Old Style Politics Could Sink The New Korea

Little more than a week into his five-year term, South Korean President Kim Dae Jung is under siege. The opposition Grand National Party refuses to confirm his Prime Minister, Kim Jong Pil. Worse, the GNP is intent on challenging Kim's crusade to institute radical reforms to pull South Korea out of its economic crisis.

Gridlock is threatening to snarl up Korean politics, weaken Kim's presidency, and crimp his ability to manage the crisis. Kim, of course, holds some trump cards. He has strong international backing and an electoral mandate for change. But the GNP controls 161 of 294 seats in the National Assembly, which must enact key reforms to accountancy, bankruptcy, and corporate-governance standards. Analysts say the faction-riddled GNP is more worried about losing its majority by attrition than it is about backing reform.

ERSTWHILE ENEMIES. Kim is fighting back by working up political countermeasures that would weaken his opponents. And he is thumbing his nose at the GNP by naming Kim as his acting Prime Minister, a move that doesn't need parliamentary approval. But the brawling could put essential reforms on hold.

Partisan politics is a luxury South Korea can ill afford. Unemployment soared to an 11-year high of 4.5% in January and will head higher. The won's blowout has pumped inflation to near double-digit levels. And the economy will be lucky to grow 1% this year. Now, in exchange for a $60 billion bailout, Kim must implement an International Monetary Fund austerity program. He had hoped the GNP would help--at least initially--to build a consensus to reform the vast industrial chaebol, shutter insolvent banks, and brace the public for hardship.

But the GNP, formerly the ruling New Korea Party of outgoing President Kim Young Sam, is fighting every inch of the way. The party is friendlier to the chaebol and Seoul's debt-besotted banks than is the President. It may stymie measures that threaten business barons or its own campaign coffers. "The reform process is faltering while our core problems have not been tackled," frets Park Kyung Suh, research fellow at the Korea Institute of Finance think tank.

So far, Kim, 74, shows no sign of ditching his acting premier. The irony is rich. Kim Jong Pil backed the coup that brought strongman Park Chung Hee to power in 1961. He founded the notorious Korean Central Intelligence Agency that allegedly tried to kill Kim Dae Jung, then a dissident. But as rival candidates last December, the erstwhile enemies made common cause.

FEAR OF DEFECTIONS. The GNP argues that it opposes Kim Jong Pil out of principle. "[He] symbolizes an old era when corruption was rife," intones GNP lawmaker Lee Shin Bom. Truth is, the GNP is terrified that its own members will defect to the Kims, who want to adopt a parliamentary system giving lawmakers more power. Legislators love the idea, which could bring pork to their constituencies. "A debate on constitutional changes could split [the GNP]," warns Gong Sung Jin, head of the Hanbek Foundation think tank.

Meanwhile, economic reform is bogging down. President Kim had cajoled the chaebol into accepting changes. They agreed, for instance, to end cross-lending among subsidiaries, adopt transparent accounts, and divest nonessential businesses. Yet when Kim's party introduced a bill during the presidential transition to permit foreign hostile takeovers immediately so as to speed the process, the GNP pushed back the start date to 1999.

It seems that not even the biggest economic upheaval since the Korean War can focus the nation's leaders on unity. South Korea, as a result, could end up paying a far higher price in economic pain than it needs to.