KOREA FOCUS - August 2012

Table of Contents

Korea Focus - August 2012 - TOC - Politics 1. Prerequisites for Korea’s Next President 2. Unification of Korean Peninsula and China 3. Ulterior Motives behind China's Extension of the Great Wall 4. Healthcare in a Unified Korea 5. North Korean Teens are Shorter than South Korean Children - Economy 1.Warning Signal on Net External Debt 2. Threats from Rising Government Debt 3. Welfare Populism Entails Tax Hikes 4. Problems Facing Small Business Owners 5. New Challenges for Korean Contractors - Society 1. Jang Bogo Station to Open New Era of Polar Studies 2. ‘Korean-style’ Success of New York High Schools 3. Challenges of the Military in a Multiethnic Society 4. Love and Hatred for Park Chung-hee 5. Better Habits Needed in Electricity Use - Culture 1. The Glow behind Dancer Keum Beena 2. Why Should I Buy My Own Car? 3. Cultural Heritage Content and National Power 4. Two Late Cardinals and Archbishop Yeo m Soo-jung 5. Mountain After Mountain - Essay

1. [Roundtable] Is Korean Politics in a State of Evolution?

2. Possibility of Kim Jong-un Regime’s Reform and Opening Up 3. Time to Prepare for Demographic Bonus 2.0 4. Economic Polarization in Korea: Trends and Implications - Feature 1. ‘All Eyes On Korea’ Vies for Global Limelight in London - BookReview 1. Three Neighboring Nations Coauthor Mutually Acceptable History Book 2. Foreign Affairs Correspondent Explores Truth in U.S.-ROK Relations - Interview 1. Jeong Yeong-seon: “Our generation is not the last to live on this earth.”

- COPYRIGHT

- Prerequisites for Korea’s Next President - Unification of Korean Peninsula and China - Ulterior Motives behind China’s Extension of the Great Wall - Healthcare in a Unified Korea - North Korean Teens are Shorter than South Korean Children

Prerequisites for Korea’s Next President

Kang Chun-suk Editor-in-Chief The Chosun Ilbo

The Republic of Korea will be 64 years old in August this year. Had its birth not been delayed by the country’s disturbing internal conditions, it would be 67. The nation was placed in such a destitute situation at the time of its birth in 1945 that few credible records are available about its financial status at the time. Eight years later, South Korea’s recorded per capita annual income was a meager $67. The figure is in striking contrast to the $400 that the average Korean urban worker spent monthly on dining out in 2007.

Between 1945 and 1948, the world’s two superpowers occupied the Korean peninsula, which they had partitioned as victors of World War II. Separated from the more populous South, with all means of contact practically severed, North Korea was left in the hands of an autocrat who employed violent and

forcible means to conceal his incompetent leadership. Moreover, he was later brazen enough to hand down power to his son, who produced an impoverished state. The North Korean ruler’s atrocity was initially exposed in 1950, five years after the peninsula was divided, as the tyrant launched an unprovoked invasion of the South. It drove the whole country into three years of devastating war. Today North Korea is isolated from the rest of the world, with its people groaning under suffocating repression.

Against this backdrop, the Republic of Korea will elect a new president on December 19. More than a dozen aspirants, including politicians, nonpoliticians, former and incumbent provincial governors and college professors, have claimed they are “qualified contenders” with all sorts of modifiers extracted from dictionaries. Off hand it is hard to assess their qualifications.

Yet, we need to use various yardsticks to closely check their merits and shortcomings so as to cast educated votes on Election Day. The first thing to be checked is whether a candidate has a proper understanding of the “post-liberation history” of the two Koreas. Although history is not a critical factor in the conduct of their livelihood, the people should be aware of their favorite candidate’s views of history. This is not to solicit an ideological war. But a presidential candidate must take at least a clear-cut position on the legitimacy of the Republic of Korea and the illegitimate hereditary dynasty of North Korea. Another requisite is a desire to advance the time of freeing the North Korean populace from the misery and torment of outdated totalitarianism.

Second, a presidential contender should be able to present a new national vision of the Republic of Korea. Thus far we have been placed under economy-oriented national mottos, largely calling for sustained increases in the national per capita income and trade volume. In the past, when the nation

progressed through various stages of development, this kind of slogan was widely accepted as a matter of setting higher goals. However, such monolithic calls can no longer incite public commitment for further advancement. An economy-centered policy tends to lose its driving force once its goal has been attained. We now need a more enduring spiritual vision that befits our national standing and pride and guide us in coping with changes in the international community.

Third, it must be asked whether a presidential contender has a lucid enough view of social welfare to heal societal frictions and divisions, which have beset Korean society as it moved from an “era of poor equalitarianism” into an “age of rich polarization.” Attempts to copy welfare systems in such Scandinavian countries as Sweden, Denmark and Finland are tantamount to petty deception rather than presenting a wholesome vision. Social welfare policies of those countries with populations ranging from five to nine million cannot be the same as that of the Republic of Korea, which has a far larger population of 50 million and which has to embrace 25 million North Koreans at some time in the future.

Fourth, a critical qualification required of a candidate is the ability to accurately fathom and effectively cope with sudden changes that may flare up in volatile Northeast Asia. The gross total of military expenditures of world countries is estimated at about $1,600 billion. Of the amount, some 60 percent is spent by major powers surrounding the Korean peninsula. Following China and North Korea, Japan is tampering with the buttons of nuclear devices. The “security equation” involving the United States, China, Japan and Russia as well as North and South Korea would be hard to solve even for a supercomputer. Under such complicated circumstances, should a leader make a misstep for whatever reasons, his country would instantly fall off the labyrinth.

An insightful perception of national security is indeed a crucial requisite of the

president of the Republic of Korea.

Those who fail to meet any of the four qualifications have to be omitted from the presidential race because the life and death of the nation and the people are dependent on those prerequisites. Of course, a respectable president should be able to distinguish politics from state administration and public affairs from private matters. The presidency is a career a good many ambitious aspirants take up with fabulous dreams but eventually face exits in humiliation. Human beings by nature tend to deplore the past, complain about the present and entertain exorbitant fantasies about the future. Still, in the history of any country in the world, there have been a few, if not many, great heads of state, and there is no reason why we should not dream of having a great leader.

[June 23, 2012]

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Unification of Korean Peninsula and China

Jin Jingyi Professor of Oriental Studies Peking University

When the unification of the Korean peninsula is debated, China’s position and attitude is almost always put on the agenda. It seems that many South Koreans think China wants to maintain a status quo and does not want to see the divided peninsula reunified. But is that really the case?

China has consistently expressed support for a “peaceful” unification of the Korean nation. It emphasizes the modifier “peaceful” because the “process of unification” is important. If the unification process is not peaceful but coerced by forceful means or war, Beijing will resolutely oppose it. In modern history, China has experienced a great deal of pain amid armed conflicts surrounding the Korean peninsula, which is the historical basis of Beijing’s emphasis on peace and stability on the peninsula.

On the other hand, some argue that China would not welcome Korean reunification because it would lead to the stationing of U.S. military forces right up to the Yalu River, which separates the two countries, assuming that U.S. troops would remain on the peninsula after unification.

The key question in this regard is whether Beijing could be expected to support an “uncomfortable” Korean unification, in case China and the United States are engaged in a confrontation mode or Washington attempts to use the Korean peninsula as an advance base against China. Such developments may lead to repeating the failed diplomacy of the Joseon Dynasty, which tried in vain to check a foreign power’s encroachment by leveraging another alien power around the turn of the 20th century. Should the tragic history be repeated, the Korean peninsula would not be freed from geopolitical fatalism even after unification.

For sure, a unified Korean peninsula would never repeat the historical tragedy.

Indeed a most noteworthy aspect in the process of unification will be the depletion and eventual demise of the conventional geopolitics of the peninsula.

In the background of the past dynasty’s tribulation was an intense contest for colonization among major powers whose conflicting geopolitical strategies converged on the peninsula to touch off a series of clashes and confrontations.

In contrast, globalization and regional economic cooperation characterize international relations today. Yet, the Korean peninsula has yet to break out of its traditional geopolitical frame because major powers maintain strategic interests in the region. The hard reality of territorial partition has provided those big powers with pretexts and room for intervention. Unification of the peninsula will be a process to eliminate these excuses. Ultimately, Korean reunification should be an historic event to overcome the division of North and

South Korea as well as to achieve freedom by casting off the peninsula’s geopolitical yoke and neutralizing the strategic influence of great powers.

Korean unification like this would benefit China more than any other nation.

History has proven that China sustained more losses than gains when major powers expanded their strategic influence on the Korean peninsula. The Chinese were adversely affected ― as a matter of course ― by two SinoJapanese wars (the first in 1894-1895 and the second in 1937-1945) and the Russo-Japanese War (1904-1905) as well as more recent conflicts including the Korean War (1950-1953) and division.

Korea’s territorial division has indeed consumed substantial amounts of Chinese resources in many fields, including politics, economy, diplomacy and security. When geopolitical factors came into play on the Korean peninsula, Beijing experienced serious friction with other major powers amid intensifying pressure. Korean unification will ultimately end this conflict-ridden history.

Of course, there is mutual suspicion between some South Koreans and Chinese as they perceive the other as a “threat.” This is natural in view of their recent history; for more than a century the two countries have never treated each other as a major power or as a unified sovereign state. The conflict, however, will help redefine the bilateral relationship. Mutual exchange and cooperation between the two nations have already matured enough to heal such conflict.

Seen from a broader perspective, the driving force to overcome the conflict will turn out to be a huge benefit that Korean unification will bring to both countries.

[The Hankyoreh, June 20, 2012]

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Ulterior Motives behind China’s Extension of the Great Wall

Kwon Hee-young Professor of History The Academy of Korean Studies

It is feared that China is making political use of UNESCO World Heritage sites, which are designated for all mankind to protect and preserve beyond individual national interests. One example is the Great Wall of China.

Emperor Qin Shi Huang built the Great Wall by connecting and extending separate walls feudal lords had built to defend their respective territories against Xiongnu invasions during the Spring and Autumn Period. Afterwards, subsequent Chinese dynasties extended and improved the walls, whenever necessary. But after the Jurchen conquered China and founded the Qing Dynasty, the extension of the Great Wall stopped because Qing became an empire with a vast territory that no longer needed to use the Great Wall for defense purposes.

The extension of the Great Wall, which was stopped in the 16th century, has resumed in the 21st century. Since 2004, China has rebuilt Bakjak Fortress of the Goguryeo Kingdom and renamed it “Hushan Great Wall.” Then, since 2009, it has claimed that the Goguryeo fortress is part of the Great Wall of China. On June 5, Tong Mingkang, deputy chief of China’s State Administration of Cultural Heritage, said, through the Guangming Ribao daily, that he was sure the total length of the Great Wall amounted to 21,196.18 kilometers. The announcement was the outcome of at least six years of planning and survey and China will continue to preserve the Great Wall, he claimed.

Why is China trying to elongate the Great Wall by “rebuilding and improving” it? As written in the newspaper, this is because the “Great Wall is a symbol of the Chinese people as well as China’s first World Heritage site.” Now we can see China’s politics behind the Great Wall: The Great Wall, which was originally built to distinguish the Chinese Han from northern peoples and defend China against Xiongnu invasions, has now become a symbol whereby ethnic minorities in China and the Han Chinese should be united under the banner of Sinocentrism.

Furthermore, UNESCO’s World Heritage project, which is designed to safeguard the legacies of each nation’s contributions to history as heritage of humanity, has become a tool for China to remove differences between ethnic groups and create a new Chinese ethnicity.

If China remodels the fortress wall in the style of the Ming Dynasty by erasing traces of Goguryeo and calling the Great Wall a symbol of Chinese ethnicity, then what is the real identity of the Chinese ethnicity as claimed by China?

What meaning does the World Heritage carry for China, if it tries to erase all

of the cultural traces of each nation in northern regions and absorb them as part of the Han Chinese people’s heritage?

We are well aware what negative effects China’s politically-charged history program, dubbed the “Northeast Project,” has had on the Seoul-Beijing relations. At a time when our memory of this is still vivid, it is never desirable for China to practice narrow-minded politics under the pretext of a World Heritage site whereby it should pursue common human values. This is undesirable not only for bilateral relations, but for China’s own international status as one of the G2 members alongside the United States.

China has abundant cultural assets. And we know that the Chinese people have achieved such cultural richness through exchanges with other nations over a long period of time. China should fully realize that the genuine value it should pursue is not politics of uniformity based on the Chinese ethnicity, but politics based on multicultural diversity that embraces characteristics of each ethnic minority. Then it can boost its national prestige as a country with refined culture, instead of giving the impression that it is arrogant and rude.

The Korean government should be aware that the “politics behind the extended Great Wall” is never simply an internal affair of China. It is necessary to respond determinedly to this by finding out whether China has any ulterior motives to exercise influence on the Korean peninsula by incorporating even the history of Goguryeo into Chinese history.

[Munhwa Ilbo, June 13, 2012]

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Healthcare in a Unified Korea

Kang Dae-hee Dean, College of Medicine Seoul National University

A total of 23,568 North Korean defectors have arrived in South Korea as of April 2012, according to the Ministry of Unification. This figure is up a whopping 25 times the number in 1998, when the total was 947. But the level of healthcare for them was found to be not so satisfactory. A study on their life satisfaction level here shows that they are least content with the medical service given to them. But what is more serious is the health of those still in North Korea.

According to a report on “health disparities between South and North Koreans� prepared by Hwang Na-mi, a researcher at the Korea Institute for Health and Social Affairs, the average life expectancy of North Koreans was 58 years in 2007, 13 years less than South Koreans. The maternal mortality

rate in the North was 77 per 1,000 people and infant mortality rate 19 per 1,000 people, both the highest in the world.

The bigger problem is that medical service in the North is deteriorating. Far more North Korean residents than defectors have serious health problems. As many as 20,000 people have starved to death in South Hwanghae Province alone this year. The strained inter-Korean relations are making medical assistance for the North more difficult.

Then, how will we prepare for a public health system in a unified Korea? Who will treat North Koreans? How will we train North Korean medical staff? And what kind of medical system will we operate, other than simply supplying the North with medical supplies and equipment? We need to think seriously about all of these questions.

There are many more differences than similarities between the two Koreas in medical terminologies, methods of medical treatment, and the doctor-patient relationship. It is never too early to make thorough preparations, starting now.

Nobody knows when and how unification will come. We should give top priority to working out a healthcare system and policy to prepare for a unified Korea, in case unification comes abruptly as Germany experienced.

Even in Germany, where there had been a lot of exchanges between East and West, it was found after reunification that the medical situation in East Germany was far below what West German healthcare experts had thought.

We know nearly nothing about North Korea’s public health system. It is urgently necessary for the two Koreas to understand each other’s healthcare system and try to narrow their health gap through systematic and efficient medical assistance and mutual exchanges and cooperation.

Until recently, many civic groups and religious organizations have given humanitarian medical aid to the North and saved many lives. But what is more necessary is medium and long-term medical assistance systematically provided for the North. The government should pay much more attention to medical exchanges with the North. It is also necessary to support research on North Korean medical and public health system, a field that has been ignored.

Medical academia should give priority to learning about the public healthcare system in the North.

In addition, medical experts should have a better understanding of what is really happening at public health facilities in the North, rather than relying only on official announcements issued by the regime. They should give the government and civic groups necessary suggestions on humanitarian medical assistance to the North and recommend healthcare policies for a unified Korea.

It is also necessary to launch an independent public health research center for a unified Korea, which is staffed by medical scholars and private experts.

The Seoul National University College of Medicine’s Medical Center for Unification, which opens next week, intends to conduct research on differences in medical terminologies, medical education, medical systems, training of medical staff, and medical cultures between the two Koreas. The center will also try to determine what problems should be resolved first and what measures would be the most effective under the current circumstances, while conducting a survey of North Korean people’s health situation in cooperation with local medical circles.

The center will, then, find out strengths and weaknesses of the North Korean medical system, suggest priorities, and make policy suggestions for the public health sector in a unified Korea. But such efforts can only contribute to resolving a very small portion of post-unification public healthcare issues.

The government, the private sector, religious circles and academia should join efforts in this regard. Especially, the government should take the initiative to unify medical systems and public health sectors of the two Koreas. Bold support for research on the North’s public health system would contribute to laying the foundation for the health of 70 million Koreans after the nation is unified.

Health is man’s basic right. The physical health of people as well as the social health of the unified peninsula might be threatened unless a health policy is properly formulated for the North Korean residents. We can’t afford to remain relaxed about preparing a public healthcare system for a unified Korea. We should rush to seek practical ways from now on.

[Seoul Shinmun, June 9, 2012]

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North Korean Teens are Shorter than South Korean Children

Editorial The Chosun Ilbo

A 17-year-old boy, identified as “Kim,” who entered an alternative high school in Seoul for teenagers from North Korea in March, stood a mere 137cm. He had lived alone in the North after his parents died. He crossed the Amnok (Yalu) River alongside two of his friends in January last year, because he was “hungry.” After three months of nutritious meals and growth hormone injections, he had his height measured again at a hospital in Seoul and found that he had grown 5cm to stand 142cm.

Seventeen is an age for 11th grade. But Kim was shorter than the average South Korean fourth grader, who is normally 11 years old and 138cm tall. He was 36cm shorter than South Korea’s average 11th grade boy, who is 173cm tall. According to a government survey of the height of North Korean defectors aged 19-29 in 2009, North Korean men were 8.8cm shorter than their

South Korean counterparts and North Korean women 6.5cm shorter than South Korean women, and North Korean male defectors in their 20s weighed 14.3kg less than their South Korean counterparts. It is no exaggeration to say that North Koreans seem to have become a different race.

Kim was born in 1995, the year when the “March of Tribulation” began. It was a time when food shortages caused by floods, drought and frost resulted in widespread starvation. In the North, those born in 1995 are subject to the draft this year. Coincidentally, the North Korean army reportedly lowered the minimum height requirement for recruits by 3cm, from 145cm to 142cm, in March. It seems that the North Korean military had to lower the height limit or face a dwindling supply of young men subject to the draft due to their short height.

North Koreans’ small physique is attributed to a lack of proper food.

According to a survey conducted in North Korea by five American charity organizations early last year, North Korean residents received mixed rations of mainly corn and rice for 1,285 calories per day, 61 percent of the minimum daily nutritional requirement of 2,100 calories.

