On Sunday, N. Korea apologized to the South for a submarine incident last September, and has for the first time agreed to talk directly with the U.S. and South Korea about peace. Charles Krause provides a background report, then leads a discussion between two U.S. - Korea policy experts.

CHARLES KRAUSE: Now for two perspectives. Kongdan Oh is a Korean policy research analyst and heads her own consulting firm. Tony Namkung is a director of the Atlantic Council of the United States in Washington, D.C. He's also been an informal adviser in the recent negotiations between the U.S. and North Korea in New York. Thank you both for joining us.

KONGDAN OH, Korean Policy Analyst: Thank you.

CHARLES KRAUSE: Mr. Namkung, tell me, how important, how significant is this recent turn of events, the apology, and the agreement to talk about a peace treaty?

TONY NAMKUNG, Atlantic Council of the United States: Not nearly as significant as I think some people believe. We shouldn't let our enthusiasm get ahead of ourselves here. There were three issues on the table: how to restore the relationships to the period before the submarine incident, the status quo, antebellum; how to restart the light water reactor project which had been suspended as a result of the submarine incident, and finally how to formulate the statement of regret.

On the first two issues, agreement had already been reached as early as in August, including the agreement on the part of the North Koreans to attend a joint briefing to be conducted by the U.S. and South Korea on the nature of the four-party talks. So what was accomplished this time, having said that, is that a certain psychological momentum was built towards possibly a dialogue between the North and South, but purely psychological and not substantive.

CHARLES KRAUSE: Ms. Oh, tell me, do you think that the importance has been to some extent overstated?

KONGDAN OH: Yes. I think so. But there is one fundamental difference with Tony with my opinion. That is, it is significant because without this action, all the agreed frame work related activities are frozen. It means that we cannot go forward at all. So in a sense it has opened the new gate. So I think it is significant in that aspect very much.

CHARLES KRAUSE: To what extent do you think North Korea agreed to apologize and agreed to talk because of the food shortages and the other economic problems that are--that that country is faced with?

KONGDAN OH: I think, given the past history North Koreans reluctant to say sorry to the outsiders, and this is a very unprecedented activity that they took. I think that their pragmatic intention to get rid of this food shortage in economic declining situation, I think they should take this stance, so in that sense that domestic demand made the leaders to choose this diplomatic choice.

CHARLES KRAUSE: Mr. Namkung, how do you see that?

TONY NAMKUNG: I couldn't disagree more with that assessment. The shortages are real. There's no question about that. And they exerted some pressures on the North Koreans to work out a solution. But what we're seeing here is the continuing playing out of a strategy that was formulated at least six or seven years ago, one of restoring or establishing normal relations in the United States. And for that purpose an apology or a statement of regret is not too much to ask.

CHARLES KRAUSE: Do you think it's wise for the United States to sell grain to North Korea, given that that may help perpetuate the regime?

TONY NAMKUNG: Well, by all means. I think the U.S. administration is firmly committed to a policy of engagement, of bringing the North Koreans out into the world community, and of eventually establishing normal relations. This is called for in the agreed frame work of October 1994, between the U.S. and the D.P.R.K.

CHARLES KRAUSE: Ms. Oh, what do you think? Are grain sales wise? Should the United States be, in effect, or is the United States, in effect, helping to keep the regime in power?

KONGDAN OH: Although you just noticed that we have some differences between me and Tony, but I think that, ultimately, pursuing the engagement policy not only just the grain sales, but even maybe lifting the structural, the restrictions, such as economic sanctions, the Trade with the Enemy Act, that kind of thing should be reconsidered.

Why create an excuse that North Korea constantly blaming us because North Korea has so-called policies of three B's: begging, blaming, and bluffing. So instead of constantly involved in that kind of three B policies, we just get rid of structural sanctions. In essence, I agree that grain sales and all other economic sanctions have to be considered.

CHARLES KRAUSE: Why is the peace treaty so important for the United States?

KONGDAN OH: Peace treaty with whom?

CHARLES KRAUSE: Well, with North Korea. Well, regarding the Koreas, in other words, bringing a formal end to the Korean War? Why is that so important 40 years after the fighting actually stopped?

