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Table of Contents

- Korea Focus - February 2013 - TOC - Politics 1. ‘Unwanted Decision’ May be Needed for the Nation and People 2. Seoul Must Lead Stern Response to North’s Nuclear Test 3. Park Geun-hye’s Three Major Tasks 4. A Counterattack by Conservative 50-Somethings? Not Exactly! 5. There’s No Need to Hasten Purchase of U.S. Global Hawks 6. Park Geun-hye Needs to Become Korea’s Richard Nixon 7. North Korean Rocket Was ICBM

- Economy 1. Ways to Revitalize Economy 2. Park Urged to Overcome Low Growth 3. Korean-Style Welfare Strategy 4, Nation’s Future Hinges on Innovative Manufacturing

- Society 1. Naro Space Rocket: Expectations and Frustrations 2. Nation Needs Better ICT Governance to Meet Urgent Needs 3. Presidential Election and Housing Market Polarization 4. No More Political Distortion of Saemaul Movement

- Culture 1. Museum Showcases Contemporary Korean History Forged in Blood, Sweat and Tears 2. Turkey Taken with ‘Gangnam Style’ 3. Exciting Christmas Carols Played with Native Korean Instruments 4. Two Visionaries Jointly Create Fascinating Museum 5. What Park Chan-ho Has Left for Me

- Essay 1. Ten Suggestions for the New Government’s Economic Policy toward North Korea 2. North Korea-China Relations in the Era of Kim Jong-un and Xi Jinping 3. Korea’s Export Trend since the Global Financial Crisis

- Features 1. ‘Children, bring twigs from trees for your medical bills.’ 2. Hangeul, Not a Substitute for Chinese Characters

- Book Reviews 1. 30 Years after ‘Revisionism,’ Korea at Cold War in the Post-Cold War Era 2. Why Korea Has Become a Country Addicted to Wild Crazes

- Interview 1. Chang Ha-joon “Dismantling Chaebol is Economic Democratization It’s Naive to Think So.” 2. Lengyel Miklos: “As South and North Koreans are of the same race, unification holds greater potential for development.”

- COPYRIGHT


- ‘Unwanted Decision’ May be Needed for the Nation and People - Seoul Must Lead Stern Response to North’s Nuclear Test - Park Geun-hye’s Three Major Tasks - A Counterattack by Conservative 50-Somethings? Not Exactly! - There’s No Need to Hasten Purchase of U.S. Global Hawks - Park Geun-hye Needs to Become Korea’s Richard Nixon - North Korean Rocket Was ICBM


‘Unwanted Decision’ May be Needed for the Nation and People

Editorial The Chosun Ilbo

North Korea has conducted its third nuclear test. The official Korean Central News Agency said on February 12 that “the nuclear test that was carried out at a high level in a safe and perfect manner using a miniaturized and lighter nuclear device with greater explosive force than before did not pose any negative impact on the surrounding ecological environment.”

The South Korean government acknowledged that, at 11:57 a.m. on the day, it detected an artificial earthquake near Punggye-ri, Kilju County, North Hamgyong Province, which measured 4.9 on the Richter scale. The explosive power of the test was equivalent to 6 to 7 kilotons of TNT, about four times that of the North’s second nuclear test.

North Korea timed the test to the day when U.S. President Barack Obama was scheduled to deliver his annual State of the Union address before Congress. The North’s first and second nuclear tests and missile launches had also been seemingly targeted for U.S. holidays or the days of important political events. Pyongyang thus made clear that its nuclear and missile activity was aimed at the United States. The Obama administration, which set a “world free of nuclear weapons” as one of its top foreign policy tasks, has repeatedly stated it would not tolerate a nuclear-armed North Korea. China’s newly inaugurated fifth-generation leadership, headed by Xi Jinping, had warned against a nuclear test,


hinting that its assistance to North Korea would be suspended should it conduct the test. Presidentelect Park Geun-hye, referring to her “Korean peninsula process” of trust building, said she would be flexible in a dialogue with North Korea but strong and resolute in her response to any North Korean provocation. In defying the strong warnings and attempts at persuasion the North surely made a strategic decision to take an irreversible path toward nuclear armament. The North Korean Foreign Ministry said in May 2011 that “the denuclearization of the Korean peninsula is the Great Leader Kim Il-sung’s deathbed instruction and an unalterable process the DPRK will have to pursue.” But it made a 180-degree turn when it said last month that “the death knell was sounded for the denuclearization of the Korean peninsula” and that “from now on, there could be dialogue for peace and security on the Korean peninsula but not for its denuclearization.” Thus, the joint declaration that banned the testing, manufacture, production, receipt, possession, storage, deployment or use of any nuclear weapon more than 20 years ago was rendered null and void.

The international community attempted to persuade North Korea to denuclearize by offering a security guarantee and economic assistance. But North Korea, which successfully launched an intercontinental ballistic missile in December, can now claim nuclear state status. When such an isolated country as North Korea possesses a uranium enrichment technology capable of massproducing nuclear material in a hidden place, it is impossible to put the country’s nuclear facilities under thorough surveillance. Though it may be out of the question to officially acknowledge North Korea as a nuclear state, we cannot but take North Korea’s possession of nuclear weapons as an indisputable threat to our security and have to prepare ourselves against it.

The military balance between the nuclear-armed North and the nuclear-free South is tipped in favor of the North no matter how powerful the conventional weapons being procured by the South may be. President-elect Park should determine what self-defense measures need to be taken to compensate for the imbalance. Her response to the situation needs to be extraordinary.

Among the alternatives that can be taken immediately is to redeploy tactical nuclear weapons, which the United States withdrew from South Korea around the time when the Joint Declaration for the Denuclearization of the Korean Peninsula was signed in 1991. In early 2011, Gary Samore, White House coordinator for arms control and weapons of mass destruction, said the United States would be willing to redeploy tactical nuclear weapons if South Korea asked for it, and in May last year, the U.S. House Armed Services Committee passed an amendment to the National Defense Authorization


Act that supported the redeployment of tactical nuclear weapons to South Korea. President-elect Park also needs to consider whether or not to take over the wartime operational command from the United States in 2015, as scheduled.

But the question is how effective those measures, designed to keep the South Korean people and the fate of their country under the U.S. nuclear umbrella, will be. As such, we have to ask fundamental questions regarding the North Korean nuclear issue. First, would it be possible to get North Korea to revert to a pre-nuclear armament state by offering a guarantee of regime security and economic assistance? The answer is no, given the attitude the North has shown thus far. North Korea appears to have concluded that it is much safer to possess nuclear weapons than to rely on an international guarantee of its safety.

Second, does either the United States or China have the capacity to persuade North Korea to give up its nuclear weapons? The United States has no proper leverage over North Korea. Nor can China easily abandon a geopolitical shield provided by North Korea at a time when the direction of its complicated relations with the United States and Japan is unpredictable.

Another question is: Will the United States and China be able to persuade North Korea against its nuclear ambition if they join hands? If there is any such possibility at all, we will have to make a strategic choice in favor of pushing the United States and China to move in that direction. South Korea and its people will have to convince the United States and China that they can make an “unwanted decision� at their own expense, instead of putting their security and fate in the hands of the nuclear-armed North, if that is unavoidable in defending themselves on their own. President-elect Park should ask herself the three questions when she is striving to resolve the North Korean nuclear question.

[ February 13, 2013 ]

www.koreafocus.or.kr


Seoul Must Lead Stern Response to North’s Nuclear Test

Editorial The Hankyoreh

North Korea has carried out its third nuclear test. The South Korean government and the international community had put up a unified front to dissuade the North, warning of possible consequences, but its leadership opted to pay no mind. It is an extremely distressing and discouraging turn of events, and North Korea should be prepared to pay a steep price for its misdeed. North Korea’s state-run Korean Central News Agency reported on February 12 that the country’s national defense and science sector had “successfully conducted a third nuclear test in the northern underground nuclear test site.” It went on to say that “the test carried out at a high level in a safe and perfect manner using a miniaturized and lighter nuclear device with greater explosive force than before did not pose any negative impact on the surrounding ecological environment.”

The seismic activity detected by the Korea Meteorological Administration after the test measured 4.9 on the Richter magnitude scale and the Ministry of National Defense estimated the explosive force of the nuclear device as equivalent to 6 to 7 kilotons of TNT. This indicates a significant increase from the first test in 2006, when the tremor from the test measured 3.6 on the Richter scale and the device had 1 kiloton of explosive force, and the second test in 2009, which hit 4.5 on the Richter scale and 2 to 6 kilotons of power. It remains uncertain whether the device was based on plutonium, as in the first and second tests, or highly enriched uranium, or a combination of the two.


One thing is certain: The crisis that this test will trigger in Northeast Asia will be different from those following the previous nuclear tests. North Korea successfully tested a weapon with roughly half the power of the atomic bomb dropped on Hiroshima, and it did so soon after launching a long-range rocket late last year that could potentially be used for an intercontinental ballistic missile. If the North Korean report is true, it means the country now has a nuclear weapon capable of threatening the continental United States. By pushing ahead with its third test, the North also made clear that its aim was not to develop a device for defensive purposes, but to acquire offensive nuclear capabilities. This probably means the North wants to possess the most powerful nuclear weapons available before deciding whether or not to take a seat at the negotiating table.

The United Nations convened an emergency meeting of the Security Council last night, within 12 hours of the test, to begin discussing additional sanctions on North Korea. South Korea, the United States, China and Japan, among other countries, are keeping in close contact with one another to work on a concerted response.

The South Korean military has upgraded its readiness posture from stage three to stage two, and the ROK-U.S. Combined Forces Command raised its WATCHCON (North Korean intelligence monitoring posture) from level three to two in anticipation of additional military provocations from North Korea. This is an entirely reasonable response. According to Resolution 2087, which was passed in January, the U.N. Security Council is very likely to present additional, more powerful financial sanctions and naval blockades. The international community must respond sternly to Pyongyang’s flouting of U.N. resolutions.

The problem, however, is that sanctions alone are not enough to keep North Korea from pursuing nuclear armament. Nor is it possible for us to seek military solution that would result in more than a million casualties. There is little possibility, though, that North Korea would attempt a preemptive strike using a nuclear weapon, knowing very well that such an action would lead to its own demise. All countries concerned should grasp the situation cool-headedly and employ a judicious mix of toughness and moderation. Seoul’s response is especially crucial. It is fortunate that South Korea has prepared an environment to take the initiative with the major political parties reaching consensus to jointly address the issue. But what is more important than a temporary display of bipartisanship is for the rival parties to put their heads together to devise a creative solution that can sever the vicious cycle of the North’s


escalating provocations and international sanctions in a way that would be acceptable to the global community. The current situation demands exceptional wisdom and courage from the incoming administration of Park Geun-hye.

[ February 13, 2012 ]

www.koreafocus.or.kr


Park Geun-hye’s Three Major Tasks

Choi Jang-jip Professor Emeritus Department of Political Science and Diplomacy Korea University

I voted for the candidate of the opposition Democratic United Party (DUP) in the presidential election, so I did not plan on writing to President-elect Park Geun-hye to express my views about her impending tasks. However, in respect to the election outcome in which she received the majority of votes, I hope she fulfills the wishes of every Korean and successfully serves the nation and public interest. I would like to discuss three concerns that will demand her attention.

First, she has to mitigate the chronic political or ideological polarization. As underlined by the persistence of the jargon like “pro-DJ (Kim Dae-jung)” versus “anti-DJ,” “pro-Roh (Moo-hyun)” versus “anti-Roh” and “pro-Lee (Myung-bak)” versus “anti-Lee,” Korean politics is mired in divisive acrimony. The very fact that “integration” became a critical catchword of the latest presidential race reflects the depth of the animosity. Park’s promise to accommodate alienated social segments and regions and balance personnel appointments and management is notable. It contrasts with President Lee Myung-bak who entered office amid anticipation that his administration would recruit superior social elite. But integration must not be reduced to token representation of opposition camps, or “tansformismo” as defined by the Italians, for it would call into question the president-elect’s ability to embrace the social segments,


generations and regions that did not support her Saenuri Party. If she wants a true social integration, she needs to directly tackle the problems confronting regions, generations and classes, personally listening to their voices and providing channels to include their thoughts in the policy-making process. By doing so, Korean politics hopefully will not be distilled into a mere “pro-Park” versus “anti-Park” dichotomy while she is office.

Second, the conservative ruling Saenuri Party should use its victory as a turning point to evolve into a party that promotes social integration and democratic values. I have long thought that Korea’s conservative forces lack moral leadership because they remain locked in an anachronistic Cold War anti-communism and authoritarianism, even though they played a decisive role in spearheading national reconstruction and industrialization. Tardy progress in Korea’s political development is due to the conservative camp’s ideological intolerance as well as the opposition’s incompetence and failure to comply with the changing political trends after the 1987 pro-democracy movement. If the Saenuri Party grows into a trustworthy conservative party committed to universal values such as social integration and peace and human rights, Korean politics will gain momentum toward moving to a higher level.

One noteworthy difference between the latest presidential election and past campaigns was the scale of contentious socioeconomic issues that were raised. They included economic democratization, expansion of social welfare programs, stable livelihood for the middle- and low-income earners and employment of young adults as well as the ownership structure of conglomerates. Candidate Park and the Saenuri Party deserve a nod for joining the debate rather than evading or dismissing the issues. Their action, stemming from their adoption of “pragmatic conservatism,” complied with demands of the majority of society, instead of sticking to the “ideology-driven conservatism” of the 1950s and 1960s.

Thus, their talking points against the DUP were not about economic democratization per se but about what sort of democratization should be pursued, a novel approach that proved persuasive. Consequently, candidate Park was able to win the election on her own, despite being the daughter of authoritarian strongman Park Chung-hee, not by virtue of her father’s achievement as the architect of modern economic development. After taking the reins, President-elect Park will still have to shoulder the burden of freeing herself from the legacy of her father, who led the industrialization of the nation but ruthlessly trampled on democracy and human rights and disregarded the rights of workers.


In this regard, I suggest Chancellor Angela Merkel of Germany as a role model for Park, rather than former British Prime Minister Margaret Thatcher, and Germany’s Christian Democratic Union (CDU) as the model for the Saenuri Party, not the Republican Party of the United States. Thatcher and the Republican Party aggravated polarization by solidifying the base for extreme conservatism. Merkel and her CDU developed a model of “liberal conservatism” to achieve social and economic integration more effectively through a pragmatic approach.

Lastly, President-elect Park should strive to materialize responsible politics or, more precisely, a responsible government. What is the gravest factor that has hampered Korea’s political development? In my view, it is the absence of responsible politics, which at best has been frail. In a modern democracy, the elected chief executive is entrusted with the power to rule the country and, at the same time, responsibility for governance. But, if the elected head of state is not held accountable in implementing campaign pledges and serving public interests, the government cannot be called democratic.

The president as well as the governing party is responsible for turning the campaign pledges into reality. In a democracy, the ruling party plays a vital role in providing the chief executive an organization and mechanism to govern. During the recent election campaign various ideas were broached on political reform. Among them was switching to a four-year presidential term and a chance of re-election from the current single five-year tenure. A decrease in the number of National Assembly seats also was aired. But there are ways for achieving responsible politics within the existing institutional framework.

In this regard, a most crucial task is to establish a properly working relationship between the administration and its political arm, the ruling party. It should be stressed once again that the cardinal way of promoting democratic politics is to establish a “party government,” not merely a Park Geunhye administration or a Cheong Wa Dae government. As we have witnessed over the past several decades, the greater the presidential power, the higher the chances grow for authoritarianism. The president is tempted to distance himself from his party and lord it over all others. The National Assembly and political parties should be assured of having a voice in governance, a normal role that keeps the government stable.

The worst situation in a democracy under a presidential system does not necessarily come when the president’s popular support drops but when the president loses the support of the governing party. Therefore, if President-elect Park wishes to have a properly functioning government, her


administration would better be named the “Saenuri government,” not following the odd practices of previous administrations adopting nicknames like the “Civil (munmin) Government” of Kim Youngsam, “People’s (gungmin-eui) Government” of Kim Dae-jung and “Participatory (chamyeo) Government” of Roh Moo-hyun.

[ Kyunhyang Shinmun, December 25, 2012 ]

www.koreafocus.or.kr


A Counterattack by Conservative 50-Somethings? Not Exactly!

Han Gwi-yeong Research Fellow Hankyoreh Social Policy Institute

I am weighed down by a heavy heart. A great many people were dismayed by the outcome of the presidential election, including me. Nonetheless, we have to make a level-headed, fair analysis for the sake of the future.

The prevailing assessment is that conservatives in their 50s and above were the pivotal voters that enabled Park Geun-hye to win the presidency. There is a prediction that Korea’s aging demographics will mean the voting population will become more and more conservative. The conservative camp already seems to be elated over the prospects while liberals and progressives seem consigned to slimmer chances of seizing power.

The demographic-based analysis is comparable to the post-2002 election assessment. An intense “generation conflict” was also outstanding at the time. Voters were sharply divided into progressives in their 20s and 30s and conservatives in their 50s and 60s, with those in their 40s playing the role of balancer. The voters in their 50s and 60s, despite their high turnout at the polls, had to concede to the younger generation in their 20s and 30s because of their low demographic ratio of 29.3 percent against the latter’s 48.3 percent. Some in the liberal/progressive camp believed that this year’s election would be a repeat of 2002.


Mindful of the increased number of 20- and 30-somethings, it was assumed they would support the progressives. Of course, this decade-old rationale and forecast proved to be preposterous and absurd. The logic failed because it did not distinguish between “age effect” and “generation effect.” The tendency of people to become conservative as they become older is an age effect, while generation effect denotes that common historical experience of a youthful or adolescent generation will have a most critical impact on its future political choice. A model case of the latter is the “486 generation,” a term coined in the 2000s, referring to people then in their 40s, having attended university in the 1980s and born in the 1960s. As young adults, this generation was very active politically and instrumental in the pro-democracy movement in the 1980s.

Liberals and progressives tend to reflect the generation effect, and conservatives are more prone to the age effect. But, it is difficult to judge which effect is stronger or more prevalent. Human beings all change as time elapses yet their directions are not uniform.

People in their 50s nowadays were young salaried men and women who actively backed up the 1987 pro-democracy movement. Later they supported both Kim Dae-jung and Roh Moo-hyun to establish consecutive liberal governments. Up until 10 years ago, expectations were high that those in their 40s (now in their 50s), despite getting older, would remain distinct from older generations obsessed with the nation’s security and industrialization and not become conservatives. But the truth is that they have now become the core of Korea’s conservative forces.

Social unrest intensified during the Roh administration when liberals and progressives were in their 40s. Polarization, unemployment and unprincipled education policy aggravated instability, sparking a craving for stable livelihoods. After losing power in the 2007 presidential election, the factionridden liberal/progressive forces failed to display political credibility or mollify public misgivings. The opposition forces must now deeply reflect on their fallacies and start all over again.

There is yet another point worthy of attention. It is not necessarily a new finding that an increase in the demographic ratio of the generation in their 50s and 60s to nearly reach 40 percent and its political inclination played a pivotal role in the election. Changes in demographic composition must be accepted as a given factor that cannot be arbitrarily controlled or altered. If the liberals and progressives try to mask their lack of an effective election strategy and blame their defeat on the high turnout of older voters, their failure will be repeated. It is time for the liberals and progressives to make a dispassionate and thoroughgoing analysis of the overall political situation, enduring all bone-


chilling pain.

[ The Hankyoreh, December 24, 2012 ]

www.koreafocus.or.kr


There’s No Need to Hasten Purchase of U.S. Global Hawks

Editorial The Hankyoreh

Washington was reported to have started official procedures to sell the Global Hawk unmanned reconnaissance aircraft to South Korea. The Pentagon notified Congress of its intent to sell four Global Hawks to Korea for $1.2 billion (1.3 trillion won), the required first step when U.S. weapons are to be sold to a foreign country. We are surprised by the very high price that was quoted even if it is not the final offer to Korea. The U.S. Air Force had first put the price tag for a four-aircraft package at the equivalent of 450 billion won in 2009 and then raised it to 940 billion won in 2011. A much higher price has now been quoted.

The introduction of Global Hawks was initiated during the Roh Moo-hyun administration but shelved by the Lee Myung-bak administration. It was revived after the North stepped up its provocations against the South with the sinking of the patrol craft Cheonan in 2010 and the artillery shelling of Yeonpyeong Island later in the year. While the two successive administrations were delaying decisions on this matter, the price per unit steeply increased. As the aircraft’s manufacturers saw a decline in orders, they marked up their price to shore up their revenue stream. We are now condemning a waste of taxpayers’ money.

We also have to scrutinize the possible connection between the Global Hawk deal and the U.S.-Korea military agreement that decides the maximum range of Korean-made missiles. There is speculation


that the Korean government promised to purchase Global Hawks in return for the U.S. consent to increase the missile range to 800 kilometers from the current 500 kilometer limit.

Wikileaks documents revealed last year included papers which indicated that the United States had stronger intent to sell Global Hawks to South Korea than Seoul’s desire to acquire them. Thus, they suggest that Seoul is being compelled to purchase U.S. arms at an astronomically high price in order to satisfy U.S. interests rather than ours. It is essential to examine how necessary the Global Hawks are to Korea’s defense, considering that the unmanned aircraft have an operational range of 3,000 kilometers while Korea has only 500 kilometers of operational scope.

Some civilian experts believe that the mid-altitude unmanned reconnaissance aircraft that Korea is developing will suffice in conducting aerial surveillance over the Korean peninsula. On the other hand, military authorities insist that Global Hawks would be indispensible for aerial defense, especially because South Korean forces are scheduled to take over wartime operational control from the United States in 2015.

Global Hawks are cutting-edge weapons and we need to spend money for the modernization of the Korean armed forces and their independent operation. Yet, it is inconceivable that an enormous amount of taxpayers’ money is spent to avoid offending U.S. authorities. The new administration of President-elect Park Geun-hye is advised to make a thorough review of the whole plan to introduce the long-range reconnaissance aircraft into our arsenal.

[ December 26, 2012 ]

www.koreafocus.or.kr


Park Geun-hye Needs to Become Korea’s Richard Nixon

Kwon Man-hak Professor, Department of International Studies Kyung Hee University

Madam Park Geun-hye will be inaugurated as the 11th president of the Republic of Korea on February 25, 2013, exactly 41 years after U.S. President Richard Nixon and Chinese Premier Zhou Enlai toasted each other at a banquet in Beijing celebrating their agreement to normalize relations between the two Cold War adversaries. Not only Americans but the whole world was surprised by the diplomatic coup Nixon achieved by visiting China. More surprising were the changes that took place in the ensuing decades. China went on to implement peaceful reforms and openness and the Soviet Union, facing an emboldened neighbor across the border, vanished from history two decades later.