[June 29, 2012]

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- Warning Signal on Net External Debt - Threats from Rising Government Debt - Welfare Populism Entails Tax Hikes - Problems Facing Small Business Owners - New Challenges for Korean Contractors

Warning Signal on Net External Debt

Kim Kyung-soo Professor of Economics Sungkyunkwan University

Korea’s net external credit, which is calculated by subtracting the nation’s foreign debt from its external credit, was US$98 billion at the end of 2011, making the nation a net creditor. Meanwhile, external assets, which include foreign credit and overseas stocks and foreign direct investment, totaled $742 billion while external liabilities amounted to $839.1 billion, creating $97.1 billion in net external liabilities.

Since the 1997 Asian financial crisis, Korea has had a current account surplus.

Nevertheless, net external liabilities have swollen along with financial globalization. In 2001-2010, Korea’s aggregated current account surplus reached $178.1 billion, but its net external liabilities increased by $102.4 billion. Consequently, the net external liabilities as a share of gross domestic

product rose from 11 percent in 2001 to 14 percent in 2010.

In other words, net external assets declined in reverse proportion to current account surplus. That’s because the prices of investment assets and effects of changes in foreign exchange rates and the international balance of payments were reflected in the fluctuations of external assets and liabilities. The effects of changes in currency rates stem from the composition of external assets and liabilities. Advanced countries, for example, tend to classify debt securities, a safe asset, as external debts, and stocks, a risk asset, as external assets. The United States is a typical country.

The United States raises funds by issuing treasury bonds and other debt securities in the global financial markets. The low-cost financing is then funneled into riskier assets ― stocks or overseas direct investments ― to generate high returns. As a result, the United States is both the world’s largest debtor nation and a creditor nation. Earnings from its external assets are large enough to offset losses from its external liabilities.

In a sense, Korea is diametrically different from the United States. Korea has used its current account surpluses to buy U.S. treasuries and other securities that boast high liquidity and safety but yield low returns. Foreign-denominated holdings accumulated from such investments represent the biggest portion of the nation’s external assets. On the other hand, foreigners’ investments in higher-risk, higher-return Korean stocks represent the biggest share of the nation’s external liabilities. Hence, the nation’s external liabilities exceed its external assets in terms of earnings rate.

The combination of current account surpluses and increasing net external debt has significant implications that should not be ignored. Above all, external liabilities

that

outpace

external

assets

underscore

macroeconomic

vulnerability. Such dangers can be easily understood if the volume of foreign capital that left Korea as the global financial crisis erupted in September 2008 and the volume of Korean capital retrieved from abroad are compared.

It remains questionable whether Korea’s current account surplus is sustainable over the mid to long term. The pace of population aging in Korea is the fastest in the world, which will inevitably lower household savings. That will exacerbate the current account balance unless enough households invest in high-yielding assets to bolster their fragile financial condition during retirement.

Japan logged a current account surplus last year despite its trade deficit. That was made possible by the country’s enormous external asset holdings.

Likewise, Korea needs to improve the profitability of its external assets.

Accordingly, our foremost priority is to further advance the financial sector system to better recognize the risk-reward profile of investments. Moreover, the currency exchange system, in which the foreign exchange authorities control the country’s external assets, should be overhauled.

To that end, the government should build a more effective regulatory system to strengthen foreign exchange soundness. It should also present a mid- and longterm road map for the globalization of the Korean won and gradually reduce the adequate level of foreign exchange reserves in its external asset portfolio.

[Maeil Business Newspaper, June 13, 2012]

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Threats from Rising Government Debt

Ohn Ki-un Editorial Writer The Maeil Business Newspaper

In the Middle Ages of Europe, absolute monarchs often defaulted on funds borrowed from rich merchants and aristocrats to finance wars. The creditors risked losing their money if the debtor king died suddenly or if his successor refused to honor the debts. Due to such risks, the interest rates on money borrowed by the king were higher than those on money lent to ordinary merchants.

This changed after the British parliament enacted the world’s first law on national debt in 1692, a few years after the outbreak of the Glorious Revolution. Parliament-guaranteed public debt, or the issuance of government debt, eventually replaced the unpredictable royal borrowings as a state’s universal method of fundraising.

Today, national debt is widely used to gauge the soundness of a national economy. International credit ratings agencies determine sovereign credit ratings on the basis of a nation’s ability to pay its debt and interest rates on national debt are set accordingly. Unstable economies tend to have a higher possibility of default on its debt principal or interest, so they are obliged to pay higher interest rates if they want to continue to raise money by issuing government notes. Premiums of credit default swaps (CDS), which are meant to protect lenders from default-related losses, will also rise. These conditions are seen today among Southern European countries.

Greece, where the European debt crisis originated, is still mired in red ink, though creditors have forgiven 53.5 percent of its national liabilities estimated to reach over 200 billion euros. The interest rate on Greece’s 10-year government bond exceeded 17 percent, while its CDS premium surged to 117 percent last week. The Southern European country is virtually bankrupt.

Crisis-hit Spain’s 10-year borrowing costs hover around 7 percent, which economists consider unsustainable. Italy, saddled with $2.7 trillion in national debt, the largest volume among Southern European countries, is also facing a fiscal crisis, amid a surge in the interest rates on its government bonds.

The crisis has triggered capital flight to Germany, a haven in the eurozone turmoil, bringing down yields on its 10-year government bonds to the 1 percent range and, for a time, yields on two-year notes below zero.

Before the launch of the eurozone in 1999, government bond interest rates in Southern European countries were much higher than those of Germany and France. But the regional economic integration pushed down interest rates to very low levels, giving rise to real estate bubbles and galloping inflation.

Governments and people spent money like water.

The consequence is the current pain in Europe. Governments and households ended up with huge debt loads after the asset bubbles burst. As the debt-laden countries’ sovereign credit ratings nose-dived, the value of their government bonds plunged. Discussions are now under way to cope with the eurozone debt crisis through the issue of euro bonds and other measures. But the crisis is far from resolved.

Compared with crisis-hit European countries, Korea appears to be in good shape. But we should guard against complacency. Korea’s national debt amounted to merely 25 trillion won in 1990. Following the 1997 Asian currency crisis, however, the debt load surged to 101 trillion won in 2000. The figure again swelled to 127 trillion won in 2002, the last year of the Kim Daejung government, and more than doubled to 289 trillion won in 2007, the final year of the Roh Moo-hyun government. Last year, the national debt rose to 421 trillion won.

The ratio of government debt to gross domestic product (GDP) hovered around 10 percent before the Asian currency crisis, but increased to 34 percent last year. If debts owed by state-run corporations are included, the ratio of government debt to GDP exceeds 60 percent. Government bond issues mushroomed from 10 trillion won in 1990 to 397 trillion won last year.

The Organization for Economic Cooperation and Development (OECD) forecasts Korea’s potential economic growth rate will decline to 1 percent in 2050, the lowest among OECD member states. The slowing economic growth will inevitably cut into tax revenues, forcing the government to further increase its bond issuance. Korea’s national debt problem could become more serious than that of Southern European countries, considering its rapid population aging, falling birth rate and welfare policies promoted by

politicians.

Spain’s ratio of government debt to GDP also jumped from 36 percent in 2007 to 100 percent this year. The corresponding ratio for Japan, which has the world’s highest government debt ratio, has soared from 70 percent in 1990 to 230 percent. Korea’s government debt ratio could suddenly surge, if the state finances are not properly managed.

[June 26, 2012]

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Welfare Populism Entails Tax Hikes

Hyun Jin-kwon Director, Center for Social Cohesion Korea Economic Research Institute

Japan’s rival parties have reached a surprise agreement on a consumption tax hike. On June 15, they agreed to double the 5 percent consumption tax rate by 2015, seeking to address government deficits and paving the way for tax increases and welfare reform bills.

Japan’s national debt is equivalent to about 200 percent of the nation’s gross domestic product, exceeding the 150 percent equivalent of Greece, where the eurozone debt crisis originated. While the volume of Japan’s national debt is an obvious cause for concern, the situation is mitigated somewhat by the fact that Japanese investors hold most of the nation’s government bonds.

The fundamental reason for Japan’s debt problem lies in populist welfare

policies and indiscriminate spending on infrastructure. The welfare policies provide a typical example of how democracy can actually stifle economic growth. The ruling Democratic Party’s key election promises called for additional welfare benefits without tax increases. The party’s push for a new welfare system, in which pension allowances based on past annual incomes are added to a minimum of up to 70,000 yen a month, represents the culmination of its political strategy built around pandering welfare promises.

A political campaign to expand welfare benefits at no additional cost to the public appears to be the best strategy to seize power. In reality, however, it may be difficult to honor the pledge. The ruling party will be able to deceive the people if national debts and fiscal deficits are manageable and can be handed over to the next generation. But tax hikes are inevitable when they reach the scale of Japan’s current national debt.

Japan’s corporate and income tax rates are already comparatively high by international standards. Japan had no choice but to raise its relatively low consumption tax rate in order to maintain its national competitiveness in the era of openness. A consumption tax hike can be effective in securing more tax revenue. But it is also the most daunting option politically. A consumption tax disproportionately affects the poor and small businesses, due to its regressive nature. It also exerts pervasive effects on the entire population. Thus, if political support is taken into consideration, consumption tax is the most dangerous tax alternative.

While the agreement on consumption tax was praised by some as a decision for the sake of future generations, it also indirectly illuminated the seriousness of Japan’s fiscal soundness problem. The 21st Century Public Policy Institute, a Japanese private think tank, has warned that despite raising the consumption tax rate to 10 percent, Japan’s national debt ratio will eventually rise to 600

percent by 2050 unless welfare expenditures are additionally cut.

In the run-up to the April 11 general election, Korea’s ruling and opposition parties competed with promises of free welfare services. As the December 19 presidential election nears, the rival parties are again vying to develop new policies to expand free welfare benefits.

Free welfare incurs fiscal deficit and worsens national debt problem. Korea’s fiscal soundness was a critical determinant in its recovery from the 1997 Asian foreign exchange crisis and the 2008 global financial crisis. The Korean economy is again clouded by the ongoing eurozone debt crisis. The only weapon to fight the lingering economic risks is fiscal policy. That’s why the issue of fiscal soundness should be included among the top policy priorities.

But the attempt of political parties to outdo each other’s populist welfare promises imperils our fiscal soundness.

The outlook for the Korean economy, a small and open economy, will remain unclear if it is stripped of policy measures to cope with the global economic crisis. At present, public opinions are overwhelmingly in favor of raising corporate tax rates. But the public will soon realize that it will be difficult for Korea to implement corporate tax hikes, particularly considering the realities of fierce international competition. In the end, the additional fiscal burden due to welfare populism should be shouldered by ordinary working people, who will be forced to pay more consumption taxes.

The Korean people should learn a lesson from Japan’s consumption tax hike.

They must realize that it is impossible to expand welfare benefits without raising levies on ordinary working people.

[Munhwa Ilbo, June 20, 2012]

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Problems Facing Small Business Owners

Park Sang-kyu Professor of Business Administration Kangwon National University

Small business owners are a genuine hope for the future of the Korean economy. Despite a host of difficulties, aspiring entrepreneurs continue to start their own businesses. They are not speculators in pursuit of a quick fortune.

They work hard in low-profile businesses to support their family and harbor long-term dreams of turning their pursuit into a large conglomerate.

Since the Asian currency crisis of the late 1990s, the number of small business owners has surged. Many of them are retirees. According to a recent poll, 80.2 percent of self-employed people said they established their business to earn a living for their family. Small businesses account for 32.7 percent of the nation’s employment, which is 3.8 times that of the United States, 2.5 times that of Japan and 1.8 times the average among member states of the

Organization for Economic Cooperation and Development.

The average monthly sales volume of self-employed people is estimated at 9.9 million won (US$8,600), with 83.7 percent of them earning less than 10 million won a month. Nearly 27 percent of these small business owners are operating in the red, while only 19 percent of them earn a net profit of more than 2 million won a month.

In a survey by the Korea Federation of Small and Medium Business, 30.7 percent of small business owners cited increase in financial assistance as their most urgent need, while 27.4 percent called for lowering credit card commission rates and 22.8 percent demanded that large conglomerates be banned from doing business in areas traditionally dominated by small businesses. Fifty-five percent asked for sustained government attention to make small business policies feasible.

Problems cited in the survey included the lack of government support for startup businesses, consumer bias toward luxury and department store goods, increases in costs including personnel expenses and rent fees, and the emergence of large-scale retailers. But small business owners themselves are partially responsible for their plight. Many are guilty of making insufficient preparations and plunging into saturated markets.

The government is obliged to build a framework for win-win development of companies of all sizes and extend sustained support for small business owners in order to help them become the backbone of the nation’s economic growth.

The foremost task is to foster entrepreneurship among small business owners.

People who choose to start a business after retirement simply to earn a living without making sufficient preparations stand little chance of success.

The government should focus on building a business ecosystem for new business start-up and growth and resolving the problems facing small business owners. In this system, all economic agents should operate harmoniously, realizing their fate is interconnected, but when it comes to government support, there must be a clear discrimination between small businesses with the potential to grow into large companies and livelihood-oriented enterprises.

For small businesses themselves, the starting point is customer satisfaction. It is said that 80 percent of corporate problems arise from an insufficient understanding of business environment on the part of chief executives. They need to continuously review their company’s performance and find a breakthrough.

The government, for its part, should build a manpower training system to help small business owners improve their mindsets and capabilities. It is also worthwhile to consider strengthening the education of would-be entrepreneurs so they can make thorough preparations ahead of launching their businesses.

Germany’s meister (master tradesman) system can be a model for Korea. The nation needs to introduce a new system to prohibit people without a master’s license from starting a new business in specific areas.

[Seoul Shinmun, June 5, 2012]

www.koreafocus.or.kr

New Challenges for Korean Contractors

Choi Jae-duck Chairman International Contractors Association of Korea

Korea’s cumulative overseas construction orders have exceeded US$500 billion this year. It took Korea 47 years to reach the milestone after the nation took its very first step into the overseas construction market.

In 1965, a Korean construction company won the contract to build the PattaniNarathiwat Highway in Thailand. I recently came across a diary written by a Korean worker in the project. It reads, in part: “Bridge construction is in full swing today in this Pattani highway construction site in southern Thailand near the border with Malaysia. Compressors and air hammers are still hard to handle, but it is much easier to carry out the backfill operations. Three months have passed since my arrival here. Everything looks unfamiliar and we are facing challenges every day. My ankle aches and I have a sharp pain in my

wrist. It’s really hot.” The diary also records Korea’s struggle to become a global construction powerhouse. In fact, few Koreans had heard of “compressor” or “structural backfill” in the 1960s.

Back in 1965, it was almost impossible to build an expressway in the sizzling tropical climate, which hindered even the production of concrete. The Korean workers’ clothes were soaked with sweat and rainwater, with their faces sunburned. It required hard work and dedication to complete the expressway. It was a miraculous achievement.

The Thai project marked a big step in Korea’s transition to an export-led economy. It would not have been possible without the Korean construction workers’ indomitable determination to turn the impossible into the possible, as well as their love for the nation and their family.

Last December, Korea became the world’s ninth country to surpass the $1 trillion mark in annual trade volume. The nation’s contractors helped lay the cornerstone for this achievement. During the first Middle East boom from the 1970s to the early 1980s, Korea was struggling to sustain rapid economic growth. At the time, the overseas construction industry served as a key growth engine by boosting the nation’s income, employment, savings, foreign exchange holdings and technological capabilities. It also helped paved the way for the development of the nation’s heavy and chemical industries.

In 1982, when the Bank of Korea held $7 billion in foreign exchange reserves and the nation ran a current account deficit of $2.1 billion, Korean contractors won $13.3 billion in annual offshore contracts and recorded $2.6 billion in foreign exchange earnings. Their contribution clearly illustrated the importance of overseas construction projects for the national economy. Largescale offshore projects won by Korean builders also contributed greatly to

Korea’s international reputation and the self-esteem of Korean people.

We now have a lot of expectations for the future of overseas construction projects. Of the $500 billion offshore construction revenue achieved over the past 47 years, $300 billion was earned during the recent five years, hinting at explosive growth momentum. The global construction market is expanding at an annual rate of over 5 percent. It is increasingly likely that a fusion of the construction industry, state-of-the-art information technology, the hallyu craze for Korean culture and various other industrial sectors will create significant synergistic effects.

Korean construction companies will have to exert greater efforts to diversify their businesses into high value-added industries. Competition with Chinese builders is becoming increasingly fierce. But excessive competition among Korean companies, as seen in low bidding for contracts in the Middle East and other major global markets, is also denting their profit margins. Therefore, diversification is needed more than ever. It is also necessary for Korean contractors to improve their financial capabilities in order to effectively cope with changes in global business patterns. The importance of securing source technologies and improving cost competitiveness through innovation cannot be emphasized too much.

The feat of surpassing $500 billion in overseas construction orders has been achieved thanks to our builders, who aggressively ventured into scorching deserts and unknown jungles, fought endemic diseases on foreign soil, risked abduction, and dodged wars. This morning, I get even more heartbroken over the news of our colleagues sacrificed in a recent helicopter crash in Peru while returning from a trip to inspect potential sites for a hydroelectric power plant in the South American country.

[Maeil Business Newspaper, June 18, 2012]

www.koreafocus.or.kr

- Jang Bogo Station to Open New Era of Polar Studies - ‘Korean-style’ Success of New York High Schools - Challenges of the Military in a Multiethnic Society - Love and Hatred for Park Chung-hee - Better Habits Needed in Electricity Use

Jang Bogo Station to Open New Era of Polar Studies

Park Young-il Professor of Industrial Administration Ewha Womans University; Co-chairman of Polar Forum

Korea has finally obtained permission to establish a foothold on Antarctica.

The Antarctic Treaty Consultative Meeting (ATCM) and the Committee for Environmental Protection unanimously approved Korea’s plan to build its second Antarctic research station, named “Jang Bogo Scientific Research Base.” The approval on June 10 paved the way for Korea to advance into Antarctica 24 years after the country built the King Sejong Base on King George Island, 1,000km from the continent.

The task now is to meet the construction deadline of early 2014 and set up the central headquarters for Korean polar studies, which will operate in conjunction with the King Sejong Base and the icebreaker and research vessel

Araon. The construction of Jang Bogo Base at Terra Nova Bay in the Ross Sea will be an epoch-making event in Korea’s history of science and technology.

Above all, the nation will be able to join in the effort to solve global issues.

As is widely known, polar studies in Antarctica mainly involves research on climate change, a crucial issue for the future of mankind. So far, Korea has conducted considerable research and reaped significant results from the King Sejong Base.

