The dispute between Japan and South Korea over Koreans mobilized for wartime labor in Japan has escalated yet again after a South Korean court approved the seizure of local assets of a leading Japanese steel-maker that had been ordered to pay damages to the former laborers — even though a 1965 bilateral agreement to settle property claims resolved the compensation issue. Seoul has rebuffed Tokyo’s calls to resolve the case on the basis of the 1965 accord, saying that it respects the judiciary’s decision, and President Moon Jae-in, in his new year’s news conference this week, accused Japan of “politicizing” the issue and “making sources of controversy and spreading them.”

The two governments have also remained at odds over the alleged radar lock-on incident that took place between the South Korean Navy and a Self-Defense Forces aircraft late last month. The situation is nothing less than a crisis in relations between Japan and South Korea, which, along with their mutual ally, the United States, need to be united in the effort to end North Korea’s nuclear weapons and ballistic missile programs. The crisis must not be left to fester. We urge Moon to make a rational decision to address the dispute and stop bilateral ties from spiraling further downward.

South Korea’s Supreme Court in October ordered Nippon Steel & Sumitomo Metal Corp. to pay damages to four Koreans mobilized to work for one of the steel-maker’s predecessors during World War II — while Korea was under Japan’s colonial rule from 1910 to 1945 — as it determined that individual South Koreans have not lost their right to seek damages for wartime labor. Japan protested that such a court decision runs counter to the 1965 agreement, which accompanied the basic treaty that normalized diplomatic ties between the two countries, and urged the South Korean government to take appropriate steps in line with the agreement. Seoul, however, has not done so. The top court has since handed down a similar ruling ordering Mitsubishi Heavy Industries Ltd. to compensate two groups of South Koreans for wartime labor, and more similar lawsuits targeting other Japanese companies are pending in South Korean courts.

The plaintiffs in the lawsuit, meanwhile, requested a seizure of the assets of Nippon Steel & Sumotomo Metal in South Korea after the steel-maker, as urged by the Japanese government, refused to comply with the top court order. Earlier this month, a South Korean court approved the plaintiffs’ request, and a partial seizure of shares that the Japanese firm holds in its joint venture with South Korean steel-maker Posco became effective when the court notice of its decision was delivered earlier this week to the joint venture. Speculation has surfaced that if the seized assets are put on sale, Japan may consider retaliatory action — possibly including tariff hikes on imports from South Korea or a tightening of visa requirements on South Korean visitors. There is a danger that retaliatory steps by both sides could spiral out of control.

On Wednesday, the Japanese government requested that Tokyo and Seoul hold formal talks as stipulated by the 1965 agreement, which provides for governmental talks as a means to resolve disputes that arise over its interpretation. It is the first time that such talks have been requested under the 1965 agreement. However, it remains unclear whether South Korea will agree to hold them. The agreement provides for the launch of an arbitration committee that includes members from a third country if the talks between Tokyo and Seoul go nowhere. But the consent of both governments is needed to hold the bilateral talks and launch an arbitration committee. As a last resort, Japan could take the case to the International Court of Justice, but it also needs South Korea’s consent to do so.

In his news conference Thursday, Moon said Japan needs to understand that the South Korean government has to honor the top court’s decision due to a separation of powers. He also said it would take time before his government can act on the wartime labor dispute, saying he needs to wait for the investigation into suspicions that the South Korean judiciary delayed its ruling on the issue under his ousted predecessor, Park Geun-hye. Moon’s remarks make it look like the president, who appears ready to play up to domestic anti-Japan sentiment, has no intention of taking any measures to stop the dispute from escalating.

That does not mean the crisis should be left unaddressed. The dispute led to the shelving of a potential visit to Japan by Moon last year. Further suspension of diplomatic dialogue will endanger cooperation between the two countries at a time when it’s badly needed as the region tries to resolve the North Korea problem. While maintaining its position over the wartime labor issue, Tokyo should also explore a political solution to what could otherwise take a lasting toll on bilateral relations.

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