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     Jul 7, 2010
Seoul wary of success backlash
By Donald Kirk

WASHINGTON - Listen to Marcus Noland of the Washington-based Peterson Institute for International Economics sing the praises of South Korea, and you might think the country was heaven on earth. "South Korea is arguably the success story of the past half century," he told a forum last week on Korea's rise as an economic power. "Here we are today with the premier economic success story."

Listen to people on the streets of Seoul and other urban centers, and you get quite a different picture. The rich-poor gap is widening and the middle-class is shrinking, people complain, while a newly rich chaebol class led by the heirs to the founders of the giant conglomerates that control the economy is firmly entrenched as


an aristocracy at the pinnacle of a structure populated by their relatives, in-laws and faithful servants and spear-carriers.

Chosun Ilbo, the country's biggest-selling newspaper and a powerful conservative voice, dissected the conflict with a precision that eludes most foreign analysts. Even as the economy grew more than 7% in the first half of 2010, "returning to levels before the global economic crisis," said the paper, "the effects of that growth have yet to spread to the public" amid forecasts of worsening economic conditions.

Not surprisingly, in view of those concerns, Korea's conservative President Lee Myung-bak, who rose to the top of Hyundai Engineering and Construction, the mother company of the Hyundai empire, before turning to politics, faces bitter criticism. Like the two left-leaning presidents who preceded him, he risks a backlash - in his case from leftists and liberals who see him perpetuating the power of the chaebol class, bestowing favors and rule-changes for chaebol chieftains at the expense of an embittered majority.

The image of a Korea triumphant over historical odds, not that of a society and a culture riven by protest and controversy, dominates speeches and seminars, many of them funded by the chaebol, as the government gears up for its greatest display of success since the 1988 Seoul Summer Olympic Games.

The occasion is the Group of 20 (G-20) summit on November 11 and 12 in Seoul, a gathering of leaders from the world's 20 most important economic entities, and the mission is to work out a consensus for solving the world's economic ills at a time of widespread uncertainty. The whole show is coming to symbolize recognition of South Korea as one of the leading centers of business and industry.

"The G-20 will be an important step for Korea," said Victor Cha, a professor at Georgetown University who directed Asia policy on the White House staff during the presidency of George W Bush. "Like the 1988 Seoul Olympics," said Cha, talking at the forum in Washington on Korean economic development, "it will be a step to show Korea punches considerably above its weight in the international arena."

Or, as Scott Snyder, long-time Asia Foundation expert, put it during the same forum, "The challenge for the Korean government is to market it not just as an event but as a platform for Korea to show its development."

A sure sign of the importance of the G-20 is that it raises security concerns that go far beyond that of demonstrators protesting the presence of the leaders of 20 economies all converging on Seoul at once.

"Anything that's a success for South Korea is a threat to North Korea," said Cha at the forum. "That's worrisome." As a precedent, he cited the explosion of a Korean airplane over the Indian Ocean in November 1987 in which 115 people died, less than one year before the Seoul 1988 Olympics. It's suspected, said Cha, that North Korea deliberately timed the explosion, set by a pair of agents who had planted a bomb in the plane before getting off at a stopover, for the run-up to the Olympics,

If North Korean terrorism did nothing to stop the South from staging the Olympics, however, it certainly won't detract from the G-20. No one is working harder to make the summit a success than SaKong-il, a former finance minister who for years has run a prestigious economic think-tank in Seoul and now chairs the presidential committee for the summit.

"We've got 120 people working day and night," said SaKong at a luncheon at the Peterson Institute in Washington. "Sometimes we're only getting two or three hours sleep a night."

SaKong spoke after attending the G-20 summit in Toronto last month at which leaders talked in very general terms about resolving an economic crisis that has a way of recurring just when it appears to have subsided. For SaKong, the most compelling aspect of the final communique was the emphasis on the need to follow up at the Seoul summit. "I've never seen a communique which mentions an upcoming summit so many times," he observed.

Still, if the G-20 is to be a success, the leaders at the summit will have to go beyond the cliches inherent in French President Nicolas Sarkozy's emphasis at Toronto on "unity and coherence". SaKong hopes the Toronto conflab "will provide the momentum for the G-20" but acknowledges disappoint over the lack of real results. "We have insisted that leaders will recommit so that we can get results from the Seoul summit," he said flatly, particularly in the areas of trade quotas and barriers.

Rather than come up with still more generalities, SaKong offered assurances that the Seoul G-20 "will take a focused and targeted approach on infrastructural development and education". Emerging and developing countries, he said, "will have strong incentives to generate sources as insurance for growth". The new summit agenda, he said, "will help not only the developing world but also the G-20 framework".

SaKong made an implicit connection between the G-20 and the yet-to-be-realized Korea-US free trade agreement, widely known by the acronym, KORUS-FTA. He was "very pleasantly surprised", he said, when US President Barack Obama, meeting Lee in Toronto, promised to try to win approval of the accord by the US Congress. "It is really a win-win," said SaKong. "Both sides should work together economically."

China, SaKong said, had become far and away South Korea's biggest trading partner, accounting for 23% of all the South's foreign trade, as opposed to 11% with the US and 6% with Japan. Ratification of the FTA would be "not just an economic thing" but a move with "important geopolitical implications", he said, but it "will work out for the benefit of both countries".

The US will no doubt press to pry open South Korean markets for the import of more American motor vehicles and beef. Obama and Secretary of State Hillary Clinton were both foes of the FTA, but now are clearly listening to the advice of aides who see the agreement as critical to broad US regional interests. As US diplomat Kurt Tong put it at another gathering in Washington, "The KORUS FTA would provide momentum for the entire Asia-Pacific agenda."

After three years of foot-dragging since negotiators worked out the terms for the KORUS FTA, SaKong sees time as essential before anti-FTA forces rise again in the US Congress to thwart the agreement. "We'd better hurry," he said. "The sooner the better."

SaKong was definitely among sympathetic friends at the Peterson Institute. C Fred Bergsten, the institute director, pledged unstinting support for the FTA, while heaping still more praise on South Korea's economic policies, declaring "Korea still has the most brilliant development record of any country". Yet another advantage, said Bergsten, was South Korea's place in the middle range among G-20 countries in terms of income.

Bypassing such nettlesome questions as wage distribution and economic equality, analysts prefer to focus on South Korea's status as a "middle power" between global giants near and far and smaller powers in the region.

Snyder, who spent several years as director of the Asia Foundation in Seoul before transferring to Washington, sees Lee as envisioning "the idea of a global Korea" whose "rise is a product of the current system". How, he asked, would Korea "position itself and manage differences with the US in the context of China's rise?"

Park Myung-lim, a professor at Yonsei University in Seoul, viewed "the rise of Korea as a middle power" as "the offspring of confrontation and the passion of the Korean people" in the struggle for democracy. Korea's conservative leaders want to be sure those passions do not boil over again before or during the G-20 summit, a celebration of Korea's ranking among the world's major economic powers.

Donald Kirk, a long-time journalist in Asia, is author of the newly published Korea Betrayed: Kim Dae Jung and Sunshine.

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