The detente between Washington and Beijing was possible because of external and internal factors. The Sino-Soviet dispute paved the way for the United States and China to approach each other and their leaders prioritized national interest over ideology. Moreover, Nixon’s staunch anti-communist background bolstered the chances of his diplomatic success. It provided a buffer to any accusations of being soft on communism. Americans’ firm belief in his thinking allowed him to freely engage the Chinese communists for cooperation. In the first year of Park Geun-hye’s presidency, the Korean peninsula and the surrounding region will be thrashed by high waves of international politics. North Korea has been pursuing nuclear armament as evidenced by its recent launching of the long-range Unha-3 rocket after nuclear tests in 2006 and


2009. Meanwhile, the Korean peninsula is set to suffer from the geopolitical consequences of regional conflicts. China will step up its challenges to the existing order in East Asia as shown in the ongoing conflicts over Senkaku Islands (Diaoyudao Islands). Amid these circumstances, the Park administration cannot avoid the vital task of improving relations with North Korea. The incoming president needs to demonstrate a wholly new way of thinking. North Korea’s nuclear armament may simply be Pyongyang’s response to what it perceives as “hostile policy” from South Korea and the United States, which wield overwhelming supremacy over the North. Having lost its nuclear-armed supporter of the past, North Korea is pursuing asymmetrical nuclear capabilities as it feels serious security threats that cannot be overcome with conventional weapons alone. But a more fundamental problem is Pyongyang’s deep sense of insecurity that it is not being recognized as a state by Washington and Seoul. How to resolve this question is the task for all.

The North Korean nuclear issue has proved to be outside the realm of resolution by military means. Simply put, no military option is available to us, and unless we are capable of completely neutralizing the nuclear arms the North is believed to possess as well as its conventional artillery capabilities to strike our capital, no military initiative can avoid astronomical damage to us.

Also, as long as North Korea has its back doors open to China, we cannot strangulate it by political or economic means. China’s attitude toward the North’s sinking of the patrol boat Cheonan and artillery shelling of Yeonpyeong Island in 2010 shows that it has a major stake in sustaining the Pyongyang regime.

The Korean Peninsula Forum, held in July 2012 sponsored by the JoongAng Ilbo, proposed that North Korean statehood be recognized in order to remove the sense of crisis that grips Pyongyang and to promote a three-fold approach of denuclearization, peace and cooperation. As long as North Korea remains an “anti-state group” and an “aggressor” to us, Pyongyang will never feel safe and secure. Foreign scholars in the forum stressed that only South Korea was blind to the fact that the United Nations and many nations of Europe had recognized North Korea’s state capacity. Accepting the statehood of North Korea will open the way to denuclearization, peace and cooperation.

There is no guarantee that this initiative will succeed. But with prudence and careful algorithms we will be able to achieve the desired results. Past administrations failed to seize, or deliberately ignored, the opportunities open to them because of ideological biases. In contrast, the conservative Park Geunhye government, like Nixon’s, is qualified to engage the North for the future interests of the nation.


It is hoped the new government will end the Cold War state of the Korean peninsula by fully taking advantage of its external and internal environment.

[ JoongAng Ilbo, January 2, 2013 ]

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North Korean Rocket Was ICBM

Editorial The Chosun Ilbo

The Ministry of National Defense has determined that North Korea’s rocket technology is capable of carrying a warhead of 500 to 600 kilograms over more than 10,000 kilometers. The ministry said it reached the conclusion by analyzing data collected from remnants of the rocket the North fired on December 12. The rocket’s first-stage oxidizer container, which provides oxygen to burn the fuel, was recovered by military salvaging teams in the West Sea on December 14.

The oxidizer was not the liquid oxygen used by nations with advanced space technology. It had nitric acid, which turns red when exposed to air. North Korea used the same kind of oxidizer for its shortrange Scud missiles and medium-range Rodong missiles. The shape of the oxidizer container was similar to that of the rockets developed by Iran. Military authorities have thus concluded that North Korea was developing an intercontinental ballistic missile, not a space rocket as it claims.

A simulation test of an oxidizer container filled with 48 tons of red fuming nitric acid yielded a 500 kg payload and 10,000 km range. When North Korea becomes capable of producing a 500 kg nuclear warhead that can endure temperatures of 6,000-7,000°C on reentry into the earth’s atmosphere, it means that the North can strike the western United States. Moreover, South Korean and U.S. authorities have detected that North Korea is currently operating a highly enriched uranium (HEU) facility for production of nuclear weapons.


It is believed that North Korea has already obtained about 40 kilograms of plutonium enough to make six to seven nuclear bombs at the nuclear reprocessing facility in Yongbyon. In addition, there is high possibility that the North has secured enriched uranium from its HEU facility over the past two years, acquiring materials needed to replenish its nuclear arsenal with four to six more bombs. U.S. experts predict that the North may conduct its third nuclear test with a uranium device during 2013

Over the past few months, South Korea, China and Japan as well as the United States have chosen their new leaders respectively and the leadership change in these nations certainly offers North Korea a great opportunity to seek new relationships with these countries. On the other hand, if the North unveils a provocative stance by conducting a third nuclear test, the four nations surrounding it will have no other choice but to impose strong additional sanctions against Pyongyang and dismiss any thought of cooperative projects. It is no time for North Korea to pursue its nuclear and missile gambits.

[ December 24, 2012 ]

www.koreafocus.or.kr


- Ways to Revitalize Economy - Park Urged to Overcome Low Growth - Korean-Style Welfare Strategy - Nation’s Future Hinges on Innovative Manufacturing


Ways to Revitalize Economy

Lee Phil-sang Professor of Finance, Korea University Adjunct Professor, Seoul National University

Ushering in a new year, the Korean people seem to have one common wish ― a speedy recovery from the prolonged economic slump. The outgoing Lee Myung-bak administration’s “747 Plan,” which aimed for 7 percent economic growth, per capita gross domestic product of US$40,000 and the seventh largest economy in the world, failed to materialize. With the economy trapped instead in the 2 percent growth range, people’s livelihoods have worsened considerably.

Seeking to woo voters in the run-up to the December 19 presidential election, political parties unleashed a barrage of populist pledges for economic democratization and expansion of welfare benefits. In a slow-growth economy, a populist-driven policy for economic democratization will only heighten the possibility of an economic collapse. In a debt-laden nation, excessive welfare spending raises fears about damage to fiscal health as well as the economy. Soon after the presidential inauguration in late February, the Park Geun-hye administration will need to revise her campaign promises and implement measures that can reform and revive the economy in a proper way.

First, the new government should strive to restore growth momentum. Without economic growth, people can hardly make a living. Broader welfare benefits and distribution of wealth in the absence of growth momentum is the same as fighting over scarce food on board a ship with a broken engine. To help create momentum, attention should be focused on boosting investments in research and


development, promoting start-up companies and exploring new industries and business opportunities.

In addition, research and development cooperation among enterprises, colleges and research institutes should be further strengthened to enhance creativity in science and technology and future industries. At this juncture, large conglomerates need to actively embrace demands for economic democratization and make aggressive investments. At the beginning of 2012, the nation’s 30 largest conglomerates promised to invest a combined total of 150 trillion won during the year, but their spending failed to reinforce the foundation for economic growth. They also fell short of promoting shared growth with small and medium-sized enterprises (SMEs). It is the responsibility of large conglomerates to increase investments and inject vigor into the economy, particularly during economic difficulties. Those who make aggressive investments during the global economic downturn will be positioned to beat their rivals for bigger shares of overseas markets when the world economy rebounds.

Second, domestic consumption should be revitalized so it can drive growth along with exports. Due to its excessive dependence on exports, the Korean economy suffers a major blow whenever the world economy buckles. Large conglomerates should concentrate on exports to promote the development of domestic demand-oriented industries, while leaving the domestic market in the hands of SMEs and self-employed individuals. In the next step, a blueprint should be drawn to turn the service sector into a new economic pillar, with the food, tourism, leisure and entertainment industries leading the way.

The international competitiveness of the knowledge-based service sector, which includes financial, legal and medical services, also should be strengthened. This would involve entry into overseas markets as well as protection of the domestic market. Above all, the financial services industry needs to improve its viability. Our country’s financial market has been so vulnerable to rapid flight of foreign capital, particularly during times of global economic instability, that it is dubbed a “cash dispenser for foreign capitalists.” It is necessary to minimize damage from speculative foreign capital and promote fair distribution of capital by speeding up efforts for sound and autonomous development of the financial services industry and efficient monitoring of the financial markets.

Third, job creation needs to be stressed. Due to the scarcity of jobs and decline in national income, various forms of financial stress have appeared such as the “house poor,” or overleveraged homeowners; the “education poor,” those groaning under a heavy burden of educational expenses; and the “silver poor,” retirees with little savings or welfare benefits. Such inadequacy is driving the


society into serious pain and division. Without jobs, the economy can hardly create the virtuous cycle of growth and division and guarantee sound social development. Both revival of growth momentum and investment revitalization form the basis for recovering the economy’s ability to create jobs.

Moreover, the bipolarization of the labor market should be tackled in order to help expand job creation. In Korea, the working hours are comparatively long and wage differences among workers are wide. In particular, there is serious status discrimination between regular and non-regular workers. Job sharing should be implemented by curtailing the working hours, introducing the salary peak system and reinforcing vocational training programs. The biggest task facing the incoming government this year is to revitalize the economy. It must establish a new policy paradigm that can revive the economy, setting aside political bickering. People’s power should be united to turn the crisis into an opportunity and make a giant leap forward.

[ Maeil Business Newspaper, January 1, 2013 ]

www.koreafocus.or.kr


Park Urged to Overcome Low Growth

Kwon Soon-woo Vice President Samsung Economic Research Institute

Korea’s presidential poll on December 19 capped a series of major elections around the world in 2012. Besides Korea, new leaders were chosen in France, the United States, China and Japan. With few exceptions, the economy was the dominant election issue and all the candidates spewed forth promises to resolve economic problems as soon as possible. But the economic conditions facing the election winners seem to be very daunting.

European Union countries, which are hobbled by negative economic growth and debt, appear to be treading on thin ice day by day. The European Central Bank has pledged unlimited purchases of sovereign bonds from the most distressed Eurozone countries, and the European Stability Mechanism is seeking to extend direct loans to ailing European banks. Thanks to such makeshift measures, Europe has managed to set up a firewall to prevent state insolvencies and successive bank failures. But the firewall itself looks vulnerable and may collapse anytime soon. Even if the firewall remains erect, the Eurozone may not be able to escape from its slump for a long time. The United States is heading toward the so-called “fiscal cliff,� a combination of tax hikes and major spending cuts to reduce debt. President Barack Obama and the Republican Party are expected to reach a compromise, but substantial fiscal retrenchment cannot be avoided forever. Indicators of housing and labor market recovery have improved. But any meaningful recovery of the U.S. economy can


hardly be expected, as fiscal austerity seems inevitable. In China, the era of the so-called “baoba,” a reference to the central government wanting to maintain the economic growth rate at 8 percent, appears to be coming to an end, as its growth rate has recently fallen to the 7 percent range for two consecutive quarters. China’s high growth model, in which double-digit growth rates were driven by both exports and investments, is no longer viable. It is impossible for a trading superpower with an annual export volume of US$2 trillion to continue to increase its overseas shipment by over 20 percent annually when the global economy is in the doldrums. Large-scale investments linked to exports have triggered a debate over excess industrial capacity and the chances of an economic hard landing.

In Japan, the situation is more serious, as deflation is worsening and overall economic vitality is weakening. Amid an extended slump in domestic consumption, the country’s exports have also dived. Its gross domestic product even contracted in the third quarter of last year. Japan’s consumer prices unexpectedly rose in the first half but fell again in the latter half, heightening the possibility that its consumer price index would drop for the fourth consecutive year.

Confronted with daunting economic circumstances and a bleak outlook for the future, the new governments of the major global economies are eventually shifting the focus of their economic policies to growth. France has also begun to recognize the seriousness of its weakened competitiveness, after the Socialist Party’s Francois Hollande took over as new president. On the basis of the so-called “Galois report,” which contains measures to strengthen industrial competitiveness, the French government is shifting its focus to economic growth.

The United States is in desperate need of economic stimulus measures but is constrained by fiscal austerity. In the meantime, the U.S. Federal Reserve is maintaining its unconventional monetary policy of quantitative easing and has set 6.5 percent unemployment as the target point when it can consider raising its benchmark interest rate from the current near-zero level. Those actions have signaled a strong determination to achieve economic growth.

Japan has displayed a more aggressive attitude, as seen in the radical remarks by Shinzo Abe, chairman of the Liberal Democratic Party. Abe said his party is willing to print unlimited amounts of yen to strengthen Japan’s struggling economy through a weaker yen. He also vowed to put the top priority of economic policy on escaping from deflation. On the back of his party’s landslide victory in the December general election, Abe is expected to come up with strong growth-oriented policies


in the days ahead. The Korean economy is also stuck in difficult circumstances. The nation’s export slump is getting worse, due to sluggish demand from China and other major export markets. Korean exporters are expected to suffer a further blow, if the competitive quantitative easing policies in the United States and Japan weaken the dollar and yen. In the past, Korea suffered a severe downturn whenever the value of the yen fell. The unpleasant memories still linger. The outlook for domestic consumption also remains unclear due to uncertainties associated with massive household debts. The future of the Korean economy is clouded by a low-growth trap. The nation’s economic growth rate fell sharply whenever a crisis occurred. The Korean economy expanded by around 7 percent annually before the Asian financial crisis in the late 1990s. Thereafter, the growth rate declined to the 4 percent range before dropping below 3 percent in the wake of the global financial crisis of 2008. It is too early for Korea to accept GDP growth in the 2 percent range. The top priority for the incoming government should be to overcome low growth.

[ Chosun Ilbo, December 21, 2012 ]

www.koreafocus.or.kr


Korean-Style Welfare Strategy

Ahn Sang-hoon Professor of Social Policy Seoul National University

Dark clouds hanging over the global economy are growing thicker and thicker. Amid the gloom, the Korean economy has been faring relatively well, but its outlook for next year is not bright. As skepticism spreads, a variety of new economic stimulus measures are being discussed by presidential camps. “More haste, less speed,” as the saying goes. It is feared that fundamental solutions will give way to short-term stopgap measures. Due to the controversy over the refurbishment of four major rivers and urban redevelopment projects, massive infrastructure construction programs may not be an option as economic stimulus. Likewise, reducing the burden of debt-laden households alone doesn’t seem to be the perfect solution. Now is the time for us to carefully consider the right options for stimulating domestic demand. At this juncture, the theory of “social service state” can be a “two birds, one stone” solution. Under the influence of John Maynard Keynes’ theory of effective demand, government stimulus has been mobilized as a “relief pitcher” in every economic crisis since the New Deal public works projects in the wake of the Great Depression in the 1930s. Apart from civil engineering and construction, the New Deal was mostly about social security.

Social security was once a successful relief pitcher in economic stimulus packages but caused longterm problems in many cases. There are two kinds of relief pitchers ― security of income and security


of social services. If income security alone is employed, adverse side effects, such as erosion of labor motivation and abuse of welfare, will inevitably appear. The basic strategy to win the entire season is to save the ace pitcher’s physical strength. Those who excessively depend on the ace pitcher in the name of income security in all games are defeated without exception.

All welfare strategies are not efficient and fundamental solutions to an economic crisis. Therefore, it is necessary to carefully examine all presidential candidates’ welfare promises to help stabilize livelihoods. It is believed that a welfare strategy focused on social services will contribute to boosting economic growth as well as overcoming a crisis. We should elect our next president after carefully studying the candidates’ welfare strategies. If we can learn a lesson from the experience of advanced countries, Korea’s 21st century welfare strategy should be based on the job-friendly theory of social service state. Today, high-tech robots are replacing manpower at automated plants, while labor-intensive production facilities are moving to developing countries. As a result, a growing number of ordinary people find it difficult to land jobs. Even the scarce jobs available are mostly non-regular positions. Regular workers appear to reap all the welfare benefits. The virtue of self-help and self-care sounds increasingly empty.

The public sector should shoulder the responsibility for creating more job opportunities. In a fair society, all hard working people should be allowed to enjoy the benefits from social safety nets, regardless of their employment status. If jobs should be created immediately to help improve public livelihoods, welfare benefits should be expanded in the form of services rather than a cash payment. A number of studies already have confirmed that the social service sector has an exceptionally strong job creation effect. In a comparison of welfare states with conflicting fates, the superiority of social service job strategies is noteworthy.

The success of Northern European countries and the failure of Southern European countries point to the difference between social services and cash payments. Economic accomplishments are more notable in a country where social service expenditures are greater than outright cash support. The typical outcomes of social services include high employment rates, solid economic growth rates, sound finances and eased social inequality.

A long time ago, the Northern European welfare strategy already called for creating more jobs through social services. Their ordinary citizens who were included in the social insurance system thanks to jobs created by social services have been shielded from the Eurozone debt crisis. By contrast,


Southern European countries chose to concentrate on doling out the sweet and popular welfare cash, leaving social services in the hands of the market. Those nations’ low-paying social service jobs were eventually occupied by migrant foreign workers, resulting in the deepening of labor market bipolarization. Ordinary citizens in those countries where even the social safety nets were monopolized by winners were doomed to become the first victims of the global economic crisis.

Of course, the strategy to strengthen social services can succeed only when backed by detailed policy considerations. For instance, dual career couples should have priority over childcare support to ensure a virtuous cycle of employment and welfare. Beyond the efforts to overcome low birthrate, women’s employment should be further boosted in order to secure growth momentum.

A small sum of money doled out to senior citizens as a basic subsistence allowance does not suffice; all the elderly people wanting to work should be given jobs so that their sense of happiness in old age will increase. Instead of seeking to win the votes of young people with promises to cut college tuition in half, presidential candidates should endeavor to link social contributions to college scholarships or encourage the youth to design their future at social enterprises. Even if both social services and jobs are expanded, the level and speed of increases should be determined in consideration of fiscal conditions to avoid any adverse side effects. The “Miracle of the Han River” is no longer viable in Korea. Responsible leadership is needed to realize a second miracle through a better brand of capitalism. In this election year, a flurry of porkbarrel promises of “large-scale cash welfare programs” may not be avoided. But all candidates should leave room for a grand compromise on Korean-style welfare, if they want to be remembered as a successful leader after their desperate vote-chasing campaigns end.

[ Chosun Ilbo, December 6, 2012 ]

www.koreafocus.or.kr


Nation’s Future Hinges on Innovative Manufacturing

Kang Tae-jin Professor, College of Engineering Seoul National University

There are two nations that stand out amid the global economic crisis. They are Germany and China. Germany, dubbed the engine of Europe and the last bastion of stability in the Eurozone crisis, is now a model for state economy. China is widely forecast to become the world’s richest nation as the global economic axis tilts toward Asia.

What do these two countries have in common? The answer is the high competitiveness of their manufacturing sector. Germany’s potential lies in its soft power that combines advanced technologies, brand trust and rational and clean state image. That’s why the “Made in Germany” brand has become synonymous with high-quality products and innovation. The biggest contributors to German economic power are undoubtedly the nation’s 1,300-odd manufacturers who rank among the top three in the global market. Thanks to those “hidden champions,” Germany’s unemployment rate recently fell to 5.9 percent despite the Eurozone debt crisis. The country’s annual economic growth rate also stayed in the 3 percent range, with its annual exports soaring above 1 trillion euros. German manufacturing sector’s strong competitiveness is generally attributed to the government’s efficient industrial policy, which promoted technological upgrading, reduced social inefficiency and attempted to diversify export markets, while many other countries relocated their manufacturing bases to emerging economies in pursuit of cheap labor. Policy consistency is also notable. In 2003, then


Chancellor Gerhard Schroeder of the Social Democratic Party launched reforms aimed at restoring national competitiveness. Chancellor Angela Merkel of the Christian Democratic Union has consistently implemented the same reforms, paving the ground for labor market flexibility, tax reductions boosting corporate growth and welfare reform, which have all contributed to the dynamics of the German economy. China’s manufacturing industry began to take off in the 1980s, when the nation was called “the factory of the world,” a term referring to a global outsourcing production base. After acquiring technological capabilities from the outsourced manufacturing plants, China launched a drive in 2005 to develop its own manufacturing technologies, particularly in high-tech industries, to achieve qualitative economic growth. In 2010, China eventually became the world’s top manufacturing country by output and ranked second worldwide in terms of investments in research and development. Taking a leaf out of the two countries’ experiences, other nations are trying to revitalize their manufacturing sector. In the United States, the ongoing boom in low-cost natural gas from shale is driving down energy costs and boosting the recovery of petrochemicals and manufacturing industries. The so-called “Reshoring” of good, well-paying manufacturing jobs back home is gaining momentum. For example, General Electric is moving part of its overseas production back to America, while Apple plans to shift production of one of its Mac computers from China to the United States. In Britain, aggressive measures to advance its manufacturing sector began last year. Manufacturing innovation centers were established at nine universities and tax cuts were extended to investments in research and development. What is our reality? Long sandwiched between “high price and high specification” products from advanced countries and “low price and low specification” products from emerging economies, Korea’s manufacturing sector is now being threatened by “low price and high specification” products made by innovative Chinese manufacturers. China is rapidly catching up with Korea in its mainstay industries, such as electronics and automobiles. Chinese companies are already surpassing their Korean rivals in new industrial fields, such as solar energy and pharmaceuticals. The situation is not different in the textile industry, which played a key role in Korea’s rapid export growth in the 1970s and 1980s. In contrast to the rise of electronics, heavy and chemical, and other new industries, Korea’s textile industry has been neglected for a long time and lost its international competitiveness. The Korean textile industry this year posted the first export increase in 20 years thanks to free trade agreements


with the United States and the European Union, paving the way for its renaissance. But local textile manufacturers are suffering from a severe labor shortage due to the hollowing out of production over the past two decades. The problems facing Korea’s manufacturing industries have just one solution ― innovation. In order to remain competitive in the global market, we have to further strengthen our manufacturing industries by producing high value-added products featuring outstanding technologies or unique Korean cultural traits and fostering global brands. The value of the “Made in Korea” brand can be further upgraded when such high value-added products are manufactured at home. To that end, priority should be given to easing regulations and securing labor market flexibility.

Top-level human resources should be nurtured in natural sciences and engineering. Technocrats armed with expertise also are required to contribute to manufacturing innovations, which will help prevent unemployment crisis and the collapse of the middle class. A creative and advanced manufacturing sector infused with unique Korean cultural features can add to national wealth. We need to have a clear sense of mission, though the task may take time. We should patiently work to develop indigenous and creative technologies. There are no shortcuts in science and technology.

[ Maeil Business Newspaper, January 2, 2013 ]

www.koreafocus.or.kr


- Naro Space Rocket: Expectations and Frustrations - Nation Needs Better ICT Governance to Meet Urgent Needs - Presidential Election and Housing Market Polarization - No More Political Distortion of Saemaul Movement


Naro Space Rocket: Expectations and Frustrations

Hong Sung-ook Professor, School of Media and Communication Korea University

A huge science and technology project requiring large amounts of research funding and manpower and more than 10 years to complete is a double-edged sword. Since it attracts media highlight and public attention, the project offers a good opportunity to introduce the experts, research institutes and bureaucrats behind the project and politicians who support it.

