North Korea/South Korea: Hyundai's disastrous deals with North Korea mirror the collapse of Seoul's rapprochement, writes Jasper Becker
Hyundai's great plans to expand its commercial empire into North Korea came to grief on the 12th floor of the Hyundai headquarters in downtown Seoul.
This is where clerks are still busy taking bookings from South Korean tourists eager to visit the North and where the man who had set up the tourism project, the Hyundai Asan chairman, Chung Mong-hun, threw himself out of the window late one night in early August.
The story of Hyundai's disastrous deals with North Korea's dictator, Kim Jong-il, closely mirror the collapse of the Sunshine policy which South Korea's former president, Kim Dae-jung, launched with such great hope in 1998.
That policy seemed as far removed as ever yesterday as North Korea announced it had successfully finished reprocessing some 8,000 spent nuclear fuel rods in June and had switched technology to enhance its use of plutonium extracted from the rods for possible atomic weapons.
The Sunshine policy culminated in a summit in 2000 and set off a rush by South Korea's top tycoons who scrambled to stake out claims in this new land of opportunity.
At the front of the pack was Chang Ju-yang, the visionary founder of the giant Hyundai group which bought the right to run tours across the border to the beautiful Geumgangsan \ range of mountains and to open a Chinese-style special economic zone across the Demilitarised Zone at Kaesong.
The initial optimism has now wilted. Out of the 500 companies which invested in the North during the peak of the Sunshine policy only a few dozen are still hanging on despite running up big losses.
Chairman Chang gave his fifth son, Chung Mong-hun, the job of operating the tourism project, and after investing $600 million, Hyundai has run up losses of $300 million in operating costs.
Visitors peaked at 250,000 in 2000, the year of the North-South summit, but have steadily declined in keeping with South Koreans' dwindling enthusiasm to embrace their hungry, and grasping, brothers in the North.
On the 12th floor, Hyundai executives insist the corner is being turned. In September Pyongyang allowed Hyundai to transfer tourists by road instead of ship, making the trip cheaper and quicker, and October will be a record month with 16,000 bookings.
On Monday a thousand South Koreans will also be getting on a bus and for the first time be driven directly all the way to Pyongyang to attend the opening of the Chang Ju-chang memorial gymnasium, a gift from the Hyundai founder to Kim Jong-il for a range of exclusive 50-year concessions in the North.
The gymnasium cost $50 million to build and is part of the $500 million which Hyundai paid to the North. As such it is at the centre of a criminal investigation which has deeply shaken public faith in the Sunshine policy.
Chung Mong-hun committed suicide just as state prosecutors uncovered evidence suggesting that Kim Dae-jung had effectively bought the summit, and a Nobel Peace Prize, by paying bribes through Hyundai.
State banks had underwritten all the money Hyundai had transferred to the North, and government critics are now wondering what Kim Jong-il did with it and if he used it to finance his nuclear weapons programme.
The saga is also raising suspicions that Hyundai's close ties with Kim Dae-jung's government bought it special treatment during the crash following the 1997 Asian financial crisis which left its rival, Chaeobols, bankrupt.
Before Kim Dae-jung retired last year, his opponents had been confidently expecting to win the elections on the strength of public disillusionment about the Sunshine policy. Yet they were defeated at the last moment by the former human rights lawyer, Roh Moo-hyun, who attracted younger voters swept up in a wave of anti-US feeling.
Since assuming office Roh's young and inexperienced team has been floundering as problems have piled up thick and fast.
After state prosecutors showed that Hyundai had made $100 million worth of unauthorised payments to the North, 18 officials and Hyundai executives linked to the deal were given suspended prison sentences.
As Roh's grip on power has faltered, he has also slackened support for the Sunshine policy and is currently prevaricating over whether or not to answer the US call and send troops to Iraq.
His political base is crumbling around him. The Grand National Party which dominates the National Assembly rejected his choice of one minister and forced the resignation of another. Kim Dae-jung's former party base, the Millennium Democratic Party, broke up and Roh resigned from it.
Roh now commands only 43 seats out of the assembly's 272 and they are loyalists who have set up a new party, the People's Participatory and Unity Party. However, Roh declared he would be more effective if he was unaffiliated with any party.
Another scandal is putting more pressure on him. It is about the treatment of a former North Korean agent, Prof Song Du-yul, a professor who had lived in Germany since the early 1970s and who returned to South Korea but hid his past.
The opposition is now demanding that Prof Song should be indicted for treason after the National Intelligence Service identified him as not merely an agent and active member of the North Korean Workers' Party but as a senior official with a seat on the party's politburo.
Prof Song denies only the latter accusation and has apologised for not being honest about his earlier activities.
The opposition is furious that the Korean Broadcasting Service, a state-run station financed like the BBC, as well as many left-wing intellectuals are defending him as a misguided patriot who deserves sympathy for finally changing sides.
At the heart of the debate is the question of whether North Korea should still be treated as a dangerous threat or not.
Roh's difficulties are being exacerbated by Pyongyang's increasingly belligerent assertions that it is a threat and indeed is rushing ahead with manufacturing nuclear weapons which would inevitably be targeted against the South.
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