But compared to other advanced countries conducting research on the Antarctic continent, King Sejong Base, lying 3,500km from the South Pole, has fundamental limitations in studying global environmental change, glaciers, upper atmosphere, physics, meteors, astronomy and space. After the Jang Bogo Base is built, Korea will be positioned to perform specialized research; develop extreme engineering technologies, which the nation lacks; contribute to international efforts to address climate change; and raise its science and technology capability to the level of advanced countries.

However, we must bear in mind that the construction of Jang Bogo Base alone will not automatically bring about all these developments. Most importantly, the government and people will need to be as patient as ever to invest in expensive research that does not generate revenue and necessary infrastructure in the years ahead.

The international community granted approval for Jang Bogo Base at unprecedented speed. This was largely attributable to the successful activity of the Araon, which was built in 2006 and put into operation in 2009. I hope that the nation will continue to make proactive and aggressive investments in similarly essential research infrastructure in other scientific and technological fields, including the construction of additional polar research stations in the

Arctic.

Polar studies represent adventure and challenge for future generations. Polar studies can help nurture visions for the future and dreams about the common prosperity of mankind and the earth in the hearts of young students. In this regard, teachings about the polar region should be drastically expanded.

Construction plans for the Jang Bogo Base call for a total floor space of 4,458 square meters to accommodate up to 60 people. The base will be constructed as a safe, environmentally-friendly and functional research facility to consistently produce research of international significance, thereby repaying the support of the Korean people and the international community, and further setting a new milestone in the world history of polar research.

[Chosun Ilbo, June 20, 2012]

www.koreafocus.or.kr

‘Korean-style’ Success of New York High Schools

Cho Ho-yeon City & Feature Editor The Kyunghyang Daily News

Last week, the Korean education scene witnessed two events of quite different nature. One was a visit by an American educator in his 30s, who has achieved remarkable success after adopting Korean-style education methods, and the other was accusations by students against the minister of education, science and technology.

Seth Andrew, the head of Democracy Prep Charter School in New York City, introduced Korean-style education, and the school has vaulted from the bottom of national test scores to the top tier. Recently, the school lived up to its reputation again by recording high ratios of success in English and Math subjects in the Scholastic Aptitude Test, comparable to those at elite high schools.

The motto of the school, which is in Harlem, a neighborhood characterized by high unemployment and low-income households, is “Work Hard. Go to College. Change the World.” This surely smacks of Korean education. From the position of Korean educational circles, it certainly is gratifying that the school teaches Korean as a second foreign language as well as Korean mask dance, samulnori (traditional Korean percussion music) and taekwondo martial arts.

On June 18, only a few days after the visit by Superintendent Andrew, students of a local alternative school named “Our School of Hope” filed a complaint with prosecutors against Education, Science and Technology Minister Lee Juho, accusing him of dereliction of duty. They claimed that Minister Lee neglected his duty to prevent and eradicate bullying in schools.

They also insisted that recent suicides of students were due to hypercompetition for university admission and called for the suspension of curriculum that focuses on preparation for college entrance exams, including after-school supplementary lessons and required self-study exercises. It is quite shocking to see young students suing a government minister. Yet, we can’t dismiss their action as deviant or impulsive because their stance has merit by and large.

So far, most government measures against school violence drawn up by the Education Ministry have focused on documenting facts about cases and stiffening punishments. Thus, the measures have had little effect in curbing bullying. It is therefore natural that doubts are being raised about the government’s ability and determination to solve the problem.

The compliments of Mr. Andrew aside, Korean education has long been in

crisis. Public education has already collapsed in large part. Private evening cram schools have taken over education with individual attention simply abandoned. Even worse, the die-hard worship of test scores, the rampant school violence and the infringement of teachers’ authority are shaking our education system. Korean students rank at the top in global scholastic exams but their interest in studies ranks among the lowest. The Korean adolescents who study the most and sleep the least are at the bottom in the world happiness index.

What is even more frustrating is that the Education Ministry is engaged in fierce battle against education officials of cities and provinces. The ministry has brought criminal charges against two superintendents, Kim Sang-gon of Gyeonggi and Kim Seung-hwan of North Jeolla provinces, for dereliction of duty, and trials are currently under way. The charges stem from their refusal to reprimand teachers who were indicted for issuing anti-government statements.

It is self-evident that disputes on educational matters cannot be resolved through legal proceedings. Even if a solution is provided, it can hardly lead to better education. This is why many people say the Education Ministry’s move was not intended to benefit education, students or the country, but to cater to the self-esteem and arrogance of a certain group. Instead of cleaning up the mess in schools, education authorities are spreading confusion.

The success story of Seth Andrew tells us a lot. It is undoubtedly a great feat to transform a school amid poor conditions into one of the best-performing schools in a short period of time. However, I’d like to reserve my judgment about whether this is an educational success. Superintendent Andrew has succeeded in drastically raising the academic scores of his students. However, test scores are only one of numerous yardsticks of education.

Looking at Superintendent Andrew guiding his students by saying, “Work hard and go to college,” we are reminded of our own past when we poured our all into education with the belief that Korea had nothing but its human resources to depend on. Working hard to climb up the ladder of success deserves applause. But, if young students are forced to study hard, rather than study by their own free will, it is educationally inappropriate.

Korean education has hardly changed institutionally but the educational environment is undergoing violent turmoil. Above all, students are markedly different from the older generation in that they highly value autonomy, creativity and diversity. Though small in number, we find young students rejecting the obsession for college entrance, choosing to attend alternative schools, and even filing a complaint against the education minister.

The world is changing, indeed. If we try to confine our students in a rigid frame, marked by pursuit of excellence and forcibleness, and unilaterally herd them in one direction, it is nothing but anachronistic behavior. In this regard, the success of Seth Andrew should be taken as a message that Korean education needs to be reformed, rather than evidence of its excellence and effectiveness.

On June 19, the Kyunghyang Daily News hosted a meeting between reporters of its recent feature series, “Teens Are Sick,” and readers. Through questions and answers the participating students and parents said that our teenagers continue to suffer from education that fails to break away from outdated conventions. When asked what his dream was, a student replied, “It’s getting good sleep on weekends.” The Korean-style education, which deprives students of their dreams, should now open its doors.

[June 21, 2012]

www.koreafocus.or.kr

Challenges of the Military in a Multiethnic Society

Dohkgoh Soon Research Fellow Korea Institute for Defense Analyses

The concepts of a multiethnic society and multiculturalism are no longer alien to Korea. They first emerged in advanced European countries, North America and Australia which accepted migrant workers from developing nations in Africa, Asia and Latin America to address labor shortages.

As the rapid influx of non-Western immigrants had a demographic as well as politico-socio-economic-cultural impact in their countries, the Western nations tried to assimilate the newcomers but multicultural tolerance became more and more prevalent. Korean society is treading a similar path, opening doors in a variety of areas to foreigners and non-ethnic Korean citizens. National defense is no exception to this trend.

When it comes to national defense, adaptation to multiethnic society will need to take place on three fronts. First, the servicemen raised in a multiethnic family are subject to the nation’s compulsory military service requirement. The military has deleted all racially discriminatory provisions as of January 2010.

Support guidelines for multiethnic families have been issued as well.

These measures are not enough, however. It is difficult for the young people from multiethnic families to get along in typical Korean culture, much less adapt to and realize their potentials in the military, where they have to abide by strict rules and where they are constantly exposed to dangers. Though the number of multiethnic servicemen is around 200 at the moment, considerate and sophisticated measures need to be taken so that they can adapt to military life and, at the same time, become active members of both the military and society at large.

Second, the military has to become culturally sensitive. Having gone through wars in Afghanistan and Iraq and also being mindful of China, the U.S. military is sparing no investment in enhancing the cultural awareness of its soldiers. As Korea dispatches more of its troops overseas to cooperate with multinational forces, it becomes more important to enhance their linguistic skills as well as cultural understanding of non-Western countries. Korean military needs to shape up as the guardian of world peace and as global military in a multicultural age.

It will become necessary to integrate and coordinate ethnic and cultural diversity from the national security perspective. The military has changed the wording from “nation” to “people” in the oath officers take when they are commissioned or join the army. Now it is time to begin to think about where one’s loyalty and patriotism lie.

Education on the importance of one’s country as well as on security matters has thus far stemmed from the notion of a single national community sharing the same history. Now, serious thoughts are needed to answer the question where each individual should find the roots of national identity and patriotism.

Multiculturalism is a new issue to Korea, which has cherished homogeneity and cultural uniformity throughout its history. But it is a phenomenon being seen around the world.

Projections show that, in almost all Western European countries, the proportion of non-European minority groups will account for 15 percent of the total population in 2025, forming a much younger population than the natives and in turn leading to heightened social tension. Hopefully, the barracks life in Korea where the servicemen spend time together 24/7, getting trained and sharing mutual understanding and friendship, may provide some clues as to how to overcome the dichotomy of center vs. sideline, mainstream vs. marginalized, and majority vs. minority, and to integrate the differences in one community.

[Chosun Ilbo, June 16, 2012]

www.koreafocus.or.kr

Love and Hatred for Park Chung-hee

Kang Beong-tae Editorial Advisor The Hankook Ilbo

I became downcast when I read journalist Go Jong-seok’s column titled “The Reasons Why Park Geun-hye Should Not Become President” carried in a progressive-oriented newspaper. I hate that I will have to read and hear similar comments innumerably until the presidential election and have an internal conflict with myself about whether or not to argue what is right and wrong. I feel even more disinclined to reveal my personal views on the life and deeds of President Park Chung-hee, because I would have to confront denial and hate for him. Nor is it acceptable that such an act would be immediately translated into support for Park Geun-hye.

My personal reluctance aside, I decided to write this column because Go Jongseok mentioned me on Twitter some time ago. In a post which a younger

colleague conveyed to me, he praised me as a conservative worthy of being called a “polemist” first and then added, “I just hope he would give up his attachment to Park Chung-hee.” This is my delayed response to his writing in hopes to help reduce wasteful arguments in the run-up to the presidential poll, even if it might be impossible to change the conviction of an intellectual.

Go said that Park Geun-hye should not become president because she is the daughter of Park Chung-hee and approves everything about her father. In his eyes, Park Chung-hee is a traitor to the nation and fatherland and a destroyer of democracy. He insisted that our national pride would be damaged if the daughter of such a man becomes president. He asked, “How can we say we are better than animals if we abandon our collective pride as a nation in exchange for three decent meals a day?” Probably due to his deep-seated hatred for Park Chung-hee, his reasoning is rough and crude.

To me it seems unclear whether Park Geun-hye approves everything about her father. It is rude to define the late president’s service in the Japanese army as treason against the nation and his involvement in leftist movement as betrayal to the Republic of Korea. I cannot find any traces of evidence that Go tried to understand the conditions of life of a young man who was born in a colony, not to mention the conditions of history that repeatedly changed its course.

Psychoanalyst Carl Jung said, “My life is the story of the self-realization of the unconscious.” According to him, personality develops in accordance with the conditions of the unconscious. Though it may sound wild and preposterous, it can be construed that there is no exemplary model of life under any condition or in any period. While we have great forebears who contributed to independence and the founding of the Republic of Korea, an absolute majority of Korean people were strangled by the realities of daily life and historical circumstances.

For example, Lee Jong-chan, an exemplary soldier of similar age as Park Chung-hee graduated from the Japanese Military Academy. Paik Sun-yup, a veteran military officer, also graduated from the Mukden Military Academy of Manchukuo, a puppet state set up by imperial Japan in Manchuria. President Choi Kyu-ha was a government official of Manchukuo. We may assume that these people conformed to Japanese colonial rule, unlike anti-Japanese independence fighters of the preceding generation, such as Syngman Rhee (Yi Seung-man), Kim Gu and Shin Ik-hee, who were born in the late 19th century during the Korean Empire.

Is it right to condemn Park Chung-hee as a traitor to the Korean nation because he chose a different path from Chang Jun-ha of the same generation, who was recruited as a student-soldier for the Japanese army but escaped to join the Korean Liberation Army? The same is true for the allegation that Park was involved in leftist political activities amid the chaos following liberation. What about accusing him of toppling the Second Republic, which was built upon the blood of students, in a military coup and trampling on democracy and human rights?

According to historians, Sasanggye (World of Thoughts), a critical journal for intellectuals published by Chang Jun-ha, was so focused on the “modernization of the fatherland” that it carried special coverage of military revolutions in Third World countries shortly after the May 16 coup led by Park Chung-hee in 1961. A former U.S. ambassador to Korea recorded that “a surprisingly large number of intellectuals, journalists and politicians regarded the coup d’etat as an unavoidable good thing for Korea.”

Park Chung-hee’s third presidential term, dubbed as “yushin” (Revitalizing Reform) dictatorship, was stained with military fascism, but at the same time

institutional foundations were laid for a nation-state and democracy.

Especially, the majority, the rural lower class and laborers who had been suppressed by the semi-feudalistic social order and excluded from politics and public debate dominated by aristocrats, experienced a new democracy through the Saemaul Undong (New Community Movement), a nationwide campaign for rural development.

It is not the right attitude of an intellectual to be solely preoccupied with hatred for Park Chung-hee while disregarding or completely denying the historical recognition that Park succeeded in inducing voluntary participation and enthusiasm from the people. Go is also far removed from the majority view of the Korean people regarding Park as the greatest Korean president, regardless of whether they lived under his rule or not.

Attachment or animosity, an individual’s opinion of Park Chung-hee is largely based on indirect experiences of historical reality. It can be the selfrighteousness of a petty intellectual to uphold a narrow personal point of view or conviction as a criterion for the people’s choice for president. Everyone should be humble before history and reality.

[June 26, 2012]

www.koreafocus.or.kr

Better Habits Needed in Electricity Use

Park Hi-chun Professor of Economics Inha University

When an unprecedented rolling blackout occurred on September 15 last year, all the media reports said that electricity conservation is the only realistic way to prevent a catastrophic nationwide power outage. Nevertheless, the maximum power demand rose to 67.40 million kilowatts from 67.28 million kilowatts in the wake of the blackout. How can such a phenomenon be explained? It would be meaningless to discuss this summer’s electricity supply and demand without defining the primary cause of the situation.

The nation’s electricity reserves stood at 422 megawatts at 3 p.m. on May 2, which was the before-crisis level. The figure represents a 55 percent drop from a year ago. As it was watching the real-time electricity supply and demand, the Korea Electric Power Corporation (KEPCO) urgently requested customers to

reduce their power consumption. But the situation remains volatile.

Power demand usually remains stable enough to raise the electricity reserve ratio to nearly 20 percent during April and May, but it is rapidly rising amid unusually high temperatures this year. Making things worse, the power supply capacity has declined due to an unexpected accident at a nuclear power plant, lowering the electricity reserve ratio to 7-8 percent.

Therefore, the government has requested high energy-consuming companies to curb excessive air conditioning and to adjust their work schedules to avoid peak hours. Maintenance work at nine thermal power plants scheduled for May to June to increase their power supply capacities have been postponed until after the peak summer season. It means the government has realized that the nightmarish power outage of September 15 can recur at any time.

KEPCO purchases electricity from power generation companies at 105.94 won per kilowatt for supply to consumers at 98.44 won. The purchasing costs have swollen due to rising fuel prices and foreign exchange rates, but the electricity rates remain low. As a result, KEPCO suffers from accumulating deficits, and in view of its characteristics as a public enterprise, the liabilities will eventually fall on the shoulders of taxpayers.

Since 2002, the prices of gas, kerosene and diesel oil have risen 63 percent, 139 percent and 158 percent, respectively. Accordingly, the consumption of kerosene and diesel oil has decreased significantly, but electricity consumption has jumped a whopping 63 percent over the same period as its price has risen at a relatively lower rate of 21 percent. This is the reason electric heating appliances are becoming more popular than oil or gas heaters.

Amid the soaring international oil prices since 2008, this has been a dominant

pattern of energy consumption in Korea. What is even more surprising is that the nation’s electricity consumption growth rate has outpaced its economic growth rate. Korea’s electricity consumption per GDP (grow national product) reaches three times that of Japan and twice that of the United States. In other words, Korea’s energy consumption pattern remains at the G70 level while its economy approaches the G7 level.

Construction of additional power plants is inevitable to meet power consumption which is increasing at a faster pace than economic growth. A nuclear power plant costs about 3 trillion won per reactor, a coal-fired thermal power plant 1.3 trillion won and an LNG-fired plant 0.6 trillion won. These expenses will eventually lead to increases in electricity rates. The uncertainty surrounding power supply and demand cannot be fundamentally resolved without changing the pattern of over consumption.

Let’s look at the case of Japan which is enduring severe hardships after the accident at the Fukushima nuclear power plant. Japan lowered electricity use by 21 percent last year, as a result of waging a national campaign that targeted a 15 percent reduction. Japanese citizens actively participated in the campaign but many old people died of heat as the energy-saving campaign continued despite many tropical nights. Then, the government finally had to broadcast a special announcement to urge the people to turn on air conditioners.

Japan’s power rates are more than twice higher than that of Korea.

Nonetheless, Tokyo implemented a 15 percent rate hike on consumers who exceeded 50 kilowatts. The government is inducing further energy-saving by raising the price of electricity in addition to mounting a conservation campaign.

The blackout in Seoul on September 15 last year created a “hellish” situation,

with pedestrians and cars tangled up on the streets, where traffic signals stopped working, and some 2,000 citizens trapped in elevators, where they anxiously waited to be rescued in pitch black darkness. But electricity consumption has hardly decreased since then and public campaigns for energy conservation apparently draw little attention.

Under these circumstances, it is necessary to convey a warning message by raising the price of electricity so the consumers will try to find more rational and efficient consumption patterns for themselves. We must not bequeath to our posterity the fears stemming from our “backward� habits of electricity consumption.

[Hankook Ilbo, June 1, 2012]

www.koreafocus.or.kr

- The Glow behind Dancer Keum Beena - Why Should I Buy My Own Car? - Cultural Heritage Content and National Power - Two Late Cardinals and Archbishop Yeom Soo-jung - Mountain After Mountain

The Glow behind Dancer Keum Beena

Han Su-san Writer

I picked up the book and casually opened a page, which read: “My favorite Korean word is the honorific form of the verb ‘to die,’ which is literally translated into ‘to go back,’ implying ‘to return to where one came from.’” The word embodies the circular view of life as well as a sense of respect for those who have departed this world. To speak or listen to the word, people are humbled and lose their train of thought. Is there a more beautiful and touching rendition that better expresses life and death?”