President Lee Myung-bak visited the Naro Space Center to encourage its scientists after the first launch attempt of the space rocket Naro failed in 2009. Another attempt in 2010 also failed as then Prime Minister Chung Un-chan watched the entire launching process with concerned officials and researchers at the center. However, if the third launch attempt succeeds, all the traumatic memories of the failures will disappear and those who led the project will be thrown into the national spotlight.

The brighter the sunny spot the darker the shades. When a gigantic science and technology project fails, everyone involved is harshly criticized and denounced. Should Naro’s third launch attempt fail after spending over 500 billion won (approximately US$430 million), the public will be extremely disappointed and critical voices will grow louder demanding that those involved be held accountable. Furthermore, the development of Korea Space Launch Vehicle (KSLV), scheduled for 2021, will likely become difficult. Researchers at the Korea Aerospace Research Institute were recently reported to be refraining from washing their hair and clipping their nails, a sign they are nervously keeping


their fingers crossed amid anxiety about another failure. The Naro rocket is “very Korean” in many senses. With the United States extremely reluctant to transfer its rocket technology to Korea for political and military reasons, Korea jumped into space development in 2002. The goal was to develop a launch vehicle within several years. To that end, Korea signed a technology development agreement with Russia and brought in the entire lower-part (first-stage) rocket, the core element of rocket propulsion, while producing the upper-part (secondstage) rocket. The combination of Korean and Russian technologies led to unexpected problems, and after the launch failed, both sides tried to shift responsibility onto the other. The analysis that the success of Naro rocket’s launch will create economic effect amounting to 2 trillion won reminds one of the earlier hustle and bustle over Professor Hwang Woo-suk’s stem cell research that was said to be capable of producing economic effect worth 30 trillion won. Likewise, the media has exaggerated the potential economic effect of space development. All this seems “truly Korean.”

Space development involves significant political implications in all nations concerned. The grouping of nine countries which have successfully launched rockets, the “Space Club” includes not only Russia, the United States, France, Japan, Britain and China, but India, Israel and Iran as well. All of these countries are not wealthy, nor are they more advanced in science and technology than Korea. Germany, a powerhouse of science and technology and the origin of rocket technology, is not a member of this club, while Iran and India are members. North Korea is also struggling to join it. Let’s take a look at nuclear weapon states. Considering that Russia, the United States, Britain, France, China, India and North Korea possess nuclear weapons and Israel also has a nuclear program, the Space Club has quite an overlapping list with that of nuclear weapon states. Iran’s nuclear arms development is drawing suspicion from the international community. While the two Koreas are now competing to become the 10th member of Space Club, North Korea lost a chance by failing to put its Kwangmyongsong-3 satellite into orbit last April. But some even suspect the North deliberately foiled the launch to manufacture an excuse to resume talks with the United States.

It is also noteworthy that many European countries that are wealthy and advanced in science and technology are not members of the Space Club. Britain and France have both put their satellites in orbit but discontinued their rocket development and instead are launching satellites via commercial rockets of Arianespace, a joint venture of 10 European countries. Korea plans to spend nearly 2 trillion


won to develop its own launch vehicle in order to put more satellites into orbit. But it should note that European countries are relying on commercial service to lift far more satellites.

One single large science and technology project costs more than 100-200 billion won annually, while research projects at university laboratories are often suspended when they lack a mere 10-20 million won. Huge science projects for political purposes are important in their own way, but the so-called “bench science,” or the “hands-on science,” exclusively conducted in a laboratory is the centerpiece of scientific research.

As a Korean citizen, I earnestly hope that the launch schedule of Naro is fixed as soon as possible and this time it will be successfully put into orbit. Thereafter, it is also hoped there will be more active public debate on the future of Korea’s large science and technology projects to determine whether space rockets are absolutely necessary for the future of the nation. Editor’s Note: Korea’s first-ever space rocket, the Korea Space Launch Vehicle-1 (KSLV-1), popularly known as Naro, was launched at 4 p.m., January 30, and put a science satellite in orbit. It was the third launch attempt at the Naro Space Center in southwestern Korea.

[ Dong-a Ilbo, December 4, 2012 ]

www.koreafocus.or.kr


Nation Needs Better ICT Governance to Meet Urgent Needs

Kim Seong-cheol Professor, School of Media and Communication Korea University

Amid the anticipation and concern about the incoming administration of Park Geun-hye, expectations are high for the reform of ICT (information and communication technology) governance. At a preelection roundtable meeting hosted by the ICT Union on October 30, candidate Park promised to consider establishing an ICT ministry to lead a creativity-based economy. However, there is opposition to even discussing reform of ICT governance on the grounds that it involves conflicting positions and is an attempt to revert to the past. At its inception, the Lee Myung-bak administration proclaimed “a small, practical government.” In the downsizing that ensued, the Ministry of Information and Communication was abolished and its responsibilities were distributed between the Ministry of Knowledge Economy, the Ministry of Culture, Sports and Tourism, the Ministry of Public Administration and Security and the new Korea Communications Commission (KCC).

In keeping with the global convergence trend of broadcasting and telecommunication, the Lee administration created the KCC by merging parts of the Information and Communication Ministry and the Korea Broadcasting Commission. The KCC’s tasks resemble those of the U.S. Federal Communications Commission but the nation’s dispersed governance of ICT has undermined KCC’s role as a central authority. Thus, policy response to smart media has been ineffective.


The shortcoming is weakening the international competitiveness of Korea’s ICT ecosystem, which performs a crucial role in Korean economy. Global ICT ecosystems have emerged along with smartphones, with accelerating competition between ecosystems. But the scattered governance structure has resulted in a lack of C-P-N-D (content-platform-network-device) integration to respond to the changing environment. Moreover, the nurturing of future-oriented creative industries has been delayed.

Korea stands out in global competitiveness in ICT infrastructure and hardware manufacturing, but its presence is insignificant in large-scale, high value-added content and software markets. Considering the restrained potential growth of ICT infrastructure and hardware, the nation’s economic structure should shift its focus to creative industries in order to secure future growth engines. This is hard to attain with the current ICT governance system.

Meanwhile, the government has poorly coped with negative effects of information society, such as Internet addiction, illegal duplication, dissemination of false information and misuse of personal data, over the past five years. Besides, due to excessive intervention of political factors as well as its own operational system, the decision-making process at the KCC was often disrupted so severely as to undermine policy enforcement even in matters that did not require legislative approval. As a result, political intervention in broadcasting intensified, dampening its development.

What the Korean public, including the one million ICT workers, want from the incoming Park Geunhye government is not conventional administrative services but job creation, heightened ICT competitiveness, elimination of negative effects of information society and provision of good content through an ICT ministry. For the past five years Koreans have had trouble searching for an institution to meet their most urgent needs. I hope the incoming administration will resolve this dire problem for the people.

[ Seoul Shinmun, December 26, 2012 ]

www.koreafocus.or.kr


Presidential Election and Housing Market Polarization

Park Hae-cheon BK21 Research Professor Hongik University

A real estate information service agency estimated the total market value of apartments in the country at some 1,931 trillion won as of the end of November 2012, up about 363 trillion won from the end of 2007 when the 17th presidential election was conducted. Although this shows that the nation’s housing market has expanded over the past five years, the media is expressing worries about a real estate recession and the campaign offices of the presidential candidates are racking their brains to draw up policies for “house poor� people. What are the reasons for this ambivalent situation? The agency cites two major reasons.

First, there has been an increase in the number of new apartment homes. Some 1.16 million apartments were built over the past five years, while the apartment prices have dropped 0.29 percent during the same period. Second, the apartment market has been polarized. Apartment prices in Seoul and Gyeonggi Province fell 6.7 percent and 11.43 percent, respectively, but those in provincial regions rose sharply. The apartment prices in five municipalities have risen a whopping 40.1 percent on average, with those in Busan jumping up to 56.9 percent.

What draws our attention is the polarization of housing market between the Seoul metropolitan area and provincial regions. The apartment price increases in provincial regions are obviously attributable to the launch of the new administrative city of Sejong; construction of innovative cities; the good


performances of exporting companies in provinces owing to a weak won; the trickle-down effects of the government’s restoration project on four major rivers; Pyeongchang’s successful bid to host the 2018 Winter Olympics; and the Expo 2012 Yeosu.

Given these circumstances, it may be assumed that many middle-class people in provincial regions are experiencing a real estate bubble in this election year like the one Seoul residents saw during 2002-2007. To people in provincial regions, the ominous buzzword “house poor” should merely be a fuzzy word from distant future or hearsay from the capital city.

Based on these assumptions, there is a high possibility of the middle class in provincial regions having totally different feelings toward the Lee Myung-bak administration than that in the capital area. Let’s examine the results of two elections that coincided with the peak of the Seoul area housing price bubble. In the 2007 presidential election, conservative candidates Lee Myung-bak and Lee Hoi-chang garnered support from over 60 percent of voters in the Seoul area. Such a trend continued to prevail in the general elections of the following year, with the ruling party winning in 81 out of the 111 constituencies in the capital region.

These election results showed a considerable number of middle-class voters in the Seoul metropolitan area cast their ballots in consideration of their interests related to the property market, as many experts pointed out. Some even said the elections were “votes for apartments,” while others defined the voting pattern as “politics of desire.” In this context, one may predict that the “politics of desire” will again be practiced today at polling stations in provincial regions.

After the April 2012 general election, many analysts said the election proved the incompetence of the opposition, which hardly did anything more than ask the voters to “pass judgment on the governing power.” However, isn’t it possible that the election brought to light the “politics of desire” gaining currency in provincial areas? Isn’t it possible that the middle class in provincial regions, relishing benefits from soaring property prices, cast their ballots for their apartments, while the capital area was overflowing with painful outcries of the middle class suffering from falling housing prices and polarization? In fact, opposition candidates performed poorly in nearly all areas except Seoul and Jeolla provinces, and progressive candidates suffered crushing defeats in the traditional labor strongholds of Ulsan and Changwon.

It may be a little belated to predict that the housing market polarization will be a major variable in today’s presidential poll. Nonetheless, I hope that before going to the polls today, voters will check


some basic statistical figures related with apartments. The total household debt amounts to 1,000 trillion won, and the rental home market, which is tantamount to the total worth of home mortgages, has surpassed 600 trillion won, while the total market value of apartments that are collateral for these debts is estimated at 1,931 trillion won.

According to data of the National Tax Service of Korea, the average per capita income of those in the top 10 percent bracket is 68.95 million won and the average per capita income of the overall population is 34.6 million won. Eight years from now, children born in 2002, when the nation’s birthrate hit the bottom, will enter college. It is high time for the nation to practice thrift and frugality, not the politics of desire, to prepare for the imminent era of low growth.

[ Kyunghyang Shinmun, December 19, 2012 ]

www.koreafocus.or.kr


No More Political Distortion of Saemaul Movement

Noh Jae-hyun Editorial Writer The JoongAng Ilbo

I returned to my hotel room exhausted from languishing all day under the glare of the equatorial sun. When I turned on the TV, I found news had just started. It was 9 p.m., local time in Uganda, on November 21. Ugandan President Yoweri Museveni, 68, who has ruled his country for 27 years, was on TV. He said, “We should learn from the Chinese. They are united. They do what their government tells them to do. They never waste time engaging in useless arguments as we do here.”

A groundbreaking ceremony was held that day in Uganda to build a four-lane highway over 51 km between the capital city of Kampala and Entebbe Airport. The Export-Import Bank of China provided a loan of US$350 million for the construction at an annual interest rate of 2 percent with a 40-year grace period. The Chinese ambassador in Uganda attended the ceremony. I could feel China’s eagerness to help Africa for long-term advantage over the continent’s plentiful resources. In the news, the Ugandan president went on to praise China, saying, “Unlike other aid donors, China isn’t attaching any strings to loans··· In China, if caught stealing, you will be shot to death by security officers. If we do the same, the number of thieves will fall significantly.” Museveni spoke unequivocally. No wonder considering that he made himself a virtual permanent ruler of his country by removing the constitutional ban on the sitting president running for a third term in 2005.


The total amount of China’s official development assistance (ODA) to Africa is 180 times as much as Korea’s. Korea can’t match China in terms of monetary assistance. I keenly realized this while touring Africa as a member of an evaluation team for the overseas Saemaul (New Community) Movement. But I saw a gleam of hope in Kiboha and Busanja villages in western Uganda. Korea’s competitive edge was not in the amount of money but its “experience.” The residents in these villages knew, though a little awkwardly, how to sing “Let’s Live Well,” the signature Saemaul campaign song that was sung in Korea back in the 1970s. Thanks to village leaders who have received training in Korea, the traditional-style toilet at each house has a cover now, and village roads and neighborhoods have been neatly repaired.

Uganda is not the only country where the Korean rural development campaign has been successfully introduced. The movement is currently under way in a total of 19 villages in 10 Asian and African countries. The United Nations has already designated the movement as one of the programs to fight poverty in Africa. Now, I couldn’t help asking, “So what?” Korea is the only country which has transformed itself from an aid recipient to a donor nation. Foreign aid? Of course, it’s nice to help other countries. It sounds great especially at a time when many Western countries are backing down from their hitherto largescale aid programs amid economic crisis. The problem is that the Saemaul Movement has not been fully systematized and theorized, nor freed from political arguments, at home.

As a journalist, I still vividly remember watching Chun Kyung-hwan, then chairman of the National Federation of the Saemaul Movement Headquarters and younger brother of then President Chun Doohwan, fall into disgrace with corruption charges. In March 1988, for several days before “Little Chun” was arrested, I staked out his house in Palpan-dong, not far from the presidential mansion. At the time, I wrote a story about female Saemaul leaders visiting the younger Chun’s house to console him. They were all fair-skinned and wearing heavy makeup, far from having “dark tanned faces and rough hands.”

Since 1988, the headquarters has been carrying out a second-phase movement under a new law. But many people still remember the movement’s checkered past. Under the Roh Moo-hyun administration, the presidential office went so far as to ban the use of the name “Saemaul Movement.” Therefore, a Saemaul expert dispatched to Cambodia to educate local residents hurriedly made a new name in the Khmer language. Despite his earlier resentment, President Roh wrote on his website in


March 2008 after retirement: “It’s true its name keeps bringing back negative memories, but the movement seems to be an effective way to revive the rural environment. I think I will have to call for reintroducing the movement.”

Lim Hyung-baek, an ODA expert and professor of community science at Sungkyul University, once commented on the significance of the movement in a thesis titled “Tasks for the Globalization of the Saemaul Movement and Application of ODA.” He wrote critically, “An evaluation of Park Chunghee overlaps that of the Saemaul Movement. Therefore, evaluations of Park and the movement could be significantly influenced by political inclinations of individual researchers.”

This question comes into sharper focus in the ongoing presidential race between Park Geun-hye, daughter of Park Chung-hee, and Moon Jae-in, former chief of staff for Roh Moo-hyun. Indeed, Saemaul officials are worried about the future of the movement no matter who will win the election. They fear that if Park wins the movement may go on a rampage and if Moon wins it may suffer a severe blow.

The Saemaul Movement, a homegrown rural development campaign, is a rare case in the world. Ironically, the movement successfully realized the ideals of the dependency theory. Let us now stop painting the Saemaul Movement, our proud legacy, with political colors. Whoever wins the presidential election should free the Saemaul Movement from political controversies surrounding Park Chung-hee.

[ December 8, 2012 ]

www.koreafocus.or.kr


- Museum Showcases Contemporary Korean History Forged in Blood, Sweat and Tears - Turkey Taken with ‘Gangnam Style’ - Exciting Christmas Carols Played with Native Korean Instruments - Two Visionaries Jointly Create Fascinating Museum - What Park Chan-ho Has Left for Me


Museum Showcases Contemporary Korean History Forged in Blood, Sweat and Tears

Editorial The JoongAng Ilbo

The National Museum of Korean Contemporary History opened yesterday in the heart of downtown Seoul. Previous memorials have only dealt with single historical events such as independence, the Korean War and the May 18 democratic uprising in Gwangju, or key figures such as former presidents Park Chung-hee, Kim Young-sam and Kim Dae-jung. The new museum is significant in that it showcases Korean history since the independence movement of the early 20th century. It contains exhibits of nation building and security as well as industrialization and democratization, providing a comprehensive and balanced view.

Among the exhibits of particular importance are calligraphy by An Jung-geun [1879-1910; patriotic martyr who assassinated Ito Hirobumi, then resident-general of Korea, in 1909], the Declaration of Independence issued on March 1, 1919, the draft Constitution written by the first National Assembly of the Republic of Korea, journals on the April 19 Student Revolution, major documents on the fiveyear economic development projects of the President Park Chung-hee government, diaries and passports of miners dispatched to Germany in the 1960s, and Pony, the first Korean-made car to be exported. The halls dedicated to young labor activist Jeon Tae-il and pro-democracy struggles offer visitors an opportunity to experience the dynamism of contemporary Korean history. Hence the museum may well be dubbed the “Memorial to Blood, Sweat and Tears.�


The latest presidential election was characterized by unprecedented controversy over history. The progressive/leftist camp criticized Park Chung-hee’s dictatorial rule. The conservative/rightist camp emphasized Park’s economic development and attacked the confusion created under the Kim Daejung and Roh Moo-hyun administrations. Although Park Geun-hye won, it was not by a landslide. The voters were divided into 51.6 percent vs. 48 percent, reflecting the intense tension prevailing in society’s view of history.

Regardless of its outcome, however, the presidential election has taught the nation a lesson: history is an inheritance of irreversible legacies. Park Geun-hye paid respects to the late presidents Kim Daejung and Roh Moo-hyun, who led opposition parties. However, her election opponent, Moon Jae-in did not visit the graves of Syngman Rhee (Yi Seung-man) and Park Chung-hee, for which he had to face accusations throughout his presidential campaign that he failed to understand the bigger picture of historical inheritance and national integration. This shows that Korean people have broadened their views of history. In his congratulatory address at the museum’s opening ceremony, President Lee Myung-bak said, “We need to learn from old and create new.” Rightly said. Korea’s contemporary history is unique in the world in that it is a history of unprecedented success and development. I hope that the presidential election and the opening of the contemporary history museum marks a turning point from which Koreans have a more positive perception of their contemporary history.

[ December 27, 2012 ]

www.koreafocus.or.kr


Turkey Taken with ‘Gangnam Style’

Choe Jeong-dong Staff Reporter The JoongAng Sunday

Toward the end of November, when I visited Istanbul, Turkey, the old capital of the Byzantium and Ottoman empires was neither too cold nor too warm and the sky was blue. The entrance to Hagia Sophia was packed. The Islamic crescent moon was beaming on top of the Roman-style main dome. I wanted to see the inside of the cathedral. I have seen the pictures a thousand times, but you need to see the real thing in order to appreciate the beauty of such a huge building. The Byzantine Emperor Justinian was said to have shouted, “Solomon, I have surpassed you!” upon entering the cathedral when it was completed in 537.

What was so special about the architecture that the emperor was so deeply moved? Inside the cathedral there was hardly room to move because of the crowd. As my eyes slowly adjusted to the vast and dim space, noise began to fill the air. I could make out the words “Gangnam Style,” “Psy” and “Korea.” Dozens of Turkish elementary school pupils surrounded my company, took pictures, offered handshakes and did the horse dance. I was taken aback by the sudden greeting, but I quickly recovered to sum up the situation. To them, we were people who came from the country of “Gangnam Style.” That reason alone made us celebrities and camera flashes went off.

My next destination was Pamukkale lying in the middle of Turkey. The city contains hot springs and travertine, white terraces of carbonate minerals left by the flowing water. Tourists usually soak their


feet in the hot springs and relieve the fatigue from their long journey. However, I hurried to Hierapolis in the background, which was one of the cities dating back to the Roman Empire. I did not want to miss the sunset. Earthquakes and wars have flattened the once prosperous city, and only a hilltop amphitheater is left to relate the past.

After photographing the sun-soaked theater, I walked downhill and there again I was greeted this time by a pack of middle school students. They were also shouting “Gangnam Style” and “Psy.” How did they even know I was Korean? (Later I heard that Turks can tell Koreans by the way they dress and by how women perm their hair.) They offered to shake hands with me and asked me questions in awkward English. I couldn’t answer all the questions so I yelled, “Can you dance Gangnam style?” As soon as the question escaped my mouth, they all placed one hand over the other in Psy fashion and began to dance. Even when their teacher called them loudly, it took a while for them to let me go.

I toured around Turkey and came back to Istanbul one more time. I did not know that the city was home to the world’s most splendid palace. The golden, crystal-bedecked Dolmabahce Palace resembled the Versailles. Shortly after it was built the Ottoman Empire was dissolved. Outside the palace was the Bosphorus Strait.

The waves connecting the Black Sea and the Mediterranean Sea were pretty strong and the white foams wet the palace grounds. I took my seat in a café facing the strait and ordered the seasonal pomegranate juice. The waitress lingered on after serving me the glass of juice. Wearing a shy smile on her face, she pointed at my camera. She wanted to take a picture with us, the people from Korea where Psy is from. It isn’t just because the song is great that the Turks go mad over “Gangnam Style.” To them, Koreans are blood brothers. During the Korean War, Turkey sent 15,000 soldiers to fight of whom more than 3,000 were killed or wounded. They sent the third-largest forces following the Americans and the British. The youths of the newly born Turkish republic saved the Korean and U.N. armies from the clutches of the Chinese at the Battle of Gunu-ri. For a long time, the veteran soldiers and their families have been watching us from afar with mixed feelings of concern and awe. Indeed, our two nations share a very special friendship.

There were many things to see and eat in Turkey, but I liked the people best. They are warm-hearted, honest people. It felt good to have them welcome me as brothers. The Turks were disappointed at one time because they felt the friendship was only one way. We have to be sincere and genuine wherever


we meet them to do away with the misunderstanding. We don’t have to speak Turkish. We can get by for a while with “Gangnam Style.”

[ Vol. 301, December 16, 2012 ]

www.koreafocus.or.kr


Exciting Christmas Carols Played with Native Korean Instruments

Kim Dong-eon Professor of Art Management Graduate School of Art and Fusion Design Kyung Hee University

There are only a few days left in 2012. I feel that another year has flown by quickly, just as I do around this time every year. Still, this year the atmosphere is somewhat different. Something seems different with the familiar bustling mood in the streets and stores hardly found. Maybe this is not simply because of sluggish economy. It feels as if our daily routine and culture are changing at a fast pace.

The performing arts market is also undergoing various changes. The number of theaters is increasing, people’s preferences have become more varied, and there are a plenty of performances with content and format that could not be easily found in the past. While Handel’s “Messiah,” Beethoven’s “Choral” Symphony and Tchaikovsky’s ballet “The Nutcracker” and large-scale musicals have been the perennial year-end favorites so far, several new wrinkles are detected in this year’s program.

In particular, changes under way in the traditional Korean music world are noteworthy. It is not difficult these days to find various types of traditional Korean music performances, such as Christmas carols played with native Korean instruments, popular puppet dramas based on traditional Korean music, concerts of classical and film music, joint performances of traditional Korean music and jazz, and local musical adaptations of famous Western classics. All of this is highly welcomed. The joy of


choosing one’s favorites is immense.

