The Historic June 2000 Summit. On June 13,2000, South KoreanPresident Kim Dae Jung flew to Pyongyang for a three-day summit with North Korea's paramount leader, KimJong-il. The meeting was the first-ever between the leaders of North and South Korea, which have been divided since 1945andofficially at war since 1950. (1) The two Kims signeda joint declaration pledging, among other things, to work towardseventual reunification, open a dialogue between government officials, engage in economic cooperation, permitfamilyreunions, and hold cultural and athletic exchanges. Upon his return to Seoul, Kim Dae Jung stated that Kim Jong-ilhadverbally agreed that even if North-South tensions continued to be reduced, U.S. troops should remain in South Koreatohelp preserve regional and peninsular stability. "It became clear," the South Korean president continued, "that wewill notever go to war again." (2) The Ebb and Flow of the New Inter-Korean Dialogue. Since theNorth-South summit, inter-Korean interchanges have alternated between bursts of meetings and lulls in publicactivity. Inthe summer and fall of 2000, North-South interchanges flowed, as the two Koreas rapidly developed a new dialogue. Fourrounds of inter-ministerial talks were held, the two countries' defense ministers met for the first time, talks oneconomiccooperation commenced, the two sides marched together at the 2000 Sydney Olympics, and emotional reunions wereheldamong hundreds of families separated by the inter-Korean divide. South Korean President Kim stated his desiretonegotiate a North-South peace agreement, which would officially end the Korean War, before he leaves office inFebruary2003. Moreover, numerous South Korean businesses and citizens forged their own contacts with North Korea, adevelopment made possible when President Kim - under his so-called "sunshine policy" of trying to induce morecooperative behavior from North Korea through engaging Pyongyang - relaxed Seoul's previous insistence that thegovernment monopolize all contact with the North. (3) In October of 2000 North Korea slowed the pace of the dialogue - perhaps to focus on a flurry of diplomatic activity withthe outgoing Clinton Administration - leading to the postponement and delay of scheduled family reunions andseveralmeetings. Inter-Korean activity again picked up from November 2000 to January 2001 as the talks entered a newphase:ministerial-level talks shifted from meeting approximately every month to every quarter, with more frequentworking-levelmeetings expected to provide forward momentum. (4) Kim Jong-il's business-oriented trip to China, combined with talk of"new thinking" in the state-run North Korean press, seemed to promise more breakthroughs in 2001. Such hopes were frustrated in March of 2001, however, as North Korea abruptly halted virtually all inter-Korean contactsfor nearly six months. Pyongyang linked the move to the Bush Administration's calls for stricter reciprocity indealingwith Pyongyang. However, the inter-Korean dialogue had slowed even before the Bush Administration launchedits reviewof U.S. policy toward North Korea, a process that was completed in June 2001. (5) Economic talks in late 2000 and early2001 had hit a snag over North Korea's demand that the South provide 500,000 kw of electricity immediately and2 millionkw soon thereafter. Although the two sides military-to-military talks in February produced an agreement on rulesofoperation for construction of a railroad through the DMZ, North Korea declined to sign and ratify the pact. Furthermore,Kim Jong-il made no move to fulfill his promise of a return summit visit to Seoul. The inter-Korean dialogue picked up again in September, following Kim Jong-il's trip to Russia and Chinese PresidentJiang Zemin's visit to Pyongyang. The resumption was curtailed, however, by the changed internationalenvironmentfollowing the September 11 terrorist attacks against the U.S. There were some signs that North Korea would usetheattacks as an opportunity to improve relations with the South and the U.S., if only to extricate itself from the U.S.list ofterrorist sponsoring nations. In addition to condemning the attacks, Pyongyang publicly rejected terrorism and thesupportof terrorist organizations, signed two anti-terrorism treaties and announced plans to sign five more. However, inter-Korean talks broke down completely in November 2001 due to Pyongyang's objections to Seoul'sheightened security posture to guard against terrorism, and the North's demand that all future talks be held in theDPRK(rather than alternating between North and South) for security reasons. North Korea's chronic fears of an Americanattackwere further heightened in November by the Bush Administration's apparent expansion of the definition of terrorismtoinclude the development of weapons