The book titled “Dal·Bi·Jam” was written by the Odissi dancer Keum Beena (also spelled as Geum Bit-na meaning “Shining Gold”). The title puzzled me at first, and I realized it meant “the moon (dal), the rain (bi), and sleep (jam).”

But the book is not simply about the moon, rain, or sleep. Surprisingly enough, it is a record of thoughts that a young individual has experienced, the painful

shedding of the shell of a devastated soul, and meditations on time of both destitution and abundance experienced on a journey in search of oneself. I found myself ever so immersed in the book, underlining many passages that struck a chord deep in my heart and sent quiet ripples.

Keum Beena started out as a French literature major at Sogang University, but expanded her horizon to theology and philosophy while agonizing over the question, “Who am I?” One day, she happened to see a dance in an Indian movie and became fascinated. She went to Sri Lanka to study Buddhism and there she discovered she had seen a classical Indian dance called Odissi.

Without hesitation she made up her mind to become a dancer; she left for India immediately to visit a guru of Odissi and become his student.

In 2010, after four years of painful training and practice, Keum debuted as an Odissi dancer. Her search for herself ended up blooming in the dance. The days she had spent searching for her “hour” before she went to India and her days in India, where she finally discovered her “self,” are described in detail in her book.

Keum whispers in her book, “Cutting myself off from everything that is familiar to me is certainly helpful in finding another me, a different me, from somewhere deeper inside me.” Then, as if comforting herself, she goes on, “There are things that I must endure to get what I want. But, whatever pain it entails, I tell myself to not take it simply as pain, beware that it hurts you, but not collapse underneath it.”

To narrate her journey, she uses a clear tone of voice that richly resonates with her humanities background, at times tickling your sensibility from toe to head with her remarkable descriptive power reminiscent of prose poetry. Her brilliant choice of words is clear cut and fresh as ice. That is not all. One of the

joys of reading the book is that it lends glimpses of the Hindu lifestyle through the writer’s on-site experience, such as the ban on carrying any animal skin bag inside a Hindu temple, eating vegetables only on a certain day of the week in reverence to a certain god, and so on.

To the youth of today, who are searching for their way with the classic question in their heart who they are, I want to suggest that they face the question Keum Beena throws at them with her whole body. Her question is more fundamentally introspective in the sense that in all her doubts, wandering and suffering, she confronts the question, “What should I go on to live for?” instead of “How should I live?”

Believing that I am old enough to have overcome the luxury of envying or missing a young person’s soul-searching journey, I assumed I would be able to read this book with little turmoil in my heart. But I was wrong. I felt a strong urge to reach out and shout to whoever passes by: “Hey, young men! Look at Keum Beena! That is the way you should try to look for your dream, your way, your hope. Whether from that dreary semi-basement flat, or the makeshift roof-top room where the wind never sleeps, throw away your worries about ideology, employment, or love, and walk out. And walk on ahead with the belief that somewhere you will find your way awaiting you. What are you afraid of? Don’t you see Keum Beena going her way over there before you?”

[Munhwa Ilbo, June 5, 2012]

www.koreafocus.or.kr

Why Should I Buy My Own Car?

Michelle Farnsworth Foreign Client Relationship Manager Shinhan Bank

I don’t think anyone will disagree with my topic today: Public transportation in Seoul is awesome. Well, actually the public transportation all over Korea is awesome. I’ve been living here for 10 years and have been car-less the whole time, yet have visited so many of Korea’s beautiful cities, villages, mountains, and beaches. It’s really incredible how convenient, easy, and comprehensive Korea’s public transportation system is. But while the entire South Korea is a very convenient place to travel, today, I want to focus solely on the amazing transportation system that keeps Seoul moving.

A city the size of Seoul with its huge population would be unsustainable without an efficient public transportation system. According to Wikipedia, Seoul’s subway carries 6 million riders per day. That means that half of the

entire population of Seoul takes the subway every day. And that does not even include all of the additional people who take the bus. Seoul’s public transportation system is moving people quickly and safely from one side of the city to the other and everywhere in between in a quiet, quick, and orderly fashion.

Cities all over the world are building, expanding, or at least maintaining their subway systems. Seoul’s public transportation system is unique because it is clean, efficient, affordable, climate-controlled, and easy to use. We get spoiled by riding Seoul’s immaculate transportation. It’s easy to forget that the rest of the world doesn’t have it so good.

Although I was born and raised in the United States, I did not ride a subway until I was in London attending college. The whole experience was intimidating and overwhelming. All those twisted, colored lines on the subway map, all those rushing people, all the strange-named stops. How would I ever be able to figure it out? After a couple of days though, it was easy, and I thought the city planners in London were geniuses. But looking back, I see now that London’s transportation system doesn’t compare to Seoul in terms of cleanliness, timeliness, or affordability. In addition, there were always delays and bomb scares on the London subway system. And it was expensive. And I never was actually able to figure out the bus system there ― and I spoke the language there!

I’ve been on subways in major cities all over the world. I’m telling you that Seoul’s subway is world class. New York’s subway is old, unreliable, and actually quite scary since public transportation in America is seen as only for the poor and underprivileged. Tokyo’s is confusing due to so many different owners and it is surprisingly expensive. Berlin’s seems old and outdated and requires paper tickets and hole punching mechanisms. Paris’ subway is simply a nightmare. So since my first experience on Seoul’s subway system, I have

not looked back.

And the best part is that taking the subway is so cheap in Seoul. The basic fare was just raised to 1,050 won but I don’t think there is a major city in the world that will allow you on the train for less than a dollar. The affordability and efficiency means that people from all walks of life take the subway in Korea. I wouldn’t be surprised to look up and see Lee Myung-bak standing across from me on the orange line one day.

Now, we are very lucky that Seoul not only has an excellent and efficient subway system, but we also get to benefit from a fantastic bus system. Bus stops are clearly marked and the routes are easy to understand (especially if you can read Korean, and tourists might prefer the much more Englishfriendly subway). But the absolute best thing about Seoul’s buses is the bus lanes. I love the bus lane! During rush hour, commuters on buses are whizzing past the drivers stuck in traffic. It is very frustrating to be sitting in a taxi in traffic with the meter running and seeing a bus heading to your destination fly by you in the bus lane. If Seoul can expand the bus lanes, perhaps the number of people who drive to and from work each day could be reduced.

One additional benefit of Seoul’s well connected public transportation system is the ubiquitous T-Money card that allows travelers to transfer between buses and subway, without additional fees. This is innovative and impressive. Other cities around the world are now benchmarking Seoul’s ground-breaking initiative.

Basically, the only problem is that too many people are still driving their own cars. There are more than 3 million cars in Seoul and every time you look it seems like there is only one person in each vehicle. I hope more and more people will use Seoul’s amazing public transportation system and leave their cars at home to continue to improve Seoul and help it become a truly sustainable global city.

[JoongAng Sunday, No. 274, June 10, 2012]

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Cultural Heritage Content and National Power

Hwang Young-mee Film Critic; Professor of Cinema Studies Sookmyung Women’s University

The impact of cultural content is far greater than our expectations. That is why turning Korea’s cultural assets into content products matters. We cannot overemphasize that exporting cultural products outweighs shipments of goods in enhancing the nation’s image and reaping economic benefits.

In this context, it is a welcome development that cultural festivals based on the Korean people’s beloved cultural symbol, “Arirang,” are under way. These events are aimed at raising public awareness of the urgent issue surrounding the traditional Korean folk song. Recently, China designated “Arirang” as an ethnic minority’s intangible cultural asset; furthermore, it is pushing for the inscription of “Arirang” on UNESCO’s Representative List of Intangible Cultural Heritage of Humanity.

Against this backdrop, a mammoth cultural festival named “Shake the World ― Arirang Arariyo” was held at Suwon World Cup Stadium on June 2. “The Arirang,” which is being held on June 15-17 at the National Museum of Korea, is another event aimed at spreading Arirang. The event’s programs include an academic conference to explore the significance of “Arirang” and offer a theoretical basis and vision for its dissemination around the world. In particular, it is meaningful that the Ministry of Culture, Sports and Tourism is one of the organizers. After all, efforts to identify and spread the nation’s cultural heritage require society-wide participation beyond the cultural and academic sectors.

In the film world, China has released several movies based on the famous ancient novel “Romance of the Three Kingdoms,” including “The Lost Bladesman,” “Three Kingdoms: Resurrection of the Dragon” and “Red Cliff 1 and 2,” in the past five years. In contrast, Korea is yet to produce high-profile movies on themes based on its history, culture and popular sentiment targeting global markets. Korean producers and filmmakers should try in earnest to produce movies that will be known globally as “Korean national cinema.”

“Arirang” has been a popular theme of movies over the decades. Na Woonkyu’s “Arirang” (1926) is known to be the first Korean movie on a nationalistic theme. It has spawned sequels and remakes. Among other films related to the song are “Ah, Arirang!” (1977), “Susanne Brink’s Arirang” (1991), “Kuro Arirang” (1989), and most recently, “Arirang” (2011) directed

by Kim Ki-duk. For this latest film director Kim grabbed the top prize in the Un Certain Regard category at the Cannes International Film Festival, which served as an opportunity to make the word “Arirang” known around the world.

Director Im Kwon-taek’s hit movie “Seopyeonje” (1993) adopted “Arirang” as the title song.

Now, fresh approaches are needed in developing cultural content based on Korean cultural heritage. Amid the surging wave of globalization since the 1990s, it is necessary to consider the potential for universal reinterpretation of the unique cultural heritage and sentiment of the Korean people from global perspectives. It is because safeguarding our cultural heritage has become a task to be pursued in view of relations with the global community.

Facing an oncoming current and doing nothing is like being pushed backwards. Now is the time to push ahead more vigorously to create and spread cultural content inspired by traditional cultural heritage. To generate tangible results, multi-faceted and concerted efforts are needed across diverse genres, including literature, cinema, drama, music, dance, fine arts and architecture, as well as pop culture media such as games. There is no doubt that cultural heritage storytelling is essential for supporting these endeavors.

[Segye Ilbo, June 16, 2012]

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Two Late Cardinals and Archbishop Yeom Soo-jung

Lee Seon-min Opinion Page Editor The Chosun Ilbo

Andrew Yeom Soo-jung, 69, who will have his inaugural mass as the new archbishop of Seoul on June 25, was born to a family of devout Catholics whose history goes back five generations. He graduated from Songshin High School (Minor Seminary) and the Catholic University of Korea, and was ordained a priest in 1970, as his mother and all other family members had devotedly wished.

For the next 32 years Yeom worked for various parishes and seminaries as well as the headquarters for the Archdiocese of Seoul before he was named a bishop in 2002. In the following decade he served as auxiliary bishop of the metropolitan archdiocese, assisting Cardinal Nicolas Cheong Jin-suk. Last month, the Vatican appointed him the 14th archbishop of Seoul.

Archbishop Yeom has had a unique career path in Korean Catholic Church for having singularly devoted himself to the Archdiocese of Seoul throughout the past 54 years before reaching the top post. His predecessor, Cardinal Cheong, had a different path. He was ordained in Seoul in 1961, but was appointed to the Cheongju Diocese upon becoming a bishop in 1970. It was 28 years later in 1998 that Cheong returned to Seoul. The late Stephen Cardinal Kim Souhwan entered priesthood in the Daegu Diocese in 1951 and served at parishes in North Gyeongsang Province before becoming the head of the Masan Diocese in 1966 and the Seoul Archdiocese in 1968.

Most auxiliary bishops in the Seoul Archdiocese have been named bishops of other dioceses. Yeom’s latest appointment marks the first straight promotion to the top post within the metropolitan archdiocese. This is why the archdiocese particularly welcomed the appointment of Yeom, who is called “the eldest brother” among some 1,100 priests in Seoul.

When it comes to public image, Yeom also differs from his predecessors.

Cardinal Kim is widely remembered as an inspiring figure who battled during the authoritarian period of the 1970s to the 1980s, often going beyond the Catholic Church to help people in need. Cardinal Cheong is a renowned scholar of church law. Despite his tight schedule as the archbishop of Seoul, he split his time to publish books; he has authored 36 books and translated 13 books.

Yeom’s image among the public has been shaped primarily by his endless visits to parishes to talk with priests, nuns and believers. While Kim and Cheong had strong charisma, Yeom is mostly viewed as a modest and gentle pastor. Most people who have met Yeom in person have been impressed by his unaffected attitude and warmth.

Archbishop Yeom has inherited a jurisdiction under favorable conditions. As of late 2011, the Archdiocese of Seoul accounts for 27 percent of the total Catholic population in the country, or 1.43 million out of Korea’s 5.31 million Catholics. Among the 16 dioceses across the country, the ratio of Catholics in the population is also the highest in Seoul at 13.6 percent.

In 1975, Seoul had a total of 272,195 Catholics, or 3.5 percent of its population. The rapid growth in evangelization rate is largely due to the previous archbishops, who took the lead in democracy movement and respectfor-life campaigns, responding to the spirit of the times. At the same time, inside the church, Catholic leaders divided the large diocese into smaller parishes for a localized approach to believers. Over the past decades, other religious organizations have seen their influence and size shrink or remain stagnant; in contrast, the Catholic Church has achieved stellar growth, led by the Seoul Archdiocese.

For all the impressive records, however, there is a growing voice of concern within the Catholic Church. The number of Sunday mass attendees continues to decline. The same phenomenon is hitting baptism of infants and Sunday schools, a sign of uncertainty for the church. In addition, the Catholics are required to offer the right voice on important social issues at times of turbulence at home and abroad.

Archbishop Yeom is well suited for the job, largely because he has long taken care of each and every quarter of the Seoul Archdiocese and also spearheaded its representative social activities through the Babo Nanum Foundation and the Committee for Life. It is hoped that Yeom will infuse fresh energy into the church and try to bring it closer to people in a way that promotes the progress and integration of Korean society.

[June 8, 2012]

www.koreafocus.or.kr

Mountain After Mountain

Peter M. Beck Korea Representative Asia Foundation

One of the things I love most about Korea is the mountains. Consequently, one of my favorite Korean expressions is “mountain after mountain” (san neomeo san). It vividly describes not just a difficult situation we face, but also reminds me of how wonderful Korea is for hiking.

Let’s start with Seoul. My hiking buddies and I disagree on which mountain is the best, but no other major city in the world is blessed with so much great hiking nearby. From Dobongsan in the north to Gwanaksan in the south, you are rarely more than 15 minutes from a great mountain to climb.

I live at the base of Inwangsan. It takes me roughly 30 minutes from my front door to hike the 1.5 kilometers along the fortress wall to the top. Like most

Korean mountains, it is short, but steepă…Ąmaking for a great morning workout and spectacular views of Seoul. On weekends I like to add Bukaksan behind the Blue House.

One of my dearest teachers, the late Professor Lee Young-hee of Hanyang University, introduced me to what remains my favorite mountain in Seoul, Bukhansan. With entrances less than 20 minutes from downtown, there are dozens of peaks to climb (some requiring ropes) and temples to explore. Turn your back on Seoul and you will feel like you are in the middle of an endless mountain range. For the less ambitious, a trail and fitness parks encircle the mountains.

Hiking is a great way to reaffirm friendships and that we are not over the hill yet. Last weekend I went with two of my oldest and dearest friends for our first temple stay at Odaesan`s Woljeongsa, the largest temple in Gangwon Province. The monks are extremely friendly and the food and facilities amazing. From there we hiked to another temple and hermitage and then summited the Birobong peak.

Last month I was able to carve out time during official trips to hike two of Korea’s most beautiful island mountains. There is nothing like seeing water in every direction from the summit of Hallasan, but even if you don`t feel like hiking the 7-10 kilometers to the top, Jeju also boasts a set of more than 20 interconnected walking trails that now encircle the island.

At 984 meters, Seonginbong on Ulleung Island is just over half the height of Hallasan, but it is still an impressive peak in its own right and helps make up for the lack of exercise one gets when making the five-hour side trip to Dokdo.

From the main port, take the trail that passes near the Dokdo Museum (a

worthwhile side trip) and hike down the other side to a peaceful valley where you can sample the island`s special beef (yakso), unique mountain herbs, and famous homemade pumpkin makgeolli.

Now, if only I could travel to North Korea and revisit the two most impressive mountains I have hiked on the Korean peninsula: While Myohyangsan was disappointing, Kumgangsan (Geumgangsan) and Paektusan (Baekdusan) are like no other mountains I have ever been to.

Although I don`t agree with the proverb that it had to be viewed after eating, Kumgangsan`s Manmulsang is truly unique. You really can pick out countless formations in the rocks and there is no better way to do so than while relaxing in the nearby hot springs.

I did not expect to be very impressed with Paektusan, but I was. The extinct volcano`s massive lake appears to be bigger than Hallasan`s and America`s Crater Lake put together. Of course, you can still visit from the Chinese side, but I offer one bit of advice: Walk to the lake and then hike up to the rim. I saw my life pass before my eyes when I took one of the Chinese bullet taxis, so I told my driver I would walk down.

I would also love to find out if Chilbosan really contains seven treasures. In the meantime, I am waiting for the opportunity to climb Jirisan. I fell in love with the mountain after watching Im Kwon-taek’s amazing film “Taebaek Sanmaek” almost 20 years ago. Even after living in Korea for almost eight years, I still have plenty of new mountains to climb. What is your excuse for not trying a few? [ JoongAng Sunday, No. 275, June 17, 2012 ]

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- [Roundtable] Is Korean Politics in a State of Evolution?

- Possibility of Kim Jong-un Regime’s Reform and Opening Up - Time to Prepare for Demographic Bonus 2.0 - Economic Polarization in Korea: Trends and Implications

[Roundtable] Is Korean Politics in a State of Evolution?

Moderator: Kim Se-joong Publisher, The Quarterly Zeitgeist

Discussants: Kim Dae-ho Director, Social Design Institute

Kim Yong-ho Professor, Inha University

Kim Jae-han Professor, Hallym University

Park Chan-wook Professor, Seoul National University

Date: April 21, 2012 Place: Zeitgeist Conference Room

I. Transformation of the Saenuri Party

Kim Se-joong: The main topic of this edition of the Quarterly Zeitgeist is “Is Korean politics in a state of evolution?� Both the Saenuri Party (New Frontier Party) and the Democratic United Party made significant changes in their platforms as well as in their leadership before the general elections in April.

First, we would like to discuss the significance of these changes in the development of Korean politics.

