South Korea proposes fund to compensate victims of Japanese forced labour

South Korea is to set up a public foundation to compensate the victims of Japan’s wartime forced labour practices, in the latest attempt to resolve a long-running dispute between the countries and pave the way for improved trade ties.

Seoul’s foreign minister Park Jin on Monday said the foundation would be funded by the South Korean private sector, which received money under a 1965 treaty with Japan to resolve claims over forced labour during the second world war.

The announcement comes as the leaders of the two US allies have sought to repair strained relations, with Washington pressing for co-operation to counter China’s regional assertiveness and to deter nuclear-armed North Korea.

Japan’s prime minister Fumio Kishida welcomed the proposal as helping “to return relations between Japan and South Korea to a healthy state”. The US also welcomed the plan.

But it drew immediate backlash from victims and opposition parties for failing to compel Japanese companies to contribute to the fund.

The leader of South Korea’s main opposition Democratic party called the plan “humiliating” and accused President Yoon Suk Yeol’s administration of choosing “the path to betray historical justice”.

Lim Jae-sung, a lawyer for several victims, wrote in a Facebook post: “It is a complete victory by Japan, which has said it cannot pay a single yen on the forced labour issue.”

Ties between Tokyo and Seoul collapsed in 2018 after South Korea’s Supreme Court ordered two Japanese companies — Mitsubishi Heavy Industries and Nippon Steel & Sumitomo Metal — to pay victims of forced labour.

The same year, a separate deal brokered by Kishida, then foreign minister, to compensate South Korean victims of sexual slavery collapsed.

Tokyo has rejected calls for compensation from Japanese companies, insisting that all claims related to its colonial occupation of the Korean peninsula from 1910 to 1945 were resolved by the 1965 treaty.

Japan’s foreign minister Yoshimasa Hayashi said on Monday that the government would not object to Japanese companies making voluntary contributions to the fund. He said Kishida’s administration endorsed a 1998 expression of “deep remorse and heartfelt apology” for colonial rule.

Analysts said leadership changes in South Korea and Japan had brightened the prospects of a thaw. Yoon last week said Japan had “transformed from a militaristic aggressor of the past into a partner that shares the same universal values with us”.

People close to both governments said Yoon could visit Tokyo as soon as this Friday to attend a South Korea-Japan game at the World Baseball Classic in Tokyo.

For Japan, tensions with South Korea had weighed on its efforts with the US to bolster regional defence efforts. President Joe Biden hailed the plan as marking “a groundbreaking new chapter of co-operation and partnership between two of the United States’ closest allies”.

“The speed with which the two countries reached this deal shows that they share a deep understanding of the deterioration in the security environment,” said Kohtaro Ito at the Canon Institute for Global Studies.