Korea in Crisis

The political paralysis in Korea over the government’s decision to restart imports of American beef is moving to a new crisis point, with the resignation en masse of the cabinet headed by the Prime Minister, Han Seung Soo. At the same time, the entire policy support staff at the presidential executive office has tendered resignations, leaving President Lee Myung-bak practically alone at the top of the government.

These developments come only 107 days after Lee’s inauguration to a five-year term in office and it leaves him in an increasingly untenable position, beset on one side by the need to save a trade pact with the US that is far more advantageous to Korea than it is to the US, and on the other by opposition political opportunism that is fanning nationalism dangerously.

Tarred by an image of high-handedness, irresolute leadership and dependence on ethically blemished aides, Lee’s approval rating has plummeted to below 20 percent from a high of 50 percent when he took office in February. His label as “the Bulldozer” CEO from the business community has become a political liability in the face of accusations that he is pushing tainted US beef on reluctant consumers.

But beef imports could well be a surrogate issue. The real problem underlying the current unrest is Lee’s image as a conservative leader intent on undoing the past government’s policy, ranging from relations with North Korea to privatization and deregulation. His hard-line policy on the north, of giving food aid only when it makes progress on the nuclear issue, has fired up the radical community as well as the opposition United Democratic Party. His new line on education policy, emphasizing quality control and elitism over left-wing school teachers clamoring for “equal opportunity” and “egalitarianism” has alienated teachers and students. Trade unionists and farmers have joined hands to oppose market opening, privatization and restructuring that would hit their interests.

In the face of the growing political uproar, Lee has been forced to apologize for his quick-paced move on reimporting American beef, suspended since 2003 after an outbreak of mad cow disease in the United States. Over the weeks of political foot-dragging, Lee’s leadership style and quality of his appointees have become targets, giving the center-left UDP -- defeated in the last presidential and parliamentary elections – a chance to regroup and take control of the national agenda. The UDP’s mercurial leader, Sohn Hak Kyu, has even boycotted parliament to bring more pressure on the beleaguered government.

President Lee is expected to fire Prime Minister Han, a bland technocrat, and others including Agricultural Minister Chung Woon Chun for mishandling the beef issue. Others will be replaced following questions over ethical standards, such as suspicions of draft-dodging and property market speculation. Han himself came under attack at the time of his appointment for possessing extra homes and a villa, on top of allegations that his US-educated son served his mandatory military service playing golf. Han’s defense of his son’s hardly rigorous army life caused nationwide outrage from parents whose sons were doing time in boot camp.

So what is at issue is more than the import of American beef. It was this incendiary sense of unfairness and privilege at the top of government is causing widespread protest. Lee’s cabinet has earned the name of being a rich man’s club, an exclusive group of propertied executives from south of the Han River in Seoul.

With their slogans moving from beef to political issues, the protest marches that first began in mid-April are likely to continue. On the evening of June 10, which marks the anniversary of the 1987 civil uprising against the military government, a crowd estimated by police at 40,000 filled the central square in Seoul, demanding ouster of the Lee administration as well as stopping US beef. Organized by 1,500 NGO groups, the protesters have come from a broad spectrum of the leftwing constituency fostered under the past two administrations of center-left presidents.

Although Lee is trying to use the reshuffle to douse public wrath, it is hardly likely to mollify his critics. In order to consolidate party unity, he is offering the premiership to Park Geun Hye, his rival in the presidential nomination process and a daughter of the former military dictator Park Chung Hee. A vaguely conservative figure with no experience in government or the private sector, she is being promoted in the hope that a new face would help heal the country. Her only strength comes from the fact that she leads the biggest faction in the ruling Grand National party, whose unity is vital to keep the government from falling apart.

But on the important issue of beef imports, Lee runs the risk of triggering a dangerous trade war with the United States if he backs away. Important members of the US Congress, including senators Hillary Clinton and Democratic presidential hopeful Barack Obama, plus House Speaker Nancy Pelosi, all have heavily criticized the US-Korea Free Trade accord, saying they wouldn’t endorse its passage unless Seoul agrees to open its beef and car markets fully. Failure to pass this agreement would not only mean the loss of half a million potential jobs for Korea, it would shave off at least $10 billion in additional trade between the two countries. The US Congress’s failure to pass the pact would mean more of a crushing blow to Korea than to the US, analysts say.

In effort to keep the treaty from collapsing, Lee is asking US meat-packers to limit their exports to beef below 30 months of age, supposedly because they are less prone to mad cow disease. This is likely to be accepted on a temporary basis, though any permanent arrangement for such discriminatory treatment is unlikely to hold. The question of beef, like autos, is a matter of principle, not to be compromised.

Unsurprisingly, Lee rejects any idea for renegotiating the entire deal, not only because no self-respecting government can nullify what has already been agreed upon through a painstaking process, but also because any change would be worse, not better for Korean interests. For instance, South Korea imports 5,000 units of American cars while annually shipping 800,000 to US markets. Seoul’s controversial position on beef – at most worth $800 million a year – appears set to invite US retaliation worth several billions of dollars. When that happens, it’s the opposition DUP, which relies on labor and farm support, that will be hit harder than the ruling party.

At home, no less worrisome is the implication from Lee’s failure to push through robust economic reform. The swelling protests have made it impossible for him to trim the size of the civil bureaucracy, deregulate the market and promote more privatization and corporate restructuring to improve the country’s overall competitiveness. On these issues, the government and protesters stand far apart from each other.

The local business community, already hobbled by recurring strikes and high taxes, firmly backs Lee’s reforms. If they face a retreat, more and more Korean companies could move overseas where labor is cheaper and the support system is better. “Given the difficult economic situation, (antigovernment) rallies should stop immediately,” said a statement jointly issued by the nation’s five major business organizations including the Federation of Korean Industries.

But leftwing demonstrators continue to excoriate the government, saying Lee’s business-friendly policy is actually aiding the chaebol, whose law-breaking tycoons go scot-free after being caught bribing government officials and legislators. They cite the recent court rulings convicting chaebol leaders from Samsung and Hyundai but allowing them to stay out of jail on the excuse their imprisonment will hurt the national economy. Here the new Lee government has failed to assure taxpayers that things under his leadership will be different.

But political stability will be essential for Korea to navigate the high seas of rising oil and raw material costs. The spiraling cost of energy and foodstuffs around the world threaten Lee’s policy goal of achieving high growth. With its hands tied by protest rallies, he finds it impossible to move on the reform front that will help achieve that goal.

Only three months after his election to office by the biggest margin of support in the country’s history (he won 5 million more votes than his opposition rival), President Lee’s confidence has been shaken by the power of populism on the street. His party has 153 seats in the 299-member National Assembly, but it is torn by infighting between various factions. All this seems to indicate he is heading towards a period of unrest, unable to establish a strong constitutional order.

In their long fight against the military rule, Korean radicals have succeeded in bringing about a democratic system based on regular change of governments through the ballot box. However, they have yet to create a system of resolving differences through parliamentary procedure. Ignoring the rule of law, the opposition sides with protesters, refusing to acknowledge its minority status. As for protesters, they refuse to acknowledge the principle of fair, reciprocal trade even though they depend on exports for economic survival. The current malaise makes it plain that Korea’s closed, ultra-nationalist mindset remains the biggest challenge facing the country even as it seeks to become a member of the global community.