Dictator’s Death Upsets S. Korean Policy : Asia: In Seoul, a Cold War consensus is over. Even business has backed a softer stance toward the North since its leader died.

The death of North Korean leader Kim Il Sung has brought to a head a dilemma for the government of South Korean President Kim Young Sam: How does a pluralistic nation deal with a monolithic rival?

A former opposition leader who made demands for democracy the core of his political career, Kim Young Sam turned away from those roots when a small minority started urging his government to express condolences over the death of the man who had launched war and terrorism against the South.

Instead of merely criticizing that position, Kim banned it. He also ousted a newspaper publisher who dared to visit the North and express sympathies over the northern leader’s death.

And unlike last year, when he allowed citizens to organize a chain of hands extending from Seoul toward the North, Kim has forbidden a similar expression of the desire for reunification planned for Aug. 15--”liberation day,” commemorating the 49th anniversary of the end of Japanese colonialism.

With most of North Korea’s 1.1-million-strong armed forces stationed just north of the demilitarized zone 25 miles from Seoul, a security threat to the South is obvious. In addition, the North has tried consistently to foment anti-government opinion in the South and has torpedoed gestures of reconciliation, such as a North-South agreement in December, 1991, to free the peninsula of nuclear weapons and ban nuclear fuel reprocessing.

As a result, Kim Young Sam’s government, insisting that it remain the only authority entitled to deal with the North, has kept a National Security Law forbidding espousal of communism or support of any “anti-state organization,” including North Korea.

Although softened from the old days of authoritarian rule, the law still “violates freedom of expression, association and travel” in South Korea, a 1993 U.S. human rights report charged. Earlier this year, to Kim’s displeasure, Secretary of State Warren Christopher openly criticized the law.

Even now, Seoul does not permit South Koreans or the mass media to receive unfiltered North Korean media reports. Naewoe, a government-controlled “news agency,” monitors North Korean publications and feeds filtered reports to South Korean media.

Although CNN televised Kim Il Sung’s funeral procession and a memorial ceremony in countries around the world, South Korean TV showed only snippets of both events.

But South Korea’s old consensus on dealing sternly with the North has broken down. “There is no unity of opinion anywhere,” complained a leading businessman who asked not to be named.

One reason for the lack of consensus, he said, is that many of the 40,000 people convicted over the years of violating the National Security Law have entered the political process that Kim helped democratize, thus destroying the old Cold War unanimity.

Dissent against an unyielding government approach to the North has been rising even within the nation’s business community.

Recently, the Korean Trade Promotion Corp., better known as KOTRA, urged that the government start promoting trade with the North while treating worries about North Korea’s suspected development of nuclear weapons as a separate issue. KOTRA counts most leading business firms among its members, and the organization is supported by the government.

A notable difference between government and public perceptions surfaced with Kim Il Sung’s death.

Kim Young Sam’s reaction was to order a military alert. The public’s, according to a Gallup survey, was disappointment that an opportunity for reconciliation offered by a first-ever summit of North-South leaders had been lost.

It would seem spoon-feeding an increasingly prosperous and sophisticated population is becoming a more difficult task.