Asia Pacific

The World This Week: New South Korean President Faces Three Big Challenges

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Moon Jae-in © Republic of Korea

May 14, 2017 23:56 EDT

Moon Jae-in’s election victory is a triumph for democracy, but reforming the economy, balancing China and the US, and managing North Korea will prove tricky.

This week, US President Donald Trump sacked James Comey, the director of the Federal Bureau of Investigation. To say this has proved to be controversial would be the understatement of the year. FBI bosses tend to be shadowy figures. They are immensely powerful but rarely in the news. Comey is different. He first made the news over the FBI’s investigation of Hillary Clinton’s emails. Now, the firing of the FBI boss has caused a ruckus.

The White House has tied itself in knots over Comey’s dismissal. First, the Trump administration claimed it fired Comey because he did not investigate Clinton’s emails properly. Then it claimed the deputy attorney general had recommended Comey’s dismissal. Thereafter, Trump himself claimed he got rid of Comey “because he wasn’t doing a good job.” Finally, the unconventional president admitted on television that he was thinking of “this Russia thing” when firing Comey.

During this brouhaha, Moscow released photos of Trump meeting the foreign minister and the ambassador of Russia in a closed-door meeting. Speculation continues on a minute by minute basis whether Trump fired Comey to hamper the FBI investigation into his links with Russia, or whether he did so in a fit of pique because he is notoriously thick skinned.

Elsewhere, there is some good news. The cheery and youthful Emmanuel Macron has beaten the far-right Marine Le Pen and taken the oath of office. His task, as the April 30 edition of The World This Week pointed out, is no less than a root and branch reform of Charles de Gaulle’s Fifth Republic.

However, the most important development this week is the election of Moon Jae-in as president in the South Korean election. This son of refugees from North Korea was once jailed for protesting against General Park Chung-hee, the military dictator who ruled South Korea with an iron fist in the 1960s and 1970s. Moon’s victory promises a new start for a country that has been paralyzed by scandal for months.


The March 12 edition of The World This Week examined the political scandal that led to the fall of Park Geun-hye, the first female president of South Korea. This blue-blooded politician was the daughter of none other than General Park Chung-hee and the scandal that caused her downfall could not have been cooked up by the most imaginative of Hollywood scriptwriters.

Suffice to say, Park did not behave with dignity or propriety as president. Her impeachment was a great triumph for South Korean democracy. Moon’s victory at the polls is an even bigger triumph for the country’s democracy. South Korean institutions have proved sturdy in the face of scandal. Park is in prison, awaiting trial. Power has passed peacefully from a patrician to a plebeian.

Moon’s victory is hugely symbolic. As this author pointed out in March, there is a dark side to the South Korean success story. Chaebols, family-run conglomerates, control the commanding heights of the country’s economy. They squeeze out entrepreneurs and smaller businesses. Chaebols and politicians have long had incestuous relations, making South Korea a classic example of crony capitalism. Like other countries, South Korea is experiencing increasing “income polarization and a shrinking middle class.” Add rising unemployment, a rapidly aging population and gender discrimination to the mix to get a highly dissatisfied country.

At the moment, the heir of Samsung is on trial. Lee Jae-yong is charged with bribery and is the target of public fury. Apparently, he paid off Park’s associate to get government support for a merger between two Samsung companies. As a result, both Park and Lee are on trial. South Koreans are outraged. They want their rich and powerful to be accountable. If Lee is found guilty, then faith in the system would be restored after a sordid scandal. Yet it is important that Lee gets a fair trial and, in the words of Bloomberg, “South Korea’s rule of law is on trial.” The special prosecutor has dubbed this the “trial of the century” and, for once, this is not hyperbole.

Lee’s troubles are part of a pattern. Samsung’s bosses have been in trouble before. In 1996, Lee’s father was convicted of bribing politicians and sentenced to two years in prison. In 2008, he was in hot water again and was convicted of tax evasion and sentenced to three years in prison. On both occasions, the sentence was suspended and the tycoon was granted a presidential pardon. This pattern of suspended sentences and presidential pardons is the norm for South Korean tycoons.

Of all the chaebols, Samsung is perhaps the mightiest. Lee presides over a business empire that includes gadgets, appliances, shipbuilding, insurance and credit cards. Samsung Electronics, the maker of televisions and smartphones, alone accounts for 20% of South Korea’s exports. It was none other than General Park who presided over the rise of the chaebols. He gave them subsidized loans, cheap land and tax breaks so that South Korea could emerge as an exporting powerhouse. Protection of infant industry helped too. To be fair, General Park succeeded.

However, that success has come at a price. Concentration of power invariably tends to lead to abuse, inefficiency and corruption. Politicians need money to run for office. Chaebols have the capital to invest in them. Once they are elected, chaebols call in favors. In some ways, this is the story of democracy worldwide. In South Korea, this story is a bit more exaggerated. As a result, chaebols have long been above the law.

