268. Telegram From the Embassy in Korea to the Department of State 0

66. Country Team has reviewed current situation and provides following assessment:

1.
For almost two months military government has been undergoing its greatest crisis since taking power. Leadership struggle at highest levels has been coupled with economic dislocation stemming largely from ill-advised monetary reform and stock market fiasco. Embassy and USOM have taken firm position on failure of government to consult on matters of fundamental importance to our relationship, and we also expressed clearly unfavorable consequences if iniquitous aspects of monetary changes not removed. This has introduced measure of strain in Embassy-ROKG relations and a feeling which may border on frustration and even anger on part of certain people in ROKG, although others have welcomed our initiative. Additionally, a mood of pessimism and uncertainty has arisen in the country as result government’s economic faltering, evidences instability in leadership, activities of ROK CIA, and concern over problem of transition to representative government.
2.
It appears that worst of current crisis has passed. Undesirable features of monetary reform have been rescinded. Some minor changes [Page 582] in SCNR have been effected, a new team of economic administrators has taken cabinet office and we are hopeful that more fruitful relationship between Embassy, USOM and their ROKG counterparts can be instituted. At the leadership level an uneasy truce seems to have been achieved but factional clash which pitted Kim Chong-p’il and some of young colonels against combination of Hamgyong and other anti-Kim elements hovers over scene.
3.
After wavering and despite heavy pressure Pak appears have decided retain Kim in some position of significance, whether as ROK CIA [omission—head or?] figure elsewhere in military government. While Kim may have his freedom of maneuver and his exercise of power restricted to some extent by Pak and may even be shifted, he still is a major force in military government. Kim has not given up his efforts to gain complete upper hand over his opponents, and this promises have continuing unsettling effects.
4.
Test of power between Kim and his opponents has left each side wary of other. Pak carefully avoided taking sides since he derives support from all contending elements. Nevertheless, he finds himself faced with classic Korean factional struggle which has roots in personal antipathies and ambitions and involves rival groups bound together by common regional or education ties. Factionalism also plays its part in bureaucratic rivalries, and is intensified by the overlapping and often conflicting jurisdiction of SCNR, cabinet and CIA.
5.
Factional fighting is deeply rooted in Korean national character and has been a continuous problem for Pak and this government. It played a part in Chang To-young case and was feature of illicit fortune committee case last [garble] Kim Chong-p’il attacked Yi Chu-il. Similar attacks and counter-attacks re-appeared in fight between Song Yo-chan and Kim early this year and again in June. Latest outbreak occasioned by economic activities of CIA gave Kim’s opponents their first big chance move against him.
6.
Retention and exercise of power by Pak has always required restraint of factional fighting, and maintenance of balance between contending forces. While it is significant that outcome of most recent fracas finds most of young colonels and their leader Kim in strong position, Hamgyong and other factions have also emerged intact. In our opinion, conflict is only suspended and stability not assured through next year’s election. Meanwhile, worthwhile achievements of regime have been obscured and its public reputation has suffered as charges and counter-charges of corruption, bad advice, shady-dealings, bad planning, economic retrogression, CIA repression, and coup-plotting have become common knowledge.
7.
Unsettling actions and disturbing tensions of past two months have shaken our confidence in government’s judgment. They have also [Page 583] thrown doubt on ability and willingness of military government to bring about satisfactory (tolerable for the US) political evolution in Korea. Military government has been approaching task of governing with dogmatic faith in their own sometimes ill-formed ideas and belief that since their ends are lofty, their means and even their mistakes are justified. Military government’s political image is tarnished by recent events; its leadership is at odds; its opponents may seek capitalize on instability to bring about drastic change; and government measures to control thought and deed in Korea remains pervasive and could worsen.
8.

Outlook for military government has become clouded and consequences could be serious. We believe, however, that we must continue support Pak and continue behave toward him and his government in manner showing understanding of his problems and reflecting confidence in his leadership. We should not, however, take open and unquestioning public stance which will associate US without reservation with all actions and policies of military government. Our eyes should be focused on promoting peaceful transition to representative government while promoting economic progress in Korea.

