By Kevin Sullivan
Washington Post Foreign Service
Wednesday, May 26, 1999; Page A20

SEOUL—Kim Chang Ho slurped buckwheat noodles made of flour shipped from Pyongyang and served in bowls imported from the most famous restaurant in the North Korean capital. Then he washed his meal down with liquor bottled in the North.

Many South Koreans are serving prison sentences for violating this country's strict national security laws, which ban all assistance to Stalinist North Korea. Yet here were Kim and scores of others dining boldly in a brightly lit downtown Seoul restaurant that plans to send about $1 million a year in profits to Pyongyang.

"We need to try endlessly to engage the North Koreans," said Kim, a manager at a Seoul architectural firm, who came to the restaurant not just for the rare North Korean food, but because he thinks "buying North Korean goods and accepting their culture" could help reunify the divided Korean Peninsula.

Diner diplomacy is the latest attempt to draw the reclusive North out of a xenophobic shell bounded by barbed wire and artillery batteries. Taking advantage of South Korean President Kim Dae Jung's "sunshine policy" of cross-border engagement, Okryukwan, a franchise of a popular Pyongyang restaurant owned by the ruling Communist Party, has become the first North Korean business to open a branch in the South.

It has been a roaring hit since it opened two weeks ago. Hundreds of people have waited in line for six hours or more for a taste of the restaurant's specialty, naengmyon -- a cold noodle soup flavored with beef, chicken, vegetables, fruit and spices.

The three-story restaurant seats 360 people -- compared with the 3,650 who can fit into its massive namesake in Pyongyang. On the restaurant's second day in business here, it served 8,000 bowls of noodles. On the third day, all 30 waitresses quit, citing exhaustion. A new staff has been hired, and diners are still lining up beneath a massive mural of the Pyongyang restaurant -- a display that, without government approval, would normally result in prosecution for promoting North Korea.

"There is no option other than cooperation in this desperate world," said Kim Young Baek, who left an importing company to open the Seoul restaurant. "South Koreans need to do anything we can to avoid a war, and in order to do that we need to cooperate to make things better."

How to deal with North Korea is a matter of increasing concern in Seoul and Washington, as the Pyongyang government steps up production and overseas sales of increasingly sophisticated ballistic missiles, and suspicions grow that it is attempting to build nuclear weapons.

Congress has been inching toward a harder line with North Korea. A group of U.S. nuclear specialists was in Pyongyang last week inspecting a suspected nuclear weapons facility, while former defense secretary William J. Perry began a visit there Tuesday as part of a review of U.S. policy toward North Korea.

But under President Kim, South Korea is sticking closely to its philosophy that more person-to-person engagement will lead to a more peaceful North. It is hard to overstate how much that policy differs from the policy of Kim's predecessors. Until Kim took office last year, Seoul had maintained an inflexible hard line toward Pyongyang, preferring military buildup to economic exchange.

Under Kim, Seoul is granting an unprecedented number of permits for South Korean businesses to invest in the North. Clothing, television sets, golf bags and other goods are now produced in North Korean factories under joint ventures with South Korean companies. South Korea's Hyundai conglomerate is paying North Korea $25 million a month as part of a massive development project. Since last November, Hyundai also has taken more than 60,000 South Korean tourists on cruise-ship tours to a scenic spot on North Korea's east coast -- a first since the end of the Korean War in 1953.

Now, for the first time, Seoul's Ministry of Unification has granted a permit for a North Korean restaurant -- which was built on orders of Kim Il Sung, founder of the North Korean state -- to open a branch in the middle of Seoul. Restaurant manager Kim said that under his franchise agreement he must pay Pyongyang about 2 percent of his profits -- a contribution he projects to be about $1 million a year.

While the two governments are bitter rivals, people on both sides of the border have deep attachments and complex feelings about each other. More than 10 million South Koreans -- about a quarter of the population -- have family ties in the North. While they distrust North Korea's Communist leaders, many of them want to help its impoverished and hungry people.

Sitting at a table in the Seoul restaurant, Paek Sung Il, 70, and his brother devoured platefuls of North Korean bulgogi, a grilled beef dish. Paek fled the North in 1948, when he was 20, leaving behind aunts and uncles and cousins he has not heard from since. "This is how we can get closer to unification," Paek said, making a sweeping gesture at the packed dining room. "The sunshine policy is a good idea."

But even some people with blood ties to the North are skeptical about how much good can come from a bowl of noodles. "It's nonsense that this could help with unification; I think this is all just a way of marketing the restaurant," said Kim Ock Kyun, 62, who fled the North as a boy when the war began in 1950.

Kim said North Korea understands only force and will never agree to a peaceful reunification with the South -- noodles or no noodles. Still, he said, busily working his bowl with chopsticks, they sure got the taste right -- just as he remembered it from his childhood.