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Korea, Japan expand currency swaps

Lee-Noda summit  addresses FTA, N.K., but not comfort women

Seoul and Tokyo agreed to expand their currency swaps to $70 billion from $13 billion for stronger financial cooperation amid global economic uncertainties during President Lee Myung-bak’s summit meeting with Japanese Prime Minister Yoshihiko Noda in Seoul.

Also on the occasion of Noda’s two-day visit, Japan returned five of the 1,205 royal books that it extorted during its 1919-1945 colonial rule of Korea. Japan is to hand over the rest of the Joseon Dynasty archive by Dec. 10 under an agreement that took effect in June. The “Uigwe” books record the procedures and formalities for royal weddings, funerals, banquets and for reception of foreign envoys, as well as cultural activities of the royal family.

Lee and Noda, however, stopped short of discussing the issue of “comfort women,” who were forced by the Japanese army into sexual slavery during World War II, Noda said in the joint press conference after the summit.

“(The compensation for comfort women) is a difficult problem in many ways. The two sides should wisely engage in discussions from a broad perspective so that it does not harm bilateral ties,” Noda said.
President Lee Myung-bak and Japanese Prime Minister Yoshihiko Noda head for their summit in Cheong Wa Dae on Wednesday.(Yonhap News)
President Lee Myung-bak and Japanese Prime Minister Yoshihiko Noda head for their summit in Cheong Wa Dae on Wednesday.(Yonhap News)

“I believe I was able to build personal trust with President Lee.”

Seoul’s Foreign Ministry proposed official talks with Tokyo on the compensation for comfort women in September, after the Korean Constitutional Court ruled that the lack of proactive government engagement to address the war crime was a violation of the victims’ human rights.

In the beginning of the summit, Lee said he expects Noda to deal with “pending issues that are a stumbling block between the two nations” in a “sincere and proactive” manner.

“I have mentioned several times that it would be the basis of Korea-Japan relations to not forget the past and move towards the future, and that it is necessary for Japan to make proactive efforts on issues from past history,” Lee said during the joint press conference.

The two leaders also agreed to expand bilateral cultural exchanges, bolster cooperation for North Korea’s denuclearization, and hold working-level talks to resume negotiations for a Korea-Japan free trade agreement.

Noda emphasized the need for an FTA during his breakfast meeting with a league of Korean and Japanese legislators including the president’s brother Rep. Lee Sang-deuk of the ruling Grand National Party, saying that voices against the FTA should be overcome with political decisions.

Under the currency swap agreement reached Wednesday, the two sides will augment the $3 billion won-yen swap facility to $30 billion and open a new $30 billion U.S. dollar-local currency arrangement, the Bank of Korea said.

At the peak of the global financial crisis in 2008, the BOK agreed with its Japanese counterpart to expand its won-yen swap facility to $20 billion from $3 billion.

Last year, the two central banks closed the extra currency swap line as the global financial markets showed signs of stabilizing. The current $3 billion tranche is set to expire on July 3, 2013.

Under the so-called Chiang Mai initiative aimed at cushioning regional currencies, South Korea has a won-dollar swap arrangement of $10 billion with Japan, which can be tapped in the event of an emergency.

By Kim So-hyun (