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RE BLIC OF KOREA/JAPAN

4.

The Republic of Korea is concerned at how quickly Japan moves in establishing formal relations with North Korea. South Korea is

putting pressure on Japan not to recognize the North following the latter's entry into the United Nations, believing Japan might use

the UK's recognition as a reason to follow suit. The South does not wish North Korea to be given a diplomatic propaganda boost at a time

when North/South talks are about to re-start. There is a school of

thought in South Korea that suspects Japanese motives towards the

North, believing that their long-term objective is to prevent

unification (which might produce a more powerful economic competitor in the region).

REPUBLIC OF KOREA/NORTH KOREA

5. North and South Korean Prime Ministers met for the first time

since the Korean war in September 1990 in Seoul. Two meetings

followed in October and December but after this, in protest at

ROK/US annual military exercises (Team Spirit) due to be held in

February this year North Korea refused to proceed with any further

talks. These were reinstated for August but again failed to take

place. North Korea blamed a cholera outbreak in the South as the reason but it is thought that the North needed time to reassess its position following the coup attempt in the Soviet Union. But a meeting at Prime Ministerial level is now scheduled to take place in Pyongyang from 22 - 25 October. The talks are not expected to lead to any concrete proposals, particularly at a time when North Korea still refuses to undertake its NPT obligations (see para 1 above).

6.

Inspite of this, trade between the two Koreas is growing (US $122.9 million in the first 8 months of this year) and direct trade is now beginning to take place. The South is clearly keen to boost the North's economy: South Korea is clearly concerned about the costs of reunification based on the evidence provided by the

German experience.

I10APP

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