South Korea: an Uneasy Nation

Among the many politicians whose reputations are on the line as they try to cope with the global recession is South Korea's President Lee Myung-bak, a conservative leader elected to a 5-year term in a landslide vote in December 2007. The former Hyundai executive and mayor of Seoul heads up the Grand National Party, the current majority power in the legislature. Various efforts to stimulate the economy, bolster the foreign currency exchange rate, stem job loses, curb inflation, and rebuild consumer confidence are either in process or under consideration. In a cabinet reshuffle a much-criticized minister of finance was replaced by a financial expert in a move intended to demonstrate the government's control over a rather chaotic situation. However, with the won, the Korean currency, and the stock market in free fall and foreign investors bailing on all sides, it is evident that the crisis is far from contained for this export-dependent North Asian nation.

Additionally, President Lee has other problems. For one, his policy of getting tough with North Korea in regards to dismantling nuclear weapons sites appears to be backfiring. North Korea's dictator, Kim Jong Il, apparently fully recovered from a recent stroke, has stepped up his rhetoric to condemn South Korea's policies, has rescinded recent cooperative agreements on tourism and joint manufacturing operations, has threatened to ignore maritime boundaries, and has placed his entire army on war alert. In early April North Korea plans to launch a satellite with a long-range rocket aimed over Japan. Not surprisingly, Japan has noted that it would shoot down any missile threatening its territory. This March's 10-day joint military exercise involving South Korean and United States troops has not helped the tense situation, even though the joint exercise is a well-known annual event.

Besides military policies, trade issues with the United States are also important to South Korea. A misstep made early in his administration by the South Korean President was to welcome back American beef imports following a 5-year ban instituted because of fears of mad cow disease. President Kim clearly did not expect the immediate public outcry this deal elicited. His aim had been to secure a free-trade agreement with the U.S., an agreement with better prospects if the beef restrictions were lifted. At the moment, both items, the free-trade pact and the beef issue, are in a sort of limbo.

That the South Korean economic situation is rather complicated may be illustrated by taking a glance at two national automobile manufacturers. Ssangyong Motor, owned since 2004 by China's Shanghai Automotive Industries, has filed for bankruptcy recently and cited its parent company for fraud and exploitation. Enjoying a quite different scenario, Hyundai Motor's marketing of its first luxury model has delivered impressive sales figures in South Korea and abroad, particularly in the U.S. So, while overall the economy may be struggling, there are at least some bright spots.

Here's another optimistic item: broadband Internet access is nearly universal in this small, peninsular nation. As a direct result, e-gaming has become hugely popular, with computer game champions attracting many fans and large TV audiences for tournaments. Although professional cyber gaming will never challenge manufactured exports and transhipment services as a leading economic indicator, it does suggest the potential of technology to captivate the imagination and possibly to bring financial profits for the young, wired generation.

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"South Korea Reels From Record Export Plunge", Zibb/AsiaPulse News
Jack Kim, "South Korea, Japan warn North Korea on missile", Yahoo News/Reuters
"Uncertain future for fractious Koreas", BBC News
Choe Sang-hun, "In Carmaker's Collapse, a Microcosm of South Korea's Woes", New York Times
"Sui Genesis: Hyundai's surprising success", The Economist
Barry Petersen, "The New "Sport" Of The Century?", CBS Evening News