895.6463/5–1548: Telegram
The Economic Adviser in Korea (Bunce) to the Secretary of State
priority
363. Cite Zpol 667. Reference PolAd No. 360, May 14,1 regarding cut-off of electric power from North Korea.
Part 1. Soviet motives. It is believed here that Soviet motives in cutting off flow of power into South Korea were almost entirely political. By this action Soviets evidently hope (1) to embarrass preparations for establishment of new government by this new method following their failure to discredit recent elections; (2) to reemphasize [Page 1199] their propaganda theme that Koreans actually control North Korea and that Koreans problems can be settled best by direct negotiations between Koreans, with no direct participation of foreign powers (this is timed to embarrass US before responsible Korean group is in position to represent South Korea); (3) to enable the North Korean People’s Committee to reach an agreement which might be the basis of de facto recognition, and in which the People’s Committee is recognized as having sovereignty in North Korea; (4) to discredit the Americans’ occupation and occupation policies in Korea in eyes of Koreans by impugning good faith of Americans; and (5) to attempt to assist Communist agitators in South Korea by forcing shut-down of factories, or at least sharp reduction in industrial production and curtailment of normal electrical services. This analysis of Soviet motives appears to be confirmed by timing of cut-off action, apparent lack of interest of North Koreans in picking up commodities now in South Korea valued at over $2,000,000 and totaling 40% of old power bill, failure of Soviet commander to answer General Hodge’s recent letters, and the general tenor and emphasis of both Soviet and Korean pronouncements from Pyongyang.
Part 2. Proposed American counter-actions. It is believed here that their action will make US willing to negotiate agreement at almost any price. Actually South Korean electric-power potential is substantially better at present than at any time since end of war. Power cut-off immediately reduced available power in South Korea by 60% but by putting stand-therman [steam thermal] plants and power-barge electric into operation, South Korean production has been stepped up 50% to average about 60,000 kw. This equals about 60% of the 100,000 kw total power available in recent months.
If conditions as outlined in Seoul PolAd No. 360 of May 14 can be effected, it is expected that during the rains in July and August, South Korean average power output can be boosted to 80,000 or 90,000 kw. Bituminous coal and petroleum coke now stockpiled in South Korea will enable Seoul and Pusan thermal plants to operate near capacity through July, but additional bituminous coal imports of 20,000 metric tons per month will be required thereafter as long as present emergency continues.
On basis of above facts, General Hodge will send another letter to General Korotkov reiterating his previous requests for conference in Pyongyang. He will emphasize that conference should include responsible Korean leaders from both North and South Korea, as in the past. If this approach fails, it may be desirable later to consider other approaches and possible take matter up on Washington–Moscow level to try to reach settlement for all past indebtedness (up to the time government [Page 1200] is established in South Korea) in conjunction with over-all settlement of US–USSR claims. It would be highly desirable to reach settlement regarding past power payments and enable new government to start with clear slate in negotiations regarding power to be purchased in future.
Part 3. Information program. Extensive information campaign in Korean mass media, including radio beamed to North Korea, emphasizes goods already received, goods awaiting shipment, offer to pay in US dollars, promises made to two Kims at North Korea joint conference, and political objective of sabotaging the coming Korean Government. This campaign will continue with application of rationing of power as expression of why rationing is necessary.
- Not printed.↩