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CIAO DATE: 2/00
Korea’s Economic and Political Challenges for the New Millennium
September 13, 1999, New York
Thank you Ambassador Lord. It’s great to be in New York. The scholarship and expertise of the Asia Society, the Korea Society and the Council on Foreign Relations are well known throughout the world. It is an honor to be among so many experts on Asia. I thank you for your hospitality, and for the chance to offer my perspective on the situation in Korea today and the challenges we can expect to face in the new millennium. A Century of Upheaval
The 20th century has brought suffering and hardship, as well as recovery and rewards to the Korean people. During the first half of the century, Koreans endured the indignity of colonization and the devastation of war. When the dust and ashes settled in 1953, the Republic of Korea was one of the poorest nations on earth.
Since that time, however, the nation has accomplished a dramatic reversal of fortune, advancing to become a successful self–governing democracy and proud participant in the affairs of the international community.
In spite of the recent financial crisis, Korea’s economic progress has been remarkable. In scarcely a generation, the poverty and hunger wrought by colonization and war was virtually eliminated. Its economy has grown to the point that Korea is now a member of the OECD.
At the same time, democracy was taking root. The constitution has been amended to give the people the right to elect their President. Freedom of the press has been restored. The military, which stood as the biggest impediment to democracy, has been reformed and returned to its original mission. And in 1997, the smooth transition of power from the ruling to an opposition party was realized–good news in that respect, even if I was the ruling party candidate for President!
In sum, having made the transition from authoritarian rule, Korea is now recognized as a nation that has achieved democratization as well as industrialization.
I. Political and Economic Challenges Ahead
As the century wanes, are we ready to celebrate our gains? Not by a long shot. If Korea is to consolidate democracy and develop a mature market economy, we must first overcome two serious obstacles. The first is the legacy of authoritarianism, which is exacting a toll on both political and economic progress. The second is a preoccupation with political expedience–pursuing short–term, partisan goals at the expense of long–term national interests, placing personal gain ahead of the greater public good. Our ability to overcome these obstacles is critical. Nothing less than Korea’s future success hangs in the balance.
People who follow Asian issues might logically ask, hasn’t the election of Kim Dae-jung, a lifelong advocate for democracy, sounded the death–knell for authoritarianism? Unfortunately, old habits die–hard. In fact, the Kim administration has not broken off with a host of past authoritarian practices, including suppression of the political opposition, sidelining the National Assembly, even manipulation of the press. Likewise, the recent economic crisis, which in large part was precipitated by government’s heavy hand, has failed to serve as a wake–up call. Preoccupied with popular opinion and short–term gains, the Kim administration is perpetuating the practice of wanton interference in the market. Legacy of Authoritarianism
Briefly, I would like to point out several areas where the advance of our democracy is being undermined. In general, power is tightly centralized in the hands of one man, such that the President essentially makes or breaks all major decisions. The normal operation and influence of the National Assembly has been disrupted. The democratic policy–making process is often ignored, while the authoritarian method of ramming through policy decisions made behind closed doors continues. Government agencies are still used as instruments to engage in political suppression of the opposition. Political parties are too often centered around bosses rather than common ideas. As was seen in a series of recent cases of collusion between politicians and businessmen, official corruption has not been rooted out. At the same time, the selective application and even misapplication of judicial authority for political gain endangers the rule of law.
The legacy of authoritarianism—the penchant for powerful state intervention—persists in the economy as well. In the name of overcoming the crisis, the government has actually strengthened its interference in the market, especially in the manipulation of financial institutions. Likewise, in its corporate restructuring efforts, the administration has also given the market short shrift in favor of the use of government pressure. Desperate times may call for desperate measures—but not at the expense of creating a command economy.