KONGDAN OH: Well, that--I mean, we know that the Cold War is over. In a sense, the Korean Peninsula has been really one of the classic cases of Cold War victims. And I think after this Cold War environment is changing, note that the Korean Peninsula has not adopted the so-called new environmental changes. So armistice agreement, functioning just as a temporary measure, will not longer be very effective. So in a sense of talking just the reactive and the kind of case by case resolution, why not thinking about some kind of a permanent peace, institutionalized peace? In that sense, peace treaty is an important thing.

CHARLES KRAUSE: Mr. Namkung, what do you think about that? Will a peace treaty have real practical impact for the United States or on the United States?

TONY NAMKUNG: Only a peace treaty that's organized and designed by the United States. After all, the armistice system has maintained the peace for over four decades now. What is different now? The Cold War is over, the U.S., which together with the Soviet Union was responsible for the division of Korea in the first place. It's incumbent on the United States at this point to exercise some leadership and to bring the two Koreas out into the open and in a dialogue with one another. That's the true significance, incidentally, of the recent accords, that the U.S. for the first time was put in the position of arbiter, conciliator, mediator, intermediary. This turns the chapter on the history of the Korean issue.

CHARLES KRAUSE: There are those who would argue, I think, that given the record of the North Koreans in a whole lot of areas, including this recent submarine incident, that the United States really shouldn't be dealing with them in this way. How do you respond to that point of view?

TONY NAMKUNG: Well, I don't think we have many other choices. Are we going to go toe-to-toe with them in some confrontation, with disastrous consequences not only for the two Koreas, for the next several generations of Koreans, but also for the entire region as a whole? I don't think we have any alternatives to this policy.

CHARLES KRAUSE: Ms. Oh.

KONGDAN OH: In a sense, this time, though, we have one agreement area that we see some agreement between us. Let me, though, just add one aspect. After the Geneva agreement so-called engagement policy has been taken as the U.S. policy to deal with North Korea, as Tony rightly indicated, there is no other alternative because North Korea may act in a sense out of desperation, some kind of major contingencies, or maybe second Korean War. Dialogue and communication is always very important.

But I think engagement policy had some kind of trouble. That is, it was only to take care of the so-called nuclear crisis. It was not formally designed to have a clear road map and clearly reaching some kind of a comprehensive solution how to deal with these two Korea issues: confrontation and tension. So in that sense I think 1997 is--it should be the year to reconsider more ultimate comprehensive policy platform to deal with the two Koreas.

CHARLES KRAUSE: Let me ask you a question, turning to South Korea for a moment, why is it that that government, our ally, gets so upset every time we talk to North Korea?

KONGDAN OH: Well, there is a slogan which is Korean expression that it's the only dealing with U.S. but isolating South Korea. It is a forward phrase in Chinese. Demi Bon Nam means that we deal with--that is basically a North Korean slogan--we deal with the United States, but we don't deal with South Korea. That is a formally understood phrase by the South Korea government. The South Korea government thinks that North Korea is creating wedge between Seoul and Washington, D.C.

CHARLES KRAUSE: A wedge?

KONGDAN OH: And somehow I think the handling of this so-called consultation and the consultation mechanism, indeed, showed some kind of troubles in the past. I have to admit that.

CHARLES KRAUSE: Between the United States and South Korea.

KONGDAN OH: That's right. Although, I mean, on the surface everything's supposed to be smooth, and the consultation is perfect, but undercurrent has been a little bit rough. And I think this announcement, so-called apology coming from the--directly from the foreign ministry of North Korea is very important because it gives both a space for South Korea to make their face and also gives us a space to think about not only just reactive policy but let's do something about fundamentally how do deal with two Koreas in transition.

CHARLES KRAUSE: Mr. Namkung, let me ask you a last question. Do you think that ‘97 will be a year when peace finally reaches the Korean Peninsula?

TONY NAMKUNG: The second Clinton administration exercises the political will to see through this issue to a solution. My own prediction is that both North and South will make moves towards one another. The key to the successful resolution of this entire issue, and a genuine relaxation of tensions in an era of peaceful coexistence is the United States.

CHARLES KRAUSE: Well, thank you. We'll leave it there. Let me wish you both a Happy New Year.

KONGDAN OH: Happy New Year.

TONY NAMKUNG: Happy New Year to you.