Christmas carols heard from shops and cafes at this time of the year have notably changed. They are surely the same old tunes but played in different tones. The sounds are so appealing, tugging at one’s heartstrings intimately. Listening carefully, you will realize right away that they are Christmas carols played with Korean traditional instruments. In the early 1990s, the traditional chamber ensemble named “Seulgidoong” released its first album of fusion music performed with modified traditional Korean instruments and classical Western instruments. The album included some carols, which created a refreshing sensation in the music community. Thereafter, various groups and individual musicians have continued to introduce Christmas carols as part of their efforts to popularize traditional Korean music or harmonize Korean and Western music. Christmas carols rendered in native Korean music style have taken root as important cultural content over the past 20 years or so.

In the meantime, not only Christmas carols but local new compositions as well as Western music have been actively played with native Korean instruments, broadening the horizon of Korean contemporary music. This has been possible thanks to the modification of traditional Korean musical instruments to meet requirements of modern music, which nonetheless remains a controversial subject. Traditional Korean musical instruments are not suitable for playing Western music due to differences in mode and scale. They cover relatively narrower ranges of notes and have smaller sound volumes. Hence their modernization is considered necessary for native Korean music to gain wider appeal.

Many important Western musical instruments, including piano, have undergone a long evolution. Piano is an abbreviation of pianoforte. The name was derived from its ability to freely express soft (piano) and loud (forte) tones. Harpsichord and clavichord, the two keyboard instruments preceding the piano, could be used only for indoor performances because their sounds were too soft. European artisans and musicians struggled to make the keyboard produce more powerful or softer sounds. The development of the modern piano required several hundreds of years, and it was not until the latter part of the 19th century that piano was equipped with its present form and functions. Nobody knows how it will evolve in the future.

Music is an art form embodying the sensitivity of each era. But the time also demands music change ceaselessly. It is hoped that as time goes by our traditional music will change and develop to meet the requirements of the times so it will be loved by people in different eras. I look forward to the day


when K-carols played with Korean musical instruments will occupy an important place in the world music market, as the K-pop has created a sensation in the global pop music market this year. This is why I advocate infinite transformations of our native musical instruments.

[ Segye Times, December 22, 2012 ]

www.koreafocus.or.kr


Two Visionaries Jointly Create Fascinating Museum

Jeong Jin-hong Editorial Writer The JoongAng Ilbo

This past Saturday, two men embraced each other, overwhelmed with emotion, in a plaza outside the Charmsori Gramophone and Edition Science Museum near the Gyeongpo Lake in Gangneung, Gangwon Province. One was actor Ahn Sung-ki, a leading Korean actor whose 55 years in filmdom has earned him the nickname “National Actor,” and the other was Son Sung-mok, president of the museum, who has devoted himself to the museum’s collection for 55 years.

Devoting oneself to something for 55 years is tantamount to lifetime dedication to a single objective. And the meeting of two men who have led similar lives in that sense has given birth to another museum, named the “Ahn Sung-Ki Cinema Museum,” an outcome of Son’s enthusiasm in collecting hardware equipment of cinema and Ahn’s passion for software. Their exchange has continued for three decades, resulting in a museum epitomizing a convergence of their extraordinary lives.

Ahn made his film debut at the age of five in 1957. The greatest virtue he has shown throughout his long acting career, which may not have been always smooth, is “consistency.” I think that consistency is perhaps the biggest underlying strength that made him a “national actor.” He never brags, but rather shows shyness quite often. But he couldn’t be tougher when it comes to acting. Seldom going off the beaten track, he may seem too commonplace as an actor, but in screen he is definitely outstanding, or even heroically determined. Between the big wrinkles which become even deeper when he smiles I


see his relentless determination and consistent professionalism as an actor.

For toughness and professionalism, Son comes next to none. In January 1951, when the South Korean and U.N. forces retreated in the face of China’s massive offensives, his family fled south from their hometown Wonsan in North Korea; Son, at nine, carried on his back a Columbia G241 portable gramophone that he had received from his father as a present three years earlier. His family settled in Gangneung after the ceasefire. In his youth he worked in the Middle East as an employee of a construction company. After returning home he made a fortune from apartment construction and leasing businesses. He spent most of the money he earned on collecting gramophones, incandescent light bulbs, movie cameras and projectors. He was “crazy” enough to bid for a gramophone in an international telephone auction in January 2000, when his business went bankrupt and all his valuable household items were put up for auction. However, one has to be a maniac to get what he wants. He has combed through South America, Europe and Japan, not to mention the United States, in search of inventions by Thomas Edison, particularly the gramophones, incandescent light bulbs, and movie cameras and projectors. If he was alive, Edison himself would surely be envious of his peerless collection.

The gramophone is a device for recording and reproducing sounds, which would otherwise never be heard again. An incandescent light bulb produces light and heat through a conductive wire filament. Also, movie cameras and projectors capture images that would disappear in the twinkling of an eye and reproduce them in continuous imagery at 16 or 24 frames per second. Likewise, a fruit of threedecade friendship and exchange between two extraordinary men, the magical cinema museum will interweave and revive things that were destined to disappear and be forgotten.

A museum is not a warehouse for the past. It is a precious space where the future is hidden to be discovered by children with their innocent eyes and ears. Therefore, the cinema museum that is being created by Son and Ahn will not merely exhibit old-fashioned projectors and cameras and worn-out movie props. It will contain the dreams of a boy who made his film debut at age five and another who was mesmerized by the sounds from a gramophone he received from his father, not to mention their legendary tenacity and perseverance.

[ December 1, 2012 ]

www.koreafocus.or.kr


What Park Chan-ho Has Left for Me

Kim Min-hee Staff Reporter The Seoul Shinmun

Winter started early this year. On the last day of November, arid wind blew on Seoul Square in front of the city hall. Heading for a news conference where Park Chan-ho was to announce his retirement, my heart felt like a cold winter’s day. While memories about Park throwing balls with all his might as an LA Dodger rookie and the gleeful faces of young Korean boys mesmerized by their baseball star still remain vivid, he is retiring at the age of 40.

Looking back at the past 18 years that have flown like an arrow, so many emotions crossed my mind. Then, how would Park feel? Far from being eloquent by nature, he even seemed to find it difficult to get the words out on that particular day. Who could help doing so?

For the past 19 seasons he has endured the warlike situations in the world of professional baseball, including stints as a major leaguer. How could he fluidly describe all the sighs, regrets, frustrations and the moments of joy that he has experienced over these years? Among various remarks he made on the day, one specific statement tugged at my heartstrings. Asked what he wanted to say to himself, Park replied, “I want to tell myself, ‘You’ve been great.’ This is not because I have achieved anything remarkable but because I have managed to pull through [all these years]. I want to say ‘good job’ to myself.” Hearing him say this, I could feel the incredible depth of his mind as a man who has reached the top in his profession.


When people start doing something, they naturally set their eyes on success. It is human nature to want to do things well. But reality is different from dramas and a rookie cannot always succeed. A rookie experiences frustrations, takes wrong turns and loses his way. He must weather this process repeatedly to reach a certain level. This may be called the “law of qualitative change toward mastery.� It means ability is the result of a certain amount of accumulated pain.

Park Chan-ho did not boast of his glamorous title as the first Korean to play in Major League baseball. Instead, he took pride in himself having bounced back after suffering adversities like being traded and expelled and overcoming hard times in a minor league. He was aware that a legend is created only at the end of extreme hardship. Dearly bearing in mind the trivial but poignant truth that Park has taught me, I am going to pull through next year. Brilliance will adorn the sufferings polished by time.

[ December 8, 2012 ]

www.koreafocus.or.kr


- Ten Suggestions for the New Government’s Economic Policy toward North Korea - North Korea-China Relations in the Era of Kim Jong-un and Xi Jinping - Korea’s Export Trend since the Global Financial Crisis


Ten Suggestions for the New Government’s Economic Policy toward North Korea Kim Byung-yeon Professor, Department of Economics Seoul National University

One of the most important tasks of the government that will be chosen in the December 19 election will be drafting an economic policy toward North Korea. On the campaign trail, Park Geun-hye of the ruling Saenuri Party has stressed a policy based on trust while Moon Jae-in of the main opposition Democratic United Party has emphasized peace. The candidates’ campaign pamphlets elaborate on their policies in considerable detail. But their stances remain abstract and idealistic, far from being any kind of concrete action plan.

In the absence of sufficient knowledge about North Korea or enough policy experience, it is inevitable for any administration to undergo trial and error in mapping out an efficient approach toward North Korea. Therefore, the incoming government should carefully examine the policies of previous administrations, i.e., engagement advocated by the Kim Dae-jung and Roh Moo-hyun administrations, dubbed the “Sunshine Policy,” and the Lee Myung-bak administration’s “Denuclearization, Openness and Vision 3000,” which aimed at helping the North become a nuclearfree nation, open up its doors, and achieve US$3,000 in per capita income. In addition, research in the North Korean economy has been compiled. Based on the lessons learned from previous policies and the research results, the following suggestions may be made: First, the incoming administration’s economic policy toward the North should be realistic. There is no denying that earlier economic policies vis-a-vis the North were considerably influenced by the personal conviction or ideology of the sitting presidents. But officials in the new administration should formulate realistic and feasible policies based on cool-headed judgment of the North’s actions rather than its words. Sometimes they may need to predict the North’s strategies and changes to present practicable, strategic and effective policies. They also will need to persuade the people that North Korean issues cannot be resolved overnight. This is because the higher the expectations of people, the greater the temptation to introduce unrealistic policies. Second, the new administration should not base its policies on “good faith” or “wishful thinking.” While private citizens or nongovernmental organizations may be guided by good intentions in dealing with the North, the government should squarely face the reality that relations between the two Koreas


are equivalent to relations between two sovereign states, so any wishful thinking that the North would properly reciprocate favors will very likely heighten the probability of policy failure, or the cost of failure. We want the North to show its “good faith” by becoming a normal state through nuclear disarmament and introduction of market economy and open-door policies. But the North remains wary of these changes. Therefore, if Pyongyang disappoints the South Koreans again by failing to behave in good faith, the government should cancel or curtail its aid and cooperative projects.

Third, an engagement policy is essential in South-North relations. We have learned a very clear lesson from the Lee Myung-bak administration’s attempts to tame the North without engaging it. China’s presence, in particular, has exposed the limits of the South’s policy to tame the North. It remains uncertain how much the South can gain through an engagement policy but it seems certain that the South can achieve nothing without engaging the North. Hence it has become self-evident through experience that engagement is indispensable for resolving North Korean issues. This should be the unwavering framework of the North Korea policy of any future administration in the South.

Fourth, economic cooperation should be the first step in the effort to resolve the North Korean problem. The Sunshine Policy failed to guide North Korea into reform and opening up, but succeeded in bringing it into a dialogue through economic cooperation and assistance. The possibility for change and widened contact with the outside world can occur in the North only through dialogue. Efforts for dialogue, economic cooperation and assistance will eventually help pry open the door. When that happens, we would be able to gain much more than we have paid. No doubt the North should abandon its “military-first” policy in favor of an “economy-first” policy, but the South should also put the economy ahead of everything else in its North Korea policy.

Fifth, humanitarian aid should be given unconditionally, with the private sector allowed in principle to pursue inter-Korean economic cooperation on its own. The government should give up trying to unilaterally induce change in the North and achieving unification. It is necessary to breathe a whiff of market economy into the North Korean society to help it change. The private sector is better suited to do this than the government. The North might shrink back further if the South Korean government intervenes, but would relax its guard and respond more positively if the private sector steps in. The government should now drop the idea of trying to keep everything related to the North under its control. Otherwise, we could end up having the North close its window of opportunity for change once and for all.

Sixth, small projects should be prioritized in government-led economic cooperation with the North.


The incoming administration may be tempted to promise to launch large-scale projects to trigger changes in the North. And it may feel inclined to justify the projects by giving them grandiose names. Given the market system is yet to be introduced to the North Korean economy, however, large-scale cooperation projects may further distort the country’s economy, rather than helping it grow. The North’s stagnant growth is more attributable to the lack of a system that spurs efforts to develop technologies and builds factories than the absence of technology or capital. Also, the society has little understanding of how the market economy functions.

Simply put, the current predicament facing the North is of its own making. The North Korean economy could improve temporarily with technology and money from the outside, but eventually deteriorate again. In other words, external assistance alone cannot ensure sustainable economic growth in the North, without structural reform of the economy. Due to its systemic malfunctioning, the best therapy for the North Korean economy would be to conduct a number of small projects that have significant ripple effects on the livelihoods of people.

Seventh, large-scale economic cooperation projects with the North will need some strings attached. As explained above, unconditional assistance will prove to be a waste. If the North does not change despite huge economic cooperation and assistance, public opinion in the South will be unsupportive, forcing another policy change. Such unprincipled zigzagging will incur policy costs and divide public opinion. As a precondition for cooperation and assistance, the South may propose changes in the North’s major economic systems and policies and its denuclearization. The South will need to set goals for each stage of changes and policies as well as denuclearization and calibrate cooperation and assistance accordingly. In order to draw the North’s attention, the South should make bold approaches, but with caveats and contingencies, breaking away from its conventional frames of cooperation and assistance.

Eighth, government-initiated projects for inter-Korean cooperation and assistance need to be prioritized in consideration of cost-effectiveness, acceptability of financial burden and the probability of success. Priority should be given to projects ensuring higher cost-effectiveness, including political as well as economic effects. Among factors to be considered when measuring such effects are the potential economic benefits for both the North and the South, the chances for improvement of relations between the two sides, and social and economic transformation in the North. Priority should also be given to projects that will likely impose a small burden on the South’s economy.


Especially, there is high probability the South Korean economy will face difficulty during the first half of the next administration. Therefore, the acceptability of financial burden should be an important factor in project prioritization. The probability of success is also important. If the first project fails, overall inter-Korean cooperation will lose momentum.

Ninth, the government should listen to economic experts well versed in general economics as well as the North Korean economy in the process of drawing up its economic policies toward the North. The previous administrations tended to reflect the opinions of non-experts without sufficient knowledge in economics or North Korean economy in their economic policies toward the North. General policy outlines were drafted by non-experts, such as scholars of international politics or North Korean politics, based on academic theories supporting the personal convictions of the presidents or presidential candidates. Then North Korean economy experts or economic theorists were asked to work out the details. Therefore, there was little room for economists to contribute to formulating major economic policies toward the North, resulting in the creation of ineffective policies.

Now is the time for the South to change the process of writing its economic policy toward the North. The president may decide the strategic direction but leave the content of policy to be drawn by experts, especially economists specializing in related areas. Then, North Korean economy experts and other concerned specialists should put their heads together to formulate detailed policy programs.

Tenth, economic policies toward the North should be depoliticized. South Korean politics is severely influenced by ideological confrontation between conservatives and progressives. If this political structure holds sway over the South’s economic policies vis-a-vis the North, affecting their direction and content whenever a new administration takes office, policy consistency will disappear and the possibility of failure will increase, eventually to make the people take the brunt. Since the Kim Daejung administration (1998-2003), dubbed the “Government of the People,” decision making concerning North Korea and unification policies has been swayed most significantly by the vagaries of domestic politics.

In order to prevent similar problems from recurring in the years ahead, the government should seek systemic ways to separate its decision making on economic policy toward the North from domestic politics. One possible solution would be setting up a “committee on economic unification,” comparable to the Monetary Policy Committee of the Bank of Korea, with its members given a relatively long term in office and authority over major economic policy decisions regarding North Korea. The unification minister could concurrently head the committee, which may consist of


members recommended by the ruling and opposition parties, economic organizations and civil society groups, as well as other experts.

The campaign promises of the two leading presidential candidates, Park Geun-hye and Moon Jae-in, concerning their North Korea and unification policies hardly seem well-rounded when they are evaluated from the standpoints of the above 10 suggestions. However, both candidates have clearly manifested their intentions to improve relations with the North, which have been frozen during the Lee Myung-bak administration. But good intentions alone cannot guarantee success in economic policy toward North Korea.

What have we learned from the Sunshine Policy? What have we learned from research in the North Korean economy? And what have we learned from the attitude of the North Korean regime over the years and what from the lessons thus learned are reflected in the election pledges of the presidential candidates? Also, what have we learned from the previous research done on the systemic transition, integration and growth of other socialist economies?

Our nation is known to have outstanding learning ability. It is hoped that our politicians and policymakers will put this on display when they smooth out and solidify their policies in the days ahead.

[ KDI Review of the North Korean Economy, December 2012, published by the Korea Development Institute ]

www.koreafocus.or.kr


North Korea-China Relations in the Era of Kim Jong-un and Xi Jinping Lee Sang-sook Visiting Professor Institute of Foreign Affairs and National Security

I. Introduction The fourth-generation Chinese leadership headed by Hu Jintao departed at the seventh plenary session of the Communist Party’s 17th Central Committee on November 1, 2012. Two weeks later, a new seven-member Politburo Standing Committee led by Xi Jinping and Li Keqiang was introduced at the first plenary session of the 18th Central Committee. The leadership change in Beijing creates important variables in Korea’s security environment. As 2013 begins, it is important to look into future relations between the new leaders of China and Kim Jong-un of North Korea, who succeeded his father, Kim Jong-il, in late 2011. North Korea and China have strengthened bilateral cooperation since 2008, particularly with the designation of special economic zones after 2010 to accommodate China’s increased economic activities in the North.

The death of Kim Jong-il did not affect relations between the two neighbors but the failed launching of the Kwangmyongsong-3 satellite on a rocket in April 2012 in defiance of international warnings put Pyongyang-Beijing ties into a delicate situation. Jang Song-thaek, vice chairman of the National Defense Commission and the second most powerful man in the North Korean hierarchy, made an official visit to Beijing in August 2012, drawing attention to China’s future policy toward North Korea, which will directly affect Pyongyang’s behavior toward South Korea and therefore overall developments on the Korean peninsula. Since Kim Jong-un’s installment as North Korea’s uncontested supreme leader, there has been speculation about whether he would continue foreign policies that revolve around support from China. Xi Jinping visited Pyongyang in 2008 but he did not meet Kim Jong-un officially at that time. After Kim Jong-il’s death, Hu Jintao invited Kim Jong-un to visit Beijing and the potential summit became a matter of interest. Li Keqiang, then a standing member of the State Council, visited North Korea in October 2011 and had an official meeting with Kim Jong-un, who was then the heirdesignate to his father.


This study attempts to look ahead to future relations between China and North Korea under the leaderships of Xi Jinping and Kim Jong-un. It starts with a review of the Sino-North Korean relations during the time of Hu Jintao and Kim Jong-il.

II. Sino-North Korean Relations under Hu Jintao and Kim Jong-il 1. Change in Bilateral Relations since 2008

In 2008, China took significant steps to promote amicable ties with Pyongyang and ensure the successful staging of the Beijing Olympics. China provided funding for the Olympic torch relay through North Korea while Pyongyang reciprocated with large-scale memorial events for the 110th birth anniversary of Premier Zhou Enlai. Beijing also felt compelled to ease the North’s deepening food shortage. China restricted rice exports in early 2008 when domestic rice prices increased due to low production and worldwide price hikes. However, at Pyongyang’s request, China increased its shipment of maize by more than 10 times to North Korea. In June 2008, Xi Jinping toured North Korea, Mongolia, Qatar and Yemen. Xi had visited North Korea in July 2005 when he was serving as the party secretary of Zhejiang Province. During the 2008 visit, Xi, then in line to be the next leader of China, met with Kim Jong-il to discuss bilateral cooperation between their countries. After Pyongyang’s first nuclear test in October 2006, China joined in the U.N. resolution condemning the North’s action and reduced its economic cooperation with the North. But Beijing eventually separated economic cooperation from its misgivings about the North’s nuclear development. China did not rebuke the North’s second nuclear test in May 2009 and more frequent exchanges of visits by North Korean and Chinese leaders ensued along with an increase in economic cooperation.

The asymmetric strategic relations between China and North Korea were strengthened after Kim Jong-il presumably suffered a stroke in August 2008. With South Korea consolidating its ties with the United States, China’s concerns grew about the stability of North Korea. As Brantly Womack noted (“China and Vietnam: The Politics of Asymmetry,” Cambridge University Press, 2006), a strong state has to bear a considerable cost to support a weak state in asymmetric relations, but it will also have to pay a greater cost for the weak state’s extinction or transition, and for the establishment of new relations with a replacement state.


China’s biggest fear about North Korea is regime instability and collapse in Pyongyang and the disruptive effects it could have on border areas. Thus, China expanded economic aid to North Korea because it believed that the stronger South Korea-U.S. ties and frozen inter-Korean relations since 2008 deepened North Korea’s isolation and economic adversity. The growing discontent of the North Korean people following the botched currency reform in November 2009 intensified China’s concern over stability in the North and Beijing decided to back its neighbor’s hereditary succession process.

In asymmetric relations between strong and weak states, the strong side has no great economic stake in the weak side while the weak side concentrates on getting economic gain from the strong side. Still, some local governments in the strong state can be involved in economic cooperation with the weak state, though in limited scale. When a local government seeks to expand such cooperative programs and the central government recognizes the benefits, bilateral economic relations between the two sides can be increased. Such is the case of projects under way between North Korea and the northeastern region of China. Trade with North Korea may be insignificant to China’s overall economy but its importance in the economic development of Jilin, Heilongjiang and Liaoning provinces was great enough to draw the interest of the central government.

2. Strengthened Economic Cooperation China announced the “Chang-Ji-Tu Development and Opening-up Pilot Zone” program in November 2009 to start stepped-up economic cooperation with North Korea. Chang-Ji-Tu is an abbreviation of Changchun, Jilin and the Tumen River in northeast China. Kim Jong-il visited China in May 2010 and agreed with Hu Jintao and other leaders on beefing up general communication, strategic dialogue, trade and economic cooperation, private-level cooperation, and consultations on international and regional peace.

The proposal to improve communication and strategic dialogue came from the Chinese side in reaction to the North’s sinking of the South Korean naval patrol craft Cheonan two months earlier. Hu wanted to keep North Korea from committing further provocative acts against the South, which would threaten to destabilize the North and heighten tension on the Korean peninsula.

Kim visited northeast China in August that year and held talks with Hu to solidify mutual economic cooperation as represented by the pilot zones. The two leaders set up the four principles of “government initiatives, leading roles by enterprises, market operations and mutual benefits.” On


November 20, 2010, China’s Department of Commerce and North Korea’s Joint Venture and Investment Committee agreed on yet another special zone project involving Wihwado and Hwanggumpyong islands in the western border area and the Rason district in the east.