of mass destruction (WMD), and by several Administration officials' referencesto theNorth's suspected WMD programs. Some have interpreted the North hard-line stance as a sign that hard-liners inPyongyang have gained the ascendancy. (6) Kim DaeJung and his Cabinet have expressed pessimism about future talksbeing held or bearing much fruit. Coinciding with the slowdown in inter-Korean dialogue since the spring of 2001, there have been a growing number ofnaval and border clashes between the two Koreas and between North Korea and Japan. Some analysts interprettheseincidents as signs that North Korea is attempting to pressure its neighbors to be more forthcoming in bilateral talks,andwarn of additional provocations from the North in the future. In the meantime, while Pyongyang's relations withSeoul,Washington, and Tokyo have worsened over the past year, North Korea has re-normalized relations with China andRussiaand has established relations with a number of Western European countries, in an apparent attempt to diversify itsdiplomatic contacts. Civilian Contacts Continue. Despite the freeze ingovernment-to-government talks, North-South links between groups and individuals have continued to expand. Thisis amarked contrast to earlier thaws (in 1972, 1985, and the early 1990s) in which the governments monopolizedcross-borderactivity. Although no South Korean firms have made no major direct investments in the North since the June 2000summit,a number have taken tentative steps toward building an arms-length presence in the North. Over one hundred fiftySouthern firms now manufacture goods in the North, primarily on a contract basis. (7) Samsung has sought to takeadvantage of the North's interest in information technology by opening a software center in Beijing using NorthKoreanprogrammers and by applying to open an operation in Pyongyang. Outside business circles, grassroots inter-Koreancivilian contacts also have continued to grow. Southern civic groups, for instance, donated approximately 73 billionwon(over $56 million at $1= 1,300 won) in the first 11 months of 2001, compared with over 40 billion won (over $30million)for all of 2000. (8) Criticism of the Sunshine Policy in South Korea. Within South Korea,criticism of President Kim's sunshine policy - particularly from the opposition Grand National Party (GNP) - hasmountedover the past year, particularly as North Korea put a halt to the dialogue. The tension peaked in August andSeptember2001, when a controversial visit to Pyongyang by South Korean unification activists led to the forced resignationof thePresident Kim's Unification Minister, the collapse of his ruling coalition, and his party's loss of control over theNationalAssembly. The GNP's concerns have been less over the logic of the policy - the party generally has come to supportsomeform of engagement with North Korea - than over its implementation. (9) The GNP leadership has charged President Kimwith failing to insist on reciprocity from Pyongyang in exchange for Seoul's concessions and with ignoring importantissues such as confidence-building measures and the several hundred South Korean POWs and kidnaping victimssaid toremain in the North. The GNP also has criticized Kim for failing to adequately consult with the National Assembly- inwhich the GNP is the largest party - and for trying to silence domestic criticism of North Korea. (10) President Kim'sdomestic support has been further weakened by the widespread perception that he is a "lame duck." By law, SouthKoreanpresidents can serve only one five-year term, and jockeying has already begun for presidential elections in December2002. The slowing of South Korea's economy in 2001 has added weight to the GNP's warnings that the government should avoidproviding North Korea with significant economic assistance. After recording an 8.8% growth rate in 2000, theeconomy isexpected to have grown by less than 3% in 2001. The slowdown also has accentuated the serious financialdifficulties ofthe Hyundai conglomerate, particularly its North Korean business ventures, which have been the economic flagshipsofKim Dae Jung's sunshine policy. Inter-Korean trade in the first 11 months of 2001 fell 9.3% year on year to $363million. What are North Korea's Intentions? With the apparent - and perhapstemporary - collapse of Kim Dae Jung's sunshine policy, South Korea's ability to take the initiative on peninsularmattersis limited. Thus, the future course of inter-Korean relations revolves to an even greater degree around North Korea'sintentions, which remain opaque. In the aftermath of the June 2000 summit, many wondered whether Pyongyang'sdiplomatic opening was a sign that Kim Jong-il had changed his stripes, deciding to adopt a more cooperativeposture andpossibly reform the faltering North Korean economy.