Korean businesses brace for losses as diplomacy falters. (Up Front).

Already battered by weak economies here and across the Pacific, Koreatown businesses are bracing for further disruptions if the mounting crisis between the United States and North Korea escalates.

Chief among the concerns are the possibility of an abrupt downturn in an already depressed import-export market, and the fear that Korean-American retailers will be targeted for retaliation if hostilities break out.

"Whenever tensions escalate between South Korea and North Korea, thousands of jobs are at stake," said Charles Kim, executive director of the Korean-American Coalition, a Los Angeles civic group.

In Southern California, 55,000 jobs are dependent on trade with South Korea and related services.

Like other sectors of the local economy, Koreatown has been affected by problems with the broader United States and world economies, and more recently tensions with Iraq.

Exports to South Korea have fallen to $4.7 billion in 2002 from $6.9 billion in 2000, said Lisa Grobar, an economist at Cal State University, Long Beach. The slowdown is in line with a drop in exports to other U.S. trading partners.

In the past two months, some businesses have noticed an additional slowdown.

Many are not sure how to apportion blame. The ever-growing prospect of war in Iraq is one factor; tensions with North Korea and pessimistic growth projections in South Korea are others. Independent of the U.S.-North Korea crisis, South Koreans are dealing with a financial scandal and jarring political change signaled by the ascent of South Korean President Roh Moo-hyun.

Roh is perceived as anti-American and pro-North Korean because he has not denounced North Korea's nuclear program, the cause of the current crisis.

"It is from both the South Korean economy and the problems with North Korea," said Howard M. Kim, general manager and vice president of the Oxford Palace Hotel and Galleria.

The hotel, which caters to a South Korean business clientele, has seen business fall 15 percent over the past six months. "We just have fewer visitors now from South Korea and I know it is hurting everyone around, from restaurants to gifts shops to hotels, like mine," he said.

The economic slowdown in South Korea also has affected exports to that country, said Chase Rhee, president of Ameriko, of Pasadena, an exporter of household products to South Korea

The crisis has been brewing since October of last year, when the government of North Korean Kim long Il admitted to having a nuclear program.

While the broader U.S. public has been distracted by Iraq, Korean-Americans have been closely following developments. North Korea test-fired a short-range missile into the Sea of Japan, several hours after Roh was sworn in as president of South Korea on Feb. 25. Then, North Korean fighters attempted to force down a U.S. reconnaissance plane flying over the Sea of Japan, threatening the Asian region with destabilization.

In past crises, the U.S. has been a safe haven for South Korean funds. Los Angeles, which is home to the largest Korean population (250,000) outside of Korea, would be a destination for that cash in the short term.

"There are more investments coming from South Korea because when people accumulate wealth the safest place to put their money is into real estate in the U.S." said Jack Choy, chief credit officer of Hanmi Bank in Los Angeles, a unit of Hanmi Financial Corp.

However, the flight of funds from Korea eventually would be felt in the form of lower exports and weaker travel, as South Korean pocketbooks become leaner.

"We expect a hit to the Koreatown economy but we won't see it for another six months," said Kim, of the Korean-American Coalition.

David Oh, chairman of the marketing department at Cal State Los Angeles, believes that Koreatown, which extends west from downtown Los Angeles along Wilshire Boulevard, could feel the sting from both a cutback in travel to Los Angeles and local tourism.

Last year, nearly 700,000 South Koreans visited the U.S., according to the Korean National Tourism Organization.

Koreatown draws nearly 1,400 visitors a day and shopkeepers fear that a backlash against the district could develop, similar to Americans' current animus toward things French, and the broader population's attitudes toward Arab-Americans since the Sept. 11, 2001 terrorist attacks.

"The biggest fear is that Americans will treat all Koreans as if they are North Koreans," said Oh.

Stuart Ahn, president of Ko-Am Company Inc., a general building contractor in Los Angeles, added that, "Koreans are concerned about being looked at with caution and distance even if they are pro-American and their children were born here."

Besides the dispute, other events in South Korea are holding the attention of Korean-American business owners.

Last week, executives of the country's third-largest conglomerate, SK Group, were indicted for allegedly manipulating stock prices and profits, and bankers fear the scandal, one of the biggest events in South Korea since the 1997 banking crisis, could spread and depress Asian economies.

Another wild card is the new government of Roh, 56, a liberal lawyer and former legislator who has favored warmer relations with North Korea -- a position that is popular with young people. He ran his presidential campaign largely over the Internet, after mass demonstrations about the conduct of U.S. troops in South Korea.