Kim Jong-il visited China again in May 2011 on what was widely believed to be a trip to obtain Beijing’s consent on his succession plan and also secure further assurance of economic assistance. Despite his failing health, Kim toured from Beijing to Mudanjiang and Changchun as well as Yangzhou and Nanjing to inspect farming and information-communication industrial facilities, demonstrating his strong desire for economic cooperation with China. Accompanying him were Workers’ Party secretaries Choe Thae-bok, Kim Ki-nam, Tae Jong-su, Pak To-chun, Mun Kyong-dok and Kim Yong-il, Vice Premier Kang Sok-chu, and Jang Song- thaek, vice chairman of the National Defense Commission, who all held important positions outside the military. Jang had the highest authority over the special economic zone projects. China’s North Korea policy under Hu Jintao was centered on ensuring stability of the North Korean system based on the traditional Sino-North Korean relations, in consideration of the regional security environment and the internal conditions of the North.

III. Sino-North Korean Relations after Kim Jong-il’s Death 1. China’s Reaction to Kim Jong-il’s Death

Beijing acted calmly and prudently upon the death of Kim Jong-il in accordance with procedures it had prepared long beforehand. When Pyongyang announced Kim’s death on December 19, 2011, China’s top governing institutions ― the Central Committee of the Communist Party, the Standing Committee of the National People’s Congress, the Central Military Commission of the Communist Party, and the State Council ― sent a joint cable of condolences to Pyongyang to express their support for a stable succession of power to Kim Jong-un. Hu Jintao visited the North Korean Embassy in Beijing to express his condolences on December 20, and other Chinese leaders, including Premier Wen Jiabao, visited the embassy on December 21. With the North Korean border areas placed under emergency guard, the Foreign Ministry made diplomatic contacts with South Korea, the United States, Japan and Russia to ask them to refrain from offending the North, in efforts to ensure its internal stability.

China respected the groundwork for cooperation laid by Kim Jong-il and supported his successor and


son, Kim Jong-un. The younger Kim was first introduced to a high-ranking Chinese official at a meeting between Kim Jong-il and Zhou Yongkang, a visiting member of the Politburo Standing Committee, in Pyongyang. In February 2011, during his courtesy call in Pyongyang, Meng Jianzhu, then Chinese minister of public security, was quoted as saying to Kim Jong-un, “The succession of the Choson (North Korean) Revolution has been brilliantly accomplished with the appointment of Comrade Kim Jong-un as vice chairman of the Central Committee of the Workers’ Party.” The statement indicated China’s recognition of Kim Jong-un as heir to his father.

In June 2011, Li Yuanchao, a Politburo member and director of the Organization Department, met both Kim Jong-il and Kim Jong-un when he visited Pyongyang for strategic talks. Wang Jiarui, head of the International Liaison Department of the Communist Party, had previously represented China in the talks. Li’s visit suggested the heightened importance of the bilateral strategic dialogue. 2. North Korea’s Rocket Launch and Jang Song-thaek’s Visit to China Kim Jong-un was installed as the first secretary of the Workers’ Party during its fourth conference held in April 2012. Thereafter, Kim Yong-il, director of the party’s International Liaison Department, visited Beijing to meet Chinese leaders, including President Hu Jintao, Director Li Yuanchao of the Organization Department, State Councilor Dai Bingguo, and Wang Jiarui. At this time, Dai expressed support for bolstering Kim Jong-un’s leadership, saying, “The Workers’ Party, government and people of the DPRK [Democratic People’s Republic of Korea] will successfully accomplish sustainable prosperity under the leadership of the first secretary of the party.”

However, when North Korea launched the Kwangmyongsong-3 rocket, inviting international condemnation for testing a long-range missile in disguise, China conveyed its concerns to the North. While Beijing fully endorsed the new leadership in Pyongyang, there has since been disharmony between the two countries over security issues. Kim Jong-un’s promotion in July 2012 to the rank of marshal of the DPRK served as an opening for China to smooth out relations with the North. Ri Myong-su, minister of people’s security, visited China on July 24-28 to meet his Chinese counterpart Meng Jianzhu and Zhou Yongkang, reopening high-level bilateral contacts. The next month, Kim Jong-un received a courtesy call by Wang Jiarui in what marked his first official meeting with a visiting foreign diplomatic mission since he became North Korea’s supreme leader. Wang at that time reportedly consulted with North Korean officials on Jang Song-thaek’s visit to China the following month.


Jang’s tour of China’s industrial centers in Jiangsu, Zhejiang and three northeastern provinces indicated that his visit was primarily aimed at accelerating economic cooperation with China, including the planned development of the special economic zones, in addition to confirming the end of the brief discomfort caused by Kwangmyongsong-3.

Jang called on President Hu, Premier Wen, State Councilor Wang, Minister of Commerce Chen Deming, Jilin Province Secretary Sun Zhengcai, and Zhang Ping, chairman of the National Development and Reform Commission. Accompanying Jang were Kim Yong-il and Kim Song-nam, director and deputy director respectively of the International Liaison Department of the Workers’ Party, and Ri Kwang-gun, chairman of the Joint Venture and Investment Committee. They attended talks on bilateral economic cooperation policies. In particular, the North Korean and Chinese officials held the third meeting of the “Joint Development and Management Commission for the DPRK-China Rason Economic and Trade Zone and the Hwanggumpyong and Wihwado Special Economic Zones.” Jang and Chen signed agreements on economic and technological cooperation and on investment in the ports and industrial districts of the Rason Economic and Trade Zone. They also agreed on China’s supply of power to the Rason area and exchanged a memorandum of understanding between the people’s committee of North Korea’s North Pyongan Province and China’s Liaoning Province government on launching the Hwanggumpyong Economic Zone Management Committee. The fourth meeting is scheduled to be held in Pyongyang during the first half of 2013. Jang reportedly discussed Beijing’s new investment in the North and the itinerary and agenda of Kim Jong-un’s visit to China. He failed to secure China’s commitment for new investment but Kim Jongun received assurances that China may offer some assistance during his visit. Chinese media reports on the meeting between Jang and Chen focused on the resumption of bilateral economic cooperation. The North Korean media closely followed Jang’s trip from the beginning, which could be a reflection of Kim Jong-un style of leadership, obviously seeking greater affinity between the ruling elite and the people through public disclosure of official activities.

In his conversation with Jang, Premier Wen expressed his wishes that North Korea would remove obstacles to economic cooperation between the two countries. According to the Chinese media, Wen requested the North 1) strengthen the government’s leadership in joint development and planning, and improve laws and regulations; 2) encourage active participation by concerned regions to set up


cooperative relations; 3) improve land management and taxation; 4) ease difficulties faced by companies in making investment; and 5) increase efficiency in customs clearance and quality control. Wen reportedly said that Chinese entrepreneurs would be reluctant to invest in North Korea if it did not act on his suggestions. Future progress of bilateral economic cooperation will largely depend on how Pyongyang will respond to Wen’s advice. North Korea established a new foreign investment promotion agency operating under Jang’s command, which has replaced the Taepung Group. Jang is now the highest official responsible for the joint development of special economic zones, and therefore he will control all future economic cooperation programs with China. This means Jang will be the central figure in Pyongyang’s diplomacy with Beijing. 3. North Korea’s China Policy under Kim Jong-un Kim Jong-un’s ascension was completed in a short time, allowing the young leader only brief experience in handling state affairs under his father’s guidance. Foreign affairs are being handled by the old guard who had served under Kim Jong-il with few changes in diplomatic personnel since his death. In charge of external affairs now are Party Secretary Kim Ki-nam; Choe Thae-bok, president of the Supreme People’s Assembly; Yang Hyong-sop, vice chairman of the SPA Standing Committee; Deputy Premier Kang Sok-chu; and Foreign Minister Pak Ui-chun. In the process of producing the “Leap Day” agreement with the United States on February 29, 2012, Vice Chairman Yang and Deputy Premier Kang played the leading role.

This contrasts with the major reshuffle in the military, including the dismissal of Ri Yong-ho as the Army chief of the general staff and the emergence of Vice Premier Ro Du-chol following Kim Jongun’s rise to power. Since the sacking of Ri in July 2012, China has been holding back envoys to North Korea, seemingly in order to give the North the time to streamline its internal power structure. North Korea’s China policy continues to focus on consolidating the cooperation framework built by Kim Jong-il since 2008. Economic cooperation is centered on the joint development of special economic zones in border areas while maintaining strategic dialogues on political and security affairs and cooperation on regional issues. The fact that Jang Song-thaek was the first North Korean senior official to make a visit to China since Kim Jong-un’s inauguration reveals how much emphasis Pyongyang puts on its economic cooperation with China, particularly on the joint SEZ development. There is little doubt that China will also be the first country Kim Jong-un will visit in order to


accelerate economic cooperation. North Korea’s dependence on China has continued to grow significantly since 2008, while its leaders have traditionally felt uneasy about excessive reliance on the giant neighbor. Therefore, the North may seek to widen its external cooperation to include the United States, Japan and South Korea when Kim Jong-un has stabilized his rule and economic cooperation with China has reached a sustainable level. In this context, Kim Jong-il visited Russia in August 2011 to discuss economic cooperation. At the outset of the Kim Jong-un rule in February 2012, North Korea and the United States resumed talks in Beijing and produced the “Leap Day” agreement. Later in the year, on November 15, North Korea and Japan reopened their talks on diplomatic normalization.

IV. Sino-North Korean Relations under Xi Jinping and Kim Jong-un 1. Prospects for Foreign Policy of China’s Fifth-Generation Leadership

The 18th National Congress of the Communist Party of China was held for seven days until November 14 and the 18th CPC Central Committee opened its first plenary session on the following day. In this meeting, 25 members of the Political Bureau and seven members of the Standing Committee were elected. The seven Standing Committee members are Xi Jinping, Li Keqiang, Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli. The number of Standing Committee members was reduced to seven from nine and Hu Jintao relinquished his position as chairman of the Central Military Commission, boosting Xi’s leadership and allowing him to make decisions more effectively and quickly. When Xi assumes the presidency of China in March 2013, he will become the nation’s supreme leader both in title and power.

Whereas the Hu Jintao presidency had started at a time when China was rising as a major world power, Xi takes the reins in an era when China is already a member of G2 along with the United States. Because of its elevated international status, China’s foreign policies are gaining more importance as the world community expects it to take on an expanded global role. Beijing should first establish extensive relations with the United States and then play responsible roles in addressing regional problems. China’s foreign policy statements made in the 18th party congress emphasized “a new type of major power relationship” indicating competitive and cooperative relations with the United States. Beijing will primarily respond to Washington’s policy of rebalancing Asia in the framework of cooperation.


But some conflicts will be unavoidable in dealing with the Americans on regional issues. As China regards territorial matters as its core interest, Beijing has to effectively handle territorial disputes with neighboring states, including the Senkaku/Diaoyu Islands issue, and will frequently face competition with increasingly nationalistic Japan. Reports to the party congress spotlighted military buildup commensurate with China’s international position, which will lead to the increase of naval and air power amid growing concerns among neighbors. In particular, attention is drawn to the appointment of Xu Qiliang as vice chairman of the Central Military Commission and Zhang Wenqian as vice defense minister. Xu has called for balanced development of the navy and air force, and Zhang advocates the formation of “space forces.” The reports to the congress also stressed taking a resolute stance on national sovereignty and security interests, causing fears of conflict with neighboring states over territorial waters and air space.

2. Prospects for the Korean Peninsula Policy under Xi Jinping It is often said that China’s policy on the Korean peninsula can be summarized by “five no’s.” They are “no instability, no collapse, no nukes, no refugees (defectors), and no conflict escalation.” This basic position will not change in the Xi Jinping era although the priority order may alter depending on situations. China has given first priority to maintaining stability and preventing the collapse of North Korea since Kim Jong-il’s health rapidly deteriorated in 2008.

Toward South Korea, China will basically seek to maintain the strategic partnership forged over the past decade and try to reinforce the existing ties in order to keep Seoul on its side in its contentious relations with Tokyo. China needs stronger cooperation with South Korea to check U.S. and Japanese influence in the region and maintain friendly relations with other countries. But it will oppose moves to strengthen the military alliance between South Korea and the United States such as joint naval exercises in the West (Yellow) Sea and agreement on extending South Korea’s maximum missile range.

Chinese leaders highly assess the strategic importance of North Korea and believe that an emergency in the North will seriously harm China’s national interests because of massive border crossing by refugees and other adverse consequences. There will be voices, such as Zhang Dejiang, one of the seven members of the Politburo Standing Committee, strongly calling for economic reform and openness of North Korea. Zhang, who studied at Kim Il-sung University in Pyongyang, is a North Korea expert and has accompanied Kim Jong-il on his visits to China. He has taken a hard-line stance


on the problem of North Korean refugees in China and has demanded their immediate repatriation. Politburo members Li Yuanchao and Meng Jianzhu, who have recently visited the North, are expected to be involved in formulating China’s policies on North Korea. The reports to the party congress, while stressing China’s role as a responsible superpower, clarified its opposition to military intervention in the internal affairs of other countries. Therefore, China will oppose any attempt to resolve the North Korean nuclear question by the force of arms. Still, Beijing will seek to play a positive role on the North Korean problem because it will test China’s ability to address regional issues. Domestic opinions also will pressure Beijing to successfully tackle the nuclear question. The military, business, local governments and diverse other players are increasing their influence on foreign policy decisions in China with the Internet effectively conveying public opinions.

While China has recently supported North Korea in the event of possible instability despite strategic setbacks to its relations with the United States and South Korea, Beijing has not spared strong warnings to Pyongyang on overreaching. The same attitude will be shown during the early years of the Xi Jinping leadership when stabilizing domestic politics will be crucial. The North Korean problem could be pushed aside by the pressing social and economic issues at home, such as boosting domestic demand and removing sector imbalances. For the next two to three years, China will continue to support the new North Korean regime to ensure its stability. When Xi’s leadership for internal governance has been consolidated and Kim Jong-un in the North too has stabilized his rule, there can be moves in China to review its policies on the North. Xi and his colleagues will then take a step forward from their stability-first policy to push the North toward reform and openness, while accelerating their efforts to settle the nuclear issue. Five of the seven Standing Committee members, excluding Xi and Li Keqiang, will retire at the customary age limit in 2017, and this will probably offer an opportunity for an overhaul of China’s North Korea policy.

3. Short-term Problems in Sino-North Korean Relations in the Xi-Kim Era

Attention is drawn to when the top leaders of China and North Korea will meet for the first time. In October 2010, Chinese President Hu Jintao invited Kim Jong-il and other North Korean leaders newly elected in the third party conference. Later in February 2011, Meng Jianzhu delivered an invitation to Kim Jong-un when he visited Pyongyang. Another invitation was made after the fourth party conference in April 2012. The timing of Kim’s visit will be decided after the North launches its second


Kwangmyongsong-3 rocket, probably after Xi’s presidential inauguration in March 2013. The biggest Sino-North Korean issue is the constant regional tension created by the North’s nuclear program. Pyongyang is now expected to delay its third nuclear test until after a summit between Xi and Kim in an attempt to gain more Chinese commitment to economic cooperation. A pre-summit nuclear test would strain relations between the two countries for some time and possibly halt various economic cooperation programs.

China has asked the North to refrain from increasing tension on the Korean peninsula as a precondition for its economic aid. On the other hand, Pyongyang has used brinkmanship strategies to arouse international concerns and thus raise its bargaining chip in negotiations on the nuclear issue. When China demands deference from North Korea, the regime will choose autonomy putting the bilateral relations on a collision point. Economic cooperation in the Xi era will follow the pattern of the Kim Jong-il and Hu Jintao period. But China will require reforms in the North to improve its investment environment, as Premier Wen Jiabao advised Jang Song-thaek when he visited Beijing in August 2012. Beijing will watch Pyongyang’s efforts to prepare better investment conditions for the Hwanggumpyong and Wihwado special economic zones to gauge the North’s will toward reform and openness. Chinese economists and entrepreneurs in the three northeastern provinces are making frequent contacts with North Korean authorities to discuss how to apply market mechanism for their economic cooperation projects. The Chinese are reported to be providing the North Koreans with information on market operations.

4. Long-term Prospects for Sino-North Korean Relations in the Xi-Kim Era

The Sino-North Korean relations will maintain the status quo in the short run, but the North Korean nuclear question will cause long-term troubles between the two neighbors. Unlike in the days of Hu Jintao, China under Xi Jinping is expected to involve itself more aggressively in the nuclear issue at the risk of entering into security conflict with the North obsessed with nuclear armament. China will broaden cooperation with the United States, South Korea and other regional players to pressure the North into abandoning its nuclear ambition. North Korea, on the other hand, has already declared itself a nuclear power and will therefore demand “disarmament” negotiations when the six-party talks reopen sometime in the future. China will not accept this North Korean position, making conflict inevitable.


Bilateral relations between North Korea and China surrounding the North Korean nuclear issue will expand into a triangular contention that includes the United States and progress in the nuclear question will be affected by changes in relations between the United States and China and their respective North Korea policies. In the second-term Obama administration, U.S.-China ties will be influenced by U.S. policies on North Korea, which will not undergo serious changes, however. Washington will rather be influenced by the approaches of the new South Korean government toward the North.

If China intensifies pressures on the North in cooperation with the United States, it is possible that North Korea, as an abandoned player, will choose “crisis diplomacy” toward China. Lowell Dittmer observed that in a strategic triangle involving a stable marriage of two countries, the third pariah state tends to take an aggressive attitude to challenge the other parties and thus avoid disadvantage. (“The Strategic Triangle: An Elementary Game ― Theoretical Analysis,” World Politics, Vol. 33, No. 4, July 1981) During the second North Korean nuclear crisis, Pyongyang conducted nuclear tests and launched missiles repeatedly, disrupting the six-party talks as the United States and China cooperated in the multilateral denuclearization process.

If Beijing and Washington clash, neither of them will be able to apply effective pressures on North Korea. Pyongyang will attempt to take advantage of the rift, while Beijing will try to increase cooperation with the North out of its strategic needs. In 2010 when Sino-U.S. relations were strained and inter-Korean relations were at their worst with the North’s sinking of the South’s patrol craft Cheonan and artillery shelling of Yeonpyeong Island, Sino-North Korean relations hardened and the crisis mode on the Korean peninsula deepened the conflict between Washington and Beijing. On the economic front, China will escalate efforts to expedite North Korea’s reform and openness when it sees enough stability in the North’s internal system. However, if Pyongyang resists the Chinese move and tries to reduce its influence, complaining of interference, their relations will become uncomfortable. North Korea’s approach toward the United States and Japan can be imagined as Pyongyang would not want excessive dependence on its giant neighbor.

V. Matters for Consideration by South Korea 1. China-North Korea Summit

The first summit talks between Kim Jong-un and Xi Jinping will provide momentum for future ties


between the two countries. Seoul needs to carefully observe the top-level exchanges between Pyongyang and Beijing, and draw up countermeasures for every initiative they will take in the years ahead.

2. Dialogue with China on North Korea

It is necessary to upgrade the strategic dialogue with Chinese authorities to discuss the North Korean problem, sharing information on the North and promoting cooperation to seek its transformation. Over the past years, China and South Korea have had different views on the survival of the North Korean regime, which prevented them from having meaningful strategic dialogues. The two sides need to narrow differences in their perception of North Korea and explore joint steps toward the longterm resolution of the North Korean question. Steady communication is necessary to avert critical situations evolving on the Korean peninsula from such developments as the North’s launch of longrange missiles.

3. Triangular Cooperation Programs

With the understanding that strengthened cooperation between China and North Korea does not harm inter-Korean economic cooperation, South Korea should seek to develop cooperation programs involving the two Koreas and China. By doing so, China and South Korea can increase their respective leverage on North Korea. Seoul also needs to increase cooperation with China’s three northeastern provinces, which are actively conducting exchanges with North Korea.

4. Long-term Diplomatic Approach to China and Unification Plan China’s rising influence has shifted the regional balance of power, which requires long-term diplomatic efforts to win cooperation of the new superpower for Korean unification. China needs to be convinced that unification under South Korean terms will contribute to its national interests so that Beijing will not prefer maintaining the status quo on the Korean peninsula. Seoul needs to develop as many incentives as possible for China to realize through the reunification of the two Koreas.

[ Analysis of Major International Issues, No. 2012-39, December 11, 2012, published by the Institute of Foreign Affairs and National Security, Korea National Diplomatic Academy ]

www.koreafocus.or.kr


Korea’s Export Trend since the Global Financial Crisis Rhee Tae-hwan and Shin Chang-mock Research Fellows Samsung Economic Research Institute

I. Global Financial Crisis and Korea’s Fluctuating Exports Korea’s exports have plunged, rebounded sharply and fallen again since the 2008 global financial crisis. Export growth dropped to minus 13.9 percent in 2009, soared to 28.3 percent in 2010 and then slowed to 19.0 percent in 2011 and minus 0.8 percent in 2012. In the five years immediately preceding the 2008 crisis, Korean exports recorded annual average growth of 18.0 percent.

The post-2008 trajectory has mirrored the global economic growth rate: minus 0.6 percent in 2009, 5.1 percent in 2010, and then 3.8 percent and 3.3 percent in 2011 and 2012, respectively. In 20032007, the global economy’s annual average growth rate was 4.8 percent.


To overcome the crisis, nations responded with fiscal stimulus, exchanging the financial upheaval for fiscal woes and pushing the global economy into a low-growth mode. Fundamental resolution of a fiscal crisis requires a very long time because it basically has to overcome a vicious circle of “growing debt -> attempts at fiscal tightening -> slowing growth -> growing debt.” Thus, Korean exports will unlikely see conditions improve quickly. The International Monetary Fund (IMF) expects the global economy to grow merely 3.6 percent in 2013, lower than 3.8 percent of 2011. In addition, the lackluster global economy has ignited a resurgence of trade protectionism with the little possibility of multilateral agreements curbing the trend. Since the start of 2012, various protectionist measures have included raising customs duties, expanding the ratio of purchasing domestic goods, suing for violations of intellectual property rights, and imposing antidumping tariffs and safeguards. Since the failure of the Doha Round of global trade talks at the end of 2011, the World Trade Organization has had difficulties pushing ahead with multilateral agreements. Without meaningful domestic consumption, exports remain Korea’s main growth engine. To prevent exports from becoming permanently trapped in low growth, it is necessary to analyze the characteristics of Korea’s exports since the global financial crisis and consider future courses of action. This report analyzes Korea’s major export destinations, the primary features of its export items and export dependency over the past five years, as well as Korea’s export competitiveness and future risk factors.

II. Characteristics of Korea’s Exports since the Financial Crisis 1. Export Concentration by Region and Item

1) Growing Dependency on Emerging Countries Over the past five years, Korea’s exports to industrialized countries have increased by an annual average of 0.5 percent, far behind the 5.5 percent annual average to emerging economies. Applying the IMF classification of countries, 57.7 percent of Korea’s exports went to emerging countries in 2012, compared to a pre-crisis 52.6 percent in 2007 (based on the running total from January to October). In particular, Korea’s exports to China and members of the Association of Southeast Asian Nations (ASEAN) grew rapidly, reaching 58.1 percent in 2010 and 2011. China accounted for 22.1 percent of Korea’s total exports in 2007 and then recorded a record high at 25.1 percent in 2010, but edged down


to 24.1 percent in 2012 (January to October).

