"Crisis" is a badly overused word, and it is getting a workout these days in South Korea.
In one sense, if the country is in crisis, all countries should be so lucky, for both growth and unemployment stand at 5%, enviable numbers by world standards. Yet the country could talk itself into a recession, though not one as deep as that of 1997-98, if consumers became convinced that one was impending.
More striking, President Kim Dae Jung is all but a lame duck well before his time—the next elections are not until 2002. Even his Nobel Prize was controversial beneath the surface in South Korea, and his friends have begun to worry about his capacity for governing.
In part, Kim's problem is that while history judges political leaders by the full reel of their performance, they live and die in the snapshots of their own politics. So Kim gets little credit at home for how far the country has come. Even his "sunshine policy" toward North Korea and the historic summit meeting in June with its leader, Kim Jong Il, are now old news. What is today's news is that the economy has recovered but has not been restructured, the opening to the North is stuck, with no sign that Kim Jong Il's visit to Seoul is imminent, and the country is trapped in political gridlock.
South Korea's economy has lots going for it. The country is more wired than most in Asia, and its trade balance and foreign reserves are strong. Yet economic restructuring to let the market, not the government, allocate resources will be a long process. "Reform" is a mantra, but one that lacks meaning for a country that was "a developmental dictatorship" in which the government drove the economy in tandem with a few large conglomerates, or chaebol. And as the government has failed to build a constituency, so the pain of each phase in the restructuring has turned yet another group against the process.
For all the talk of letting the market work, the government still channels money. The bailout of the banking system has already cost $100 billion. If Daewoo Motors is allowed to fail and be sold to GM or another foreign car maker, that would be a salutary lesson. Yet that lesson would be erased if the government continued to subsidize Hyundai Engineering & Construction. Hyundai's Kumgang tourism project in North Korea is politically sensitive but is now losing $100 million per year. The government's credibility on economic reform is low, including with its own constituency. Labor, for instance, believes that whatever the government may say, it will rescue Daewoo to keep such a flagship company "Korean."
The next test in the rapprochement with the North is the promised-but-not-scheduled visit of the North's leader, Kim Jong Il, and then whether security issues can be integrated into the North-South process. So far, the North has tried to compartmentalize the process, leaving security issues to its dealings with the United States. Further, the challenge is to build a consensus in the South in support of the policy. That will require, if not full "reciprocity," then at least real, visible movement from the North.
Kim Dae Jung's continued optimism stands at odds with the prevailing skepticism among those who had governed the country until his election in 1997 and who continue to see themselves as its rightful governors. President Kim has not done well at explaining his sunshine policy, and he is vulnerable to the charge that the two achievements that earned him the Nobel Prize are in conflict: He won for his advocacy of human rights and his opening toward the North, but human rights remain deeply violated in the North, and he has said little about this since his trip to Pyongyang.
Politically, the country is deeply divided, and Kim's lame duck status was, in a curious way, exaggerated by the Nobel Prize, which underscored how much more revered he is abroad than at home. One of his great achievements is also a vulnerability. He brought his downtrodden southwestern region, Cholla, into national life for the first time. Yet the process has deepened regional divisions. In elections last April, more than 90% of the vote in Pusan went to the opposition, while in Cholla the same fraction went to the president's ruling party.
President Kim's experience was jail and exile, not governance, and he tried to govern with a mix of loyal outsiders and sitting bureaucrats. The outsiders were inexperienced and tended to be dismissed—not entirely fairly—as bumpkins by the ruling elite, and the bureaucracy has gained the upper hand.
Kim Dae Jung believes in democracy but is not himself a democrat. He continues to lead in an autocratic way. Korea remains under the rule of the rulers, not the rule of law. To be fair, the country's structure makes the president a kind of elected autocrat. He is the real power, yet is not accountable to the parliament.
In some ways, that structure makes the lack of confidence in the president all the more worrisome. He has talked of a major reshuffling of his government, but so far that is only talk. The snapshot of his current doldrums is a reminder of how often leaders, like former Soviet President Mikhail S. Gorbachev or the late Egyptian President Anwar Sadat, have been more esteemed outside their countries than inside. Kim has at least taken the basket off the lamp—there is now some light shining on Korea's politics. Yet it is worth remembering that not a single postwar South Korean president has finished his term without disgrace.
Michael Parks and Gregory F. Treverton, fellows at the Pacific Council on International Policy, have just returned from a meeting in Seoul of the council's task force on Korea. Parks is also a visiting professor at the Annenberg School for Communication at USC, and Treverton is a senior consultant at RAND.
This commentary originally appeared in Los Angeles Times on December 27, 2000. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.