From Death Row To The Presidency: What Kim Dae Jung Might Do

Kim Dae Jung once sweated it out on Seoul's death row, convicted of sedition. It was only pressure from President Ronald Reagan's White House that saved him from execution in 1981. But now, the 71-year-old South Korean opposition leader, a veteran of three previous campaigns, may finally be moving into Seoul's presidential Blue House after elections on Dec. 18.

Whether or not Kim Dae Jung wins, the election is shaping up as the fairest in South Korea's 49-year-history. Even-handed media coverage, a lack of strong-arm tactics, and lively television debates mark a big break from the past. Kim's TV presence has stymied long-standing government efforts to paint him as a dangerous radical who is soft on North Korea.

BAILOUT? But one thing remains unchanged in South Korea's political culture: A strong tendency to brush painful and apparently insoluble problems under the carpet. The most pressing question of the day--the future of the country's tottering and bankrupt chaebol--is barely mentioned in the campaign at all.

A full-blown bailout would be staggeringly expensive. Standard & Poor's, for instance, estimates it might cost $100 billion, or 20% of the country's half-a-trillion-dollar economy, to fix the problem totally. Some analysts worry that Kim might be tempted to make more concessions to the huge conglomerates than the ruling New Korea Party (NKP) under President Kim Young Sam has done so far.

The logic is simple. Kim Dae Jung, the argument goes, needs to broaden his appeal and widen his constituency. His support comes from farmers and small-business operators as well as labor unions. Polls show that he has already garnered the support of a third of the electorate vs. about one- fifth for the NKP candidate. Big-business support would strengthen his campaign.

Kim's position, so far, has been guarded. He has promised to end the corrupt alliance between business and government, which worked against him for so many years. Right now, "the bigger the company, the better the deal you get from the government," complains North Cholla Province Governor You Jong Keun, a former Rutgers University economics professor and longtime economic adviser to Kim. He says that a Kim administration would encourage competition to "force our chaebol to get leaner."

Kim himself has reined in earlier rhetoric in which he called for reduction in chaebol power. He puts more emphasis on boosting small business as a palliative. Besides, cutting the ground from under the chaebol would risk pushing the banking system over the edge, worsening South Korea's mounting economic plight. Already the nation's banks are in a fragile state because they are loaded with bad debts that by some estimates may now amount to tens of billions of dollars.

Softening his stance on the chaebol might also appeal to Kim's old labor union supporters and his strong nationalistic streak. Auto maker Kia, for instance, is teetering on the brink of collapse under $10.7 billion of debt, and 60,000 jobs there are in jeopardy. Bailing it out would put South Korea on a collision course with the U.S. Washington is already girding up to fight protectionism, especially in autos.

December's elections are shaping up to be a giant step along the road toward turning South Korea into a full-fledged operational democracy. The man long considered a dangerous threat to the old system may well be peacefully voted into office to end it for good. But it will take much longer than his five-year term to turn South Korea into an open economy where market rules apply fully, too.

    Before it's here, it's on the Bloomberg Terminal.