2) Decreased Concentration on High-ranked Items Since the financial crisis, the proportion of Korea’s 10 major export items have declined slightly, representing some improvement in trade diversification. The proportion of top 10 export items, based on MTI’s three-unit classification of 144 items, slid from 61.3 percent in 2008 to 58.5 percent in 2012 (January to October). The proportion of top 5 export items also declined from 43.7 percent to 41.2 percent during the same period. The concentration of high-ranked items showed an overall increase up until the financial crisis but a decline thereafter.

The Herfindahl Index, which uses the top 50 items, also dropped 11 percent from 0.050 in 2009 to 0.044 in 2012, showing that Korea’s export items are becoming diversified. [The Herfindahl Index is calculated by adding the square of the proportion of each of the top 50 export items. Higher index figure means higher concentration or dependence on high-ranked items.]


The main reason for the reduced concentration of top export items was the lack of ship orders from debt-ridden Eurozone customers. Ships were Korea’s top export before the global financial crisis. The annual average growth rate of ship exports during 2010-2012 was minus 3.3 percent, far below the 14.7 percent growth of total exports. In 2012 (January to October) alone, shipbuilding exports decreased 27.8 percent from 2011. Consequently, the shipbuilding industry, which ranked first with 12.4 percent of total exports in 2009, fell to fourth with 7.7 percent in 2012. Korea’s list of top 10 export items remains the same, but there have been changes in their order within the list following transitions in the global market and economy since the financial crisis. The ratios among export items grew for oil products due to the rising prices of crude oil, and for automobiles and auto parts owing to their strengthening competitiveness and the adversity of Japanese rivals in the wake of their nation’s 2011 earthquake and tsunami. The price of Dubai oil, which tumbled to US$40.52 per barrel in December 2008, made a steady rise to post US$122.49 per barrel in March 2012. Automobiles and automobile parts, which accounted for 10.2 percent of total exports in 2009, grew to 13.0 percent in 2012 thanks to stronger competitiveness as well as the strong yen, which created pricing advantage over Japanese rivals. On the other hand, proportions dipped for ships and wireless communication devices, due to a direct blow from the Eurozone fiscal crisis and expanding offshore production, respectively.


Strong Exports of Food, Agriculture, Forestry and Fisheries Products ▷ Since the financial crisis, exports of food, agriculture, forestry and fisheries products have delivered unexpectedly good performances. - Exports of food, agriculture, forestry and fisheries products (based on classification by the Korea Agro-Fisheries Trade Corporation) posted a positive (+) growth rate between 2008 and 2012. In 2011, in particular, the growth rate was 30.8 percent. * In 2009, when the overall export growth was -13.9 percent, exports in this sector achieved 9.2 percent growth and in 2012 (January-October), their growth reached 4.6 percent over the previous year. * The average export growth during 2008-2012 was 16.4 percent for the food, agriculture, forestry and fisheries products, compared with 8.1 percent for total exports. - This was the combined effects of the efforts made by concerned authorities to increase exports [Minister of Food, Agriculture, Forestry and Fisheries Jang Tae-pyong said at his inaugural speech on August 6, 2008 that the ministry would increase the export volume of food, agriculture, forestry and fisheries products up to US$10 billion within the next five years.], the newly attained image of “safe food” in East Asia after the 2011 earthquake in Japan, and increased awareness of Korean culture amid the growing influence of the Korean Wave (hallyu).


* In 2011, exports in this sector amounted to US$7.69 billion, 1.4 percent of the nation’s total exports.

2. Export Dependency 1) Korean Economy’s Deepening Reliance on Exports In the wake of a sharp rebound of exports in 2010, Korea’s export dependency ratio (= customs cleared exports / nominal GDP) exceeded 50 percent for the first time in the fourth quarter of 2011. Before the global financial crisis, dependence on exports remained in the 30 percent range. It increased to the 40 percent range in 2008-2010 and continued to rise in 2011, reaching 51.2 percent in the fourth quarter. In the second quarter of 2012, export dependency was 50.6 percent.

Dependence on trade, with exports and imports combined, amounted to 101.6 percent in the fourth quarter of 2012, exceeding 100 percent for the first time. In the third quarter of 2012, dependence on exports edged down to 47.1 percent, down 5.7 percent from the corresponding period of the previous year. The nation’s exports recorded a single-digit growth rate in the fourth quarter of 2011, and further dipped to a negative figure in the second quarter of 2012. However, the economy’s dependence on exports remained high as domestic consumption also weakened. From the first quarter of 2010 until the third quarter of 2012, the year-on-year export growth of goods based on national (nominal) account topped the growth rate of domestic consumption (private consumption + gross fixed capital formation).


2) Weakening Role of Exports in Growth With high export dependency, the fast declining growth in exports in recent years has significantly weakened exports’ contribution to overall economic growth. When the Korean economy emerged from the 2008 financial crisis and rebounded in 2010, exports were the primary driver. In 2010, the contribution ratio of goods exports to growth reached 6.9 percentage points while the Korean economy grew 6.3 percent, meaning the contribution ratio of goods exports exceeded 100 percent. As the rapid recovery of exports led to large-scale capital investment, providing another economic boost, a virtuous circle was formed (contribution to growth by capital investment in 2010 was 2.3 percentage points). However, with the Korean economy’s export dependency ratio hovering around 50 percent, the rapid slowdown in export growth in recent years has dragged the entire economy into a low growth trough. As the contribution to growth by goods exports showed a poor performance of 2.0 percentage points -> 1.0 percentage point -> 1.5 percentage points in the first, second and third quarters of 2012, respectively, the country’s GDP growth (year-on-year) also fell from 2.8 percent to 2.3 percent and further to 1.5 percent during the same period. Given the snowballing household debt, youth unemployment and uncertainties in domestic and overseas markets, private consumption and investment will unlikely be meaningful growth catalysts anytime soon.


3. Export Competitiveness Seen through Market Shares 1) Relatively Good Performance of Korea’s Exports Despite the worsening trade conditions due to global economic crisis, Korea rose to the world’s seventh-largest exporter in 2010 from 12th in 2007, thanks to its accumulated competitiveness. With its share in the global export market boosted to 3.2 percent from 2.7 percent in 2008, the nation is continuing its outstanding performance as of the first half of 2012. Korea has also emerged as the world’s fifth-largest manufacturer following China, the United States, Germany and Japan. The Netherlands, which is the world’s fifth-largest exporter, is known to have 30-40 percent of its total export volume deriving from intermediary trade, with its exports of agrofisheries products accounting for 15.1 percent of total exports (January to August 2012). France, the sixth-largest exporter, also is witnessing its exports of agro-fisheries products account for 12.9 percent of total exports, with its export volume excluding agro-fisheries products totaling US$327.9 billion (January to August 2012), less than US$358.2 billion of Korea.


2) Weakening Competitiveness of Exports to China Korean exports’ share in the global market rose to 3.2 percent in 2011 and edged down to 3.1 percent in the first half of 2012. Weaker performance in China, which is the largest trading partner for Korea, was the main cause of the drop. Korean export’s market share in China, which stood at 9.7 percent during 2005-2008 before the financial crisis, tumbled to 8.5 percent in the first half of 2012.

Korean exports had negative effects from not only their weakening competitiveness in the Chinese market but also the growing competitiveness of Chinese exports in the global market. Chinese exports’ share in the global market rose from 8.5 percent during 2005-2008 to 10.7 percent in the first half of 2012. Yet, in major advanced economies, including the United States, EU and Japan, Korea’s exports have maintained or improved their competitiveness. In the U.S. market, Korean exports have improved their performance, with their market share reaching 2.9 percent in the first half of 2012. In EU, Korean exports are maintaining their 1.0 percent market share, the level before the financial crisis. Korean


exports in Japan have continued a generally upward trajectory, while their market share abruptly soared to 5.2 percent after the 2011 earthquake and tsunami in eastern Japan.

3) Korea’s Shrinking Market Share and China’s Changing Import Composition Analysis of China’s import composition and volume (January to October 2012) reveals that Korea has to strengthen the competitiveness of its major exports, except for mobile phones and semiconductors, in order to better adapt to China’s changing import composition. Korea’s exports of oil products, displays and automobiles to China have dropped due to their weakening competitiveness in Chinese markets. Korea’s exports of oil products fell 8.2 percent in January-October 2012 from the corresponding period in 2011, while China’s imports of oil products rose 16.0 percent year-on-year during the same period. China’s murky protectionism shown in raising its import duties on LCD panels for TV (As of April 1, 2012, China raised its import duties on LCD panels for TV of 32 inches or larger from 3 percent to 5 percent.) and using more of domestic brands for official vehicles have also contributed to the weakening competitiveness of Korean exports. As for Korea’s major intermediate and capital goods, including chemical products, steel and machinery, exports are increasing overall along with their improving competitiveness. But the exports of these goods to China are falling because of changes in its import composition. As China attempts to shift to consumption-led growth, the proportion of intermediate and capital goods in its total imports is shrinking. The share of intermediate goods dropped from 59.2 percent to 49.2 percent and that of capital goods from 19.8 percent to 16.1 percent between 2005 and 2011.


4. Effects of Freed Trade Agreements Korea’s free trade agreements with EU and the United States, which took effect on July 1, 2011 and March 15, 2012, respectively, helped blunt the effects of the global economic slowdown caused by fiscal crisis. The total GDP of all the countries with which Korea signed an FTA was a mere 8.9 percent of the global economy in 2010, but the proportion has jumped to 57.9 percent since 2011. Free trade deals have lowered tariffs, effectively expanding Korea’s domestic market. Among Korea’s exports to EU and the United States during January to September 2012, items that benefited from FTAs showed much higher increase rates than other items. Whereas Korea’s total exports to EU fell 12.6 percent from the corresponding period of 2011, its exports of automobile parts, oil products and synthetic resins, which are major items benefiting from lowered tariffs, grew 15.5 percent. Korea’s total exports to the United States increased 6.7 percent, but exports of automobile parts, machinery, rubber goods and plastic goods rose 18.4 percent.


III. Conclusion and Implications Despite the global economic crisis, Korean exports have performed relatively well by increasing exports to emerging economies, diversifying major export items, and introducing free trade. Amid the two-track recovery where emerging countries have consistently shown higher growth rates than industrial countries, Korea has made active efforts to increase exports to emerging countries. Particularly, the increases in exports to China, ASEAN and the Middle East have supported the Korean economy [On the back of high oil prices, which led to stronger purchasing power of Middle East countries, Korea’s exports to the region grew 17.1 percent year-on-year during January to September 2012]. Also, in exports to industrial countries, negative factors from the global economic slowdown were partially offset by the effects of the Korea-U.S. and Korea-EU FTAs. Since 2008, Korea’s export items have become more diversified, contributing to the stability of the nation’s overall exports. Among Korea’s top 10 export items, the proportions of ships and wireless communication devices have declined sharply but the overall exports avoided a sudden drop thanks to the strong performances by automobiles, automobile parts and oil products. Construction and mining machinery have also emerged as major export items. Korea’s share in these export markets rose from 0.9 percent in 2009 to 1.5 percent in 2012, with its ranking moving from 16th to 11th, respectively.

Accordingly, Korea ranked seventh in terms of exports and eighth in terms of trade in 2012, emerging as the world’s fifth-largest manufacturing powerhouse. Korea’s total trade volume also broke past US$1 trillion in 2011 and 2012.


As the protracted global economic crisis has become routine, however, the worldwide demand for Korean exports is expected to remain low. The role of advanced economies as the “market for the global economy” has reached a limit with their own economic recovery remaining uncertain due to the Eurozone debt crisis and concerns about the so-called U.S. fiscal cliff in which tax hikes and spending cuts go into effect automatically. As seen in the recent progress in discussions about a U.S.EU FTA, major industrial countries are trying to overcome their economic crisis with manufacturing and exports rather than domestic consumption.

China is attempting to focus more on consumption, shifting its growth paradigm from quantitative expansion to qualitative improvement, but it still remains hard to expect China to replace the demand of industrial countries in a short period of time. The ratio of nominal consumption to nominal GDP amounts to 60-70 percent for industrialized countries [71.2 percent for the United States, 64.3 percent for the United Kingdom, 60.4 percent for Japan, and 52.9 percent for Korea, based on 2011 data], but China has its ratio at a mere 34.3 percent. Besides, China has very low export dependency for consumption, with the imports of consumer goods accounting for 4.1 percent of its total imports, as of 2011.

China is also reshaping its growth strategy from an export-led model to a consumption-led one. Accordingly, Korea’s high export dependence on China may face problems. Since 2010, China has accounted for about 25 percent of Korean exports. Hence the Korean economy cannot but remain extremely sensitive to business fluctuations in China. In view of Korean exports’ heavy reliance on the Chinese market, China’s switch to growth policy focused on domestic demand is likely to cause additional drop in Korea’s exports. In 2011, intermediate goods for exports made up the largest proportion in Korea’s total exports to China at 54.3 percent, showing parallel movement of Korean and Chinese exports. China’s incoming fifthgeneration leadership is expected to focus on accelerating urbanization, strengthening social security and increasing household income toward achieving “reforms for consumption-led growth.”

Through continuous efforts to diversify its export destinations and items, Korea should maintain stable growth of exports braving the low growth trend. In terms of export destinations, it is desirable to increase exports to emerging markets while reducing dependence on China. Outside of China and Southeast Asia, where Korean exports are already rising rapidly, Korea also needs to expand its market share in Latin America, Eastern Europe and South Asia.


In terms of export items, while maintaining the competitiveness of its current anchor items, Korea needs to make more efforts at development and investment in next-generation products to lead its exports in the future. Mindful of the dwindling competitiveness of its oil products, displays and automobiles in the Chinese market, Korea should make efforts to cope with the advancing technology of China and other emerging economies. The competitiveness of general machinery, food, agriculture and fisheries products, which are rapidly growing in export volume, should be improved so they will be major next-generation export items. In response to expanding protectionism, Korea has to continue to pursue its “FTA hub” strategy, improve the utilization of existing FTAs, and actively participate in multilateral trade negotiations. Korea needs to encourage exports by better utilizing the Korea-ASEAN FTA and the Korea-India CEPA, which are relatively less used than the Korea-U.S. and Korea-EU FTAs. And more “aggressive services” including consulting and marketing support should be offered to small and medium-sized export companies, which have relatively poor access to information and human resources.

Based on its experience of chairing the G20 summit and other global events, Korea also needs to exercise leadership at international organizations such as WTO to push ahead with multilateral dialogues to stop spreading protectionism.

[ SERI Economic Focus, No. 404, December 18, 2012, published by the Samsung Economic Research Institute ]

www.koreafocus.or.kr


- ‘Children, bring twigs from trees for your medical bills.’ - Hangeul, Not a Substitute for Chinese Characters


‘Children, bring twigs from trees for your medical bills.’

Song Ho-jin Staff Reporter The Hankyoreh

AGANGRIAL, South Sudan ― Seven-year-old Mehroon, barefoot and alone, tightly gripped a tree twig taller than himself as he passed a sign saying no knives, spears, guns or bows were allowed inside, and entered a fenced compound that contained an infirmary. Although the country’s civil war, which had claimed more than 2.5 million lives, ended in 2005, bloody shootouts among tribes to loot livestock still occur everywhere. Some soldiers sell guns for cash worth a bit more than a head of cattle (1,750 Sudanese pounds, or about 520,000 won).

In December and January, daytime temperatures in the African heat often approach 40 degrees Celsius. After walking for more than an hour in the sizzling sun, Mehroon’s head seemed to be boiling hot, and he complained of a stomach ache that he said was probably due to drinking contaminated water. “Once there was a child who had to walk over 20 kilometers in the rain to come here after getting bitten by a snake,” said Father Pyo Chang-yeon, 35. “The boy was shivering hard from cold, so I wrapped him in a blanket, and held him warmly.” Young children here usually have to survive on only one meal a day. According to statistics released by the U.N. Food and Agriculture Organization in February last year, 4.7 million people, half the population in this North African country, are suffering from food shortages.


Blooming Hope in South Sudan Mehroon put his twig into a yellow box at the entrance of the infirmary, which accepts twigs as payment for medical care. If a test finds malaria symptoms, he will be given a prescription. “We don’t accept money, but we are encouraging children to bring any twigs they can find along their way here as a token of their appreciation,” said Father Lee Sang-hyeop, 33. This payment policy is intended to help the local children give up the habit of getting free assistance. The priests store the twigs to use as firewood later. Sometime later, an old lady with the nickname “Grandma Tang Ku You” dropped by to meet Father Pyo. Grandma Tang Ku You, who is now living alone after her son left for the city, brought a bag of charcoal made from burnt wood. As a form of appreciation, the priest handed her 10 pounds, enough money to buy corn flour, a small amount of sugar and 10 bars of laundry soap. She earned her nickname because she pronounces “tang ku you” for the English expression “thank you.” Father Pyo said that in the past most people here didn’t know how to express their gratitude. However, change has taken place in this remote rural community of the Republic of South Sudan, which seceded from Sudan in July 2011. Agangrial, some 420 km from the country’s capital city of Juba, is accessed by following a long, narrow trail through the woods. More widely known among Koreans is Tonj, a relatively large South Sudanese village where the late Father Lee Tae-seok dedicated his life to helping needy people.


Agangrial was an emergency haven created by fleeing South Sudanese people when Muslims from Northern Sudan and Christians of Southern Sudan fought. Some people live in mud houses built next to a rusty army truck, left by Northern Sudanese. But there are signs that residents are trying to wean themselves from relief goods and support themselves. The changes have been initiated by three young Korean priests, Pyo Chang-yeon, Jeong Ji-yong and Lee Sang-hyeop, all in their 30s and belonging to the Catholic Diocese of Suwon, who volunteered to serve in this remote region.

These priests are helping the villagers stand on their own feet by providing medical services and scholarships, and growing peanuts and sorghum with them. “We are trying to create an environment in which these people can live on their own by helping them kick their old habit of depending on others,” Father Pyo said. “We pray for peace every day because this is a dangerous place where many people still carry weapons around,” said Father Jeong. At the morning mass every day, they recite the Prayer of St. Francis, which goes: “Where there is hatred, let me sow love, where there is despair, the light of hope.”

The Joy of Working Disseminated in War-torn Land Peter, 29, who is blind, waited for Father Pyo while trying to hold onto a hen that was flapping its wings violently. He came to sell his hen to the priests, who promise a fair price (about 25 pounds, or 6,000-7,500 won) to anyone who brings their fowl. “(He) sometimes brings sick hens,” Father Pyo said, grinning. After the morning mass that had started at 7 o’clock, a group of children followed around Father Pyo. One of them borrowed a bike to go to a big market in Chueibet County, which takes three to four hours by foot. Some were assigned chores such as removing weeds around the church or cleaning a bamboo fence eaten by termites. “We are trying to provide these children with some work during vacation. If they work like this for about five days, they can make money (50 pounds, or 15,000 won) enough to pay one year’s tuition,” said Father Pyo.

The priests opened a grain mill to help save local women from grinding sorghum, their staple food. The mill produces three small cans worth of sorghum flour for one pound (300 won), which barely covers the fuel cost. Father Lee said, “There is another grain mill nearby. If we offer grinding service free of charge, it would affect their business.” The priests are trying to help locals without destroying their market order.


The priests are growing sorghum on land the size of a soccer stadium, and also peanuts, along with local residents. Thus, they provide 100 or 200 natives with collective farming experience as well as daily wages. The crops are distributed to the poorest residents, and part of the harvest is consumed at village festivals. At first, it was not easy to coax the villagers into working because they took outside assistance for granted, saying “you are here to help us.” But the priests steadily moved ahead step by step, inheriting the task begun by their predecessors. “We’ve come to realize that we must work hard to get rewards,” said another Peter, 33, who works at the priests’ house. Some local students have even volunteered to serve at a health clinic established by Korean priests. Father Pyo said, “Not every place in Africa needs emergency relief. This was once an area in need of relief for war refugees, but now it has entered into a rehabilitation phase. So we are helping them fend for themselves.”

The villagers, belonging to the Dinka tribe, refer to the Korean priests with an affectionate title, Abuna, a native word meaning “father” or “Catholic priest.” They are the youngest members of the Korean Catholic clergy dispatched to Africa. They succeeded the first group of Korean priests, including Father Han Man-sam, from the Suwon Diocese, who arrived here in 2008 at the request of the bishop of the Rumbek Diocese. Before arriving, they spent one and a half years studying English and African culture in Kenya. Father Pyo and Jeong have lived here for 19 months, and Father Lee for seven months. Father Jeong leads mass at a church in Chueibet five days a week, where the population is increasing.

The priests recently built a container clinic, where they no longer need to fight mosquitoes and insects that would gather around the wounds of patients in a tent clinic. Still, it remains a daunting challenge for them to treat children so badly beaten that their bones can be seen or young malaria patients who pass out with high fever. The priests only received month-long training in first aid in Korea. Hence they couldn’t feel more encouraged when they get assistance from medical volunteers. Father Lee said, “Young children here like it better when we apply liquid medication a few times rather than putting a pain relief patch on a sore spot. It means they crave affection.” With relief funds and goods supplied by the Suwon Diocese, the priests have provided one year’s tuition to 58 pupils and school uniform for 33 pupils and meat for meals at an elementary school near their church this year. They also made a fence around the school. Moreover, they have provided living expenses for 15 students in other regions over the past year, giving them a chance to learn at higher levels.


On the night of December 24 last year, hundreds of local residents filled the church, which is about twice the size of a classroom, to celebrate the Christmas Eve mass. The priests grabbed the deformed hands of a mother and her daughter, both Hansen’s disease patients, and stooped down to make eye contacts with 29-year-old Philip, who walked to church on his knees. The mass was preceded by an outdoor screening of the Hollywood biblical movie classic “Ben Hur” on the wall of the church. The villagers have watched over a hundred movies so far.

During the mass, looking at a jam-packed crowd of children sitting on the floor, Father Lee said, “These frail youngsters are our hope and a symbol of peace,” drawing applause from the congregation. It was a little regrettable that the priests had to give up their performance of “Silent Night, Holy Night” on the violin, which they had practiced. A simple celebration of singing and dancing inside the church turned into a hilarious festival in the yard, which continued well into the starry night. Thus the night was far from silent.

Despite the apparent peace since the civil conflicts ended, there were reports that about a month ago more than 10 people were killed in a gunfight over cattle between the tribes here and at Tonj. The region doesn’t even have electricity and the mud roads are bumpy so driving a vehicle isn’t easy. “My heart pounded with the thought of working in a remote region when my diocese was looking for volunteers to serve in South Sudan,” said Father Pyo. “But on the first day I arrived in Agangrial, walking along a narrow path in the woods, I suddenly felt at a loss and sighed.” Then he added, laughing, “But I feel at home now.” Father Jeong said he came here eager to spread the Catholic values of equality, justice and love. “At the same time I also wanted to rediscover what I had forgotten while leading a comfortable life in Korea,” he said.