Evolution, in my common sense understanding, is the process of adapting to the environment to increase the chances of survival. In view of this positive sense of the word, I would like you to discuss the transformation of the Saenuri Party, which is the ruling party of Korea and the main force of Korean politics. As you see, some regard the current changes in the party as signs of losing the party’s conservative identity while others see them as progress toward more healthy conservatism.

Kim Yong-ho: I positively assess the changes taking place in the Saenuri Party, including its name change, the (policy) adoption of upgraded welfare, the slogan of economic democracy, and above all the shift of power from President Lee Myung-bak to presidential candidate Park Geun-hye.

Ideologically, the party moved a little to the left from its original neoliberalism, and the electorate in the last general elections seemed to have viewed it favorably. As the 2008 global financial crisis exposed the limitation of neo-liberalism, the Saenuri Party responded to the calls for change by revising the party line. Yet, I don’t believe that the Saenuri has compromised its identity.

Park Chan-wook: Frequent changes of party name reflect the fluidity of Korean political parties. The Forward Liberty Party changed its name after five years and the Grand National Party became the Saenuri after 15 years. At

first, I was critical of the name change, but, seeing it winning the majority in the elections, I changed my mind and gave it a pass.

The old Grand National Party exposed a series of improprieties between November 2011 and January this year, culminating with the disclosure that former Assembly Speaker Park Hee-tae passed out envelopes of cash to representatives at the party convention. Pessimism prevailed that Saenuri would not be able to win even 100 seats in the election. Under this grave situation, we have to recognize the need for strategic change. Yet, the method of change left something to be desired. They took the process of what looked like the dictatorship during the Roman Republic. The Saenuri formed an “emergency committee” as an ad hoc crisis management body and Park Geunhye became the “dictator” with temporary powers. Through this method, the party distanced itself from the administration of President Lee, changed its platform to emphasize welfare and carried out bold personnel changes.

Overall, it deserves a positive assessment.

Kim Dae-ho: I am not sure how much the transformation of the Saenuri contributed to its election victory because the opposition had a lot of faults. In my opinion, Saenuri made changes to survive, which was a bigger issue than establishing its identity. The party’s effort to transform by changing its name and colors, operating an emergency committee and introducing policies that it

had been uncomfortable with, all deserve positive evaluation.

Yet, I have to point out that the real problem with the Saenuri Party and Korea’s political community in general is that they do not have a philosophy, values, vision, or policies with which they can resolve the key problems of Korean society, namely the problem of social polarization, shortage of jobs, sense of unfairness, unease, distrust and tiredness of life. This problem is shared by both the conservative and progressive circles. As the people do not have solutions, they pick one party, test it for one or two years and then abandon it after three to four years. This vicious circle has continued and will continue to recur unless the parties, both conservative and progressive, make a real change.

Kim Jae-han: Parties easily engage in debates on maintaining or abandoning their ideological direction. But concrete contents of left and right or liberal and conservative ideologies vary depending on time and place. For example, the question is often raised if the Korean opposition Democratic Party can be called a leftist party in the European sense of the term. The transformation of the Saenuri Party was rather a gesture of adaptation to the overall political climate in our society, which generally moved to the left.

The first point of controversy is whether such a transformation was desirable.

Basically, it is desirable if it meets the demands of the electorate. But it is undesirable to make unprincipled changes in what is described as populist approaches. Korea’s present political culture allows opportunistic changes. If the Saenuri’s alterations are cosmetic, simply to cajole the people without true change, they are not desirable. Fundamentally, policies are more important than emotional appeal. The recent changes we have witnessed indicate the nomadic quality of our political parties. Nomads use tents. Parties seem to have found it more beneficial for themselves to demonstrate changes to the people by moving their tents and sometimes pitching new ones rather than having a permanent settlement.

Kim YH: I would say that changing party names represents retrogression of Korean politics. The fact that they can change their names with a decision by a few leaders without asking the opinion of general members means that Korean political parties are not based on the masses. Such practices actually hamper the institutionalization of party politics. I have again confirmed the fabulous rule of Korean politics, which is that the party that has produced the president is abolished about the time of his departure. The examples are the Uri Party of Roh Moo-hyun, the National Congress for New Politics of Kim Dae-jung, the New Korea Party of Kim Young-sam, the Democratic Liberal Party of Roh Tae-woo, the Democratic Justice Party of Chun Doo-hwan, the Democratic Republican Party of Park Chung-hee, the Democratic Party of Yun Po-sun and the Liberal Party of Syngman Rhee (Yi Seung-man). There has been no exception.

Because of the nomadic nature of Korean parties, as Professor Kim Jae-han said, the Western concept of political parties cannot be directly applied here.

Political parties in Korea, unlike their Western counterparts, do not properly represent any social forces and their interests. Instead, they are regarded

simply as tools for maintaining the objectives of those who hold power or for challengers to snatch power from them.

Kim SJ: Judging from the result of the elections, we can positively assess the changes in the Saenuri Party. But apart from this particular aspect of election, we can still analyze the changes at Saenuri from the viewpoint of political development in Korea, with a focus on policies. Kim Jong-in, chairman of the Emergency Committee, once raised the issue of removing the term “conservative” from the party platform. When I read its new platform, I noticed “economic democracy” a few times, and I wondered how a conservative party could accept the concept of economic democracy. Besides, the new platform contains remarks on chaebol (family-run conglomerates) and welfare, which it had previously not emphasized.

Kim YH: There seem to be two differing positions on the concept of economic democracy: One is to maintain or strengthen regulations on chaebol and the other is to relax or abolish them. Opinion polls immediately before the elections found roughly 60 percent in favor of maintaining or strengthening regulations and 40 percent against. So the Saenuri was restrained from calling for relaxation of the rules. And, on welfare, the liberals wanted universal welfare while the conservatives called for relief only for those in need. On this issue, voters supported the selective welfare by the ratio of 55-45.

From the viewpoint of “election mechanism,” or political pragmatism, Saenuri’s changes, moving slightly toward the center chanting economic democracy and welfare, did help pick up some votes. But the important question is if the changes were based firmly on a new philosophy or a new vision. Around the world, few leaders or parties have presented clear alternatives to neo-liberalism in the wake of the global financial crisis. It should be pointed out that battles over policy essentially hinge on how well

political forces can improve people’s lives in an efficient and effective manner.

Park CW: Political democracy involves procedures while economic and social democracy refers to substantial aspects. In order to properly operate procedural democracy, it is necessary to address the problem of imbalance in wealth and income because economic inequality leads to political inequality.

That is, the political democratic principle of one man one vote becomes distorted. The promoters of procedural democracy should not neglect the issue of fair distribution. In other words, if a conservative party emphasizes economic and social democracy, it does not necessarily mean that it is moving away from its roots. The problem is that this particular party chose the issue of economic and social democracy as an election tactic without systematic programs to promote it.

Why did this right-wing conservative party advocate welfare? It was because they had to woo middle-ground voters. As the limitations of neo-liberalism have been exposed and social polarization deepened, voters worldwide demanded equality and distribution. Here, even Lee Myung-bak who is a neoliberalist, has talked about a fair society and shared growth between large and small businesses. The Saenuri Party moved an inch to the left because the decisive votes were there. Overseas, in the case of the Social Democrats (SPD) of Germany, they adopted the Godesberg Program to change its course because it did not want to remain a permanent opposition party. Tony Blair’s Third Way was taken through the revision of Article 4 of the party charter, which prescribed public ownership of the means of production. It moved to the right to become a party for the middle class.

The Saenuri Party’s transformation is not a problem in itself. But its procedure and method were problematic. A political party may transform itself by collecting the wishes of party members through proper conventions or

representative bodies. The way the Emergency Committee, made up of obscure members who do not represent the party, adopted crucial reform measures speaks to the immaturity of our party politics.

Kim JH: As to the question of the Saenuri Party’s conservative ideology, I think there should be distinction between “how” and “who” in protecting the interests of any specific strata of society. In conducting realpolitik, the Saenuri is more engrossed in the question of who should benefit rather than how it should be done when drafting its welfare policies. The terms of “lifelong” and “individually tailored” sounds a lot like populist expressions.

Kim DH: Not many would regard the party’s “lifelong, individually tailored welfare” as a populist campaign. I rather welcome it, as I understand it to be designing specific welfare programs for every stage of life.

Park CW: It looks like the Saenuri version of “from cradle to grave.”

Kim JH: If the Saenuri Party is to support all people through their whole life, it may be quite ideal. But if the party is telling something sweet to one group at one time and to another group at another time, it probably is populism. It should be most desirable for a party to establish a principle that can be applied to all cases consistently. It is not good to guarantee everything for everybody for their whole life.

Kim SJ: You all seem to understand the policy-level changes in the Saenuri as a positive step to keep pace with the changing times. I raised the question of “economic democracy” because it could mean “rule over wealth by the people” because democracy in politics means “rule by the people.” The Saenuri’s platform has the expression of “fair market economy.” I think this is a more adequate terminology for a conservative party.

Park CW: Chairwoman Park Geun-hye does not seem to be content with applying the same rule universally. She might be seeking to give something extra to the weaker people.

Kim SJ: That’s right. A populist distortion of economic democracy could lead to “destroying control over wealth by 1 percent and establishing control by the 99 percent.”

Kim DH: Democracy is “one vote for each.” In corporate governance, it is one vote for each stock. In a sense, economic democracy combines two incongruous values, which is not wrong. The purpose of state management, democracy and market economy all pursue a free, affluent, just and happy life for all. If imbalance deepens in any sector, the nation or the community should take remedial action, and in this process the one vote for each principle should prevail. I think economic democracy reflects this ideal and we cannot question the appropriateness of its purpose.

Terms like “sustainable economy,” “economic vitality,” “fair and equal society” and “free and fair market economy” have been expounded since old times. Now we can add another term, “economic democracy.” When we talk about a fair market economy, it means the fairness is maintained by a wellbalanced scale and it is not left up to the market.

Kim SJ: No. To guarantee fairness in the market, the role of the authority outside the market is essential.

Kim DH: What decides fairness is the will and wisdom of the majority of people.

Park CW: As a political scientist, I academically use the term democracy chiefly for the political realm. Article 119 Paragraph 2 of the Constitution has the expression “economic democracy.” But when the concept of democracy is extended to economic and social realms, I would rather like to use a more concrete description like “fair distribution of wealth and income” instead of economic democracy or social democracy. Yet, in the political world, economic democracy and social democracy sound more attractive.

Kim YH: As Professor Kim Jae-han pointed out, the concepts of liberalism and conservatism differ widely among nations. When we consider the positions of our parties concerning regulations on the chaebol and other forms of government intervention in the economy, the ruling and opposition parties, or the conservative and liberal camps, in our country are both extremely liberal

by U.S. standards. American conservatives prefer small government, tax cuts, deregulation and as little economic intervention as possible, whereas both our ruling

and

opposition

parties

generously

acknowledge

government

intervention.

If we are to advise the Saenuri Party on its future course, it may take a lesson from the policies of Britain’s Conservative Prime Minister Benjamin Disraeli in the 1870s. In the great confusion after the Industrial Revolution, Disraeli formed conservative labor clubs and enacted various reforms such as the Factory Act and the Health Act to demonstrate that the Conservatives were not a party of landlords but they were trying to serve the interests of the world class. As a result, the Conservatives were able to hold power for 30 years with the support of workers and the middle class. Flexibility seems to be the best way of survival and the Saenuri needs to consider conservative transformation a la Disraeli.

Kim JH: John Rawls may be the origin of the concept of fairness we

mentioned just before. It was a revolutionary idea at that time in the United States when everyone believed that making the pie bigger was the best thing.

As Rawls said social justice benefits the weakest the most, there was a great uproar. American society at the time still identified fairness with regulating the free market. In Korea today the liberals are uncomfortable with the idea of fairness, perhaps because the Lee Myung-bak government has advocated it.

They seem to believe that the fair application of the basic rule helps vested interests. So, the Saenuri may be advised to continue to strengthen procedural fairness in the market, which is the way to maintain Korean conservatism.

Park CW: A conservative party here should strive to preserve the identity of the Republic of Korea, which was founded on free democratic order under the Constitution, and then it should seek to achieve sustainable growth by increasing the pie on the basis of fair competition. The norm of conservatism essentially requires the responsibility of the leader and the elite group, who should display warm leadership of conservatism.

Kim SJ: I would add that the Saenuri Party has taken a clearly different position on the Korea-U.S. Free Trade Agreement and the Jeju naval base issue. These policies proved the party’s internationalist orientation and demonstrated the conservative tradition of upholding the importance of national security.

Kim DH: Park Geun-hye has displayed consistency more than anything else and has built up trust and sense of stability. Stability is most important when handling the security issues. Her capabilities have not been vetted yet, but she has been strongly committed to freedom and openness based on trust. If she is playing baduk (go), she is making very few erratic moves, but her great challenge is how to meet the people’s desire for dramatic change and reform.

Our people always aim high for changes, which is reflected in the high rate of college attendance and strong competition for promising jobs. In the presidential election late this year, expectations for change will burst out, and any candidate who is accustomed to playing safe will face daunting battle. The liberals could use every dramatic gambit to raise the public’s expectations and thus win the game.

II. Transformation of the Democratic United Party Kim SJ: Let us now move to the Democratic United Party, the main opposition party. The DUP tried to enlarge its political domain through an “opposition coalition” ahead of the past general elections. But in the course of collaborating with the United Progressive Party, it went a little too far to the left so that its identity as Korea’s legitimate main opposition party may be questioned.

The origin of the DUP dates back to the 1950s, when the opposition party rested with conservative centrists. Because of its move to the left, its ideological difference from the Saenuri Party has widened. Here we can ponder whether our parties will open an era of modern partisan politics, replacing outdated regional rivalries with more healthy contention based on ideologies, or put domestic politics further into the abyss of unstable, unproductive confrontations.

Kim YH: I think there were three factors that pushed the DUP to the left during the election period. First, the pro-Roh Moo-hyun group, the more progressive force in the party, took up hegemony in the DUP. Second, the Saenuri Party’s emphasis on welfare and economic democracy forced the opposition party to take a more progressive stance to differentiate itself from

the ruling party, and the third was the pulling effect of the UPP. This resulted in unifying conservative voters, particularly those in their 50s or older who were worried about what would happen if the leftist coalition won the majority in the National Assembly. The coalition squandered votes because of suspected North Korea sympathizers called the “Eastern Gyeonggi Solidarity,� including Lee Jung-hee, a co-leader of the UPP; its diehard obstruction to the construction of the Jeju naval base; its demand to scrap the Korea-U.S. FTA; and decisively, the verbal garbage produced by its star candidate Kim Yong-min.

Park CW: Yes, they certainly made a leftward jump. But they showed no signs of deep soul-searching or persuasion of the electorate before taking the ideological shift and changing policies. Regarding the Korea-U.S. FTA, they said it did not guarantee a balance of interests; on the Jeju naval base, they expressed worry over deteriorating relations with China; and they failed to sufficiently explain why they had to abandon the major projects the previous leftist government had initiated.

I have the impression that the DUP was over frustrated with the Lee Myungbak government, which replaced the 10-year leftist rule. They were simply too anxious to change power, and the MB (Myung-bak) government fueled their obsession by defaming the past 10 years of progressive rule. The DUP attached some social democrats but essentially the party should be regarded as reformist liberalists. The Kim Dae-jung and Roh Moo-hyun administrations in fact made significant achievements, not only with democratic progress but with laying foundations for a welfare state and improving relations with North Korea. The DUP people blame the MB government for what they call degeneration of politics, the strengthening of vested interests in the economy, deepening social polarization, worsening inter-Korean relations, and strained

relations with China.

While they were honing their anti-MB, anti-Grand National Party sentiments, they won the 2010 local elections, the by-election in Bundang and the mayoral election in Seoul last year, which made them more confident of recovering power in the National Assembly as well as the presidency. The anti-MB coalition turned away reasonable centrists and incited the solidarity of conservative votes.

Kim DH: This needs to be analyzed through ideological and tactical aspects.

Ideologically, they attributed the present absurdities and improprieties mostly to neo-liberalism and they found their solution in tight regulations on the market and expansion of universal welfare. Such a policy package is a product of the progressives’ shallow, biased understanding of the market and enterprises. Anyway, a lack of careful studies drove the DUP to follow the United Progressive Party and accept reckless expansion of welfare, unreasonable control of the market, coarse and negative attitude toward the Korea-U.S. FTA, etc. And general paranoia toward the U.S. helped it move to the left.

Next comes the problem of political technology. They believe they know the causes for the absurdities and improprieties in Korean society and how to solve them. Their opponents are the evil neo-liberalists, and they are anti-neoliberalists who are good. The division is so clear and they are convinced that all they need is the power to destroy the opponents. Through coalition and instigation, they could mobilize more people and increase the hate and furor toward the present holders of power. Kim Yong-min was part of the instigation mechanism. To achieve a coalition, the DUP had to accept UPP slogans and eventually was forced to utter self-contradictory statements against the KoreaU.S. FTA and the Jeju naval base. In making the move to the left, they lost

public trust. They were defined as an unstable, untrustworthy force.

A party may make an ideological shift to the left. But the people have found them to be unworthy of assuming state power. They are afraid of social confusion, disorder, and communist invasion and revolution. The leftists’ political technology touched the people’s uneasiness about security. To sum up, the DUP made the left turn because they have an incorrect view of where Korean society stands now and what is needed to resolve its problems. They had a chance to mount two viable fronts if they had wisely combined the essential strengths of the right and left. But they failed to grasp the reality and lacked the resolve to take decisive actions, so they conceded ideological underpinning to the United Progressive Party and accepted its course of struggle. Again, I should say that the problem with the DUP is its vulgar sociohistorical perspective. Actually, the conservatives share the same problem. But their weakness is not easily exposed because they rarely attempt dramatic changes; the liberals revealed their mistakes as they sought to forge an opposition coalition as a means to change things radically.

Kim JH: Basically, the DUP wanted to clinch victory under the anti-MB, antiGNP banner of a united opposition command, but its left turn made voters turn away. A plus B sometimes produces plus-alpha but minus-alpha at other times, and the DUP was not adept in this kind of political skills. Besides, the DUP itself has a complex structure, which causes confusion in the election of its leadership and in the process of nominations. As the general political climate was tilted toward the left, the more left-oriented personalities had a greater say and eventually allowed the party’s left turn.

Kim SJ: Judging from the general tendency of the mainstream pro-Roh Moohyun faction and the former pro-democracy activists in the DUP and its slate of proportional representation lawmakers, the leftist orientation of the party is

expected to become even clearer in the days ahead. How do you see its future course?

