South Korea took a step toward improving ties with historical rival Japan by announcing a plan Monday to raise local civilian funds to compensate Koreans who won damages against Japanese companies that enslaved them during Tokyo’s 35-year colonial rule.

The plan reflects conservative President Yoon Suk Yeol’s determination to mend frayed ties with Japan and solidify security cooperation among Seoul, Tokyo and Washington to better cope with North Korea’s nuclear threats.

US President Joe Biden hailed the plan as new chapter of cooperation and partnership between two of the United States’ closest allies and said he looked forward to enhancing trilateral ties. Yoon and Japanese Prime Minister Fumio Kishida “are taking a critical step to forge a future for the Korean and Japanese people that is safer, more secure, and more prosperous,” Biden said in a statement.

The plan however drew immediate backlash from former forced laborers and their supporters. They demand direct compensation from the Japanese companies and a fresh apology from the Japanese government.

South Korean Foreign Minister Park Jin told a televised news conference the victims would be compensated through a local foundation that would be funded by civilian donations. He said South Korea and Japan were at a “new window of opportunity” to overcome their conflicts and build future-oriented relations.

“If we compare it to a glass of water, I think that the glass is more than half full with water. We expect that the glass will be further filled moving forward based on Japan’s sincere response,” Park said.

Park didn’t elaborate on how the foundation would be financed. But in January, Shim Kyu-sun, chairperson of the Foundation for Victims of Forced Mobilization by Imperial Japan, which would be handling the reparations, said the funds would come from South Korean companies that benefited from a 1965 Seoul-Tokyo treaty that normalized their relations.

The 1965 accord was accompanied by hundreds of millions of dollars in economic aid and loans from Tokyo to Seoul that were used in development projects carried out by major South Korean companies, including POSCO, now a global steel giant.

Ties between Seoul and Tokyo have long been complicated by grievances related to Japan’s brutal rule of the Korean Peninsula from 1910 to 1945, when hundreds of thousands of Koreans were mobilized as forced laborers for Japanese companies, or sex slaves at Tokyo’s military-run brothels during World War II.

Their disputes intensified after South Korea’s Supreme Court in 2018 ordered two Japanese companies — Nippon Steel and Mitsubishi Heavy Industries — to compensate former Korean forced laborers or their relatives.

Japan, which insists all wartime compensation issues were settled under the 1965 treaty, retaliated by slapping export controls on chemicals vital to South Korea’s semiconductor industry in 2019.

South Korea, then governed by Yoon’s liberal predecessor Moon Jae-in, accused Japan of weaponizing trade and subsequently threatened to terminate a military intelligence-sharing agreement with Tokyo, a major symbol of their three-way security cooperation with Washington.

Their feuding complicated U.S. efforts to reinforce cooperation with its two key Asian allies in the face of confrontations with China and North Korea. Worries about their strained ties have grown in both South Korea and Japan, especially after North Korea last year adopted an escalatory nuclear doctrine and test-launched a barrage of missiles, some of them nuclear-capable that place both countries within striking distance.

During a parliamentary session on Monday, Kishida said he stands by Japan’s previous expression of regrets and apologies over its colonial wrongdoing but said whether to withdraw Japan’s export control is a separate issue. He said Japan will continue to seek appropriate response from Seoul on its actions including its complaint filed with the WTO.

When asked about South Korea’s failure to ensure that the Japanese companies participate in the compensation of forced laborers, Park, the foreign minister, said he doesn’t expect Japan’s government to block “voluntary donations” by its civil sector. Japanese Foreign Minister Yoshimasa Hayashi told reporters that Japan “appreciates” the South Korean announcement as a step to restore good ties. But he said the South Korean announcement doesn’t require contributions from the Japanese companies.

Former forced laborers, their supporters and liberal opposition lawmakers berated the government plan, calling it a diplomatic surrender. About 20-30 activists rallied near Seoul’s Foreign Ministry, blowing horns and shouting slogans, “We condemn (the Yoon government)” and “Withdraw (the announcement).”

“Basically, the money of South Korean companies would be used to erase the forced laborers’ rights to receivables,” Lim Jae-sung, a lawyer who represented some of the plaintiffs, wrote on Facebook. “This is an absolute win by Japan, which insists it cannot spend 1 yen on the forced labor issue.”

Bong Young-shik, an expert at Seoul’s Yonsei Institute for North Korean Studies, said the government’s plan was “a big political gambling by Yoon.”

He said Yoon was likely under pressure to bolster South Korea’s defenses and military alliance with the U.S. as North Korea’s missile threats increase.

Choi Eun-mi, a Japan expert at South Korea’s Asan Institute for Policy Studies, said it has been obvious that a third-party reimbursement of forced laborers was the only realistic solution for South Korea because there are “fundamental” disagreements with Japan over the 2018 court rulings.

She said it was also hard for Seoul officials to ignore the advanced ages of victims. “One might say that the government hurried toward a solution, but the negotiations have been going on for nearly a year and the plaintiffs would have had most to lose if the issue isn’t resolved now,” Choi said.

Many former forced laborers are already dead and survivors are in their 90s. Among the 15 victims involved in the 2018 court rulings, only three are currently alive.

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