South Korean 'tiger' is in our best interest Former Md. congressman explains why strength of ally is important to U.S.

January 04, 1998|By Michael D. Barnes

Recently, the Center for National Policy has sponsored trips to two very different countries in Asia. Each time, the destination was South Korea.

In October, we visited a dynamic Asian "tiger" with a booming stock market, huge multinational corporations and a population of 70 million looking forward to 1998 with expectations of improved economic performance.

Late last month, we visited a country in deep emotional depression brought on by the sudden collapse of banks, securities firms, major construction and manufacturing conglomerates and the stock market. Almost overnight, South Korea's currency - the won - lost more than 60 percent of its value. The government was forced to seek emergency assistance from the International Monetary Fund to stave off national bankruptcy. Now, massive job layoffs are inevitable in a society that once regarded them as unthinkable.

Signs of the new economic reality were everywhere. Seoul's infamous traffic jams have virtually disappeared. Stores, buses, airplanes were all half-empty at the height of the holiday season. Prices have skyrocketed for anything that must be imported, such as heating fuel, which has doubled in cost at the beginning of a tough Korean winter. The news media gave wide coverage to tragic stories such as that of the woman who leaped to her death from an apartment window to avoid another argument with her husband over the family's financial difficulties.

Equally dramatic is the change in Korea's politics. The Dec. 18 election of longtime opposition leader and democratic activist Kim Dae Jung as president can only be compared with that of Vaclav Havel in the Czech Republic, Jean-Bertrand Aristide in Haiti or Nelson Mandela in South Africa. In October, we were told it was impossible for Kim to win because he could never appeal to voters outside his rural home province of North Cholla. But he won a narrow victory over two candidates from the ruling party by carrying urban districts, including the capital city of Seoul.

The election of Kim to South Korea's "Blue House" is extraordinary by any measure. When I last met him in 1985, I was a congressman from Maryland serving on the Foreign Affairs Committee, and he was in exile in the United States from a repressive military regime that repeatedly attempted to assassinate him. When they kidnapped him in Japan, only an intense international outcry prevented his murder at the hands of his captors. His ultimat e return to Korea was highlighted by an attack of government thugs at the airport and his immediate arrest.

Since his election, Kim has been making the right moves to give Koreans and the world confidence that the economic and political future will be better. He has recognized the need for restructuring Korea's economy in accordance with IMF mandates, called for direct dialogue with North Korea and reached out to domestic political opponents by allowing lame duck President Kim Young Sam to pardon two former military dictators (those responsible for his own persecution). The president-elect has successfully urged the Korean National Assembly to pass key financial reform bills that give the Central Bank more independence in monetary policy, unifies financial sector regulatory bodies and improves the openness of corporate finances by forcing companies to issue consolidated financial accounts. He also has called for reform of labor laws that will permit layoffs for the first time in Korea, despite the strong support he received from labor unions in his campaign.

Kim's chief of staff, Congressman Yoo Jae Gun, told us that the president-elect's team was surprised at the extent of the economic disaster they were inheriting from the outgoing administration. Nonetheless, they are ready, he said, to take the steps necessary to turn around the economy as quickly as possible.

The Korean economic crisis might have hit with surprising suddenness, but it was many years in formation. In essence, Korean corporate giants financed their global expansion by borrowing from international investors eager to ride the success of the "Korean Miracle." Virtually all of the Korean corporate families, or "chaebols," had accumulated large debts as they circled the world finding new markets for Korean products and manufacturing facilities.

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