South Korea is making final tweaks to a plan that could finally resolve the contentious issue of compensating Korean laborers who worked for Japanese businesses during World War II, sources from both countries said.

Under the plan, compensation to the former wartime laborers will be provided by a South Korean government-affiliated foundation in place of the Japanese companies.

The Japanese government will respond to this move by saying it has inherited previous administrations’ “deep remorse” and “heartfelt apology” for Japan’s 1910-1945 colonial rule over the Korean Peninsula.

Relations between Seoul and Tokyo became strained after the South Korean Supreme Court in 2018 ordered defendant Japanese companies to pay compensation to Korean laborers.

The laborer issue has since become the stickiest dispute between the two countries.

One idea under consideration by the Japanese government is that following the announcement by the South Korean government, Prime Minister Fumio Kishida would announce that Japan has inherited the “deep remorse” and “heartfelt apology” over wartime issues during a summit with South Korean President Yoon Suk-yeol, the sources said.

Tokyo has argued that neither the Japanese government nor Japanese businesses will pay compensation or contribute funds to the proposed foundation because all compensation claims stemming from Japan’s colonial rule were “completely and finally” settled under a bilateral agreement in 1965, when relations were normalized.

The Japanese government also concluded that it cannot make a fresh apology concerning the wartime laborers.

But according to multiple sources, the Japanese government was open to inheriting past words of remorse and apology expressed by previous administrations.

The Japanese government had decided to say that after the South Korea government sought a “sincere response” by Japan over the wartime labor issue.

The South Korea government viewed such action as a “sincere response” by Japan, according to sources.

In 1995, the 50th anniversary of the end of World War II, then Prime Minister Tomiichi Murayama issued a statement that said: “(Japan), through its colonial rule and aggression, caused tremendous damage and suffering to the people of many countries, particularly to those of Asian nations. I express my feelings of deep remorse and state my heartfelt apology.”

Ten years later, a statement almost identical to the one issued in Murayama’s name was released under the name of then Prime Minister Junichiro Koizumi.

Similar words appeared in the 1998 Japan-South Korea Joint Declaration.

In 2015, on the 70th anniversary of the end of World War II, then Prime Minister Shinzo Abe issued a statement that said: “Japan has repeatedly expressed the feelings of deep remorse and heartfelt apology for its actions during the war. Such (a) position articulated by the previous Cabinets will remain unshakable into the future.”

Japanese companies have called for improvements in the rocky relationship amid the deteriorating economic security environment in the region.

Keidanren (Japan Business Federation), the nation’s largest business lobby, concluded that it can help improve the bilateral relationship by contributing funds to a project that is not related to the compensation issue.

The organization is considering ideas to promote exchanges between Japanese and South Korean young people for a “future-oriented” bilateral relationship.

One of its ideas is to grant scholarships to South Korean students studying in Japan.

According to South Korean government sources, the announcement of the country’s plan strongly reflects Yoon’s wish to strengthen ties with Japan.

However, some the plaintiffs in the lawsuits are expected to criticize Yoon’s announcement as a “lopsided compromise” favoring Japan.

An agreement in 2015 between the two countries over the “comfort women” issue became ineffective after a backlash from the women themselves and organizations that support them.

Some South Korean government officials have expressed concern that an agreement on the laborer issue could also become meaningless.

Others in the South Korean government say the two countries should continue discussions on the issue, rather than making announcements now.