Even in April, temperatures here hardly fall below 30 degrees Celsius during the night. The priests lived in complete darkness for two weeks after lightning destroyed the solar energy system at their house. During the rainy season they often had to spend the whole night in their car submerged in swamps created by torrential rains. Then, one day when he was left stranded in a swamp until dawn, Father Pyo experienced a touching moment. “I saw children running toward me from afar, emerging from four different paths and shouting they should save Abuna, just like rescue forces. There were about 30 or 40 children. They pulled my car out just in 10 minutes,” he said. The priests drive motorcycles for hours to visit villages with no church. “In one village, I found the


whole neighborhood was trembling in terror,” said Father Jeong. “They said one of the villagers had a dream in which everyone died within a week’s time. So I prayed for them to regain peace in their mind.” From time to time, when they get lost in vast grasslands, the priests themselves are gripped in fear of being eaten by wolves or hyenas. Still, they keep visiting remote areas for the joy of leading masses under a tree for villagers who have been waiting for them, and giving them treatment and medication.

They are now considering another project to benefit the local community: connecting Agangrial and nearby remote villages through a radio broadcast. It would require an FM broadcast transmitter and a power generator. With neither postal delivery nor mobile communication services available yet, the villagers would be able to share local news through radio broadcast, as well as study the Bible. Young children as well as adults could also listen to educational programs. “In so many places people still lack clean drinking water, health care and education,” the priests said. “But we are learning a lot from the local people who would gladly cook chicken for guests, though they find it difficult to support themselves, and try to enjoy their lives in singing and dancing.” Father Lee said, “We cannot solve all their problems but are just trying to play the role of a link. We want to help them find a vision for their life while living along with them like family members and friends and spreading the good news of Jesus Christ among them. Based on trust thus built, we can be a link between the local residents and medical and educational workers who would come to serve here.” Father Jeong said, “I must admit that at first I saw their skin color first, but now I can see the faces of individuals.” It means he has come to gaze at their inherent nature. “Sympathy is to give only what I want to give and feel satisfied. What’s more important is to feel in their position and respect therm.” Then he opened his hand and said, “They mean the number ‘zero’ with all five fingers spread out, and the number ‘five’ by closing a fist. Likewise, true love and sharing is to understand others and give them what they really want. I hope to help Africans to stand on their own.” Children here often mimic the priests saying the local word, “Mangku! Mangku!” meaning, “Clap and cheer!” Amid the children holding out their hands first and puppies happily wagging their tails to welcome a foreign reporter, I assumed the priests have installed an aura of optimism in the whole community.

[ January 2, 2013 ]

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Hangeul, Not a Substitute for Chinese Characters

Hwang Gyeong-sang Staff Reporter The Kyunghyang Shinmun

Pak Ji-won (1737-1805), a scholar of the Silhak (practical learning) school, wrote in “Jehol Diary” (Yeolha ilgi) that he admired the unity of spoken and written Chinese, yet criticized the translation of Chinese works into Korean. Another proponent of practical learning, Jeong Yak-yong (1762-1836) believed that use of a Korean script violated the spirit of Sino-centered academic learning. Their contemporary Pak Je-ga (1750-1815) even argued for abandoning the Korean language and adopting Chinese as the official language of Joseon.

Amid such thoughts of leading progressive scholars who ushered in the renaissance of the Joseon Dynasty, Hunmin Jeongeum (original name of Hangeul, literally “correct sounds for instruction of the people”) evidently remained non-mainstream throughout the era. So how did Hangeul survive and eventually become the script for the Korean language? This is the question raised by Kim Seulong, professor at Sejong University and author of “History of the Development of Hunmin Jeongeum in the Joseon Dynasty.” Kim asserts that while Hangeul’s scientific excellence is its strong point, the disregard with which it was treated also played a part. “If efforts had been made to have Hunmin Jeongeum replace literary Chinese, which was the mainstream, then the Korean script would have been suppressed and unable to survive. The ruling class of Joseon maintained their supremacy based on their knowledge of literary Chinese, and this


would have been threatened,” said Kim. “However, after the promulgation of Korean script, not a single petition was written to complain. This means the yangban [ruling elite] acknowledged the new script. Yi I [1536-1584, a famous Confucian scholar, also known by his pen name Yulgok] even wrote books in the vernacular script to teach his household slaves.”

It is commonly believed that the common people took the lead in safeguarding the vernacular script. Kim believed this too, before he studied 946 records from “The Annals of the Joseon Dynasty” (Joseon wangjo sillok) regarding the Korean script for his doctoral dissertation. “In fact, even lowborn people were not in a position to use the native script,” said Kim. “The most important people [in keeping the Korean script alive] were the women of the royal family and the ruling class. When women of the royal households wrote official documents to government officials, they used the Korean script, so the officials had to know it. And because noble women used the script, their husbands started to use it too. In later days, when practical manuals and popular novels were published, the commoners also played a part in the spread of the Korean script. In this way, Hangeul developed with the help of both the ruling and the ruled classes, each motivated by their respective interests.”

Professor Kim identifies six factors behind the spread and development of the native Korean alphabet, and divides the process, beginning with the script’s invention, into nine stages. It is particularly notable that the translation of Buddhist sutras in the early years, Confucian classics in the middle years, and Christian scriptures in the later years played a major role in disseminating the Korean script. While school textbooks say that Hangeul was the unofficial script of the state until it was adopted as the official written script in 1894 following a royal decree by King Gojong, Kim says this is incorrect. Hangeul may have been “non-mainstream” but it was still the official script, he claims. “The National Code” (Gyeongguk daejeon) defines Hunmin Jeongeum as the national written language, and in the reigns of Yeongjo (r. 1724-1776) and Jeongjo (r. 1776-1800) the king’s words and state announcements were sometimes written in Hangeul. “There also are many official contracts written in the Korean script. However, we need to think about the fact that long disregard for the native script meant there was no revolution in knowledge or communication,” said Kim.

As far as Kim is concerned, Hangeul still remains non-mainstream in Korea. Research on Hunmin Jeongeum as the archetype of the current Korean script is practically nonexistent, to the extent that Japanese research on the subject is highly acclaimed. “If Hunmin Jeongeum had been the Japanese


script, perhaps thousands of research papers would have been produced by now. No university in Korea offers a major course on Hunmin Jeongeum in its Korean language and literature department. Thanks to the special consideration of my current school, I am now giving lectures on King Sejong related studies and the globalization of Hangeul, but my dream is to lecture on Hunmin Jeongeum as a major course. One university advertised for a professor specializing in Hunmin Jeongeum but the interview was carried out in English,” Kim said.

Professor Kim, a research committee member of the Korean Language Society (Hangeul Hakhoe), brought up the need to verify the original of “Hunmin Jeongeum Haeryebon” (explanation that was written by King Sejong when the script was promulgated in 1446) in a recent article for the society’s journal, written to commemorate Hangeul Day’s designation as a national holiday. “Now preserved at the Kansong Art Museum, the text has rarely been shown to the public over the past seven decades since its discovery. Preservation is important of course, but preservation of something with unverified value is meaningless. The true value can be made clear if experts are given the opportunity to verify and study the document.”

Professor Kim has an extraordinary love of Hangeul, which even drove him to change his original Chinese character-based name to the purely Hangeul name “Seul-ong” after reading an article by the Korean language scholar Choe Hyeon-bae as a high school student. “We have yet to establish such basic things as the pronunciation rules of Hangeul, let alone its scientific and aesthetic aspects,” he said. “England has named King Sejong as one of the top 50 linguistic philosophers of all time. We need to study Sejong again as a scholar rather than a king.”

[ December 19, 2012 ]

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- 30 Years after ‘Revisionism,’ Korea at Cold War in the Post-Cold War Era - Why Korea Has Become a Country Addicted to Wild Crazes


30 Years after ‘Revisionism,’ Korea at Cold War in the Post-Cold War Era

Han Seung-dong Staff Reporter The Hankyoreh

“Understanding the Post-Cold War Korean History” Compiled by Park Ihn-hwi, Kang Won-taek, Kim Ho-gi and Chang Hun, Hangilsa Corp., 584 pages, 28,000 won In the early 1980s, the introduction of “revisionism” rattled Korean society. The shock first emanated from the publication of “Understanding Korean History Before and After Liberation” (Haebang Jeonhusa-eui insik) in 1980. Previously tabooed subjects were brought to light and analyzed for the first time. The book talked about the U.S. military occupation following Korea’s independence from Japanese colonial rule, activities by leftist forces, and social movements by farmers and workers. Questions were raised about how to hold the United States accountable for the division of the country and other aspects of history that remained unanswered.

Professor Park Tae-gyun of the Graduate School of International Studies at Seoul National University, in his article titled “The Origin of Korean Ideological Topography in the Global Age,” contained in this latest book, points out that the revisionist historical viewpoint advocated by Bruce Cummings three decades ago shocked Korean society and “Understanding Korean History Before and After Liberation” served as the epicenter. Before this hugely controversial six-volume series was published,


few could critically talk in public about President Syngman Rhee (Yi Seung-man) and his era, but it set that right and started a boom in humanities and social science books throughout the 1980s. In 2006, a group of “new rightist” scholars, arguing against left-leaning revisionist historians, provocatively named their book “Rethinking Korean History Before and After Liberation” (Haebang jeonhusa-eui jae-insik). This may have been a marketing ploy. Nevertheless, it demonstrated the lasting memory of the 1980 revisionist book. A generation later, “Understanding the Post-Cold War Korean History” (Tal-naengjeonsa-eui insik) has been released, and by reading its epilogue we discover that its starting point is the problems discussed in the earlier books. In the epilogue Professor Park Ihn-hwi of Ewha Womans University’s Graduate School of International Studies, notes: “About 30 years ago, our senior intellectuals wrote the book ‘Understanding Korean History Before and After Liberation,” through which they delved into the social scientific origins that defined the Korean society of their times. Those who gathered to write the present book wanted to at least deliver, in the context of 2012, the concerns and issues of the social scientists who wrote the earlier book.” Professor Park also wrote the article “Korean Security at Crossroads of New Dichotomy” for this book.

Sixteen politically neutral scholars with different expertise and world views spent over two years to jointly produce 16 pieces of writing. They are divided into four sections, namely, politics, foreign affairs and North Korea, economy, and society and historical perception. The possibility of another “sequel” with the title “Rethinking the Post-Cold War Korean History” being published sooner or later aside, the book studying “how and from where the social characteristics came about on which we rely for our frame of reference when we think and act,” points out that the “social scientific origin of our life” is the post-Cold War period that began with the collapse of the socialist system around 1990.

The end of the Cold War, which coincided with democratization and globalization, greatly changed Korean society. The current ideological divide between conservatives and progressives characterizing Korean politics and intellectual society began at this time. Foreign relations started to undergo structural change, and the policies toward North Korea also changed directions significantly. The economy became more external-oriented and opened up to remarkable extents.

It was also at this time that neo-liberalist policies were fully embraced, which in turn accelerated polarization and environmental destruction. Civil society grew considerably while post-nationalistic and postmodern historical perceptions and ideologies began to bloom, with the conservative and


progressive groups each undergoing self-division. In literature, postmodern imagination was unraveled along with subversive attempts to flee the postmodern crises. The writers of this book discuss these phenomena in different areas, and their implications and limitations.

Professor Kang Won-taek of the Department of Political Science and International Relations at Seoul National University contends that the coalition of the three conservative parties in 1990 was possible because the political interests of their bosses ― Roh Tae-woo, Kim Young-sam and Kim Jong-pil ― were aligned. This, however, created the unintended political consequence of ideological division between conservatives and progressives. In his article titled, “The Three-party Merger and Structural Change in Party Politics,” Professor Kang says that the new mainstream achieved the political majority through the three-party union and thus became independent of the old mainstream that refused to revise their Cold War-style anti-communism. Hence the new mainstream promoted their own policies toward the former Eastern bloc countries based on their revised conservatism befitting the democratized domestic environment. The isolated opposition party embraced dissidents and advocated progressive values.

However, Professor Park Chan-pyo of Mokpo University observes that the three-party merger was among the decisive factors that applied the brakes to dismantling the Cold War regime in Korea. Despite the global trend to put the Cold War behind and seek democracy, the Cold War structure remains intact in Korea due to its inflexible system of political representation. Confined in extreme ideological dogmatism and conflict, it does not even tolerate center-leftists, not to mention leftists. The situation is closely related to the results of the recent parliamentary and presidential elections. In his article “Frustrated Attempts to Overcome the Domestic Cold War Structure,” Professor Park analyzes the limitations of the 13th National Assembly (1988-1991) and offers a partial answer. Above all, the 13th National Assembly, created as the result of the general elections held in April 1988, exposed clear limitations in its composition: the Democratic Justice Party had 125 seats, the Party for Peace and Democracy 71 seats, the Unification Democratic Party 59 seats, the New Democratic Republican Party 35 seats, and independents nine seats. The opposition parties formed the majority, but the ruling and opposition parties alike were all conservatives or liberal conservatives, with the progressive activists who had led democratic struggle excluded from national politics.

The labor-related laws amended by the 12th National Assembly during its term that ended in early 1988 included provisions banning third party interventions, political activities by labor unions, and plural unions, fundamentally blocking the entry of labor and political activists into the 13th National


Assembly. The revised election law focusing on the single-member constituency system also played a part in prohibiting new political forces from joining parliament. The 13th National Assembly recorded considerable achievements in dealing with a wide range of democratic reform issues during the first half of its term. But they were mostly confined to restoring the basic rights of the people and strengthening the powers of parliament and local autonomous organizations.

Negotiations with the ruling party were impossible when it came to revision bills on labor-related laws to permit unions to engage in political activities or teachers and public servants to form unions, or amendments to laws on welfare and redistribution affecting the vested interests such as national medical insurance. Discord within the opposition parties was often too severe to surmount a presidential veto. Furthermore, the opposition New Democratic Republican Party joined forces with the ruling party in dealing with issues concerning social democratization and the Cold War and anticommunist regime, such as revision of the Education Act and the Act on the National Security Planning Agency, and the abolishment of the National Security Act and legislation of a substitute law.

During the latter half of the 13th National Assembly, the ruling authorities resorted to lawenforcement powers in suppressing radical activists advocating anti-Americanism and calling for national unification, challenging the status quo based on Cold War anti-communism. In the wake of the illegal visit to North Korea by National Assemblyman Suh Kyung-won, the Party for Peace and Democracy was isolated as the Unification Democratic Party severed its alliance. The incident eventually led to the merger of the Democratic Justice Party, the New Democratic Republican Party and the Unification Democratic Party, contributing to preservation of the Cold War regime in Korea, according to Professor Park.

The outcome might have been different if the civil society had been allowed access to the political scene and if the democratic activists had taken a moderate stance and adopted strategic steps that focused on gaining a voice within the system of representative politics, Professor Park laments. But what do we know? Korean politics could have evolved even more differently if the two opposition bosses, Kim Dae-jung and Kim Young-sam, had not parted ways to run separately in the 1987 presidential election.

[ January 5, 2013 ]

www.koreafocus.or.kr


Why Korea Has Become a Country Addicted to Wild Crazes

Shin Seong-mi Staff Reporter The Dong-a Ilbo

“Korea: A Society of Fad and Frenzy” By Ku Nan-hee et al., Ehak Publishing, 262 pages, 16,000 won

Any Korean who has lived outside the country for a long time will realize that Korean society is indeed dynamic and idiosyncratic. If something becomes popular, then everyone follows the craze. It was like that with investing in real estate, investing in the stock market, sending children abroad to study, immigrating, buying lottery, and getting plastic surgery. The list goes on. Koreans are so used to the latest trend that it is no longer the latest. At any rate, the frenzy was sociologically analyzed in a recently published book.

Six social scientists each took up the topic of hitting the jackpot, becoming rich, dining at gourmet restaurants, studying English, sending children to elite high schools, and indulging in sports; they identified the socio-structural causes behind the frenzy and analyzed the phenomenon. In the preface, the authors write, “The crazes are the byproduct of the compressed response collectively shown by the constituents of a certain society toward the politico-economic or socio-cultural circumstances of the times.”

A fad is momentary and may disappear soon enough but in the long term it may have such a deep


impact so as to act as the stimulus for social change, setting new directions for the society’s future. That is why it is relevant to study the cause behind the frenzy and the aftermath. It is in human nature to want to earn more money. The craze to become rich became ubiquitous after the 1997 Asian financial crisis. In the universities, resistant discourses were replaced by lectures on affluence study and rich clubs. Office workers began to buy books on asset management and financial institutions introduced financial education programs targeting children. In 2002, a credit card company aired a commercial saying, “Get rich, everyone!” and this became an instant hit. It changed the people’s mindset about the whole business of getting rich. You did not have to belong to the top elite; anyone could become rich. Jeong Su-nam, a postdoctoral researcher at Seoul National University’s sociology department, said, “The compelling information provided by professionals including financial consultants and fund managers coupled with the equalitarian sentiment that anyone can make it produced the universal aspiration to become wealthy.” Jeong attributes the affluence craze to three elements: “fear” of a more uncertain future after the Asian financial crisis; “disillusion” resulting from distrust with the government and the market; and “envy” of the wealthy and yearning to become like them. Neo-liberalism continuously reproduced the fear, disillusion and envy, and in so doing exercised emotional control over individuals.

The jackpot craze can be understood as a similar get-rich-quick rage. Jackpot implies disproportionately higher return compared to the amount of resources and time invested. It does not imply the outcome earned from working hard but rather from betting, being lucky, or engaging in illegal activities. A society where too many people dream of hitting the jackpot cannot be considered a healthy one. According to the analysis done by Professor Kim Wang-bae of the sociology department at Yonsei University, Korean society has especially fervent aspirations for upward social mobility due to its experience of achieving aggressive industrialization.

In addition, Koreans have a deeply-entrenched sentiment of equalitarianism; they constantly compare themselves to those who are better off and consequently feel deprived and victimized by unfair wealth distribution. They are attracted to a jackpot because it offers an instantaneous escape. “Instead of honest hard work, speculators want to acquire wealth through lottery, investment funds, real estate investment and development profits. Such free rider behavior manifests itself as jackpot fever,” writes Professor Kim.

Preoccupation with English education in Korea was interpreted in an interesting light as well. When


“cultural imperialism” dominated by a U.S.-centric world view and “cultural capitalism” regarding English as a tool for class perpetuation combine, this creates the explosive response of learning English zealously.

The book is meaningful in that it looks into different fads which have swept Korean society in a sociological light, but being a simple collection of monographs it falls short of expectation. If the book had analyzed the “craze theory” in a more holistic fashion and had conducted a comparative study vis-à-vis other societies, it would have drawn a much more interesting conclusion.

Frenzy, or collective tilting, is a result of strong equalitarian conviction that everyone can achieve set targets. Those readers who are interested in learning more about this phenomenon should read “Korean Equalitarianism: Habit of the Heart” written by Song Ho-keun, a sociology professor at Seoul National University (published by the Samsung Economic Research Institute).

[ December 1, 2012 ]

www.koreafocus.or.kr


- Chang Ha-joon “Dismantling Chaebol is Economic Democratization It’s Naive to Think So.” - Lengyel Miklos: “As South and North Koreans are of the same race, unification holds greater potential for development.”


Chang Ha-joon: “Dismantling Chaebol is Economic Democratization? It’s Naive to Think So.”

Lee Sang-eon London Correspondent The JoongAng Ilbo

I asked world-renowned economist Chang Ha-joon for suggestions about the policy direction that the incoming Park Geun-hye administration should adopt. Throughout a four-hour interview in his office at the University of Cambridge on December 21, two days after the presidential election in Korea, Professor Chang focused on welfare, social cohesion and national industrial strategy. He stressed the need for the government to put the Korean economy back on a growth path by investing in technological development, fostering specific industries and setting up a solid welfare system. Q. What did you think when you first heard about Park Geun-hye’s victory in the presidential election?

A. I had mixed feelings. Whoever wins the election will have to face a difficult situation. It was hard for me to jump to a conclusion whether it was good or not. Q. The expression “mixed feelings” sounds as if you disapprove of the election results.

A. It was wrong for President-elect Park not to fully rectify past wrongs. It may not be easy for a daughter to deny her father. She should have acknowledged her father’s wrongs, but she didn’t make


everything clear enough. This will remain controversial. She should not have prevaricated so evasively over such things, because her father has left us with legacies that are glaringly positive and negative. Q. How do you feel about the positive and negative legacies of Park Chung-hee’s era? A. Under his leadership our nation achieved high economic growth. He didn’t do it simply by exploiting workers harshly. It was the outcome of his industry-oriented policy. But in that process he practiced dictatorship and suppressed workers. He couldn’t probably protect all rights of workers, but he suppressed them more than it was necessary. It was a big mistake.

Q. Now his daughter has been elected president. What tasks have been imposed upon her?

A. She has promised to open a new era in which all people are reconciled. She said she will try to win the hearts of the 48 percent of the electorate who didn’t support her. I hope she precisely means what she says and will not change her mind. She has to create a good welfare system to build a country where everybody can live and work comfortably, rather than condescendingly invite a few people from the opposition camp to serve in her government. Q. “Economic democratization” was a buzzword in the presidential race. All candidates, including Park, pledged to achieve it. You also mentioned it in the book “What Should We Choose?” which was co-authored with other economists and published this spring. What is economic democratization?

A. The cost of worldwide research on diet drugs is about 20 times that of developing drugs to combat malaria. More than one million people lose their lives to malaria every year. In the market economy, this is a natural phenomenon caused by demand in rich countries. Is this a right thing? Economic democratization is a theory on preventing such a thing. It envisions guiding governments to put restrictions on the market to prevent activities that transgress the interests of society. Simply put, it is aimed at building a just and fairer society. Q. Discussions on “economic democratization” during the presidential race focused on the governance structure of Chaebol companies, or a hybrid of circular equity investment between corporate subsidiaries. Park promised to prevent conglomerates from continuing circular investment between their subsidiaries.


A. Economic democratization isn’t such a thing that simply promotes small stockholders’ rights or prevents circular equity investment between subsidiaries. Such a thing is merely a matter that arises between stockholders. Presidential candidates failed to win favorable responses from voters, as they were unfocused because they were advised poorly by some people who don’t have exact knowledge about it. Democratization isn’t a process of weakening the strong.

Q. Then what is the genuine economic democratization? How is it linked to Chaebol? A. Of course, economic democratization includes Chaebol reform. It’s necessary to fix bad practices, such as denial of labor rights, tax avoidance, attempts to find loopholes in regulations, and squeezing of subcontractors. By the way, the real problems annoying people are labor disputes at Ssangyong Motor and Hanjin Heavy Industries, protection of business rights of mom-and-pop stores, and uncertainty about employment. It’s not about corporate governance.

