Regional Outlook : S. Korea Makes Play for Unity to North’s Allies : President Roh Tae Woo even staged a soccer match as part of his diplomatic plan. At stake as the strategy plays out is peace and stability in a potential regional powder keg.

A smiling Yoon Yong Wan, 29, adjusted his 20-month-old son’s trousers while his wife packed away the baby’s milk bottle as they prepared to leave Seoul’s Olympic Stadium to the strains of the 1988 Games’ theme song, “Hand In Hand.”

“I was quite moved,” said Yoon, a shopkeeper, who had taken the afternoon off to see the South Korean national soccer team beat North Korea’s team, 1-0, before an enthusiastic crowd of nearly 80,000 fans.

“Although I was born after the war, this is certainly different from what I learned in textbooks at school,” he said.

The textbooks, he explained, told of the 1950 North Korean invasion that triggered a bloody and vengeful three-year war. They “depicted North Koreans as if they were a totally different species of people.”

“But look at that,” he said, pointing to players from north and south marching around the stadium, arm-in-arm and wearing the soiled shirts they had exchanged. “Here, we are all one people,” he said.

The soccer match that Yoon watched last Tuesday marked the first time that any North Korean sports team had visited the south in the 45 years since occupying American and Soviet armies divided a post-World War II Korea liberated from its Japanese colonial masters.

At that, it was a small triumph of South Korean President Roh Tae Woo’s so-called nordpolitik (northern diplomacy)--the strategy aimed at establishing ties with North Korea’s former Communist allies. Through them, Roh hopes to persuade, or force, the Stalinist society to the north to ease tensions, promote mutual trust and eventually achieve reunification.

Ironically, however, nordpolitik has been more successful with its intermediate targets than with the ultimate goal. As a result, South Korea has been transformed from a nation totally isolated from the Communist Bloc to one with meaningful contacts with nearly all Communist nations, even as a breakthrough in its relations with North Korea remains out of reach.

At stake as the strategy plays out is peace and stability in what remains a potential regional powder keg--one in which the United States, because of the 43,000 American troops still based on the peninsula, has a particularly vital interest.

In 1972, north and south agreed to open talks toward reunification. But after 18 years of off-and-on contacts, two rounds of unprecedented prime ministerial meetings in September and October only underscored that both sides are still talking about principles by which to deal with each other, and not concrete actions to push the process forward.

No mail, no visitors, no trade, no telephone calls, no radio or television broadcasts cross the border. Nor is the north likely to accept Seoul’s proposals to inaugurate significant exchanges, many experts agree.

North Korea, which has brainwashed its people to believe that they live in paradise and the south lives in poverty as puppets of the Americans, “can’t let contacts with the south threaten its own regime,” said Park Kwon Sang, editor of the magazine Sisa Journal and a longtime student of north-south relations.

Roh, however, argues that the waves of international change will ultimately force North Korea to change and open its doors. Unification will come within a decade, he predicts.

A highly placed Western diplomat, who asked not to be identified, agreed that north-south contacts “have yet to move from symbolism to substance.” But he remains optimistic. “An independent dynamic is beginning to operate between North and South Korea” that will eventually lead to an “erosion” of the north’s regimented society, the diplomat predicted.

Meanwhile, nordpolitik is rewriting the geopolitical map of Northeast Asia.

On Sept. 30, the Soviet Union--North Korea’s major purveyor of weaponry--established full diplomatic ties with Seoul. China, the north’s other major military ally, agreed 10 days ago on an exchange of trade offices with the south. The new offices, in Beijing and Seoul, will also be able to issue visas.

“(They) will serve as embassies in all but name,” the diplomat said.

Already, South Korea’s annual trade with China has exceeded $3 billion, and it is approaching $900 million with the Soviet Union. Four economic agreements have been signed with Moscow and a regular civilian air route established between Moscow and Seoul. Similar agreements are now expected with Beijing, and both the Soviet Union and China look forward to expanding trade and welcoming South Korean investments.

South Korean business firms are employing Chinese in Guam, Saipan and in the Middle East, and the huge Hyundai conglomerate is to hire 1,000 more for a Siberian forestry project.

Seoul businessmen have become so eager to strike deals with Communist countries that the government felt compelled to intervene to control “disorderly competition,” said Lee Ki Joo, an assistant vice foreign minister.

For the first time since it committed troops to rescue South Korea in the Korean War, the United States finds itself in harmony with both of North Korea’s major backers--neither of which any longer supports the policy of confrontation with the south that North Korean President Kim Il Sung still refuses to abandon officially.

Indeed, Moscow has halted all nuclear-related shipments to North Korea, reduced--if not halted--conventional arms shipments and curtailed economic aid, the highly placed diplomat said. It has even gone out of its way to clear the air about the Korean War, the diplomat added.

“The Soviets have come out with a whole series of articles laying absolutely bare the origins of the war in Korea--the fact that Kim Il Sung came to them for help (in launching the 1950 invasion of the south) and (Josef) Stalin agreed, and the fact that 1,200 Soviet pilots flew (for the north) during the Korean War,” he said.

“Moscow has been tremendously helpful,” the diplomat added.