Kim YH: It will depend on how the various factions within the party will align with each other. They are largely classified into three groups, the pro-Roh faction, the Honam (Jeolla) force who were loyal to Kim Dae-jung, and the non-Roh, non-Honam group of former pro-democracy activists. The pro-Roh faction tends to be more ideologically oriented than others. Therefore, contention will emerge between one side wanting to remain on the left and the other side demanding a return to the center as the party forms the next leadership structure and makes its presidential nomination.

We are now witnessing the development of ideological dichotomy in Korean party politics between the conservatives and the progressives in contrast to the days of the Three Kims, when all major parties were centrist national forces.

Since the 2002 presidential election, centrists have become weaker and the regional rivalry turned into a two-way contest between Yeongnam (Gyeongsang) and Honam (Jeolla) groups, with the diminishing of the Chungcheong force. Now Korean party politics shows the complex structure of the Yeongnam vs. Honam division overlapping the conservative-progressive contention. In all of the past three National Assembly elections in 2004, 2008 and 2012, the government party won the majority while during the ThreeKims period, the opposition always won the control of the Assembly. If the two-party dominance hardens in the future, I am afraid political stalemates with uncompromising ideological confrontation between rival parties could compromise political progress in Korea.

Kim SJ: President Roh Moo-hyun turned increasingly pragmatic in the latter part of his tenure as his push for the Korea-U.S. FTA revealed. But he was too unscrupulous with political rhetoric, such as his famous “What’s wrong with

anti-Americanism?” remark, which hardened his public image as a leftist. And just recently, his followers in the present DUP leadership pushed the party to the left.

Kim DH: About Roh Moo-hyun, there was the problem of his language and the conservative media’s bias toward him. I don’t believe that the DUP’s left approach was entirely due to the ideological choice of the pro-Roh members. I would rather say that there are many former members of Roh’s Participatory Government who do not understand the spirit and method of Roh Moo-hyun.

These people betrayed Roh as they sought to ally with the UPP. The UPP denies Roh Moo-hyun’s spirit, method and values.

Kim SJ: How do you see the future of the DUP, Professor Kim? Do you find the possibility of a truly dramatic change?

Kim DH: The Saenuri Party overhauled itself under extreme difficulties and they achieved victory in the parliamentary election. On the other hand, the DUP was too optimistic about the election and many believed that party nomination was the ticket to Yeouido (National Assembly). They were defeated in a war that they could have easily won. So it is now the DUP’s turn to make a sweeping transformation. The presidential election in December will be an interesting match if the DUP makes a really good transformation.

[Quarterly Zeitgeist (Sidae Jeongsin), Summer 2012, No. 55, published by Sidae Jeongsin Co.]

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Possibility of the Kim Jong-un Regime’s Reform and Opening Up Kim Yeon-chul Professor of North Korean Studies Inje University

I. Economic Policy under Kim Jong-un The most important economic issue of the Kim Jong-un regime in North Korea is resolving persistent supply shortages caused by a hostile external environment and a dual economic structure at home. In terms of industrial might, limitations on labor have removed its role as a key driver of economic expansion. It is difficult to raise the capacity utilization ratio and improve inter-industry relations in the near term. In agriculture, North Korea had almost no rain on the west coast from April 26 to May 31, the worse dry spell since 1962, amid unseasonably cool weather.

The food shortage is the main culprit in the deepening division between the North’s official and market economies, hamstringing economic policy-making and implementation in the impoverished communist state. The government’s pricing mechanism pivots around food prices and the continuing food shortage is causing prices at free markets to spike. That, in turn, is eroding purchasing power, but it is difficult to raise wages to keep pace with price hikes.

The economic policy under Kim Jong-un so far has been to continue the strategy of his grandfather and state founder Kim Il-sung and his father Kim Jong-il. To be sure, part of his regime’s legitimacy rests on maintaining his forefathers’ policies. Therefore, it is difficult for Pyongyang to make abrupt

and radical shifts in economic strategy. North Korea’s official media outlets, including Rodong Sinmun, criticize economic decentralization and marketoriented reforms as revisionism, emphasizing the superiority of socialist planned economy.

Nevertheless, the new leader is desperate to see tangible economic progress.

He is not trying to change the structure of growth potential but making intensive investments in limited resources to attain visible results. A case in point is the “general mobilization drive for land management,” which he has aggressively emphasized since April. As North Korea concentrates resource investments on Pyongyang, the development gap between the capital and provincial areas is widening. Pyongyang’s cityscape is changing with the completion of the exterior of Ryukyong Hotel. Investment is expanding to build new houses and electricity is supplied in the capital city on a priority basis, as shown in the capital’s changed nightscape. As the country’s limited resources are focused on Pyongyang, however, provincial development is being postponed.

To attain uniform economic development, a new policy direction will be necessary. Rather than expect a dramatic shift, reforms should be seen as a process. Changes in ideology always come after they occur in real life, and tend to be justified in retrospect. Most gradual economic reforms have the characteristics of “open-ended reform.” Incremental steps have been taken, as seen with the Kaesong (Gaeseong) Industrial Complex which houses South Korean manufacturers, and economic cooperation projects with China. The North also is watching the function and role of free markets expand amid continuing economic decentralization. But it is necessary to remember that the changes so far are fragmented; changes in one area are not being transferred.

In fact, constant clashes between reformists and anti-reformists should be expected.

Accordingly, it is necessary to forecast the possibility of economic changes in North Korea on various planes. This paper analyzes three issues: 1) the relationship between military-first economy and economic reform; 2) the relationship between bureaucracy and economic reform; and 3) how North Korean leadership would cope with the reality of spontaneous marketization.

II. Military-first Economy and Economic Reform Under the Kim Jong-un regime, North Korea still continues to emphasize military-first politics. In terms of resources allocation, if state investments are primarily channeled into heavy industries under a military-first economic policy, spending will be curtailed in light industries that are closely associated with exports. The North Korean military has traditionally been categorized as a conservative institution. How will the military-first politics work if North Korea tries to make changes in overall policy planning, including economic reforms, in the future?

1. Military-first Economy and Export Industries First, an economic policy based on military-first politics is likely to conflict with an open-door policy. If it is to cultivate export industries, North Korea has to first develop light industries, specifically parts and components, which would utilize the North’s labor-intensive industrial structure. This is because foreign manufacturers investing in North Korea will want to have locallymade parts and components to avoid the cost burden of importing. In return, the North can seek technology transfers, addressing one of its major weaknesses.

This give-and-take arrangement is evident at the Kaesong Industrial Complex.

The South-North joint industrial park is officially a South Korean business investment, but in reality, it is operating on commission with facilities and equipment provided by the South. For the Kaesong project to contribute to the development of North Korea’s domestic economy, the North should be able to receive technological transfers from South Korean investors by either fostering related parts industries outside of Kaesong area or having some of its businesses advance into the inter-Korean industrial complex.

Similarly, economic cooperation projects between North Korea and China, such as the special economic zones in Rajin-Sonbong or Hwanggumpyong, need to be supplemented with an export-oriented industrial network that includes parts manufacturing. A simple labor supply will not be enough for sustainable growth.

In short, for an open-door policy to have positive effects on its domestic economy, North Korea will need to shift its tilt toward heavy industry to light industries, especially export industries. This will require readjusted investment priorities. The key here will be to reduce spending on defense industries, which will require improvement in Pyongyang’s external relations.

With the North Korean nuclear arms issue remaining unresolved and military tension on the Korean peninsula showing no signs of abating, Pyongyang seems unlikely to abandon its military-first policy. To gain flexibility to develop export industries and to improve the investment climate for interKorean economic cooperation projects, however, the North needs to have U.S.-led economic sanctions eased or lifted 2. Economic Reform and the Military: Examples of China and Cuba

In general, the military’s conservative nature precludes any room for reforms.

The examples of China and Cuba, however, show that is not always the case.

The military played an important role in China’s reform process. The Chinese military’s acceleration of economic activity coincided with Deng Xiaoping’s push for reform and openness. Deng sought to weed out inefficiencies to secure funds for development. Thus, during the initial years of economic reform in 1979-1981, China’s defense budget plunged 24 percent with the number of troops cut down by more than 1 million. But to secure the military’s support for the reform campaign, Deng allowed the military to engage in commerce and other business activities, including real estate development, finance, night clubs, hotels, sewing factories, pharmaceuticals, mining and logistics. And he put military-run enterprises in all areas under the control of the rear command, which managed all the money and goods of the military.

At the early stages of reform and opening up, military leaders had misgivings about becoming overly involved in economic activity. They thought Deng’s reform policy and economic participation by the People’s Liberation Army would weaken the military spirit of soldiers and would eventually lead to corruption and relaxed discipline. Yet, Deng had a firm command of the military. He said, “The military’s participation in economy is their most important duty in this new, historic era.” Deng had strong conviction that the military’s interests could be closely combined with his political goal of economic reform.

In 1989, the number of businesses managed by the military amounted to nearly 15,000 with their annual profits reaching $2 billion to $3 billion. The number of workers employed by the military-run firms totaled nearly 700,000 in 1990.

Toward the end of 1993, however, concerns were raised within the People’s Liberation Army and the Communist Party that the military’s economic

activities had brought about serious corruption. The widespread corruption was the byproduct of market reform. Military leaders decided that the negative results outweighed the benefits. Under the Jiang Zemin regime, the government began to inspect the military’s economic activities in earnest. In 1998, Jiang canceled many military-run projects in his capacity as chairman of the Central Military Commission of the Communist Party. In the 1990s, various measures to restrict the military’s economic activity had some impact, but overall, they did not succeed.

Cuba followed a similar path. In the early stage of opening up the country’s tourism industry, Cuban leaders created a structure in which the military supported industrial liberalization by leaving the management of joint-venture tourism companies to the military. The current Cuban leader, Raul Castro, served as defense minister under his elder brother, Fidel Castro, earning the title of the world’s longest-serving defense minister. The Cuban military at the time took a pragmatic position on economic reform. In 1986, several businesses under the control of the military attempted to adopt economic reforms led by Raul Castro. He allowed these firms to dismiss workers and gave them authority to dispose of profits. In the late 1980s, Raul sent highranking officers to West Europe to learn management in new industrial fields, and Cuba studied economic participation by the Chinese People’s Liberation Army.

At Cuba’s third party congress in 1986, the military committed to enhancing efficiency and productivity, and Raul Castro has since been the strongest supporter for economic reform. At the fourth congress in 1991, he reaffirmed his backing for economic reform.

3. North Korean Army and Economic Reform

The most important factor in China and Cuba’s experience was the leadership’s will to reform. If a reform policy is adopted and the military can benefit from the process, they may not necessarily oppose reform. In other words, the policy direction of the Kim Jong-un regime is vitally important. If North Korea, too, promotes an open-door strategy and the military can reap some of the benefits, it can defuse potential opposition from the generals.

However, there are negative aspects of the military’s economic participation. It is hard to rule out the possibility that the military could end up investing profits into arms industries instead of private sectors. Also, chances of corruption are high, as seen in China and Cuba. This is also why there are negative viewpoints about the military’s economic activity in the civilian sectors.

The North Korean military already is participating in the construction of the Sino-North Korea special economic zones. Going forward, if reform is actively pursued the important task would be to have the military even more engaged in economic activity while minimizing negative side effects.

III. Economic Reform and Bureaucracy In general, reform-minded bureaucrats are important in changing socialist economies. China’s successful economic reform was possible because of the positive role provincial bureaucrats played in the reform process as entrepreneurs competing with other regions and agencies.

As of the end of 1993, China had 30 provinces (each with an average population of 39.5 million), 570 cities, 2,166 counties and 48,200 townships and villages. Amid fierce regional competition, provincial enterprises were

faced with rigid budget restrictions. Provincial officials were therefore obliged to turn public corporations based in counties and villages in their respective provinces into examples of corporate success. Especially noteworthy were those local enterprises that took the lead in the early reform process. In 1992, they reinvested up to 59 percent of their after-tax profits, and spent the rest on public needs. Property rights did not exist or, in other words, a capitalist class barely existed at the time, so China turned into a “developing economy” with its bureaucrats acting as entrepreneurs.

It is hard to apply China’s method of creating an economic reform system through decentralization on North Korea as it was. North Korea’s bureaucratic system is highly centralized, its provincial industries are underdeveloped due to the regime’s traditional focus on heavy industries, and its growth potential is relatively small compared with China’s.

1. Lesson from Pak Pong-ju’s Failed Reform in 2004 How will North Korea be able to create a competitive reform system among provinces and other administrative units so that they can expand marketoriented reform, and how can it create a market-oriented class of bureaucrats?

For North Korea to pursue bureaucracy-oriented economic development, it will have to decentralize decision-making and empower working-level officials.

Policy competition is expected to accelerate between the hard-liners and softliners in North Korea over the expansion of economic reforms in the future. In a situation where there is no clear-cut leadership for reform, there will also be a gradual distinction between forces that call for expanding reforms and those who oppose it.

Especially noteworthy in this regard is the conflicts between the cabinet and the party, as exposed in the course of failed reform led by former Prime Minister Pak Pong-ju in 2004. At a time when the limitation of the economic management improvement measures of July 1, 2002 began to emerge, Pak formed an ad hoc group within the cabinet to reevaluate various reform measures taken until June 2004. The group concluded that it was necessary to increase decentralization and introduce more elements of a market economy to reinvigorate growth. The team then drafted across-the-board reform plans ranging from economic management and commodity distribution to financial management and agricultural reform, and sent these recommendations to Kim Jong-il in late 2004. With respect to agricultural reform, the plan included a pilot system of family farming, allowing businesses to engage in farming as a side business, and reforming the food distribution system.

In the early phase of economic reform, the party and the military remained spectators for both the July 1 measures and encouragement of market economy. But they mounted opposition to the so-called “Pak Pong-ju reform” when the cabinet pushed for market economy in 2005. The party cautioned against expansion of the cabinet’s influence; underscored disharmony between economic reform and the party’s guidance, while examining the problems of reform policy; and investigated irregularities allegedly committed by cabinet members. The findings were reported to Kim Jong-il.

Kim trusted Pak but had some doubts about the high speed of reform that the prime minister proposed. Eventually, Kim’s belief in economic reform began to waver as the party came up with one report after another about the cabinet’s “misadministration.” Starting in 2006, the party persuaded Kim to withdraw the economic initiatives, and implemented the state monopoly for grain purchase and supply. It then began to control the speed of reform. Individuals were not allowed to start their own businesses; cabinet officials were subjected

to intensive investigations aimed at their dismissal; and Pak’s power for personnel appointments was frozen. Kim’s trust in Pak gradually withered away, and in June 2006, Pak was ordered to take a 40-day leave. He was excluded from Kim’s provincial tours and was finally replaced by Pak Nam-gi.

2. Kim Jong-un Regime and Reformist Elites In a meeting with the staff members of the Central Committee of the Workers’ Party on April 6, 2012, Kim Jong-un reportedly emphasized the need to “solve economic problems under the unified guidance of the cabinet.” There is also a presumption that the disgraced ex-Premier Pak Pong-ju was appointed the head of the party’s department for light industries. If true, that would be a good sign that Kim is stressing pragmatism as well as the role of the cabinet in economic policy.

More important, however, is the chronic split between the political and economic elite groups over the direction of economic policy. The reason for the failure of Pak Pong-ju’s reform under the Kim Jong-il regime was the leader’s lack of firm will for reform. Holding the key to all this is the leadership in the course of policy adjustment.

It is necessary to note, however, that the status and role of lower-echelon economic bureaucrats are strengthening. Inside the enterprises, one can see the roles of party committees are weakening, while those of managers are expanding. This is because managers are assuming more authority as the planning scheme is decentralized. Changes to the collectivist control system are unavoidable when the income gap widens, private vendors and firms emerge, and new occupations appear amid changes in control systems. The roles of local parties can also be said to have grown weaker.

To expand economic reforms, North Korea needs elites to drive changes in fiscal, financial and price policies. No less important is the formation of a bureaucratic class that will apply reforms unceasingly. China’s experiences point to the need for expert bureaucrats who are familiar with international economy to attract foreign investment.

Since the turn of the 2000s, North Korea, with the help of international organizations, has dispatched economic bureaucrats and other experts to China, Australia, EU and the United States for training. In 2002, it also sent an economic inspection team to South Korea. The focus in their education is finance, which holds the key in economic reform. North Korea will have to continue education for experts familiar with international financial technologies, experiences in financial reform and economic theory through curriculum reorganization.

IV. Formalizing Spontaneous Markets after Botched Currency Reform The key in North Korea’s economic reform is the price system. Only when the North narrows the price gap between the official and market economies will it secure stable wage and price levels and an incentive policy for higher productivity. It is difficult to control inflation through currency revaluation alone while maintaining the spot commodity markets in conservative ways.

North Korea implemented currency reform in late 2009 to absorb money from free markets and use it in the public sector. Generally speaking, currency reform leaves major aftershocks. It causes a tremendous sense of loss among those who see their savings stripped down, while the benefits for those who earn are momentary. Even if nominal wages rise, the value of real wage falls

when prices are not stabilized. Also, it incurs negative effects on the real economy in the short run.

North Korean authorities emphasized planning in carrying out currency reform. It revealed a logical contradiction in policy formulation. North Korea saw its domestic production increase in the mid-2000s because it had allowed market elements into its economy. It was the result of putting monetary indices ahead of commodity indices as well as giving the businesses the rights to dispose of profits. It was preposterous in this regard for the North Korean authorities to opt for a policy that would undermine production increases after making all elements, including wage and price stability, depend on expanded supply.

Both consumer prices and foreign exchange rates surged immediately after the currency redenomination. The price of one kilogram of rice soared from 20 won in December to 600 won in January, and the exchange rate of the U.S. dollar also rocketed from 30 won to 530 won over the period. With the authorities unable to normalize the real economy, the currency reform was destined to fail and so was the attempt to control markets. In the end, all the restrictions imposed on markets were withdrawn on May 26, 2010. Since the beginning of 2011, the functions of free markets have been fully restored and general markets have increased to about 300.

What will be the Kim Jong-un regime’s response to the spontaneous emergence of markets? Some hints could be found in the failed currency redenomination in Vietnam in 1985. The purpose of the currency reform was to keep households from possessing excessive amounts of cash. But the move began to produce unintended results. State enterprises could not secure operating funds due to shortage of cash in circulation while wage hikes seriously aggravated the state budget deficit. On the other hand, people who

had prior information of the currency reform exchanged their money into dollars. The measure had only negligible effects on soaking up liquidity. Yet its aftereffects were huge. The value of the Vietnamese currency quickly destabilized and the inflation rate reached a whopping 487 percent in 1986.