We should work on assumption that transition and election will be carried out on schedule and successor government will have some measure of constitutional legitimacy. We can also assume that revolutionary leadership will seek perpetuate its objectives and control in any new government. This is not necessarily an undesirable prospect. We should, therefore, continue to work with present government but look forward to its replacement by government more popularly based and resting on a publicly approved constitution containing some measure of checks and balances. We should maintain this strategy unless it becomes unrealistic.

9.
Pak remains our best hope in this situation. He is in position maintain structure of government in transition period and through his leadership we can hopefully expect a measure of stability.
10.
Pak’s problem centers on the difficult task of gaining widest possible support in country, asserting his leadership of government, and recapturing momentum of revolution which has faltered. In relations with United States, Pak should appreciate and accept necessity of close cooperation and consultation, and be prepared enlarge area and content of consultation in economic and political spheres.
11.
One consoling and stabilizing factor in midst this economic uncertainty and high level power play has been loyalty of military forces to government and also to United Nations Command. Chain of command and command relationships have been firm and reliable. This stability is anchor and foundation of military government’s existence and an area in which we have considerable influence. We should use this to our advantage and avoid taking measures which would interrupt this influence. Such actions as excessive force reductions or sharp reductions [Page 584] in MAP funds could cause trouble. (Indeed USFK believes any force reduction would cause trouble.)
12.
We have put great pressure on military government over past weeks, with particular emphasis on undoing of monetary regulations. We have also rightfully insisted on need for consultation. We have been careful reiterate our confidence in Pak and readiness support his government in reasonable courses of action. While insisting on fundamental cooperation, and continuing offer objection to unreasonable actions, we are seeking achieve greater rapport between military government and United States, while pursuing Korean political and economic progress which desirable in any event.
13.
United States should not at this time involve itself directly in factional power struggle among leaders. Resolution this problem should be left to Pak and we should be prepared accept his solution if at all possible, i.e., if it does not involve means or ends incompatible with our objectives. In a deteriorating situation, however, we may have to involve ourselves. For example, if Kim Chong-p’il’s power and actions become intolerable we may have to throw our weight against him.
14.
Probably best area for cooperation and obtaining forward momentum in immediate future lies in economic field. In this area, where we retain effective leverage, we can more readily assert ourselves in pursuit our policy objectives.
15.
USOM has proposed and ROKG has agreed to a joint review of government’s financial and economic development position as of now. This will involve full consideration of government’s plans for CY 1962 and CY 1963. In this exercise we will continue press for sound ROKG economic policies, concentrating our efforts on shorter term and priorities which can be established for next two-three years.
16.
In addition to above stated actions we propose:
A.
Keep under review possible despatch of special envoy. We do not believe this is opportune time for such visit and will elaborate on this subject in separate message.
B.
Low key, but steady expression of interest in problems surrounding political evolution involved in transition to representative government. We should exercise such influence as we can to obtain a tolerable political solution.
C.
As required use such other means as are available, [less than 1 line of source text not declassified] to influence character and actions of this government.
17.
As a final comment, we should accept fact that there is no over-night solution to political and economic problems plaguing Korea. We should recognize that cyclical variations in relationship between United States and Korea are endemic. We must face fact that judicious intervention in Korean internal affairs will continue be necessary. We will have to guide and sometimes lecture them and sometimes we are going to anger [Page 585] or frustrate them. In process we have to be careful not alienate them, but we cannot sacrifice our principles or our objectives for sake of momentary solutions or transitory agreement. There is continuing test of will involved in our relations with this government and we should preserve a firm but reasonable posture.

Berger
  1. Source: Department of State, Central Files, 795B.00/7-2062. Secret; Priority. Repeated to Tokyo and CINCPAC for POLAD.