China’s Communist Party newspaper, People’s Daily, said last week that Beijing and Pyongyang will remain “as close as lips and teeth,” indicating that China has no immediate plans to move as far as Moscow has in relations with South Korea. But while full diplomatic ties may not be imminent, Beijing is insisting that the north refrain from stirring up trouble with the south. And “in terms of economic exchange and trade, the Chinese no longer feel any restraint because of North Korea,” the Foreign Ministry’s Lee said.

It’s also indicative that North Korea is so uncertain about China’s political support that it is lobbying hard to win a South Korean promise not to seek unilateral United Nations membership. A veto by China is the only potential roadblock standing in the way of a U.N. seat for Seoul.

“I felt very uneasy in 1975 when South Vietnam fell,” said Lee Kwan, a former South Korean minister of science and technology. “Now, Pyongyang may feel the same way.”

North Korea apparently has recognized that it cannot continue business as usual.

The nation owes Western countries, including Japan, at least $3 billion and possibly as much as $4.5 billion for trade transactions--debts that it has ignored since the early 1970s. And beginning Jan. 1, the fragile North Korean economy will be forced to bear a new burden.

The Soviet Union and East European nations have informed Pyongyang that it must pay hard currency in trade with them. And Moscow, North Korea’s principal supplier of oil, has declared that it will charge international prices for petroleum, not its traditional “friendly prices.”

As a result, Kim signaled a surprising reversal of longstanding policy during a late September visit to Pyongyang by Shin Kanemaru, a former Japanese deputy premier and the chief political supporter of Prime Minister Toshiki Kaifu. He proposed that North Korea and Japan begin negotiations to establish diplomatic relations, including the issue of Japanese compensation for its 1910-1945 colonial rule. Japan accepted the proposal.

South Korea, which had thought the north finally would be forced to accept the economic aid it has been offering, was enraged.

The move appeared to underscore the north’s preference for economic relations with Japan over South Korea, said Chung Ju Yung, founder of the Hyundai conglomerate. Aid from Japan carries no psychological threat of eroding Kim Il Sung’s regime, he noted.

Interchange between North Korea and Japan, however, might open up North Korea’s closed society more than any other development since 1945, many Koreans agreed. “The South Koreans know that will work to their advantage,” the Western diplomat said.

Park, the Sisa Journal editor, said he hopes Japan will make democratization of North Korea a prerequisite for aid. “The north and south can’t live in peace with one side a dictatorship and the other a democracy. Liberalization of North Korea is the only way to achieve peaceful coexistence,” he said.

The United States, for its part, has insisted that any steps forward in U.S.-North Korean relations be matched by progress between the north and south. One reliable source said the north-south stalemate has induced Washington to turn down repeated Pyongyang requests to upgrade a series of low-level diplomatic contacts that the United States and North Korea have been conducting through their embassies in Beijing.

Washington, however, is ready to be “as flexible as the south wants (it) to be,” according to one informed official.

That includes reducing or canceling an annual military exercise called “Team Spirit” scheduled to be held again next February, and going along with a new demand by North Korea that the south sign a “nonaggression declaration.”

If the south accepts, North Korea is expected to use the declaration as a lever to “get the American troops out with all of their appurtenances,” (read: nuclear weapons), the official said.

“We can deal with that,” he added.

A nonaggression declaration, he explained, could be used as a framework under which to negotiate arms control and confidence-building measures with North Korea.

South Koreans, however, disagree. So far, they have refused to accept any statement that is called a “nonaggression declaration.”

Some leaders of Roh’s ruling party have publicly criticized him for moving too fast toward the north and striving too ardently for a summit meeting with Kim Il Sung. Critics charge that he wants to divert attention from a political impasse with the opposition, rising inflation and housing costs and what Park called his “hopeless unpopularity” at home.

Prime Minister Kang’s Oct. 18 meeting with Kim Il Sung suddenly transformed the North Korean dictator “from a villain to a friendly grandfather figure,” said Prof. Han Sung Joo of Korea University. And even after Kang returned to Seoul, the prime minister continued to use honorifics when talking about Kim in TV interviews, the diplomatic expert complained.

The professor said he fears the north is going through the motions of talking with the south only to stir up unrest against Roh’s government and create a backdrop for negotiations on diplomatic relations with Japan.

“Not even a summit will bring about substantive change in north-south relations. Ultimately, a change in North Korea will come only with the demise of Kim Il Sung,” he said.

Coming on the heels of Moscow’s diplomatic recognition of Seoul, a summit also would mark the beginning of the process of moving away from the United States, Han said.

“We would have to swim by ourselves. It would become increasingly difficult to justify the U.S. military presence . . . even though there would be no reduction in the threat (from the north),” he said.

NEXT STEP

A third round of prime ministerial-level talks between North and South Korea is scheduled for Dec. 11-14 in Seoul, with a possible 1991 summit meeting between Presidents Kim Il Sung and Roh Tae Woo--the first ever--hanging in the balance. Roh, who is believed ready to make concessions to bring about the summit, already has released the Rev. Moon Ik Hwan, a South Korean dissident jailed for visiting North Korea last year without Seoul’s permission. Freeing of a South Korean woman student also is widely expected before the meeting.