Populism on the Rise
Democracy in Korea is also suffering at the expense of the administration’s proclivity to please the electorate through political expedience. We have seen numerous cases in which policy decisions by the government have sacrificed principle to popular opinion. The practice of pork barreling is widespread, as is the arbitrary exercise of the President’s power of amnesty. The preoccupation with short–term achievements is particularly taking its toll on the economy. True, our economy has recently begun to revive. GDP growth is back, exports are on the rise, and signs of recovery are evident in both consumption and investment. We hope we have now “hit bottom”. But if you ask me, am I optimistic that we’re safely on the path to real recovery—I am not at all convinced. Restructuring in the public sector has made little progress. The disposal of insolvent companies is delayed. The reform of conglomerates is dangerously swayed by political motives. In the meantime, the budget deficit and national debt are growing quickly to worrisome levels.
Certainly, I would like to compliment President Kim on his handling of the urgent financial crisis that hit the nation in 1997 just before he assumed office. At the same time, I would hope that he not repeat the mistakes of previous administrations, who regularly failed to turn recessions into opportunities for economic restructuring, instead relying on jump–start measures to achieve short–term results. The accumulation over time of a series of these quick fixes has been a big contributor to the recent crisis. If this method of substituting expedience for sound macro–economic policy continues, prices could become unstable and restructuring further delayed. The worst scenario for the Korean economy would be for the government to squander the sacrifices made by the people thus far by triggering yet a second crisis.
New Leadership
With all these confusing signals, it is no surprise that the Korean people are deeply frustrated. Worse, many are even losing confidence in the fledgling democracy they have worked so hard to accomplish. Why are we at this impasse? In short, it is because, in spite of the first change of power in half a century, there has been no real change in leadership. Even in this so–called civilian era, the notion of an all–powerful, imperial presidency prevails. Rule of person, not the rule of law, is still dominant.
To be sure, democracy cannot settle in a nation overnight. Consolidating democracy will take time and require the change of individual mindsets and even the culture of a nation. But what Korea most urgently requires, and to a worrisome extent lacks, is enlightened leadership.
What we need now is a leader truly versed in and committed to democratic thinking and practices. He should be capable of leading through persuasion and corralling national strength. He must not avoid responsibility and be willing to decentralize power. We also need a leader of principle, one who has the courage and decisiveness to make the right choices for the long–term national and public interests, without being swayed by powerful interest groups or popular whim. Practical but principled, powerful yet properly restrained—that is the kind of leadership Korea requires to meet the challenges in the 21st century, to establish true democracy and a sound market economy.
II. A Flexible and Balanced North Korea Policy
Democracy in Korea cannot be fully, finally realized unless freedom is also secured in the North. What is really going on in “the Hermit Kingdom” or where it is heading, no one can really say.
However, certain facts about the North are no longer secret. First of all, North Korea’s economic condition is very serious. Its economy has registered nine straight years of negative growth, many of its citizens are starving, and prospects for recovery are grim. Paradoxically, the regime’s weapons development program appears to be flourishing. From conventional armaments, including military aircraft, to preparations for the long–range Taepodong missile test, North Korea’s military build–up continues apace.
The fact that this hostile regime with mounting military might is facing unrecoverable economic bankruptcy makes North Korea even more dangerous than before. It also means that our countermeasures must be correspondingly more elaborate and diverse.
In the past, South Korean governments have based their policies toward the North on the assumption that the collapse of the regime was imminent. Their main focus was on the threat, and their approach tended toward the hard–line. By contrast, the current administration’s approach assumes that the North Korean regime will continue to rule, downplays the threat, and tends toward a policy of appeasement.
The novelist Scott Fitzgerald once wrote, “The test of a first rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” In order to cope with the contradictory realities in the North—the coexistence of a weakening regime and an increasing military threat—we have to face those realities squarely. Overlooking or overstressing one reality against the other will not help. Likewise, our approach must be balanced and intelligent, addressing both realities.
