Change in Korea

 

"In the area of economy, I emphasise that I will faithfully implement the agreement with the IMF". The new president of South Korea, Mr Kim Dae-jung, comes to power with an agenda set for him by currency and market collapse on the back of high indebtedness of its banks and conglomerates. But he is determined to turn it to advantage, as he insisted in an address to the nation. "We will use the opportunity for implementing reforms so as to reinvigorate our economy. We will show the world that the Miracle on the Han is not finished at all".

The election campaign was universally deemed unsatisfactory as a forum to discuss alternative ways of dealing with the South Korean economic crisis. Instead it concentrated on personalities and the factional and regional issues that have characterised the country's politics since independence in 1945 - including the important question of how the newly elected president, once a persecuted dissident, will be accommodated by the old regime.

These issues have persisted through the long periods of authoritarian and military rule during which South Korea's extraordinary economic miracle was initiated and developed. It became the 11th largest economy in the world. But the structural reforms necessitated by its very success were avoided or postponed until the outgoing president was engulfed by the market collapse of recent weeks. It occasioned the largest-ever IMF rescue package, amid continuing fears that the regional and world economies will be damaged by the crisis.

The new president promises to open South Korea's markets to international investment. So far the IMF has expressed its satisfaction at the floating of the won, an increase in interest rates and the closing down of 14 over-indebted banks and finance houses. Higher taxes, spending cuts and tighter money supply are on the way. Mr Kim Dae-jung has therefore been handed a poisoned chalice so far as meeting the expectations of those who elected him, many of them from the poorer sections of society, is concerned.

His best course will be to go along with the IMF programme, in co-operation with the outgoing President Kim Young-sam, while he tries to mitigate the deflationary burden falling on such sectors as education, which have been an essential part of his country's developmental success. He has made a good start by setting up a joint committee on the economy and agreeing to an amnesty for the former rulers sentenced for the Kwangju massacre. A re-examination of its priorities is merited, which would fall short of the renegotiation he hinted at, then firmly denied, during the campaign.

The eyes of the world will be on the new president not only because of the economic crisis but also on how he handles relations with North Korea. A nightmare scenario would have the regime there collapse East German-style, creating a flood of refugees and imposing an impossible burden of aid on the south. Mr Kim will be expected to take a more farsighted and proactive approach than the outgoing government, preparing a long-term soft landing for the North Korean regime, with less of an exclusive concentration on military and security matters. He deserves the enthusiastic support of Japan, China, Russia and the US for this task.

South Korea is a young democracy. It is just 10 years since pro-democracy riots ushered in direct presidential and parliamentary elections. The new president has the opportunity to preside over a political as well as an economic coming of age.