It's been an uneasy winter on the Korean Peninsula. The South Korean capital, Seoul, has undergone massive labor strikes and rallies. Friday, the World Food Program appealed for new food aid to alleviate famine in North Korea. The United States would participate. With us now is James T. Laney, who is retiring this week as U.S. Ambassador to South Korea.

ELIZABETH FARNSWORTH: Finally tonight trouble in the two Koreas. Friday, the World Food Program appealed for new food aid to alleviate famine in North Korea. The United States would participate. The North Korean famine was one of several issues the departing American Ambassador to South Korea addressed in a farewell interview with Margaret Warner yesterday. Here is her report.

MARGARET WARNER: It's been an uneasy winter on the Korean Peninsula. South Korean capital, Seoul, has undergone massive labor strikes and rallies. The gatherings attracted hundreds of thousands of workers and often ended in clashes with the police. The strikes were triggered in December when the ruling party held a secret pre-dawn session of congress and ran through new labor laws giving companies more freedom to fire employees and replace those who strike. President Kim Young Sam defended the new laws, saying they would help Korean companies compete in an increasingly globalized economy. The strikes have been temporarily suspended while negotiations take place between President Kim's party and the opposition in congress, but union leaders threaten a general strike on February 18th if no progress is made by then.

In the meantime, relations between South Korea and its neighbor to the North continue to seesaw between bad and worse. Last September, Seoul accused North Korea of espionage after a North Korean submarine ran aground off the South Korean coast. That crisis was finally de-fused in December in an agreement brokered by the United States. North Korea publicly apologized, and South Korea returned the ashes of 24 North Korean soldiers who'd been aboard the sub. North Korea also agreed for the first time to talk directly with South Korea, China, and the U.S. about a treaty that would finally put a formal end to the Korea War, but preliminary meetings to launch those talks have now been delayed by North Korea. The North says the U.S. must first live up to a private promise it made to help relieve North Korea's severe food shortages. Last week, five international aid groups wrote Secretary of State Madeleine Albright warning that unless the U.S. acts quickly to get food to the North, "we will see a full-scale famine in which hundreds of thousands of lives will be at risk."

With us now is James T. Laney, who is retiring this week as U.S. Ambassador to South Korea. The Arkansas native and Methodist minister was president of Emory University for 17 years before President Clinton named him ambassador in 1993. Amb. Laney has a longstanding interest in the Korean Peninsula. He served there as an army intelligence officer in the late 1940's and taught college in Seoul for several years in the late 1950's and early 60's. Welcome, Mr. Ambassador.

JAMES T. LANEY, U.S. Ambassador, South Korea: I'm glad to be here.

MARGARET WARNER: Thanks for coming in. What does this confrontation that we've seen over the last couple of months between the South Korea government and the unions tell us about the state of South Korea today, both economically and politically? How should we look at this situation?

AMB. JAMES T. LANEY: South Korea, on the one hand, is a modern miracle economically and in many ways democratically. But in the last year or so it's gone through some pretty turbulent times. It's moving through a stage that maybe the United States went through in another form a decade ago, having to go from standard manufacturing and exports, which made them relatively well to do, to an economy that is really an advanced technological society. And that's going to take a lot of investment, a lot of time. Then we're going to see a lot of different kinds of disruptions in problems as they make the transition.

MARGARET WARNER: So why has the country's economic growth, which I gather used to be, what, 8, 9 percent a year--

AMB. JAMES T. LANEY: Right.

MARGARET WARNER: --it's slowed pretty substantially.

AMB. JAMES T. LANEY: Right.

MARGARET WARNER: Why is that?

AMB. JAMES T. LANEY: Well, I think there are several reasons. One of them is that the economy is running into stiff competition abroad. They're finding that they're hitting a sort of a ceiling on how much they can do in terms of an export-driven economy. That's why they know they have to move into an advanced technological society in order to really compete in the world. And they're ready for that, but the process, as I say, is going to be very painful. And they--after all, 9 or 10 percent is a phenomenal growth rate. They're down to six something now, which for them is just terrible.

MARGARET WARNER: We'd be very happy with that, of course.

AMB. JAMES T. LANEY: Most countries in Europe and America would be very happy with it.

MARGARET WARNER: So what kind of political stresses and strains does this create?

AMB. JAMES T. LANEY: Well, of course, the fact that they have deficit--trade deficit with the world--causes them great worry. They've been used to surpluses. The fact that fuel has gone up, the Japanese yen has made their goods less competitive on the world market as the yen has declined in value, and--

MARGARET WARNER: You mean against Japanese goods?

AMB. JAMES T. LANEY: Against the Japanese goods and the relative value because of price, and the thing they depended on most for exports was the export of semiconductors. And the price of that fell precipitously this last year.

MARGARET WARNER: Now this is also just the early stages, is it not, of a civilian democratic government there?

AMB. JAMES T. LANEY: Right.

MARGARET WARNER: I mean, it's within its fifth year, after thirty years of military dictatorship.

AMB. JAMES T. LANEY: Right.

MARGARET WARNER: How well are they making that transition? How well would you really say it's functioning as a democracy as we know it?

AMB. JAMES T. LANEY: Well, they not only had an election for President, which was a democratic election, and the first in forty years; they also have had local elections around the country and another national assembly election that had been I think by almost any standards in the world very democratic, very free, and a minimum amount of corruption. So I think democracy is well established in Korea. Also, the media is free. The newspapers criticize the government roundly, and this causes, of course, the same kind of heartburn there that it causes here in Washington.

MARGARET WARNER: But this action that the government took last December passing these new labor laws essentially in secret or lump session, that did strike many observers and critics here and there, certainly opposition as a reversion to old autocratic ways.

