The plan reflects conservative President Yoon Suk Yeol's determination to mend frayed ties with Japan and solidify security cooperation among Seoul, Tokyo and Washington to better cope with North Korea's nuclear threats.?

President Joe Biden hailed the plan as marking a new chapter of cooperation and partnership between two of the United States' closest allies and said he looked forward to enhancing trilateral ties. Yoon and Japanese Prime Minister Fumio Kishida “are taking a critical step to forge a future for the Korean and Japanese people that is safer, more secure, and more prosperous," Biden said in a statement.

The plan, however, has drawn immediate backlash from former forced laborers and their supporters, who have demanded direct compensation from the Japanese companies and a fresh apology from the Japanese government.

South Korean Foreign Minister Park Jin told a televised news conference the victims would be compensated through a local foundation that would be funded by civilian donations. He said South Korea and Japan were at a “new window of opportunity” to overcome their past conflicts and build future-oriented relations.

“And I think this is the last opportunity,” Park said. “If we compare it to a glass of water, (I) think that the glass is more than half full with water. We expect that the glass will be further filled moving forward based on Japan's sincere response.”

Park didn't elaborate on how the foundation would be financed. But in January, Shim Kyu-sun, chairperson of the Foundation for Victims of Forced Mobilization by Imperial Japan, which would be handling the reparations, said the funds would come from South Korean companies that benefited from a 1965 Seoul-Tokyo treaty that normalized their relations.?

The 1965 accord was accompanied by hundreds of millions of dollars in economic aid and loans from Tokyo to Seoul that were used in development projects carried out by major South Korean companies, including POSCO, now a global steel giant.

Ties between the U.S. Asian allies have long been complicated by grievances related to Japan's brutal rule of the Korean Peninsula from 1910 to 1945, when hundreds of thousands of Koreans were mobilized as forced labourers for Japanese companies or sex slaves at Tokyo's military-run brothels during World War II.

Their history disputes intensified after South Korea's Supreme Court in 2018 ordered two Japanese companies --- Nippon Steel and Mitsubishi Heavy Industries -- to compensate former Korean forced labourers or their bereaved relatives.

Japan, which insists all wartime compensation issues were settled under the 1965 treaty, reacted furiously to the 2018 rulings, placing export controls on chemicals vital to South Korea's semiconductor industry in 2019, citing the deterioration of bilateral trust.

South Korea, then governed by Yoon's liberal predecessor Moon Jae-in, accused Japan of weaponising trade and subsequently threatened to terminate a military intelligence-sharing agreement with Tokyo, a major symbol of their three-way security cooperation with Washington.

The Seoul-Tokyo feuding complicated U.S. efforts to reinforce its cooperation with its two key Asian allies in the face of confrontations with China and North Korea. Worries about their strained ties have grown in both South Korea and Japan as North Korea last year adopted an escalatory nuclear doctrine and test-launched more than 70 missiles – the most-ever for a single year. Many of the missiles tested were nuclear-capable weapons that place both countries within striking distance.

Since taking office last May, Yoon has been seeking to improve ties with Japan and strengthen its military alliance with the United States and a trilateral Seoul-Washington-Tokyo security cooperation. Japan has also taken apparent efforts to improve relations, such as its recent pick of a former prime minister known for his close ties with South Korea to head a bilateral parliamentarian group that had been headed by a former Cabinet member.?

During a parliamentary session on Monday, Kishida said he stands by Japan's previous expression of regrets and apologies over its colonial wrongdoing but said whether to withdraw Japan's export control is an separate issue. He said Japan will continue to seek appropriate response from Seoul on its actions including its complaint filed with the WTO.

When asked about South Korea's failure to ensure that the Japanese companies participate in the compensation of forced labourers, Park, the foreign minister, said he doesn't expect Japan's government to block “voluntary donations” by its civil sector. Japan's Foreign Minister Yoshimasa Hayashi told reporters that Japan “appreciates” South Korean announcement and that he hopes political, cultural and economic ties between the two countries would deepen from now on.

Former forced labourers, their supporters and liberal opposition lawmakers berated the government plan, calling it a diplomatic surrender. Some activists supporting former forced laborers and their lawyers plan to hold rallies later Monday.

“Basically, the money of South Korean companies would be used to erase the forced labourers' rights to receivables,” Lim Jae-sung, a lawyer who represented some of the plaintiffs, wrote on Facebook. “This is an absolute win by Japan, which insists it cannot spend 1 yen on the forced labour issue.”

The protests would pose a political blow to Yoon, who has a relatively low approval rating amid an intense domestic conservative-liberal divide.

“This is a big political gambling by Yoon,” said Bong Young-shik, an expert at Seoul's Yonsei Institute for North Korean Studies. “So to speak, it seems he'll do it his way as whatever steps his government would propose, there would be backlashes at home. I think he's decided to reach an agreement to move forward.”

Bong said Yoon has likely felt pressures to bolter South Korea's defense capability and military alliance with the U.S. amidst North Korea's increasing missile threats. Improved ties with Japan is essential to reinforce both the U.S. alliance and the three-way Seoul-Washington-Tokyo security alliance, Bong said.

Choi Eun-mi, a Japan expert at South Korea's Asan Institute for Policy Studies, said it has been obvious that a third-party reimbursement of forced laborers was the only realistic solution for South Korea because there are “fundamental” disagreements with Japan over the 2018 rulings.

She said it was also hard for Seoul officials to ignore the advanced ages of victims. "One might say that the government hurried toward a solution, but the negotiations have been going on for nearly a year and the plaintiffs would have had most to lose if the issue isn't resolved now,” Choi said.

Many former forced labourers are already dead and survivors are in their 90s. Among the 15 victims involved in the 2018 court rulings, only three are currently alive.