(Bloomberg) -- North Korean leader Kim Jong Un and South Korean President Moon Jae-in agreed Friday to finally end a seven-decade war this year, and pursue the “complete denuclearization” of the Korean Peninsula.
U.S. President Donald Trump hailed the move, declaring “KOREAN WAR TO END!” on Twitter. He’s agreed to meet with Kim at a time and place yet to be determined.
Kim and Moon embraced after signing the deal during a historic meeting on their militarized border, the first time a North Korean leader set foot on the southern side. They announced plans to replace the 1953 armistice that ended hostilities with a peace treaty by year’s end.
Their statement on a “common goal of realizing, through complete denuclearization, a nuclear-free Korean Peninsula,” stopped short of the “complete, verifiable and irreversible denuclearnization” long sought by the U.S. and its allies. The statement didn’t elaborate on what the term meant and Kim didn’t personally utter the word during remarks Friday.
“We have agreed to share a firm determination to open a new era in which all Korean people enjoy prosperity and happiness on a peaceful land without war,” Kim told reporters, without taking questions.
The agreement follows a rapid thaw in tensions on the peninsula after a flurry of North Korean missile tests and a hydrogen bomb detonation last year. The deal was expected to set up meeting soon between Kim and Trump soon, which would be the first summit between a North Korean leader and a sitting American president.
Still, it was Kim’s symbolism-laden encounter with Moon -- the third summit between leaders of the nations since the Korean War and the first since 2007 -- that captivated much of the world Friday. The event marked Kim’s first live, unfiltered appearance on world television: South Koreans gathered around screens to watch Moon lead him past a military honor guard while a band played “Arirang,” an unofficial Korean anthem.
Moon said their agreement to seek a peace treaty represented a “fundamental change” for the peninsula. The leaders agreed to hold military talks next month and seek a “phased disarmament,” without providing more details.
South Korea refused to participate in talks to end the Korean War, leaving an uneasy truce between North Korea and China on one side and United Nations forces -- led by the U.S. -- on the other. Although China long ago withdrew its troops, more than 28,000 American personnel remained based in South Korea, which the Kim regime views as an enduring threat.
“It all sounds good,” William Rhodes, former senior vice chairman of Citigroup Inc., told Bloomberg Television. “The question is how are you going to verify any denuclearization.”
Investors saw Friday’s deal easing risks. The cost of insuring South Korea’s sovereign bonds against non-payment fell 1.75 basis points to 44.75 basis points as of 6:10 p.m. in Seoul, Barclays Plc prices showed. The credit-default swap contracts, are on track for their lowest close since March 14, according to data provider CMA.
The question is whether the agreement can last longer than earlier ones by Moon’s predecessors that collapsed amid disputes over inspections, weapons tests and economic aid. North Korea, which committed to not pursuing nuclear weapons in 1992, now has an estimated 60 nuclear bombs and missiles believed capable of reaching any U.S. cities. -- a step Trump has threatened war to stop.
The announcement was followed by a tersely worded commentary from Kim’s Korean Central News Agency decrying sanctions and calling on the U.S. to drop its “anachronistic hostile policy toward” North Korea.
Any progress on dismantling the Kim’s weapons program would likely be slow and fraught, and involve visits by international inspectors. Prior efforts involving Kim’s late father when he was leader collapsed in acrimony, with North Korea blaming the U.S. for failure to adhere to the agreements.
Yet at least on Friday, optimism prevailed.
“There’ll be no victory without pain, no glory without frustration,” Kim said. “One day, we will remember this day with joy for overcoming challenges and hardship.”
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