Moon’s victory is likely to curb the power of the chaebols. Unlike Park or Lee, Moon sends a very different signal to South Korean society. He proves that a person of humble beginnings can make it right to the top. Besides, Moon is not beholden to the traditional power brokers in his country. He spent the first few years strapped to his mother’s back as she sold eggs to make ends meet. Moon managed to go to school and to jail in the early 1970s when General Park was laying the economic foundations of the modern South Korean economy. His background is markedly different to Park and is likely to follow different policies.

In his youth, Moon teamed up with Roh Moo-hyun to open a law firm in Busan that focused on human and civil rights. Later, Roh and Moon emerged as leading figures of a pro-democracy movement that led to South Korea’s first democratic election in 1987. In 2003, Roh became president and put Moon in-charge of combating corruption. Tragically, Roh committed suicide in 2009 over allegations that he had accepted $4.6 million in bribes. Moon stayed on in public life. In 2012, Moon ran for president but lost to Park. Now, this awkward civil rights lawyer who fought for democracy is finally president. In fits and starts, South Korea’s fledgling democracy has come a long way from 1987.


Moon is assuming office when South Korea faces unprecedented economic challenges. South Korea’s export-oriented economy is in dire straits. Electronics, automobiles and boats have long provided the bulk of exports. Now, demand for them is slowing because of a stumbling global economy and increasing protectionism. Furthermore, competition from China is beginning to hurt South Korea. As a result, the country is not exporting as much as it used to. In 2012, 56% of the country’s GDP comprised exports. In 2015, this number was down to 46%. Underemployment is reportedly 14% and youth unemployment is estimated to be 9%. Such is that state of affairs that Justin Fendos has argued that South Korea is poised for economic disaster.

Therefore, Moon’s first challenge is reforming the economy. He has promised to hire more firefighters, teachers and policemen. This is standard Keynesian policy to stimulate an economy low on confidence. Besides, it will provide desperately needed jobs in a country with high unemployment. Moon is also promising tax cuts and lower regulations in a country with high household debt. As per his proposals, the super-wealthy and top corporate earners will pay more tax though. He is also promising to tackle corruption and reform the chaebols. This might be an uphill task for the new president, but he is more likely than any other South Korean leader to take the path of reform.

Moon’s second challenge is to maintain a fine balance between China and the United States. The March 12 edition of The World This Week pointed out that “the Middle Kingdom is irate with South Korea for allowing the US to deploy the Terminal High Altitude Area Defense (THAAD) missile shield.” China fears THAAD will allow the US to spy on its missile tests and undermine its nuclear deterrent. Therefore, it has choked off Chinese tourists to South Korea. China is also South Korea’s biggest trading partner. It has used that leverage by turning the screws on operations of chaebols. For instance, it has been shutting down Lotte Mart stores after the Lotte Group handed over a golf course to the South Korean government to house a THAAD station. Chinese protesters are also calling for a boycott of South Korean goods.

Moon has criticized THAAD and his election might offer a chance to reset relations with China. Yet the president is caught in a bind. South Korea is still a close ally of the US. Trump has already rattled South Koreans by calling a free trade pact that came into effect in 2012 a “horrible” deal. Vice President Mike Pence complained in Seoul that American businesses in South Korea “face too many barriers to entry, which tilts the playing field against American workers and American growth.” Moon is in an unenviable situation of wooing both China and the US without offending either in the process.

His third and perhaps biggest challenge is North Korea. This liberal leader has revealed that he still dreams of returning to his parent’s North Korean home town, Hungnam. Moon wants peaceful reunification and desires to take his 90-year-old mother back to Hungnam. He has written of wanting to finish his “life there in Hungnam doing pro bono service.”

In the early 2000s, Moon was the architect of “Sunshine Policy” that promoted cooperation with North Korea. This was abandoned when the Hermit Kingdom tested nuclear weapons. For the last eight years, South Korea and the US have been locked in a tight embrace. They have squeezed North Korea with tighter sanctions and greater isolation. Moon might not quite see eye to eye with the Trump administration and Seoul might drift a bit from Washington.

Yet mending relations with North Korea is unlikely to be easy. The February 26 edition of The World This Week examined how deep cracks were appearing “between China and North Korea after the macabre murder of the half-brother of Kim Jong-un in Malaysia.” The young North Korean dictator is wantonly brutal, making North Korea more messy, complicated and unpredictable than ever.

With Trump in the saddle, the US has become unpredictable too. In April, the leader of the free world claimed he had sent an “armada” as a warning to North Korea. It turned out this aircraft carrier strike group was quite far from the Korean Peninsula and sailing in the opposite direction. Pence followed up by declaring that North Korea could do well not to test Trump and, among other things, the US will continue to deploy THAAD. The rhetoric of the Trump administration on North Korea is ratcheting up tensions not only in the Korean Peninsula, but also the rest of the Asia Pacific.

