North Korea-Japan Relations: The Normalization Talks and the Compensation/Reparations Issue [Updated June 13, 2001] [open pdf - 62KB]
From the Summary: "Japan and North Korea have not established official relations since North Korea was founded in 1948. In 2000, the two countries held three rounds of normalization talks, which had been frozen since 1992. The talks, however, have been stalled since November 2000. One of Pyongyang's key demands is that Tokyo compensate North Korea for Japan's colonization of the Korean Peninsula from 1910-1945. Though Japan has resisted using terms such as 'compensation' and 'reparations,' Tokyo has offered to provide North Korea with a large-scale economic aid package, much as it gave South Korea economic assistance when Tokyo and Seoul normalized relations in 1965. North Korea, however, insists that it will only accept 'compensation.' This disagreement over terminology has contributed to the current deadlock in the normalization negotiations. The 1965 Japan-South Korean settlement consisted of a $300 million grant, $200 million in low-interest long-term government loans, and $300 million in private credits from Japanese financial institutions. There are a number of estimates for the present value of the 1965 Japan-South Korea settlement, ranging from as low as $3.4 billion to over $20 billion. One methodology that adjusts for inflation in Japan and for inter-Korean population differences yields a 1999 value of approximately $3.8 billion. Reportedly, Japanese officials are discussing a package on the order of $5-$10 billion. This report will be updated periodically to track developments in the Japan-North Korea normalization talks."
CRS Report for Congress, RS20526