Sunshine In The DMZ.(World Affairs)(Sunshine Policy in the demilitarized zone)

Byline: Christian Caryl AND B. J. Lee

The Koreas are building a series of economic megaprojects. Peace may be a small step closer.

The notion that peace might break out between the Koreas suddenly looks less farfetched. The Bush administration's about-face on talks with Pyongyang has revived the effort to negotiate away the North's nuclear arsenal. Last week a U.S.-led team started disabling the Yongbyon nuclear reactor -- a step toward the plant's dismantlement and a full inventory of the North's nuclear materials and equipment, to be disposed of later. Meanwhile the North is pursuing a charm offensive: in September it established diplomatic ties with the Dominican Republic, Guatemala and the United Arab Emirates; on a trip to Vietnam in October, North Korea's prime minister made surprisingly positive noises about Hanoi's Chinese-style reform program. Most concretely, the summit last month in Pyongyang between southern President Roh Moo Hyun and northern leader Kim Jong Il gave a boost to growing trade between the former blood rivals. The leaders agreed to a series of grand projects: expanded rail links across the demilitarized zone, port facilities in the northern city of Haeju, shipbuilding projects and the opening of direct flights between the South and Mount Paektu, by legend the original source of the Korean people.

Tensions had been falling since the late 1990s, when South Korean President Kim Dae Jung broke the cold-war ice by declaring a new "Sunshine Policy" of partnership rather than confrontation. Nearly 2 million southerners have visited the North over the past decade, compared with 2,400 in the previous 45 years. Officials from the two Koreas now meet regularly. As routine replaces perpetual alarm, trade between the Koreas rose 23 percent in the first 10 months of this year to $1.44 billion, compared with the same period in 2006. Now the summit agreements promise to bring relations even closer to normal by opening up new areas of the North to a broader array of South Korean firms.

Early on, the Sunshine Policy created opportunities for big southern conglomerates, particularly Hyundai, in carefully sealed enclaves in the North, such as the Mount Kumgang resort area. But in 2005, the two sides opened the Kaesong Industrial Complex, just north of the DMZ, where small and medium-size southern firms set up factories. The number of participating southern firms has since doubled to 30, now employing 15,000 workers. They will churn out $150 ...