"I agonize for North Koreans"

Shortly before heading to Auckland, New Zealand, to attend the APEC summit, South Korea's President Kim Dae Jung spoke at his Blue House office in Seoul with TIME Asia deputy editor Adi Ignatius, Tokyo correspondent Donald Macintyre and Seoul reporter Stella Kim. Following is the full text of the interview:TIME: Will North Korea launch another missile?
Kim: I think the possibility that they will not fire the missile has increased. To encourage them not to fire, South Korea and the United States and Japan have been in very close consultation-and we've also had the indirect support of the Chinese and Russians. We have sent a clear joint message saying what we will do if they go ahead with the missile firings.

TIME: Such as?
Kim: The consequences will be quite painful for North Korea. They will be denounced for damaging peace and stability in Northeast Asia. The pain will also come in terms of a halt or decrease in the various forms of economic assistance that our three countries have been giving. Of course, the North Korean economic situation is one of complete devastation. It is only able to sustain itself because of this assistance, plus the help that comes from China.

TIME: Would South Korea cut off humanitarian aid to the North?
Kim: The government finds it very difficult to go against public opinion, which will turn very sharply against North Korea if it goes ahead with the missile firing. For example, when we tried to get a public fundraising campaign going to give fertilizer to North Korea recently, we could not gather all that much money because the sympathy was just not there. If they go ahead with another provocation, the sympathy will simply dry up. Critics will ask, Why give assistance to a regime that continues to use whatever it can get-cash, aid and whatever-to build up its military and couldn't care less about feeding its own people? It will be hard for the government to continue humanitarian assistance in the face of such criticism.

TIME: U.S. Congressman Tony Hall, who just came back from North Korea, argues that North Koreans are starving and that you have to send aid, regardless of what Pyongyang does. How do you respond?
Kim: We still send North Korea $5-6 million worth of humanitarian aid a year through the Red Cross, through various private organizations. We want to do more. We want to give the North Koreans assistance in reforming their agricultural sector, we want to give them grain seeds, fertilizers and all that kind of assistance so they will be able to really solve this problem of famine. I agonize over the suffering that the North Korean people must be experiencing. Every time I'm having a meal and I leave some food, I think about how much this food could do for suffering North Korean children. I really do want to do more to help them, but again, with such negative public opinion in this country, it is very difficult to go ahead with assistance.

TIME: What do you make of U.S. overtures to North Korea, delivered to Pyongyang by former Secretary of Defense William Perry earlier this year.
Kim: If you ask the North Korean leadership why they are developing missiles when their people are suffering, the regime's answer will be that they are doing this because of the threat from South Korea and the U.S. But that argument can no longer be justified in light of the proposal Mr. Perry took to North Korea. The message was this: We will do away with the threat that we pose to you, we will offer economic assistance, we will normalize ties with you and we will help you in the international community-in return for your discarding the military threat that you pose to South Korea and the rest of the world. So, for North Korea to continue to argue that they are building up their arms because of the threat from the South and the U.S. is not justified.

TIME: What is your best guess for the year the two Koreas will unify?
Kim: I have three-and-a-half years remaining in my term and do not expect unification to take place during this period. But if we try very hard, we have a real possibility of ending the Cold War on the Korean peninsula and starting a period of peaceful exchanges between South and North Korea.

TIME: Is withdrawing U.S. troops from South Korea an option in negotiating with North Korea over the missiles?
Kim: This is an entirely different issue from the missiles. The American military presence in Korea and in Japan is an integral part of the military balance in Northeast Asia. The American troops in South Korea are an issue between the U.S. and the Republic of Korea. Third parties do not have any say in this matter.

TIME: How do you keep in touch with what average Koreans are thinking?
Kim: I invite them to come and have lunch with me and engage me in various discussions. I believe during the one-and-a-half years since I became president I have met over about 10,000 people in this fashion. I take time to go out and visit people at their workplace. I also try to watch as much television and read the newspapers as much as I can to get a feel for what everyday people are interested in these days, what kinds of actors and actresses they like, what kinds of entertainment they like. And watching these shows-and particularly the entertainment shows, where you have lots of young people on stage with strange-looking colored hair styles-I get the sense that this is a really different generation from my own.

TIME: On the economy, it sometimes seems you're fighting a lonely battle for reform.
Kim: That's true to a certain extent. But I believe that people-and the global community-are supportive of my reform effort. And this is what sustains me. The reforms have not yet been completed. But at least I am able to say that we have overcome the critical part of the crisis. The economy has already started out on a very healthy direction.

TIME: What is it like when you meet with the heads of the chaebol and tell them what they have to do to reform? How do they respond?
Kim: Well, the atmosphere is quite good. Very sincere. We've met a couple of times. They have been very receptive to my criticisms and encouragement and there has not been serious opposition to the suggestions that I have made.

I am confident in my dealings with the chaebol heads. I believe that I have won their trust because, I have asked them for nothing. Unlike past presidents, I did not force them to give me money or political funds. Not a single cent. And, I have not shown favoritism to any particular chaebol. They know that I am fair.

All I ask of the chaebol is this: they must become first-rate businesses that are able to go out and compete in global arena. They can no longer go on with the management style of vertical integration, in which profitable affiliates suffer while helping out loosing affiliates. That way, money-loosing firms that should be closed quickly prolong their existence, making the entire chaebol very unprofitable and weak. This pattern must not continue. Each individual firm must be globally competitive.

This is my basic request to the chaebol. I have no hostility toward them, and I do not seek to dissolve them.

And I'm not just wielding a stick at them, I'm also dangling several carrots. During the first half of this year, Korean businesses, including the chaebol, have recorded the most profitable period in all of their history-not because of radical change towards rationalization and streamlining of their business management or any breakthrough in their technology development, but because of successful government policies. For example, because of our policies we were able to reduce interest rates from the high of 20% range to the current under-10% range. That alone has saved the chaebol millions of dollars by lowering their debt-servicing burden.

Our policies have resulted in low inflation and currency stabilization-and these things have benefited companies, too. When I meet with corporate heads I point these things out to them. They agree and acknowledge them. In fact, one corporate head has sent me a personal thank-you note for the policies that helped them to yield great profit.

TIME: When you meet heads of states at the APEC summit, what will you tell them?Kim: I believe democracy is the foundation of a healthy economy. Without genuine democracy you cannot have a genuine market economy. And, under the market economy, one must fully open doors to allow free trade and investment. This is the kind of thing I would like to discuss with my colleagues at APEC.

TIME: Does APEC still have a role?
Kim: I see APEC playing an increasing role for the benefit of the economies in this region. For example, we can stand together against hedge funds and speculative and reckless short-term capital flows, and work out joint measures to deal with the problems they create.

TIME: Are you concerned about having to wear a funny shirt at the APEC photo-op?
Kim: As the old saying goes, when in Rome do as the Romans do. But, I must admit that it's rather uncomfortable.