The confusion in Vietnam ended in 1989. In the process, the Vietnamese government chose to make a bold shift on the supply side. It reformed agriculture, revitalized foreign trade through trade liberalization, and left prices to market forces. The inflation rate fell to 34.7 percent in 1989, while the economic growth rate rose up to 8 percent. Since 1990, Vietnam has been riding on the back of a tiger named market reform, from which it cannot dismount even if it wants to.

Behind North Korea’s hyperinflation was “spontaneous marketization,” which spread naturally as the state’s supply capacity weakened. The advances and retreats of market and planned economies will continue for the time being, considering that the country’s economic reform still remains in its infant stage.

However, now that the market’s role has grown so big on the supply side as to be called “spontaneous marketization,” and North Korea is obviously preparing to expand reform, the institutionalization of the market is inevitable in the long run.

V. Conclusion: Tasks and Prospects North Korea’s elite class is increasingly embracing the idea of economic reform and openness. It is enhancing expertise in attempts to change economic policy at low-level governance amid accelerating economic cooperation with China. But it is rather passive about changing at top levels. The undue concentration of policy-making process remains unchanged.

While economic bureaucrats have emerged and the government emphasizes the “cabinet system” in economic administration, the economy has not been separated from politics. The country still remains less than positive toward pragmatic economic reform, and in policy discussions, political considerations continue to drown out the need for economic reform.

The military-first politics is the result of the international tension and confrontation faced by North Korea, and is blocking the emergence of reformminded elites at home. The military-first politics does not, of course, contradict economic reform, but it seems hardly possible for North Korea to create a structure in which the military can become beneficiaries of the reform process.

If North Korea’s economic reform is to expand in the future, the following problems should be resolved. First, the regime needs to change its decisionmaking structure, which rests entirely on the supreme leader. The over concentration of power is detrimental to coping properly with the policymaking demands on North Korea now and in the future. North Korean leaders could find useful implications from the “developmental dictatorship” of some Third World countries, which pushed for economic development while maintaining a dictatorial system. If the North Korean leadership pursues external-minded diplomacy and new development strategy, even though keeping their authoritarian political system, the “reform-minded elite” will be able to gain the upper hand in economic policy planning.

Second, North Korea needs to make efforts to ease international tension and make a developmental conversion of military-first politics. The military-first politics, which has characterized North Korean political culture since the turn of the 2000s, will likely work as the conservative foundation for the North’s

changes in policy-making and bureaucratic system in the future. The influence of military-first politics on state policies will dwindle only when the structure of international tension loosens and North Korea’s perception of encirclement by adversaries dissipates. It is imperative to ease the tension surrounding North Korea. What’s important in this process is to create an environment for the military to adjust itself to the policy change.

Third, it is necessary to help nurture elites who can push for reform and openness. Although North Korea is currently expanding overseas study of working-level officials, it needs to extend the educational courses to senior bureaucrats and come up with more systematic education programs. To support overseas training of working-level officials, the North needs to make the most of various international training programs. What North Korea needs now are not “study tours” for a small band of officials limited to international finance, in which the North Korean authorities are paying keen interest, but more diverse training programs. Various U.N. agencies, including UNDP, will need to open regular programs for North Korean officials, and universities in Western countries, including the United States, are advised to provide them with systematic educational opportunities in areas such as economics, business administration and finance.

[KDI Review of the North Korean Economy, June 2012, published by the Korea Development Institute]

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Time to Prepare for Demographic Bonus 2.0 Lee Jun-hyup Research Fellow Hyundai Research Institute

I. Joining the 20-50 Club Korea joined the “20-50 club” on June 23 as its population, coupled with per capita GDP of $20,000, has topped 50 million. This put the nation in an advanced group in terms of economic level and population size. It is the first country to enter the club in 16 years, following Japan (1987), the United States (1988), France and Italy (1990), Germany (1991) and the United Kingdom (1996).

No other countries will likely be able to become a member of the club in the next several years. China, India, Brazil, Russia and Mexico have populations exceeding 50 million, but considerable time will be needed for their per capita GDP to surpass $20,000. Spain’s per capita GDP hovers above $20,000 but its population is expected to remain below 50 million until 2031.

The per capita GDP of those countries that joined the 20-50 club before Korea has continued to rise. As of 2009, the per capita GDP of the United States, Japan, Germany and France exceeded $40,000, and that of the United Kingdom and Italy exceeded $30,000.

To stay in the club Korea will have to overcome a major demographic obstacle. Its low birth rates over the decades have already resulted in an economically active population that is shrinking at the fastest tempo in the world. This will naturally jeopardize the nation’s growth potential as well as its

newly-achieved economic stature.

II. 50 Million Mark and Demographic Bonus 1. Korea’s Population Trend Korea’s population has increased steadily during its economic expansion, rising from 30.13 million in 1967 to 40.41 million in 1984, and to 49.14 million in 2010 before reaching 50 million. But the population is expected to peak in 2030 at slightly more than 52 million and turn downwards thereafter. * Basic assumption for estimating future population: Population size of the future is affected by the birthrate, death rate and migration.

- Average birthrate will rise from 1.23 persons in 2010 to 1.42 in 2045 and will remain on that level.

- Life expectancy will increase from 77.2 years for men and 84.1 years for women in 2010 to 86.6 years and 90.3 years, respectively, in 2060.

- Population influx, which was 1.67 persons per population of 1,000 in 2010, will begin to decline and hit 0.53 by 2060. * Future population: Korea’s population is expected to peak at 52.16 million in 2030 and fall back to 43.96 million in 2060, due to its rapidly aging population.

- The ratio of economically active population (15-64 years of age) out of total population, which indicates growth potential in terms of population, is expected to plunge from 73.1 percent in 2012 to 49.7 percent in 2060, drastically weakening economic vitality.

2. Benefits from Demographic Bonus

Demographic bonus refers to a phenomenon in which increases in the economically active population boost economic growth and reduce the total dependency ratio (the percentage of childhood population plus elderly population divided by economically active population). If a country promotes family planning when its elderly population is small, it will increase the portion of its economically active population for the next 15 to 20 years and reduce the total dependency ratio. This will maximize the effects of demographic bonus.

Korea experienced a postwar baby boom to the early 1960s. Those boomers have been in the economically active population. On the other hand, a family planning policy, implemented in 1963, and cultural changes in the ensuing decades have reduced the fertility rate, shrinking the childhood and dependent populations.

If an economically active population increases, it will speed up economic growth in three ways: 1) labor supply will expand and spark quantitative economic expansion; 2) the savings rate will rise and promote investments; and 3) life expectancy will increase and help sustain consumption levels.

Korea enjoyed a demographic bonus for 46 years from 1966, when the share of economically active population bottomed at 53.0 percent, to this year, when the ratio has peaked at 73.1. The demographic bonus was particularly evident in 1970-1989, when postwar baby boomers joined the economically active population. New entrants into the economically active population sharply fell in 1966 because of the low birth rate during the Korean War (1950-53).

As 17.39 million baby boomers joined the rank of economically active population, the share of economically active population surged from 54.9 percent in 1970 to 68.6 percent in 1989. It has since edged up to its 2012 peak.

Total dependency ratio is expected to plunge from 88.7 in 1966 to 37.2 in 2016.

The nation’s potential growth rate has remained at a high level as the economically active population increases and the total dependency ratio declines. In 1970-1989, when baby boomers joined the economically active population, the annual average potential growth rate remained high at 9.2 percent. As the rise in the share of economically active population slowed, the potential growth rate gradually dropped to the annual average of 6.6 percent in

1990-2000 and further to 4.1 percent in 2000-2011.

3. Dissipation of Demographic Bonus Korea’s share of economically active people in total population was the highest among major countries in 2010, at 72.8 percent, but U.N. population forecasts predict a drop of 23.1 percentage points to 49.7 percent in 2060, the lowest level among the advanced countries, sharply weakening the nation’s economic vitality. In the same time period, the share of the elderly population aged 65 years or older is expected to surge 29.1 percentage points from 11.0 percent to 40.1 percent. Accordingly, the total dependency ratio, which indicates economic burdens stemming from population, will rocket from 37.3 to 101.0.

In contrast, France and Sweden, which are cited as successful examples of population policy, will likely maintain economic vigor as their shares of

economically active population are seen to decline gradually. France’s share of economically active population is expected to fall only 7.1 percentage points in the 2010-2060 period (64.8 percent→57.7 percent), and its share of elderly population will also likely rise a mere 8.2 percentage points (16.8 percent→ 25.0 percent). Sweden’s share of economically active population is expected to fall 8.8 percentage points (65.2 percent→56.4 percent), and its share of elderly population will likely climb 8.0 percentage points (18.2 percent→26.2 percent).

Starting in 2013, the demographic bonus is expected to disappear, precipitating a plunge in the nation’s potential growth rate. The declining inflow of economically active population due to a low birth rate and rapid population aging will shrink the economically active population and raise the total dependency ratio.

The economically active population will gradually slide from 73.2 percent of the nation’s total population in 2012 until 2019, immediately before baby boomers join the elderly population. As baby boomers become senior citizens, the proportion of economically active population is expected to fall sharply to 71.1 percent in 2020, to 57.0 percent in 2039 and to 49.7 percent in 2060. On the other hand, the elderly population will like surge from 15.0 percent in 2019 to 15.7 percent in 2020 and to 31.7 percent in 2039 before reaching 40.1 percent in 2060.

The rapid aging of society will push up the total dependency ratio at a faster tempo than the low birth rate pulls it down, curbing the nation’s economic growth. The OECD forecasts Korea’s potential growth rate will plummet from the 4-percent range in the 2000s to 1-percent range in the 2030s. Although the contribution ratios from capital and total factor productivity will likely remain positive, labor’s contribution ratio will fall into negative territory.

The main productive generation, which takes up the largest percentage of the total employed population, will likely shift from those in their 40s to those aged 60 or older in 2028, weakening economic vitality. * Hypothesis: This prediction is based on the assumption that various economic and social elements that can affect employment rate will remain unchanged, and the 2011 employment rate by gender and age is maintained until 2035. This is designed to consider only the changes in employment rate caused by shifts in demographic structure.

- As baby boomers age, the main productive generation also shifts gradually from 20-somethings to those in their 30s (1990), 40s (2004), 50s (2023) and to 60s or older (2028).

- Youth→30s: In 1990, the percentage of people in their 30s among the

employed stood at 28.0 percent to exceed the 20-somethings’ 27.8 percent (among baby boomers, those born between 1955 and 1960 belonged to 30somethings).

- 30s→40s: In 2004, the percentage of 40-somethings (27.5 percent) exceeded that of 30-somethings (27.4 percent) (among baby boomers, those born between 1955 and 1964 belonged to 40-somethings).

- 40s→50s (2023)→60s or older (2028): In 2023, 50-somethings (23.9 percent) surpasses 40s (23.8 percent), and in 2028, people aged 60 or older, or those born between 1955 and 1968, become the main productive generation (60 or older: 24.1 percent, 50s: 23.5 percent).

Amid the increases in the share of aged workers, concerns rise about an imbalance between supply and demand of labor. As the aged population actively seeks jobs, unemployment rate may sharply rise if openings for the elderly workers do not increase.

- Supply of labor: Labor supply increases as aged people seek jobs.

- Demand for labor: As businesses avoid high-wage aged workers, demand for labor declines.

As a group, economically active people are net savers. When the percentage of their population peaks, real estate prices also reach record levels. Conversely, a plunge in property prices increases the possibility of a financial crisis.

Although a worsening demographic structure can hardly be a direct cause of real estate slump, it can provide fodder for financial turmoil.

- Japan: A surge in economically active population pushed up real estate demand and caused property prices to soar in the 1980s, but the real estate bubble burst when the share of economically active population peaked at 69.7 percent in 1990, throwing the Japanese economy into prolonged malaise.

- United States: The share of economically active population rose to its peak of 67.2 percent in 2005, thereafter real estate prices continued to soar until the U.S. economy slipped into recession due to the subprime crisis in 2008.

Spain: The share of economically active population peaked in 2005 with 68.7 percent, the nation’s real estate bubble imploded in 2008, and the government asked for a bailout loan to supply liquidity to its ailing banks in 2012.

Ireland: The share of economically active population peaked at 68.4 percent in 2005, and a subsequent property bubble collapse forced the country to request a bailout package in 2010.

When economic growth declines because the economically active population shrinks, government revenue drops and welfare demand rises. This swells government debt and raises the possibility of a fiscal crisis. Particularly in the aftermath of a financial crisis, the subsequent economic slump and any fiscal stimulus combine to aggravate the budget deficit. Japan’s government debt stood at a mere 67.0 percent of its GDP in 1990, but a protracted slump pushed up the debt ratio to 229.8 percent in 2011. The United States, too, saw its debtto-GDP ratio rise from 76.1 percent in 2008 to 102.9 percent in 2011, leading to a downgrade of its sovereign credit standing.

III. Preparations for Demographic Bonus 2.0 Now that the peak year of 2012 will soon be over, Korea will enter a period of dwindling economically active people. It is high time for the nation to prepare for the “demographic bonus 2.0 era� and extend the bonus by raising its

employment rate.

The most important task is to raise the birth rate. But it will take considerable time to see the effects of a new population policy so elaborate measures are needed to solve the impending shortage of employable workers, which will be seen until 2030. * Policy priority: The first priority should be to raise the employment rate. The government should seek ways to make the most of North Korean workers and import labor from the North as well as other countries in the medium run.

- Short-term steps: Korea should raise the employment rate of elderly people, women and younger generations, who are experiencing difficulties finding jobs, to simultaneously resolve unemployment problem and labor shortage.

- Mid-term steps: If South Korea makes use of North Korean labor, it will be able to solve manpower shortage and at the same time narrow the economic gap between the two Koreas and eventually reduce unification costs. Also necessary is to seek ways to use foreign workers to an appropriate extent.

- Long-term steps: Raising birth rate requires not only a considerable amount of governmental budget but it begins to produce visible effects after 20 years at the least. Therefore, the nation should begin to put the policy into action now and continue to implement it with a long-term perspective. * Creating jobs for aged people: A significant percentage of aged people and baby boomers have failed to prepare for old age and want to continue to work, while businesses avoid employing elderly workers for higher wages. To help aged people work longer at major posts, the nation needs to simultaneously introduce a gradual extension of the mandatory retirement age and the lower salary-for-job security system. It also ought to work out custom-made employment measures that take into account the situations and skill levels of non-regular workers and self-employed people who face their retirement age at

workplaces. * Measures for youth unemployment: As the serious “mismatch between expectations and reality” among the younger generations is lengthening their periods between jobs, the youth employment policy should be geared to have their job expectations become more realistic, while supplying a larger number of “decent jobs” to them. The government should create a social environment and offer systemic assistance to guide highly-educated youth to produce more success stories by starting their own businesses. To this end, it needs to expand financial and tax support for young entrepreneurs, provide management consulting, and improve support systems to help them start anew after experiencing failures. It is also necessary to change the deep-seated trend in society to pursue higher education by invigorating technical schools and employment of high school graduates. * Raising birth rate and creating jobs for women: The government should gradually expand fertility incentives, including longer maternity leave, to encourage women to have more children, with the ultimate aim of assisting them to harmonize family life and work more easily and effectively. The government ought to provide subsidies for public day care centers taking care of children aged between 0 and 3 years, as well as for corporate childcare facilities and neighborhood childcare facilities jointly run by parents in apartment complexes. It also needs to expand the payment of childbirth and child care allowances on a phased basis in ways not to undermine fiscal health. * Proper use of foreign and North Korean labor: Even if South Korea manages to make better use of aged workers as well as women and youth, the nation will likely experience labor shortages after 2020. Therefore, the government will need to maximize the use of North Korean and foreign workers. It needs to encourage the hiring of North Korean workers through expanded inter-

Korean economic cooperation programs, such as the Kaesong (Gaeseong) Industrial Complex. Such a policy will also help speed up national unification and reduce unification costs by narrowing the income gap between the two Koreas.

The government also has to work out a social integration policy for foreign workers, marriage immigrants and their children. Accordingly, an amicable environment for Koreans and foreigners to live together harmoniously through an employment support system is acutely needed. In this context, the government should set up a mechanism to control the demand for imported labor and link it to effective vocational training programs to raise the productivity of foreign workers. * Drawing up fiscal regulations: The nation needs to adopt fiscal regulations reflecting changes in its demographic structure. As the policy to raise the birth rate and create jobs for the less privileged class will require a significant amount of government budget, the necessary measures should be gradually introduced while maintaining fiscal soundness. To this end, it is more important than anything else to work out fiscal rules considering demographic changes and observe them by all means.

[Weekly Economic Review, No. 493, June 22, 2012, Hyundai Research Institute]

www.koreafocus.or.kr

Economic Polarization in Korea: Trends and Implications Lee Bu-hyoung Research Fellow Hyundai Research Institute

I. Intensifying Debate on Polarization Economic polarization is the focus of increasingly heated discussions these days. At the heart of the debate is the yawning income gap, with the top bracket accumulating ever more wealth while pressure mounts on the middleand lower-income groups. But the discourse has widened to also include youth unemployment, disparities between large companies and small/medium-sized enterprises (SMEs) and other negative factors.

Still, when inequality is measured, the results may not always match perceptions. For example, there is the view that “when relative indicators are used, households of workers recently show less income polarization, indicating the polarization is moving in a positive direction, not in the feared way.” (Byeon Yang-kyu et al., 2012, “Discussion on Polarization: Truth and Misconception,” Korea Economic Research Institute) This study looks at the nation’s polarization realities and attempts to draw the implications in five categories: household income and inequality; household spending; employment and jobs; wages; and business growth and earnings rates.

II. Realities of Polarization by Category 1. Household Income and Economic Inequality Until recently, Korea’s middle class had contracted to a level not seen since before the Asian currency crisis in 1998. The proportion of middle-income class fell to 66.3 percent in 2008, swung upward in 2009 and recovered to 67.7 percent in 2011. Meanwhile, the proportion of the low-income population increased.

The Gini coefficient, which gauges economic inequality, has not yet recovered to the level before the currency crisis but recently began to drop. The Gini coefficient was 0.289 in 2011, still higher than 0.285 in 1998, but lower than in 2010.

2. Household Spending: Education and Housing Expenses As for the proportion of education expenses in total household spending, the gap in the ratio of education spending to disposable income edged down from 1.1 percentage points in the 1990s to 1.0 percentage point in the 2000s. In particular, the ratio of education spending by the lowest income quintile to that of the top quintile has been falling of late.

