Part III—Korea
POLITICAL
The major political problem in Korea is that of carrying out the Moscow Agreement of December, 1945, for the formation of a Provisional Korean Government to be followed by a Four-Power Trusteeship over Korea. The United States-Soviet Joint Commission, established in accordance with that Agreement, reached a deadlock in 1946 in the effort to implement the Moscow Agreement due to Soviet opposition to consultations with the Commission by all Korean democratic parties and social organizations, as provided for in that Agreement. Soviet motives have been to eliminate the extreme rightist groups in the United States zone from consultations and subsequently from participation in the new government thus ensuring a Communist-dominated government in Korea. Soviet objections to such consultations have been based on the rightist groups’ openly expressed opposition to trusteeship, while the United States has taken the position that to disqualify these groups would deprive a large section of the Korean people of an opportunity to express views regarding their government.
A resumption of the Joint Commission meetings in May, 1947, following an exchange of notes between Secretary Marshall and Foreign Minister Molotov, resulted in a further deadlock on the same issue, although these notes had established a formula which would have permitted participation in consultation by the rightist groups in question. After the Soviet Government failed to reply to Secretary Marshall’s note of August 12, requesting the submission by the Commission of a joint status report or separate reports by each Delegation, the United States Delegation, on August 20, transmitted a unilateral report to Washington. An American proposal then made to China, the United Kingdom, and the Soviet Union for a Four-Power Conference to discuss Korea has been agreed to by China and the United Kingdom, but has been rejected by the Soviet Union.
Internally, the Korean problem has been complicated by the Soviet establishment of a Communist regime in North Korea and by the machinations in South Korea of Communist groups, openly hostile to the United States.
The latter, in accordance with their directives, are endeavoring to turn over to Koreans as rapidly as possible full administrative responsibility in governmental departments. In consequence with this plan they have organized an interim Korean legislative assembly and in general, are striving to carry out a policy of “Koreanization” of government in South Korea.
ECONOMIC
South Korea, basically an agricultural area, does not have the overall economic resources to sustain its economy without external assistance. The soil depleted, and imports of food as well as fertilizer are required. The latter has normally come from North Korea, as have most of the electric power, timber, anthracite, and other basic products.
The economic dependence of South Korea upon North Korea, and of Korea as a whole, in prewar years, upon trade with Japan and Manchuria, cannot be too strongly emphasized. Division of the country at the 38° North parallel and prevention of all except smuggling trade between North and South Korea have reduced the Korean economy to its lowest level in many years. Prospects for developing sizeable exports are slight. Food exports cannot be anticipated on any scale for several years, and then only with increased use of artificial fertilizer. South Korea’s few manufacturing industries, which have been operating at possibly 20 per cent of prewar production, are now reducing their output or closing down. In part this is a natural result of ten years of deferred maintenance and war-time abuse, but lack of raw materials and essential repair parts, and a gross deficiency of competent management and technical personnel are the principal factors.
A runaway inflation has not yet occurred in South Korea, because the Military Government has restrained the issuance of currency by keeping governmental expenditures and local occupation costs at reasonable levels; because cannibalization and the use of Japanese stocks have kept some industries going; and because the forcible collection of rice at harvest time has brought in sufficient food to maintain—with imports provided by the United States—an adequate official ration in the cities. Highly inflationary factors such as the exhaustion of raw material stocks, cumulative breakdowns in public services and transportation, and the cutting of power supply from the North might occur simultaneously. The South Korean economic outlook is, therefore, most grave.
A five-year rehabilitation program starting in July, 1948, and requiring United States financing at a cost of $647 million, has been proposed by the Military Government. A review of preliminary estimates indicates that the proposed annual rehabilitation cost would be substantially greater than the relief program of $137 million which was tentatively approved for fiscal 1948, but later reduced to $92.7 million. These preliminary estimates of costs and the merits of individual projects need careful review. It is not considered feasible to make South Korea self-sustaining. If the United States elects to remain in South Korea, support of that area should be on a relief basis.
SOCIAL—CULTURAL
Since the Japanese were expelled, the Korean people have vehemently and unceasingly pressed for restoration of their ancient culture. There is particular zeal for public education. Individual and collective efforts to reduce illiteracy have produced results meeting the praise of American Military Government officials. There will be materially better results when there are more school buildings, more trained teachers and advisors, and many more textbooks in the Korean language. Current American activities aim at adult visual education on a modest but reasonably effective scale. South Korea’s health and public-welfare work are at present fully as effective as under Japanese administration and considerably more so in the prevention of serious diseases. Even the Koreans’ eagerness for improvement cannot immediately overcome the unquestionable need for large funds for social betterment.
MILITARY
The military situation in Korea, stemming from political and economic disputes which in turn are accentuated by the artificial barrier along the 38° North parallel, is potentially dangerous to United States strategic interests. Large-scale Communist inspired or abetted riots and revolutionary activities in the South are a constant threat. However, American forces supplemented by quasi-military Korean units are adequate to cope with such trouble or disorder except in the currently improbable event of an outright Soviet-controlled invasion. Whereas American and Soviet forces engaged in occupation duties in South Korea and North Korea respectively are approximately equal, each comprising less than 50,000 troops, the Soviet-equipped and trained North Korean People’s (Communist) Army of approximately 125,000 is vastly superior to the United States-organized Constabulary of 16,000 Koreans equipped with Japanese small arms. The North Korean People’s Army constitutes a potential military threat to South Korea, since there is strong possibility that the Soviets will withdraw their occupation forces, and thus induce our own withdrawal. This probably will take place just as soon as they can be sure that the North Korean puppet government and its armed forces which they have created, are strong enough and sufficiently well indoctrinated to be relied upon to carry out Soviet objectives without the actual presence of Soviet troops.
It appears advisable that the United States organize, equip, and train a South Korean Force, similar to the former Philippine Scouts. This force should be under the control of the United States military commander and, initially should be officered throughout by Americans, with a program for replacement by Korean officers. It should be of sufficient strength to cope with the threat from the North. It would counteract in large measure the North Korean People’s Army when American and Soviet forces are withdrawn from Korea, possibly preclude the forcible establishment of a Communist government, and thus contribute toward a free and independent Korea.