AMB. JAMES T. LANEY: And I think that the government, itself, has seen that that was a serious mistake. They backed off that. President Kim has entered into the picture and has offered not only to meet with opposition but to revisit bills that were passed at that lump early morning session. That's been a costly business, the fact that they tried to do that. They excused it on the fact that the opposition party physically wouldn't let the assembly meet.

MARGARET WARNER: Which it wouldn't.

AMB. JAMES T. LANEY: Physically, yes, actually could not hold a session, so they said, well, we'll hold a session when we're not there. But unfortunately, you can't really succeed in doing that. And it caused a lot of criticism of the government across all sections of society.

MARGARET WARNER: Some Asian leaders, like the former prime minister of Singapore, Li Quan Hu, has suggested that American notions of democracy or openness really aren't entirely suited to an Asian sensibility; that we can't expect the same kind of what we consider democracy. After your years in South Korea, where do you come down on that question?

AMB. JAMES T. LANEY: Well, I think democracy is one thing, and extreme or excessive individualism is another. Democracy means that the people have the right to vote, to speak, to assemble, that sort of thing. And I think that that is applicable at a certain point in any country's development and to be desired. I think--I don't want to interpret Singapore's situation, but I would say that the countries that I know in Asia are concerned about the excessive individualism that they see, particularly in the West and the United States, as an erosion of the kind of community values, the social solidarity that has marked those cultures for centuries, and they feel has given them their distinctiveness.

MARGARET WARNER: Switching now to North Korea, how serious a threat do you think there is of serious famine there this spring?

AMB. JAMES T. LANEY: Well, it is already a serious situation, and it likely will get critical before the end of the winter in the early month of spring. We don't know yet until we get some more reports how widespread starvation may be, but we know that there is widespread deprivation that for several years running now the people have had to live on a very low caloric intake, and they show it. They're malnourished. And increasingly, of course, this takes its toll in a cumulative sense. It's not just the lack of food for a few months but over a period of time their resistance is lowered, and they're more susceptible to disease.

MARGARET WARNER: So why is the United States not sending or spearheading a large international effort to get humanitarian aid in there?

AMB. JAMES T. LANEY: Well, the United States has consistently maintained the position that we will assist in a humanitarian effort. And the World Food Program right now is looking at the prospects of mounting such a worldwide effort which I'm sure the United States would seriously and positively consider participating in.

MARGARET WARNER: The North Koreans say there's been a delay in the U.S. stepping up to that because the South Koreans are lobbying against it. Is that true, and, if so, why?

AMB. JAMES T. LANEY: Well, there is a reality here, and the reality is that the only country really in the world that's going to supply a great amount of food to North Korea is South Korea. It's not going to be the United States. It's not going to be the countries of Europe. We may do some humanitarian aid, but if there's going to be massive relief, it's going to have to come from the South. In order for it to come from the South, the North has to at least acknowledge that the South exists. And that's all that we--that they want, is, for example, the four-party talk offer that was set forth in Ceduala last April by Presidents Clinton and Kim is really an invitation.

MARGARET WARNER: And that was talks between the two Koreas, the U.S., and China.

AMB. JAMES T. LANEY: And China.

MARGARET WARNER: Designed to try to finally bring an end to the Korean War officially.

AMB. JAMES T. LANEY: Well, that's a big issue, but to sit down and we could talk about anything, including food aid and including economic assistance. North Korea doesn't really want to deal with the South, and when South Korea gave a lot of rice last year to the North, they were rebuffed. For a few days some of their crew in a ship that was sent up there with rice were put in jail or incarcerated, and just things like that that are not designed to ingratiate themselves with a benefactor, so in a way it's not--you know--irresponsible or unsympathetic for the South to say, look, we stand ready to help, we would like just to meet at a table and talk.

MARGARET WARNER: But if this stalemate continues, where the South is waiting for the North to do that, and the North's saying, no, we want the food aid first--

AMB. JAMES T. LANEY: Right.

MARGARET WARNER: --does the U.S. have a responsibility to go in and try to break this stalemate before you have incredible famine and starvation?

AMB. JAMES T. LANEY: The United States always stands ready to try to resolve that situation, that stalemate, and the United States, I'm sure, as I said earlier, will participate or will certainly give serious consideration to participating in a world food program effort, an international effort. But the real--the key to this situation is in South Korea. And we are limited in what we can do in persuading the South to do some of the North if the North keeps rebuffing the South.

MARGARET WARNER: And finally let me just ask you about your prognosis for North Korea. John Deutch, who has now left as CIA director, said late in December that he thought North Korea could not maintain itself in the current political status quo, and in the next couple of years, it was either going to go to war, or collapse internally, or have some kind of massive political transformation. Do you agree with him on his feeling that North Korea cannot maintain this status quo for much longer?

AMB. JAMES T. LANEY: I think that's true. The situation continues to decline economically, and that puts increasing pressure on the regime. A regime that can't feed its people is in serious trouble. They have two alternatives. They can open up economically and get some aid, and, you know, develop in many ways like China did twenty or thirty years ago, and have a gradual evolution of their economy to where it is more functional. Barring that, they are not self-sufficient, and if they insist on being closed to the world, I don't know what they're going to do. That is the situation we're trying to avoid because a regime that has all that fire power that becomes desperate is not a situation that we really welcome. That's why we want to engage them in some fashion, and we stand ready to do that. I think that's the word that I would leave with the American public; that we really are ready to work with North Korea, and South Korea's ready to work if they'll just come to the talks.

MARGARET WARNER: All right. Well, thanks, Mr. Ambassador.

AMB. JAMES T. LANEY: I've enjoyed it.

MARGARET WARNER: Good luck to you.

AMB. JAMES T. LANEY: Thank you.