Commentary: At A Standstill In Seoul
The Rugby Ball. That's the nickname South Korean President Roh Moo Hyun quickly earned after he took office in February because no one knew which way the maverick politician would bounce. Living up to his reputation, Roh on Oct. 10 told a scrum of reporters that he wants a vote of confidence in his leadership and will resign if he doesn't get it. The call for a referendum, made less than eight months into Roh's term, throws South Korea into a serious political crisis. Just as bad, it's likely to further slow, if not scuttle, already troubled economic reforms. "You can forget about economic reform until political stability is regained," says Kim Sang Jo, an economics professor at Hansung University.
Roh's emotional plea for a new mandate came after a series of blows to his waning prestige. On Sept. 20, 37 of his supporters broke away from his Millennium Democratic Party. Nine days later, he himself quit the party. On Oct. 8, prosecutors announced they were investigating a former Roh aide, Choi Do Sul, for allegedly taking $1 million in bribes, a charge Choi denies. Polls show Roh's public approval rating has dropped below 30%, down from 70% in the weeks after he took office. The former human-rights lawyer said he saw "a darkness ahead" when he heard the news about Choi, and felt he had "lost the moral authority" to continue governing without a new mandate.
Is this the latest chapter in what some critics label Roh's public breakdown? Analysts are more inclined to see the call for a referendum as a big political gamble -- and perhaps Roh's only shot at accomplishing anything. Even before his party crumbled, Roh's Millennium Democrats were a minority in Parliament. Today there's virtually no way he can get any reform laws passed. So he is hoping to garner support by going directly to the public. Then in legislative elections in April, he and the new splinter party might win enough seats to regain some leverage. "Roh is making a high-stakes bet to break out of the current political mold," says Cho Ki Suk, political scientist at Ewha Woman's University in Seoul.
Sounds reasonable. Problem is, the attempt to regain momentum will only divert attention from the economic reforms Roh promised in his campaign. For starters, any real parliamentary action will likely be delayed until after the confidence vote, which Roh wants to hold on Dec. 15. Among the pending bills is an important law mandating tougher and more transparent accounting practices, and another that for the first time would allow class action lawsuits by shareholders.
Worse, Roh is backing away even from reforms he could install without legislation. On Sept. 27, the government made an abrupt U-turn in its policy to curb rampant abuse of credit cards by forcing issuers to reduce cash loans to cardholders. To ease a cash crunch that's dampening spending, the government has delayed implementation of the regulation for three years. "This inconsistency makes you wonder where Roh is heading," says Sogang University economist Nam Joo Ha. And since June, the government has given up its efforts to block a bailout of SK Global, the bankrupt trading arm of SK Group, by other companies in the chaebol. Roh's failure to stop this bailout -- which shareholder activists have widely condemned -- severely undermines his pledge to tackle chaebol reform.
Both decisions seem rooted in Seoul's desire to pursue only those reforms that won't hurt the economy or consumers in the short term. Bad move. Korean history abounds with evidence that heavy pump-priming backfires. The growth-at-all-cost mantra of the '70s and '80s led to the 1998 meltdown. Heavy subsidies to startups fueled a bubble in the Kosdaq market in 2000: It then lost 80% of its value. "Shortsighted policies have traditionally worsened the boom-bust cycle, " says Shin In Seok, senior research fellow at the Korea Development Institute, a state-funded think tank.
In explaining his call for a referendum, Roh said Koreans would have to make sacrifices in the short term. "Let's accept this pain," Roh said. If the President were to give the reformers reason to keep faith, they might be more willing to accept the pain and back him in the referendum. Instead, he has shown all the consistency of a bouncing rugby ball.
By Moon Ihlwan