Q. The United Progressive Party is arguing that these problems will be fixed by dismantling Chaebol. A. It’s a naive idea. Problems like subcontracting and non-regular workers also exist at non-Chaebol corporations, including KT and POSCO. There are many wrongful practices also at small and medium-sized enterprises (SMEs). They won’t be solved overnight even if we dismantle the Chaebol. On the contrary, we should help conglomerates make investments to develop technologies and create jobs, and cooperate with their subcontractors. Dismantling the Chaebol is never an answer. Even if you keep the Chaebol from running bakeries, you can’t solve employment problems. You should formulate and implement fundamental policies to expand welfare, train workers for job re-entry programs, and foster new industries. Q. Those who advocate the dismantling of the Chaebol call for introducing “stockholder capitalism,” whereby stockholders hold voting rights in proportion to their shares. A. It’s a wrong idea. Is there any guarantee that a good implementation of stockholder capitalism will produce good results? Stockholders would be hell-bent on seeking their own interest through shortterm profits, remaining negligent about making investments and training workers. People will suffer damage after all. It may sound good if you can kick out Lee Kun-hee and Chung Mong-koo and put other business leaders who will work hard for the people in their places. But is there any guarantee


that stockholders are really interested in recruiting such business leaders? If such things happen, you might have to see financial circles in the United States and Britain pick their own choice as a new CEO of Samsung Electronics.

Q. Do you think overseas capitalists could ruin our economy, if stockholder capitalism gains momentum? A. Haven’t we seen such a thing in several cases before? For example, overseas capitalists had KT&G sell its assets and pay them dividends that were more than the company’s operating profits. If such things happen, professional CEOs would be too afraid of stockholders to make reinvestments. They would have no choice but to recruit as many non-regular workers as possible and attempt to make do without employee training simply to seek short-term profits. You would have nobody to turn to protest, because investors in private equity funds or hedge funds are hidden from public view. Q. One of the characteristics of this year’s presidential election is that all candidates made promises on welfare. They pledged to focus on welfare, instead of promising to raise the growth rate. A. That’s the power of democracy. It isn’t a phenomenon that happened overnight. It’s the outcome of social change that has occurred since the foreign exchange crisis in the late 1990s. In its aftermath, such things as job stability have vanished. With the capital market opened, speculative investments have widened the income gap. With neo-liberalism gaining momentum, many people began to believe that individuals are responsible for their loss of decent jobs and their failure to earn more money. Eventually, many people were preoccupied with honing language and other skills at private cram schools to find better jobs or win promotions, or with taking out loans to make speculative investments in funds or homes. At one time not long ago, we even exchanged greetings with each other, saying, “Be rich!” There’s no country in the world that does such a thing, except Korea. Anyway, all people marched in that direction. However, things didn’t improve at all. So voters chose Lee Myung-bak as their president, as he promised to create jobs and help people live well by achieving growth. But everything turned out to be worse than before. People now began to realize that they can achieve nothing just by studying hard or investing in funds or houses. Eventually they came to think that individuals shouldn’t be blamed for their poverty and that social welfare is important.

Q. What did the Lee Myung-bak administration do wrong?


A. Not only the current government but all three administrations, including Lee’s, in the past 15 years went in the wrong direction. But Lee was more “aggressive” than his two immediate predecessors. Once you go in the wrong direction, you will cause more serious problems the harder you work. Do you remember Lee recruiting a Brit as a member of his transition committee with a view to building a financial hub in Korea? He never put his idea into practice because of tougher international restrictions that came into force in the wake of the financial crisis in 2008. If he had pushed ahead with his policy, Korea would have gone bust just like Iceland or Ireland. The onslaught of the global financial crisis in the initial stage of his administration was a blessing to Korea.

Q. Lee tried to help enterprises. A. Deregulation isn’t the only way to help companies. The government needs to take initiatives in achieving technological innovations, making investments in developing new technologies and fostering certain industries. But the government didn’t do these tasks while wallowing in the market economy. For example, it has done nothing despite its promise to develop “future growth engines.” When it comes to the industrial structure, there has hardly been any progress since the Park Chunghee era of the 1970s, with no new industries developed. As a result of its government’s proactive investments in developing new technologies such as solar cells, China now possesses world-class technologies in several areas. Neo-liberalism is a faux growth theory. It’s easy to believe that deregulation and tax cuts will solve all problems. But in fact no country has achieved growth in such a way. It might have worked in the 18th century. But today’s economic structure is not that simple. Growth is possible only when so many things, including education, welfare, retraining, job re-entry, research and development, and expansion of social overhead, dovetail with each other. It’s hard to achieve all this through deregulation.

Q. Do you think Samsung and Hyundai have performed well on their own without the government’s support?

A. They deserve credit for having invested in technological development and expanded their business under these circumstances.

Q. Park has declared she would solve the problem of bipolarization by all means. How can the wealth gap be resolved?


A. There are largely two ways to narrow the wealth gap: imposition of regulations and levying of taxes. The United States has fewer regulations and lower taxes than other countries. Hence it has severe income disparity. Japan levies low taxes but imposes many regulations. It has many devices to protect small farms and businesses. Europe comes in between as far as regulations are concerned, but levies high taxes. As Koreans have a strong sense of equality, Korean society could explode if we go the American way. After all, we have no choice but to go the European way.

Q. Park pledged to keep taxes from rising as much as possible.

A. Tax hikes are indispensable for building a solid welfare state. But you have to do it on a step-bystep basis, as you can’t raise taxes overnight. Your money won’t vanish if you pay taxes. You’d better think that all people are making a group purchase of insurance. You’d better think that all people are paying insurance premiums to an insurance company called the Republic of Korea, instead of buying insurance individually. You will find that you have never suffered any loss, if you calculate later.

Q. What kind of taxes should be raised?

A. We need to raise value added tax and income tax, while preventing evasion of income tax. When raising value added tax, the burden of low-income people may be reduced by applying differential rates to daily necessities, including foodstuffs.

Q. Middle-income earners and rich people are expected to resist income tax hikes.

A. Even rich people have little to gain in an unequal society. In Brazil you can find many helipads on the rooftops of buildings. At first I assumed it’s because of traffic congestion, but found out later that it’s because of frequent kidnapping of businesspeople. In addition to riding bulletproof vehicles and employing personal bodyguards, rich people in Brazil travel by helicopter out of concern for their safety. Would you be happy when you have to live like that?

Q. Increasing jobs is one of the primary tasks for the incoming government. Campaign promises included increasing employment in the public sector and job sharing among workers by reducing working hours. Will this suffice?

A. Such things should be done for short-term effects. But job creation from a long-term perspective requires more investment and industrial development. Comprehensive measures are needed in all


areas including capital, workforce and technology, backed up with an industrial policy. Labor unions at large companies should realize that they should never sit by and watch, or support, discrimination against non-regular workers. Good welfare leads to job creation. Many qualified female workers cannot land jobs due to a lack of child care facilities. Jobs can be created in welfare and social services sectors. In the past, an employee of a stuffed toy factory could transfer to an electronic factory after a few weeks of education. But these days anyone hoping to move from an automaker to an IT firm needs to receive education for at least six months to two years. Such education is possible only when an efficient welfare system is in place. Q. Have you ever seen Park’s campaign promises?

A. She made many good promises, which appear to have been made in haste. The protection of momand-pop stores has room for violation of the free trade agreements Korea has signed with other countries. Regulation on large supermarkets could invite problems if large overseas supermarkets discover a breach of agreement. Debate on welfare should be preceded by redefinition of the concept of tax. Her promises are little more than a collection of all kinds of symptomatic therapies, lacking a big picture for economic management. You cannot cure a patient’s disease with only first-aid treatment. For example, she needs a comprehensive policy framework showing how she will resuscitate small and medium-sized enterprises.

Q. The global economic outlook is not bright. What do you think are the prospects for the new administration’s implementation of its welfare policy? A. We face greater uncertainties than ever before. Washington’s failure in reaching a compromise in its fiscal cliff deal will jolt the international financial market. There also is likelihood that Greece will leave the Eurozone. Growth has slowed down in China and India. The overall situation will be extremely difficult. But paradoxically, it can be an opportunity to bring people together. It is more difficult to unite people when economy is faring well. Finland and Sweden succeeded in achieving a grand consensus on their welfare policies amid economic difficulties.

Q. Sweden is going to cut back on welfare spending. Should we follow the northern European model? A. It’s like an undernourished person skipping meals following the footsteps of an obese patient going on diet. The proportion of welfare spending to total fiscal expenditures amounts to 45 percent in


Sweden, while the comparable ratio in Korea hovers around a mere 20 percent. It’s time for us to worry about an absolute shortage of welfare, not welfare disease.

Q. Pundits say Korea should learn a lot from Europe. What specific lessons do we have to learn from which country? A. There’s much for us to learn about welfare, retraining of workers and job re-entry programs from northern European countries; SME support systems from Switzerland and Austria; industrial policies and operation of state-run corporations from France; operation of cooperatives from Spain; and education from Finland. Q. There are views that Sweden’s welfare system and Finland’s education programs do not suit our reality. A. When the Park Chung-hee regime built Pohang Iron and Steel Company (today’s POSCO) and Hyundai Shipbuilding (Hyundai Heavy Industries), economists in and outside of the country argued against the projects, calling them unrealistic. They contended at the time that assembling radio sets and making stuffed dolls and wigs befitted Korea.

Q. Three months ago there were news reports that the Park campaign camp was trying to invite you as an advisor. Is it true?

A. No, there was nothing like that. I gave lectures and attended forums organized by the Saenuri Party. But I never received such a proposal. I think it is my obligation as an academic to present my views through research, lectures, publications and contributions to the media. These activities are more helpful to the country.

Q. What do you think are the three most urgent tasks for the incoming president? A. First of all, she has to make good on her promises on welfare as quickly as possible. It’s possible that, as time goes by, opponents will attempt to put the brakes on her policy implementation under the pretext of the global economic situation. She also should bring businesspeople, workers, journalists and professors together to have fierce debate before laying a solid framework of economic policies. And she must think seriously of how to define the relationship between capital and labor in our society, how to create industrial peace, and how to protect the weak, rather than simply regulating


the Chaebol.

Q. Our nation stands at a critical crossroads now. What should we do and where should we be headed?

A. We must think of ways to build a society in which we can achieve harmony between competition and cooperation. Many Koreans may believe they should just send their children to good schools. But they should know that only when their country prospers can it reward its educated workforce properly. We should build a country in which everybody can live well together. We can do it well if only we make up our minds to do so. Over the past 15 years, people have suffered not because of their incompetence, but because of the ill-functioning economic framework. ◈ Who is Chang Ha-joon? Chang Ha-joon, 50, became a tenured professor of economics at the University of Cambridge in 1990, when he was 27 years old, the first Korean to reach that status at the university. After graduating from Seoul National University’s Department of Economics, he enrolled at Cambridge. A year before he obtained a Ph.D. at Cambridge he already was teaching postgraduate courses. He specializes in development economics from the viewpoint of an institutional economist.

Chang comes from a family of renowned scholars, government officials and politicians. His grandfather, Chang Byung-sang, was an independence fighter who served at the Korean Provisional Government in Shanghai. His father, Chang Jae-sik, 77, is former minister of industry and resources. His younger brother Ha-seok, 45, is a professor of philosophy of science at the University of Cambridge. Chang Choong-sik, 83, former chairman of Hynix, and Chang Young-sik, 73, former president of KEPCO, are his uncles. Jang Ha-jin, 61, former minister of gender equality and family, and Jang Ha-sung, 59, a professor of finance at Korea University and a leading advocate of Chaebol reform, who joined former presidential hopeful Ahn Cheol-soo’s campaign camp, are his cousins. He is the author of bestselling books, including “Bad Samaritans” and “23 Things They Don’t Tell You About Capitalism,” in which he criticizes the free market economy. About 1.5 million copies of his books have been sold in Korea. “Bad Samaritans” attracted more public attention because it was put on the Ministry of National Defense’s list of “seditious books” shortly after the inauguration of the Lee Myung-bak administration.

[ December 24, 2012 ]


www.koreafocus.or.kr


Lengyel Miklos: “As South and North Koreans are of the same race, unification holds greater potential for development.”

Kang Hoon Staff Reporter The Chosun Ilbo

It can be said that Hungarian diplomat Lengyel Miklos devoted his youth to Korea. After studying Korea at a Moscow university, Lengyel started his diplomatic career in North Korea and his first posting as ambassador was South Korea. Concurrently serving as ambassador to North Korea as well, Lengyel has spent most of his working life in the Hungarian Ministry of Foreign Affairs dealing with Korea-related issues. For the past six years, since his appointment in 2007, Lengyel has been a member of the group “Hansamo” (Ambassadors Who Love Korea). As he opened the door of his official residence in Dongbinggo-dong, Yongsan, he greeted us in Korean: “Cham chupjiyo?” (“Cold, isn’t it?”). ● 30-Year Connection with South and North Korea

Q. Your Korean is very fluent.

A. I started to learn Korean when I was majoring in Korean peninsula affairs at the Moscow State Institute of International Relations. It’s been 30 years now. From 1986 I spent four years working in Pyongyang, and from 1993-1997, I worked in Seoul.


Q. I heard that you’re a member of Hansamo.

A. The members are Sung Kim from the United States, Vitali Fen from Uzbekistan, Dulat Bakishev from Kazakhstan, and Tran Trong Toan from Vietnam. Originally there were six members, including Masatoshi Muto from Japan, but he returned to his country recently so now there are only five. At first it was a group of “ambassadors who speak Korean,” but we changed it to “ambassadors who love Korea.”

Q. Is there a special reason for your love of Korea?

A. Think about it. From the time I first came to Korea as a university student till now, my work has always been related to Korea. All three of my children were raised in Seoul, and I have many Korean friends. I have had relations here for many decades now, so how could I not love the country?

Q. Do you like Korean food?

A. I like bibimbap, japchae, dumplings and kimchi, and I also enjoy eating a lot of fish. Hungary has no seas, but I learned to like raw fish when I came to Korea. Korean food is delicious.

Q. You must find some of the food hard to eat.

A. A friend of mine, Chung Woo-chul, chairman of Ilsam Chemical Corporation, once took me to a restaurant in Seoul that specialized in food from Jeolla provinces. He ordered fried skate and skate soup. The taste was alright but I found the smell a bit hard to bear. When I got home my daughter made a big fuss. “What’s that smell? Burn your clothes, quickly!” she said. As you know, Jeolla-do food can be rather pungent.

Q. As someone who is pro-Korea, what points do you think need to be improved? A. Since I’m a diplomat, this is not a comfortable topic, but I will say a few things. First, regionalism. This has to go. We are not back in the ancient Baekje or Silla days. I find it hard to understand why the Gyeongsang and Jeolla provinces are still in conflict. The generation gap is also a problem. There’s no denying that the older generation were the ones who achieved Korea’s economic miracle, but the younger generation have their own role to play. I hope the older generation will show the younger generation a lot of understanding. Discrimination against women is also something that


needs to be fixed. I read an article saying that among OECD countries women’s wages are markedly lower than men’s wages in Korea.

Q. It would take all night to point out all the problems. How do you view the Korean economy?

A. The country has done well so far, and the future also looks good. Korea is the growth engine of Asia. It seems Koreans are the ones who have a problem with the Korean economy, but as a European who has been observing the country for 30 years, Korea is a country to be envied. People say Korea is in crisis, like Europe, but the GDP growth rate here is 3 percent. No European country can match that. Q. It’s now election season. How have you found Korean politics over the years?

A. When I first came to the country, Korea had a military president, and later a civilian president was elected. Over the years election practices and the political culture have greatly matured. The fact that Ahn Cheol-soo, who pulled out of the recent presidential election, earned a support rate of 20 percent shows how much Korean politics has progressed. In the past, Park Geun-hye came to do some work in Hungary as a special emissary, and I remember her as a politician who keeps her word. ● Where the Language is Very Similar

Hungary is a small country in East Europe with a population of 10 million. The capital is Budapest. Among the former socialist countries of East Europe, Hungary was the first to form diplomatic relations with South Korea in 1989. That was the year Hungary gave up socialism and became a republic. In 1996, Hungary became a member of the OECD at the same time as South Korea and now has a per capita GDP of $13,000.

Q. I understand that the Hungarian people are descended from the same Ural-Altaic language family as the Korean people.

A. The Hungarians regard themselves as Asian Europeans. Our ancestors came from the Urals 2,000 years ago. While there is no evidence of contact with the Korean people, it is true that linguistic and cultural similarities exist.

Q. What similarities do you mean?


A. The sentence structure is similar. The word order, the way the family name comes first, and dates, which are written in the order of year, month, and day.

Q. Are there any similar words? A. The Korean word for “father” is “abeoji” and the Hungarian word is “eobeoji.” The words for “dad” are “appa” in Korean and “eoppa” in Hungarian, and the words for “mom” are “eomma” and “eonyeo.”

Q. They are very similar. A. Ha, ha. An ugly girl is called “chunyeo” in Korean. In Hungarian it’s exactly the same word.

Q. What other similarities are there?

A. When I came here I found to my surprise that the Korean warriors of the past looked almost exactly the same as the Hungarian warriors. The fighting stance, the arms, the bows and arrows are very similar. Like ancient Koreans, past Hungarians were also known to be excellent archers. Taking these things into consideration, I feel that both our ancestors must have lived together in the Ural-Altaic mountains.

Q. What about the music?

A. There are also similarities in the traditional music. Ahn Eak-tai, who composed the Korean national anthem, studied in Hungary for two years. He studied under a famous composer and I understand that he also performed Hungarian music. When I heard the Korean national anthem here, I felt I was listening to Hungarian music.

Q. Is K-pop or other Korean culture popular in Hungary too? A. Of course. The drama “Dae Jang Geum” (aka “Jewel in the Palace”) has been broadcast several times, and K-pop and other forms of Korean popular culture are spread through the recently established Korean Cultural Center in Budapest. K-pop is just one part of hallyu. Personally, I like Korean movies and poetry. Director Kim Ki-duk recently won a major award and the poet Ko Un is


also very famous.

Q. Do Korean businesses have a presence in Hungary?

A. Several companies have factories in Hungary, for example, Samsung Heavy Industries, Hyundai Heavy Industries and Hankook Tire. Hungary is stable and provides a good investment environment. Q. Part of the TV drama “Iris” was set in Hungary. A. That’s right. I believe shooting for the sequel is also taking place now in Budapest.

Q. What is state of tourism between the two countries?

A. Hungarians are growing more interested in Korea and many Korean tourists come to Hungary. But as most of them come on package tours that include the Czech Republic and Poland, their stay in Hungary is very short. Usually they come to Budapest for two days but there are many other interesting places to see in Hungary.

Q. What is something that people must not miss in Hungary?

A. The hot springs are wonderful. Apart from Iceland, Hungary has the most hot springs in the world.

Q. Have many hot springs been developed?

A. We dug up so much ground looking for oil and gas, but all we found was hot water (laughs). Because the hot springs are so famous, a lot of rheumatism patients come to Hungary. ● Hope for Peace on the Korean Peninsula

Ambassadors may serve two countries concurrently. The ambassadors of 18 countries, including Spain, the Netherlands, Italy, New Zealand and Australia, are posted to both Seoul and Pyongyang. When Hungary established diplomatic relations with South Korea in 1989, it closed down its mission in North Korea and had the ambassador in Beijing serve Pyongyang as well. But when Lengyel came to Korea he was appointed ambassador to North Korea at the same time.


Q. Pyongyang must have been upset when Hungary closed its embassy in the North and opened one here in the South.

A. I never got that feeling. Many European nations do the same thing. Economic relations are most important if relations with North Korea are to progress. But there is almost no exchange at present, and with the U.N. sanctions that are in place, relations with North Korea are not improving.

Q. How many times have you visited North Korea since being appointed ambassador?

A. Three times. I originally intended to go once or twice a year but that turned out to be difficult. There are budget problems and other practical reasons as well.

Q. There must be Hungarian people living in the North.

A. Not a single one, not even a diplomat.

Q. Are there many Hungarians living in South Korea?

A. About 200. There are businessmen, students, women who have married Koreans. The number is gradually rising.

Q. How do you travel to the North?

A. We go to Pyongyang via Beijing. It is a bother. It would only take 2-3 hours to go across the DMZ and travel overland.

Q. When was the last time you visited North Korea?

A. November 2011, just before the death of Chairman Kim Jong-il of the National Defense Commission. I haven’t been there since. I met the former leader Kim Il-sung twice, but I never met Kim Jong-il in person. Also, I have yet to meet the current leader Kim Jong-un, first secretary of the Workers’ Party of Korea.

Q. Is North Korea changing?


A. Yes, I think it is changing a little bit at a time. There are more cars, and more restaurants and small shops have appeared. And the clothing is a bit more colorful. Hotels and other buildings are going up here and there.

Q. Have you traveled around there much?

A. The scenery is beautiful. I have visited many places such as Mt. Kumgang (Geumgang) and Mt. Paektu (Baekdu), and in my memory the temple on Mt. Myohyang was very beautiful.

Q. I understand that you have great interest in the issue of Korean unification.

A. It seems to me that young Koreans have forgotten about unification. As South and North Koreans are of the same race, unification holds greater potential for development. Although Korea is called a peninsula, South Korea is actually an island cut off from the rest of the continent by North Korea. If South Korea’s economic power is coupled with North Korean labor and resources, Korea will become a much stronger country.

Q. North Korea recently test-fired a long-range missile.

A. It was not a good move for South-North relations and indeed for world peace. The more it behaves that way, the more sanctions it will be subjected to.

Q. You must have been surprised by the attacks on Yeonpyeong Island.

A. That was an incredibly dangerous thing to do. A war between South and North Korea has the potential to blow up into a world war. The Korean peninsula is a place where the interests not only of South and North Korea converge but also those of the United States, China and Russia. Many people already died in the war 60 years ago. Just as the Cold War has ended in Europe, I hope that peace will be established on the Korean peninsula.

[ December 15, 2012 ]

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Korea Focus is a monthly webzine (www.koreafocus.or.kr), featuring commentaries and essays on Korean politics, economy, society and culture, as well as relevant international issues. The articles are selected from leading Korean newspapers, magazines, journals and academic papers from prestigious forums. The content is the property of the Korea Foundation and is protected by copyright and other intellectual property laws. If it is needed to reprint an article(s) from Korea Focus, please forward your request for reprint permission by fax or via e-mail. Address: The Korea Foundation Seocho P.O. Box 227, Diplomatic Center Building, 2558 Nambusunhwanno, Seocho-gu, Seoul, 137863, Korea Tel: (82-2) 2151-6526 Fax: (82-2) 2151-6592 E-mail: koreafocus@kf.or.kr ISBN 979-11-5604-014-9

Publisher Kim Woo-sang Editor Lee Kyong-hee Editorial Board Choi Sung-ja Member, Cultural Heritage Committee Hahm In-hee Professor, Ewha Womans University Hong Chan-sik Chief Editorial Writer, The Dong-a Ilbo Hyun Jung-taik Professor, Inha University Kang Byeong-tae Chief Editorial Writer, The Hankook Ilbo Kim Hak-soon Proessor, Korea University Kim Yong-jin Professor, Ajou University Peter Beck Korea Represetative, Asia Foundation Robert Fouser Professor, Seoul National University Son Ho-cheol Professor, Sogang University â“’ The Korea Foundation 2013 All rights reserved.


Korea Focus 2013 02  

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