South Korea's Yoon rushes compensation deal on forced labour row as he seeks to mend ties with Japan

South Korea's scheme to resolve the protracted diplomatic row over the compensation of Korean victims of Japan's wartime forced labour has been condemned by critics as "humiliating", as President Yoon Suk-yeol rushes to mend ties with Japan.

Yoon announced the deal on Monday, citing the need to bolster three-way defence cooperation with Japan and the United States over threats from North Korea.

Washington, which hailed the agreement as "groundbreaking", has been putting pressure on both Seoul and Tokyo, its strongest allies in Asia, to put their historical issues behind them to focus on Pyongyang's growing nuclear and missile threats, and restrain an increasingly assertive China.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

The move comes as Yoon is reportedly seeking to hold a summit with Japanese Prime Minister Fumio Kishida in Tokyo later this month, bilateral talks with US President Joe Biden in April and a three-way meeting with both leaders in May.

The deal announced by South Korean Foreign Minister Park Jin said victims would receive reparations from a Seoul-backed fund instead of Japanese firms linked to forced labour. "I hope that this resolution will open a new chapter in history for both Korea and Japan, help overcome antagonism and move towards the future," he said.

President Yoon was quoted by local media as saying the decision was based on a "determination" for "future-oriented South Korea-Japan relations".

But Seoul's solution was met with anger from critics and the opposition liberal Democratic Party.

"This is a diplomatic disaster that amounts to giving up the country's legal sovereignty," spokesman Kim Young-hwan of the Center for Historical Truth and Justice, an NGO that helps forced labour victims, told This Week in Asia.

The liberal opposition Democratic Party of Korea denounced what it called "the worst humiliating disaster in diplomacy".

"Far from helping improve relations with Japan, this will only spark a new row," it said in a statement.

In 2018, South Korea's Supreme Court ordered responsible Japanese firms, such as Mitsubishi Heavy Industries Ltd and Nippon Steel Corp, to pay reparations worth 100 million won (US$77,000) each to former forced labourers.

It threatened to liquidate their assets in the country if they failed to comply with the court order. The amount is now worth up to 250 million won (US$193,000) each.

Although 15 South Koreans have won such cases, none have been compensated. Roughly 200 other court procedures are ongoing.

Under the scheme, the Seoul-financed foundation for the victims will collect "voluntary" donations from local businesses and compensate other plaintiffs who win pending cases.

The government wants donations from South Korean companies that benefited from a 1965 bilateral treaty, such as steelmaker POSCO and KT, under which Tokyo offered US$300 million in grants to Seoul.

South Korea earlier proposed compensating the victims through this fund using donations from local businesses and called on the Japanese companies to also make contributions and apologise to the victims.

Tokyo is reportedly considering participating in a separate scholarship fund for South Korean students in Japan as a gesture of reconciliation but Japan won't make any monetary contributions directed towards the victims, Japanese news media reported last week.

"I'd say the glass is half full rather than half empty," foreign minister Park told journalists, expressing hope that Japan would come forward and "fill up the other half of the glass".

As for the demand for an apology from Japan, South Korea's presidential office on Monday acknowledged Tokyo's past statements, including the 1998 joint statement issued by then-South Korean president Kim Dae-jung and Japanese prime minister Keizo Obuchi, Park said.

Obuchi had expressed remorse and offered an apology for all the damage and suffering inflicted on peoples of Asian countries during Japan's colonial rule.

Lawyer Lim Jae-sung, who represents some of the victims, said the government's plan to take over the responsibility of repaying victims from the Japanese side would be disputed in court. "The government is now turning the battle involving victims and Japan, and into one pitting victims against itself," Lim said.

Professor Lee Won-deog of Kookmin University, an expert in Japanese affairs, said the deal had set up a "milestone" in efforts to resolve the issue that casts a long shadow over the two neighbours' ties.

"This deal is seen as humiliating [to South Korea] and domestically unpopular. However, even if the opposition party regains power, it would be difficult for a new government to overturn the diplomatic deal that was announced so publicly," Professor Lee said.

Conversely, Go Myong-hyun, an analyst at the Asan Institute of Policy Studies, said the government announcement represented a "positive step forward" in efforts to settle the thorny issue that has long strained ties between the two neighbours.

Additional reporting by Reuters

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.