishment of
relations. Hence Pyongyang is likely to encourage
as much additional forward movement as possible with-
out exerting hostile pressures that could alienate
Tokyo.
Tokyo: The consensus within the ruling liberal
Democratic Party favoring contacts and a dialogue
with the North has now been broadened to include the
conservative wing. Many conservatives were upset by
the improvement of ties with Pyongyang at the expense
of Seoul during 1973 and 1974. Now that relations
with Seoul have been restored to an even keel, how-
ever, conservative interests have been served. Re-
cent calls for further dialogue with the North in
the wake of the "Shosei Maru" incident have come
from such impeccable conservative voices as Shintaro
Abe--the minister of agriculture who is a protege of
Takeo Fukuda and former prime minister Kishi--and the
respected financial daily, the Nihon Keizai Shimbun.
Tokyo has two basic interests in ties with the
North:
--the need for flexibility in adjusting
rapidly to any new developments on the
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peninsula, especially a major change
in US policy. Tokyo has a lingering
concern that Washington, as it did in
its move toward Peking in 1971, will
change its posture toward the North--
or withdraw from the South--without
giving Japan sufficient prior notice;
--an ability to influence developments
on the peninsula through contacts
with both Korean adversaries. Tokyo
also hopes to increase stability there
by fostering a dialogue between North
and South.
Ci)
It seems reasonably clear at this point that
Japan's desire for flexibility has been achieved,
given the level of contacts already established and
Pyongyang's willingness to move ahead at any time.
For its part, Japan sees little reason for recogni-
tion of Pyongyang in the near future and probably
has no specific timetable in mind for such a move.
Foreign Ministry officials do not now envisage a
phased escalation of official dealings as occurred
in the evolution of Sino-Japanese relations.
Tokyo's second interest--gaining more influence
on the peninsula and helping foster a North-South
dialogue--will probably become more of an operative
factor in Japan's future dealings with the North.
But pursuing this interest will not be easy. Theo-
retically, Japan could modulate its policies toward
the North in response to variations in Kim's poli-
cies. The principle of extending Export-Import
Bank credits to the North on a "case by case" basis
--likely to be resumed by Japan at some future point
--would afford Tokyo some real leverage in this re-
spect and over time might serve to increase Pyong-
yang's stake in more moderate policies. On the other
hand, unwillingness or inability in Tokyo to "penal-
ize" Pyongyang during a period in which the North
had visibly heightened tension on the peninsula might
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contribute to a more uncompromising attitude on the
part of Kim. Another potential pitfall is the pos-
sibility that Tokyo's own energetic search for dia-
logue on the peninsula might result in premature sup-
port for a new attractively packaged peace proposal
by Pyongyang.
To have any real chance of success, it seems
clear that Tokyo will need to keep in close touch
with Seoul as well, continuing to provide the South
with essential economic and political support. (SE-
CRET NOFORN/NOCONTRACT/ORCON)
November 18, 1975
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South Korea: Closeup on Energy
An extended period of rapid growth in GNP and
energy consumption has made South Korea the third
largest oil importer among LDCs. Only India and
Brazil outrank it. Given South Korea's meager
energy resources, oil imports will continue to be
closely linked to economic growth.
During the past decade, South Korea has
emerged as a major oil consumer and importer.
While total energy consumption rose 8 percent
annually from 1967-74, oil usage increased three
time-s as fast. Oil consumption, which currently
averages 300,000 barrels per day, represents half
of total energy use. Industry is the main user,
accounting for about 50 percent of total oil con-
sumption. The transport and household sectors take
most of the remainder.
Growth in oil consumption slowed to 3 percent
last year, largely because of an industrial slump.
In 1975, tough government conservation measures
are helping to hold growth in oil use under 10
percent in the face of a 12 percent jump in industrial
output; oil consumption normally would rise faster
than industrial output. Commercial consumption
appears to be rebounding after last year's slump,
while unusually dry weather has required a sharp
rise in the use of fuel oil by the electric power
industry.
Over the longer term, Seoul expects oil
consumption to increase rapidly. According to
government estimates, requirements will reach about
850,000 barrels per day in 1981, nearly triple
the current level. The pattern of consumption
is not expected to change much; the industrial
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share will be buoyed by the large requirements of
several major petrochemical plants now under con-
sideration. Plans now call for oil to supply nearly
60 percent of total energy needs by the early 1980s.
Since all oil requirements are met from abroad,
import patterns have closely followed consumption
trends. In 1974 and earlier this year, however,
oil imports increased somewhat faster than con-
sumption because of government efforts to increase
stocks. In addition to normal commercial inventories,
Seoul wants to increase energy stocks to a 45-day
supply. At the time of the 1973 oil embargo, South
Korea was caught with little more than a 20-day
stockpile.
Saudi Arabia supplies 60 percent of crude imports,
with Kuwait and Iran supplying the remainder. Small
amounts of products are purchased abroad, chiefly
from Japan. South Korean hopes to reduce dependence
on imported oil by developing offshore fields in the
Yellow and East China Seas have been damped by con-
flicting territorial claims. Only a few wells have
been drilled so far on the East China Sea continental
shelf, which is claimed in part by the Japanese.
Chinese claims have interfered with work in the
Yellow Sea.
Although of declining importance in recent
years, coal remains a major energy source. South
Korea has nearly 1.5 billion tons of poor-quality
anthracite deposits, about one third of which is
recoverable with present technology. Primed with
new government subsidies and investment loans, coal
production increased a total of 22 percent: in 1973-
74, to 15.3 million tons, after three years of stag-
nating output. Additional government aid is expected
to boost coal production by a million tons annually
through 1981. To preserve the 30 percent share of
coal in total energy supply, imports also will be
increased substantially. Imports are expected to
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