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South Korea foundation may pay wartime labor damages for Japanese firms

Japan and South Korea are discussing a plan for a foundation funded by contributions from Korean companies to pay compensation for wartime labor to plaintiffs on behalf of Japanese corporate defendants, diplomatic sources said Sunday.

The planned compromise deal follows South Korean court orders for the liquidation of the local assets of Japanese companies to pay the damages. Japan maintains that all claims stemming from its colonial rule were settled “completely and finally” under a 1965 bilateral agreement.

The countries are aiming to settle the issue of the compensation, which has contributed to the deterioration of bilateral relations to the worst level in decades, by the end of this year, according to the sources.

Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk-yeol are considering meeting on the sidelines of international conferences to be held next month, such as a summit of the Group of 20 major economies in Indonesia, the sources added.

The plan comes as signs of a thaw in ties between the East Asian neighbors have emerged since Yoon assumed office in May with a pledge to take a future-oriented approach toward Japan. The South Korean president, who replaced left-leaning Moon Jae-in, has adopted a hard-line stance on North Korea.

During the period of the Moon administration, South Korean courts ordered the liquidation of local assets seized from Mitsubishi Heavy Industries Ltd. and Nippon Steel Corp., which were sued over alleged forced labor during Japan’s 1910-1945 colonial rule of the Korean Peninsula.

The two companies have not complied with the compensation orders, in line with the Japanese government’s response to the matter.

The plan was initially discussed by a public-private consultative body set up by the South Korean government. South Korea has explained the plan to Japan several times, the sources said.

Tokyo could accept, according to a Japanese government source.

Seoul has proposed that Japanese companies join South Korean companies in contributing to the foundation and apologize to the South Korean plaintiffs, both of which Tokyo has refused, the sources said.

Kishida could face opposition from hawkish members of his ruling Liberal Democratic Party who argue that Japan should not make easy compromises with South Korea.

The plaintiffs have opposed Yoon’s stance of not asking the Japanese side to pay damages in the hope of avoiding a further worsening of diplomatic relations.

The idea of the South Korean government paying damages to the plaintiffs has also been discussed but is unlikely to be adopted, according to the sources.

Local media reported the liquidation of the Japanese companies’ assets could be finalized as early as August, but the South Korean Supreme Court has yet to make a decision, possibly taking the Yoon administration’s policy toward Japan into account.

In a meeting on the fringes of the U.N. General Assembly in New York late last month, Kishida and Yoon reaffirmed that they aim to restore “sound bilateral relations.”

The first in-person, sit-down talks between the countries’ leaders since December 2019 were fully closed to the media. The meeting was described by Tokyo and Seoul as “informal,” in a signal that bilateral ties remain delicate and will not drastically improve soon.

Source: Japan Times