In the days ahead, Moon will have to deal with both Kim Jong-un and Donald Trump. This peace-loving son of North Korean refugees will have the unenviable task of smoothing ruffled waters, keeping his peninsula on an even keel, and balancing competing interests in the Asia Pacific so that all hell does not break loose. Going to the moon sounds a lot easier.

*[You can receive “The World This Week” directly in your inbox by subscribing to our mailing list. Simply visit Fair Observer and enter your email address in the space provided. Meanwhile, please find below five of our finest articles for the week.]

A Fifth Act for the Fifth Republic

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Emmanuel Macron, France © Lorie Shaull

France offers us an unfolding drama with a cast of thousands.

On May 7, nearly two-thirds of French voters boldly elected Emmanuel Macron president for the next five years. Or should I say two-thirds of French voters bravely refused to consider electing the representative of something that is closer to a neo-fascist dynasty than a right-wing political party?

In the immediate aftermath of the election, most of the French media have stuck with the first interpretation, which gives a good grade to French democracy, but the second clearly comes closer to reality. And yet neither of those conclusions sums up the deeper meaning, or plethora of meanings, of this election. Here are some of the more significant ones.

In the first round of the presidential election, the Socialist Party, in power since President François Hollande’s upset victory over Nicolas Sarkozy five years ago, barely achieved the 5% threshold required for public reimbursement of campaign costs reserved for competitive… Read more

New Thinking on Education Needed to Compete in the World

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© Sam Edwards

To compete in the 21st-century global economy, America needs a 21st-century education system.

Income inequality in America is at its highest point since the 1920s. For all our divisions, Americans understand that too much of the wealth our economy is producing is going to those at the very top, while millions see stagnant or declining wages. We will not solve income inequality until we provide better equality of opportunity to all Americans. That effort begins with a commitment to public education that prepares every American to succeed in the 21st century.

In the 20th century, our public schools were the envy of the world and the foundation of our economic growth. Today, we’ve fallen behind. Only four countries spend more per student than the United States, yet American high school students rank 38th in the world in math and 24th in science. The next generation of Americans will not lead the global economy unless we restore our global… Read more

A Stress Test for Democracy in South Africa

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Pretoria, South Africa © Henrique NDR Martins

In South Africa, there is a new branch of the ANC emerging that calls for radical change and advocates against corruption.

Riding on Nelson Mandela’s promise of freedom, equality and opportunity, the African National Congress (ANC) has exercised unchallenged electoral dominance over South African politics for decades. While South Africa has become an exceptional model of liberal democracy and economic development on the continent under the party’s leadership, the ANC is now facing a crisis.

The current head of the ANC and president of South Africa, Jacob Zuma, has downgraded both the democratic credibility and economy of the country through his scandals, cabinet reshuffles and corrupt dealings. Many South Africans have been increasingly angered and dismayed by Zuma’s misuse of public funds and disregard for protocol. Mass protests against Zuma and invigorated mobilization by the opposition suggest the potential decline of ANC hegemony. Increased inter-party competition, however, also has the potential to herald in a new era of… Read more

Europe: Moving at Different Speeds

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A multi-speed Europe presents an attractive alternative to the current EU structure. But is it feasible?

European leaders gathered on March 25 to commemorate what should have been a momentous occasion: the 60th anniversary of signing of the Treaty of Rome, which established the European Economic Community. Instead, the Rome summit took on a distinctly gloomy tone as 27 heads of government (the United Kingdom did not attend) implicitly acknowledged the irony of celebrating the foundations of a union beset by more critical problems than ever. At the forefront of the summit was a conflict over the idea of a “multi-speed Europe,” and the extent to which institutional change will be necessary to salvage the original goals of the union.

The Rome Declaration signed at the end of the March summit states that European Union members “will act together, at different paces and intensity where necessary, while moving in the same direction,” which loosely references a multi-speed European… Read more

The Case for Safe Zones in Syria

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Homs, Syria © bwb-studio

Jordan’s unsecured borders pose a threat of even further chaos in the Middle East.

Six years into the Syrian Civil War, Russia and Syria have spread their special operation forces to Syria’s southern border with Jordan in an attempt to stop any sudden deployment of US or allied troops. This fact is going to change soon: According to Jordanian government spokesman, Mohammad Momani, American and British intelligence services are planning to start operating in Syria’s south to pave the way for a wider ground intervention in that area to help establish safe zones.

The future scenario of the war in Syria will be determined after June, when Americans and Russians will sit down together to decide the possibility of setting up a humanitarian buffer zone to address the issues of refugees in northern Jordan. In mid-April, there were talks about an American-led military intervention in southern Syria to establish a safe haven for refugees who heavily burden Jordan… Read more

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Photo Credit: Republic of Korea

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