Deterrence First
We must start with a strong deterrence. Certainly it is important to win in war, but it can be even more important to deter it in the first place. As Britain’s Duke of Wellington said in a dispatch from the field at Waterloo, “Nothing except a battle lost can be half so melancholy as a battle won.” If an armed clash were to occur in Korea again, the Republic of Korea and the United States could counter the North’s attack and eventually emerge victorious. But, as the Duke of Wellington observed, such a victory could be the next greatest misfortune to losing the battle.
Engagement with a Purpose and a Strategy
While maintaining a strong and credible deterrence, we must also embark on a policy of engagement. For a fundamental resolution of the North Korea issue, there must be basic changes in North Korea’s policy and regime. Although it is difficult to effect change in a society by exerting pressure from outside, it is not impossible to help enhance internal demands for change. To this end, we should steadily expand contacts and exchanges with the North in the economic, cultural, intellectual and other realms—anything that will help promote the freedom, human rights and welfare of its people. But I would add one important, non–negotiable caveat: Engagement is not a one–way street. Our engagement policy must be purposeful, conditional and selective, which is to say it must factor in North Korea’s willingness to cooperate on improving peace on the peninsula.
Korea–US Cooperation
In order to achieve our twin goals of credible deterrence and constructive engagement, close cooperation between Seoul and Washington is essential. If there is any gap between our respective approaches, real or perceived, our effectiveness is weakened. We know that North Korea will continue its scheme to try to drive a wedge between South Korea and the US. Therefore, it is imperative that we maintain close consultations and a united front.
Preparing for Unification
Ultimately, the goal of our North Korea policy should be to lay the groundwork for unification. We hope that unification will come peacefully, gradually, and in stages. But we recognize that events may not unfold the way we wish. As we saw with Germany, it is difficult to foresee the flow of history.
The best unification policy for us to undertake, starting today, is to reform our own political and economic systems. As I have said, reform is a must as Korea prepares to usher in the 21st century. Likewise, when it comes to unification, domestic reform is a logical and necessary first step. Given the weakened political and economic structures we’re experiencing, we would be hard pressed now to deal with the demands of unification. So for this reason too, we must shore up our political and economic systems.
Our vision of a unified Korea is a nation based on democracy and a market economy. There can be no alternative on this point. Furthermore, a unified Korea must be a nation that will contribute to peace and prosperity in Asia and the world. As the unification of Germany terminated the division of all Europe, unification on the Korean Peninsula will enhance the peace and stability of the Asia–Pacific region.
Unification, of course, is first and foremost a task for the Korean people to accomplish. But it will be difficult to achieve without the help of friends and neighbors, particularly the United States. As the 20th century comes to a close, we should rededicate ourselves to overcoming the last living legacy of the Cold War.
III. Tasks for the Millennium
Will the Korean people overcome the current ordeal and return to the path of mature democracy and an advanced economy? Our work is cut out for us. Just as we were poised to celebrate our admission to the league of advanced nations, in 1997 our economy came crashing down. But with unsparing sacrifice and determination, the Korean people rose once again to meet the challenge.
The question that remains is leadership. Virtually all my life I have served on the bench. Three years ago when I entered politics, many expressed doubts over whether a person schooled in the discipline of law could survive the rough and tumble of Korean politics. Although I lost my bid for President in 1997, I have nevertheless been gratified by the support and encouragement of a great number of people. Now, as president of the opposition party, I strongly sense the people’s call for clean politics and new leadership. And I attribute the support I have earned, even as newcomer to politics, to my record of uncompromising respect for the rule of law. Thus, it is my firm belief that when the great potential of the Korean people is pooled under strong and principled democratic leadership, Korea will be more than equal to the challenges of the 21st century.
In closing, I would like to acknowledge that the economic growth and democratization Korea realized in the past half century could not have occurred without the Korea–US alliance. Today, as conditions on the peninsula are particularly uncertain, the importance of this alliance has not diminished. As allies and partners, we must go on working together to make the entire Korean peninsula free, democratic and prosperous.
Thank you very much for your attention.
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