Court decisions reignite World War II tensions, straining Japan and South Korea’s new amity

SEOUL, South Korea — Rapidly warming Japan-South Korean relations felt a distinct chill at the end of 2023 as an emotive historical dispute between the two U.S. East Asian allies — compensation for World War II victims — reared up yet again.

Two South Korean court decisions — one on Thursday demanding Japanese firms compensate wartime Korean forced laborers, and one last month demanding Japan pay compensation to Korea “comfort women” forced to work in wartime brothels for Japanese soldiers — are complicating what had been blossoming ties.

Citing prior bilateral agreements that Tokyo says have put the dispute to rest, Japanese Chief Cabinet Secretary Yoshimasa Hayashi called this week’s judgment “extremely regrettable” and “absolutely unacceptable.”

The sighs from Washington’s halls of power can almost be heard across the Pacific, given the Biden administration’s hopes of forging a trilateral front in Northeast Asia.

South Korean President Yoon Suk Yeol has made upgrading ties with Japan a flagship policy, uniting the neighboring democracies as a hedge against the rising regional risks presented by its authoritarian competitors China, North Korea and Russia.

The outreach requires finessing complex legal and diplomatic disputes that have long poisoned ties, but history hangs heavy over the relationship.

In South Korea, Japan‘s 1910-1945 colonial rule of the peninsula and related humiliations, injustices and atrocities generate explosive emotion.

Japan‘s postwar governments have apologized scores of times and compensated Korea more generously than any European imperial power has to former colonies. But many here believe the apologies are insincere and the compensation offered is still inadequate.

Given the shady ground in South Korea between victim politics and national politics and between the judiciary and the government, there is no clear way forward.

The situation presents a quandary for the Yoon government, given that a majority of victims have already accepted compensation. Do the rights of a handful of holdouts override broader diplomatic, economic and security policy imperatives?

Victims vs. compensation

In 1965, alongside a treaty opening diplomatic relations, Japan paid South Korea a grant and loan package worth $800 million. Part of that was designed to compensate wartime forced laborers, many of whom, in the chaos of the war’s final months, were never paid.

Japan argues all was settled then, in the treaty’s wording, “finally and irreversibly.” It insists it is not subject to South Korean courts, and accuses Seoul of ignoring international law.

South Korean judges, however, cite supranational humanitarian laws. Adding fuel to the fire, South Korean courts in 2018 seized the assets of two Japanese companies operating in the country, leading Tokyo to delay exports of key semiconductor chemicals needed by South Korean manufacturers.

The bad blood affected a regional intelligence-sharing system with the U.S. and there were threats of Japan de-investing in South Korean companies and withdrawing the rights to intellectual property.

The Yoon government, which took power in 2022, pursued a rapprochement with Tokyo that the Biden administration hailed as “groundbreaking.”

Under a key part of the policy, South Korean companies — which had also benefited from the 1965 Japanese cash — established a foundation to compensate domestic forced laborers. Eleven of 15 plaintiffs accepted that compensation.

Four plaintiffs rejected the offer, however, and their holdout was only empowered by Thursday’s Supreme Court decision.

Resolving the comfort women cases poses similar challenges.

In the 1990s, Tokyo, together with Japanese companies, established the “Asian Women’s Fund” to compensate comfort women. However, victims who accepted the money were criticized by a high-profile activist group which believed the compensation was not appropriately official.

Then, in 2015, Tokyo donated funds to the South Korean government to compensate former comfort women under a bilateral deal to settle matters “finally and irreversibly.” Once again, a majority — 37 of 46 survivors — accepted the funds. But the holdouts argued that they had not been consulted during government-government talks, and a new South Korean government that took office in 2017 disavowed the 2015 deal.

One of the last surviving comfort women, Lee Yong-soo, 95, attended the November court judgment.

“I’m really grateful,” she said.

Unclear road ahead

The path forward is unclear, analysts said.

“The Japanese government made very clear that the South Korean government must resolve the issue, and the South Korean government can only resolve it when victims accept the compensation,” said Moon Chung-in, a professor emeritus at Yonsei University. “If the victims do not accept government mediation, they will demand cash from the frozen assets.”

But in a democracy where firewalls separate the executive, legislative and judicial arms of government, the Yoon administration lacks the levers to control how the courts rule.

“Korean democracy is more dynamic than Japanese democracy!” said Mr. Moon, who advised the previous Seoul administration. “We have separation of powers, but they don’t give a damn about that — they really think the Korean president has absolute power.”

The Japanese corporate assets — seized by South Korean courts to compensate forced laborers in 2018 — remain in limbo today. In five years, no move has been made to liquidate them.

The judges may be feeling the political pressures.

“Here in Korea, court decisions and prosecutors’ offices are very much politically intertwined,” said Lim Eun-jung, an international relations professor at Kongju National University. “In principle, a court decision is a court decision, but still, the courts are probably pretty sensitive.”

From Japan‘s perspective, while compensating just four forced labor victims might be a minor expense, the agreement could set a precedent. If assets are liquidated and monies paid, hundreds or thousands of plaintiffs — former forced laborers and their descendants — might seek recompense as well.

“There are many, many more people who will potentially take out lawsuits,” said Ms. Lim, who specializes in Japan-Korea relations.

The Yoon government can try to wait out the political pressure, while trying to persuade the courts to keep the assets frozen for now on national security grounds.

Ms. Lim suggests Japan‘s corporate sector should match Mr. Yoon‘s willingness to take risks and contribute to the new South Korean victims’ fund as a way to resolve an enduring impediment to better ties.

“We want more responsive actions from the Japanese side,” she urged.