Meanwhile, the gap in housing expenses compared to disposable income between the top and bottom income quintiles has been widening. The housing expenses gap rose from 8.5 percentage points in the 1990s to 13.3 percentage points in the 2000s. The ratio of housing expenses of the bottom income quintile to those of the top quintile also has steadily risen since 2000.

3. Employment and Jobs The official unemployment rate of young people aged 15-29 shot up to 12.2 percent during the currency crisis in 1998, and fell to 6.9 percent in 2011. It remains the highest among all age groups but the gap with the jobless rates of those aged 30 or older has narrowed since the crisis.

The jobless rate gap between youth and the 30-39 age group plunged from 6.5 percentage points during the currency crisis to 3.8 percentage points in 2011.

In the same timeframe, the gap with those aged 40-49 fell from 6.6 percentage points to 5.0 percentage points while the gap with those aged 50-59 dropped from 6.9 percentage points to 5.0 percentage points.

In employment categories, the ratio of regular workers to all wage earners rose up to 61.3 percent in 2011. This owes to a steady rise in regular workers and decline in hiring on a temporary and day-to-day basis since the early 2000s.

The number of temporary and daily workers rose steeply in the wake of the

currency crisis, but the number of day workers began to fall in 2006 and that of temporary workers in 2010. Hence, the ratio of temporary workers to total wage earners slid from 34.7 percent in 2003 to 28.7 percent in 2011 and the ratio of daily workers also tumbled from 18.0 percent in 1999 to 10.0 percent in 2011.

The wage gap between regular and irregular workers in Korea widened until 2011, when it somewhat narrowed. The gap was 619,000 won in 2004, 1,036,000 won in 2010 and 1,026,000 won in 2011. The wage gap between the manufacturing and non-manufacturing sectors also shrank. The salary differential declined from 229,000 won in 2003 to 126,000 won, the lowest level ever, in 2011. Yet, the average wage of non-manufacturing industries, excluding agriculture, forestry and mining, continues to hover above that of the manufacturing sector.

5. Business Growth and Earnings Rates In terms of external growth indicators such as total assets and revenue, it appears that the gap has closed recently between large companies and SMEs and also between export-oriented and domestic market-oriented companies.

The gap in total assets and revenue between large companies and SMEs shrank in the 2000s compared to the 1990s and the gap has recently turned to even a minus figure. The gap in variation of total assets between large and small/medium-sized companies, which was 2.6 percentage points in the 1990s, plummeted to -3.0 percentage point since 2000. SMEs saw their total assets grow at a faster pace than large companies. The gap in revenue variation also tumbled from 3.1 percentage points to 1.1 percentage points for the same period.

The gap is also recently narrowing between export-oriented and domestic market-oriented companies. Their gap in total asset variation was an average of 3.0 percentage points in the 1990s but has dropped to 0.0 percentage point since 2000. The recent growth of total assets owned by domestic marketoriented companies is above that of export-oriented companies. Their revenue variation gap also dropped from the average of 1.5 percentage points in the 1990s to 0.5 percentage points after 2000 and is now slightly over 1 percentage point.

The profitability gap between large companies and SMEs and between exportoriented and domestic market-oriented companies, which is recently rising again, has relatively contracted since 2000 compared to the 1990s. The gap in operating profit-to-sales ratio between large and small/medium-sized manufacturers was at the average of 2.9 percentage points in the 1990s and has dropped to 2.5 percentage points since 2000. The gap declined until 2009 before ticking up in 2010. Comparing export-oriented and domestic marketoriented companies, the operating profit-to-sales ratio gap also shrank from 1.8 percentage points in the 1990s to 0.3 percentage point in the 2000s.

III. Implications Economic polarization in Korea shows various characteristics by sector and period. In particular, there is relatively intense polarization in household income and spending structure, jobs, and wages of regular and irregular workers. Yet, the general trend is easing polarization. Therefore, the policy to relieve economic polarization needs to seek various measures reflecting the different characteristics of each sector.

Along with efforts to increase the number of decent jobs, there should be practical policy-based measures to reduce the burden of housing and education expenses for the middle- and low-income classes. In order to create more jobs for youth in particular, the education system should be reformed and a more enlightened mindset such as “work = career” should be embraced. It is also necessary to expand investment in “work-based welfare” and improve the employment infrastructure such as child care services.

Efforts to tackle industrial polarization should focus on generating higher value added by sharpening competitiveness and securing new growth engines for the manufacturing sector and accelerating innovation of the service industry. To this end, the government needs to maintain the deregulation policy to encourage domestic investments and make aggressive policy efforts such as increasing incentives for companies that create jobs through investment.

It is also important to establish a win-win system to relieve conflicts caused by polarization but this needs to be preceded by the formation of nationwide consensus. In the end, the fundamental solution of polarization requires efforts for mutual prosperity and cooperation based on growth, instead of a zero-sum distribution that transfers resources from one place to another.

[Weekly Economic Review, No. 492, June 15, 2012, Hyundai Research Institute]

www.koreafocus.or.kr

- ‘All Eyes On Korea’ Vies for Global Limelight in London

‘All Eyes On Korea’ Vies for Global Limelight in London

Ki Seon-min Staff Reporter The JoongAng Sunday

Seven thousand green colanders wrapping Southbank Centre columns and colorful balloons tied onto tree branches catch the eyes of curious Londoners passing by the River Thames. Showcased in early June, they are outdoor installations of Choi Jeong-hwa, one of the most famous Korean artists along with Lee Bul and Suh Do-ho. According to the Guardian on May 31, “the Korean artist Choi Jeong-hwa had wrapped hundreds of bright green plastic colanders around the grey columns, instantly transforming them into exotic plants.”

Under the auspices of the Ministry of Culture, Sports and Tourism, Choi’s outdoor exhibition marked the launch of the “All Eyes On Korea” festival organized by the Korean Cultural Centre UK in time for the London Olympics.

It includes a series of K-pop events presenting traditional and pop music, films, performances, literature and culinary culture. The Korean festival capitalizes on the years of accumulated experience and know-how of the London-based Korean Cultural Centre, which opened in 2006. Headed by Director Won Yong-gi, the center has helped spread the so-called “K-culture” in Britain and beyond.

Jeon Hye-jung, 44, has been at the crossroads of the promotional activities.

Having organized the annual London Korean Film Festival over the past seven years, her name is now known in the Korean film industry. Last year, the KCCUK’s film event in London topped the list of 35 overseas film festivals funded by the Korea Film Council. Last year’s film event in London achieved unusually high popularity, especially thanks to smart marketing strategy that involved performances of K-pop stars. Online booking systems for more than 100 movie screens were suspended because of a sudden surge in demand for tickets to the film festival’s gala concert, which featured Korean boy group SHINee. A telephone interview with Jeon was conducted on June 21, about a month before the opening of the 2012 London Olympics.

Q. “All Eyes On Korea” is built upon the branding strategy of “Kculture.” What are the festival’s main programs?

A. Violinist Sarah Chang, soprano Sumi Jo and pansori singer Lee Jaram are to perform at the Southbank Centre. Designer Lie Sang-bong will present a hanbok fashion show at the Victoria & Albert Museum, followed by a Korean cuisine reception. K-films are also available. “Year of 12 Directors,” featuring movies of renowned Korean film directors such as Im Kwon-taek, Lee Joon-ik and Lee Myung-se, will continue to screen Korean movies, and invite the

directors to meet with audiences in central London. Widely encompassing contemporary and traditional arts, performances, movies, literature, cuisine and fashion, the festival will showcase the diversity of “K-culture.”

Q. How do you differentiate “All Eyes On Korea” from Korean cultural events organized for previous Olympic Games?

A. The Korean Cultural Centre UK has been organizing a number of cultural events in London and has established strong cultural networks with British art circles. I am confident that KCCUK has the accumulated expertise to effectively promote Korean culture, using its local networks in Britain.

Without established networks with the British cultural community, Korean artists, despite their admirable artistry, cannot secure the right venue to present their work in a manner in which they can access the target audience. In that sense, “All Eyes On Korea” is a well-prepared event, built on close cooperation and linkages between KCCUK and three major cultural organizations in Britain: the Southbank Centre, the Victoria & Albert Museum, and the Mayor’s Thames Festival. Especially, the Southbank Centre and the Victoria & Albert Museum constitute an important part of British cultural life, and also possess a high profile in the global arena of culture and the arts.

Following the fashion show during the festival, Lie Sang-bong’s designer teacups are to be sold at the Victoria & Albert Museum’s art shops. I think this is one of the best ways to increase international accessibility of Korean culture.

Q. Could you elaborate on KCCUK’s strategy for the Korean cultural festival in London? How did you establish partnerships here for the event?

A. The Southbank Centre’s Hayward Gallery and the Victoria & Albert Museum normally have full exhibition schedules around the year. The KCCUK team started to contact them two years ago to discuss the Korean festival. We thought that the 2012 Summer Olympics in London would be a highly strategic occasion to promote Korean culture among Londoners and Olympic travelers. We secured the key venues for our festival thanks to our strong local networks established from the London Korean Film Festivals.

British people’s appreciation and understanding of Korean traditional and contemporary arts and culture also contributed greatly to the successful preparation. Furthermore, Korean artists are receiving excellent international acclaim, indeed. When asked who is the Korean artist most interesting and suitable for an exhibition, the director of Hayward Gallery named “Choi Jeong-hwa” without hesitation.

Q. Among the musicians who appear at the festival, Sarah Chang and Sumi Jo are very well known internationally. However, the traditional Korean music quartet GongMyoung and pansori singer Lee Jaram are less known among the general British audience.

A. Violinist Sarah Chang easily sells 5,000 seats when she gives a concert in London once or twice a year. She is known to be an American but her parents and musical roots are Korean. We hope that the international audience will rediscover Sarah Chang as Korean and appreciate Korea’s place in the world of Western classical music. By doing so, we aim to establish a brand of “KClassic.” Compared to those renowned classical musicians, it is true that traditional music genres such as pansori are less known among the British.

However, from the initial planning phase, we emphasized that pansori master Ahn Sook-sun had been invited already to the 2003 Edinburgh Festival, and that traditional Korean music needs to be made more accessible to the local music fans.

Q. KCCUK has been organizing the London Korean Film Festival since 2006. What is your key objective for the annual film event?

A. First of all, KCCUK wants to present the genres of Korean culture that can satisfy local British demand, rather than that of Korean people living in Britain. Our surveys showed films, contemporary pop music and food were the three areas of top interests of British people when it came to Korean culture.

Whereas many Korean people tend to think their traditional culture should be the first to be introduced in the West, British people are far more interested in contemporary Korean culture such as movies, pop music and food. These segments of Korean culture easily transcend language barriers and therefore are the most accessible for local audience.

Q. How did you end up at KCCUK to promote Korean culture in Britain?

A. I was a dance student. At age 8, I started to learn Korean traditional dance and graduated from Sunhwa Arts High School and Ewha Womans University as a dance major. As a graduate dance student, I learned from Korean dance master Kim Mae-ja, and I also briefly taught at the university. Then I came to Britain with my two children for further study. I have a master’s degree in cultural policy and management from the University of Warwick. Well, in fact my interest in performance management and organization began to develop during my college days in Seoul. Anyway, after study at Warwick University I happened to work as a consultant for the Korean Embassy in London. The job subsequently led me to a career at the Korean Cultural Centre UK. To prepare for its 2006 launch, I remember visiting more than 100 sites.

Q. How do you feel the spread of hallyu in Britain?

A. I would say that the Korean Wave has only started to bud here. Since the very first inroad has been made, we are in need of further efforts to widely spread the wave. Korean films and pop music seem to be increasingly popular among young people. For example, director Park Chan-wook has become a top-notch celebrity among film aficionados and British filmmakers. They may not know the name of the Korean president but they are all aware of director Park and his film titles. A few years ago our film festival went to Oxford and Warwick, where Park accompanied us. At one of the events where Park appeared, a young Irish guy brought out a hammer from his rucksack, alarming the whole staff. I thought I would have to throw myself in front of Park to protect him. However, that guy immediately introduced himself as a huge fan of Park’s movies, especially of “Oldboy” where the protagonist (played by actor Choi Min-sik) wields a hammer to fight with his enemies. To young music fans here, “K-pop” is no longer only exotic. When I talked to an

official at the Victoria & Albert Museum to arrange designer Lie Sang-bong’s fashion show, he said that his sister is a K-pop fan. Following this conversation, things went very smooth.

Q. Where in particular did you see the heat of Korean Wave in the British society?

A. It was when a presidential Cheong Wa Dae official visited KCCUK in 2010 that I heard of “K-pop” for the first time. I got quite curious about whether there really were British young people who listened to Korean pop music with such enthusiasm. To see with my own eyes the so-called K-pop craze, I went to a club in central London, which was famed for its selection of Korean pop music. At the club, screens showed music videos of Korean idol groups such as BigBang and 2NE1, and people sang along and danced in sync with those music videos. I was very shocked to realize the spontaneous yet burgeoning popularity and I began to think seriously about ways to further support the thriving local demand for Korean contemporary culture. As part of such efforts, one of our flagship events included a K-pop clubbing night at KCCUK. We served cokes and Korean snacks to participants in the events.

Even though it only featured a simple stage with dark curtains, and some illuminators from the ceiling, British teenagers swarmed en masse to the Kpop fiesta.

Q. Beyond K-pop and K-cinema, various other aspects of K-culture needs to be better known, perhaps.

A. For that purpose, KCCUK opened a Korean cultural education program called “K-Pop Academy.” The 12-week program started last February, with 30 young British participants. It offered them on-the-spot cultural experiences and lectures on various aspects of Korean culture and history. The program was

free under the condition that they would upload online postings about their experiences. It was an effective way to increase English-written material on Korean cultural activities from British youths’ point of view. The cultural education sessions included cooking classes for Korean snack tteokbokki and mugwort rice cake. Participants were also invited to the Korean Embassy residence. There they learned traditional Korean bows on the hot-floored ondol room and the ambassador himself demonstrated Korean moxibustion therapy.

The Guardian journalist who wrote feature articles on K-pop met with the participants and offered a talk on K-pop. This reporter had become a K-pop fan after listening to Epik High’s song “One,” and often enjoyed listening to songs of BigBang, Girls’ Generation, Beast, and others.

Q. What are the effective ways you think to carry on the popularity of Kculture abroad?

A. All government and non-government organizations need to expand networking with their local counterparts in order to continue to promote popular interest in Korean culture. I am sure the tangible and intangible ripple effects of the “All Eyes On Korea” festival will exceed its budget of 1.5 billion won (US$1.3 million). Over the longer run, I hope that the interest in K-pop that people have here will continue to deepen and diversify into broader interest in Korea in general. I hope more British people will be interested in getting college degrees in Korean studies and go to Korea for further study. I believe that Korea’s cultural content is highly competitive in the global arena.

It is the greatest asset for people like myself, who work to promote Korean culture overseas. I dream that some day K-culture will take the world’s center stage.

[No. 276, June 24, 2012]

www.koreafocus.or.kr

- Three Neighboring Nations Coauthor Mutually Acceptable History Book - Foreign Affairs Correspondent Explores Truth in U.S.-ROK Relations

Three Neighboring Nations Coauthor Mutually Acceptable History Book

Baek Seung-chan Staff Reporter The Kyunghyang Daily News

“A Trilateral Account of the Modern and Contemporary History of East Asia” (Volume 1 & 2) By the Korea-China-Japan Joint History Compilation Committee, Humanist, Vol. 1: 380 pages, Vol. 2: 392 pages, 23,000 won per volume History is often more than a chronicle of facts; it reflects a certain point of view. It is therefore deemed to be next to impossible for scholars of diverse academic and cultural backgrounds to set their opinions aside and collaborate on historical writing. More so when these scholars originate from Korea, China and Japan — countries whose entangled histories are steeped not in peace and co-existence, but bloodshed and invasion. But some tasks, daunting

as they may appear, cannot afford to be eschewed.

In this case, it is even more daunting. Although almost seven decades have passed since the end of World War II, the three countries still are arguing about the trauma caused by the other. There is a plethora of unresolved issues left on the table, namely compensation and state apologies, and making things worse, someone occasionally committing a “slip of the tongue” on a delicate matter.

If the three nations don’t take the time now to properly address and record their modern history, the wounds will continue to fester and eventually cause greater pain and damage.

The Korea-China-Japan Joint History Complication Committee was set up as a response to a controversial set of textbooks issued in Japan in 2001. The history textbooks, published by Fushosha Publishing Company with the support of Japan’s conservative groups, became notorious for denying Japan’s role in invading its neighbors and other Asian nations, and defending its past militarism. Shocked historians and teachers from the three countries launched the committee in 2002, deciding it was time to overcome their differences based on the belief they could agree on a mutually acceptable perspective if they talked about it.

After four years of hard work, the committee published “History for an Open Future.” Understandably, this volume was as limited as it was poignant. It was immensely valuable in that it was the result of the first joint effort by the three countries. But in terms of content, it was little more than a chronological arrangement of historical facts. This was because the main objective of each committee member was to promote his nation’s history. A year after “History for an Open Future” was released, the committee convened once more. Six years later, it produced “A Trilateral Account of the Modern and Contemporary History of East Asia” in two volumes.

The book concentrates chiefly on the history of relations between the three nations, mainly because there had been extensive exchange of goods and people, making it virtually impossible to pen a historical account from the perspective of one country. By the 19th century, the interdependence within the East Asian region had grown to the point where no country could call their history exclusively their own.

Western powers, in the era of grand ocean voyages, had adopted imperialistic policies, and ships filled with missionaries, merchants and soldiers weaved in and out of Asia. Korea, China and Japan struggled to digest this sudden influx of Western culture and its subsequent influence, and how each country did this, in turn, had an impact on the others. The Japan-Korea Treaty of Amity, the Imo Mutiny, the Gapsin Coup, the Korean War and the Vietnam War — all important political milestones in modern Korean history are virtually inexplicable unless they are viewed in the context of Korea’s relations with Western powers, not to mention China and Japan.

Volume I, arranged in chronological order, narrates the institutional changes seen in the modern history of the three nations. Volume II describes the lifestyles of the people of the three countries and how people and culture were exchanged. The first volume, therefore, would best be read from beginning to end in its original order of content, while the second volume may be read in random order. “History for an Open Future” was written for readers in junior high school or higher, while “A Trilateral Account of the Modern and Contemporary History of East Asia” is for advanced high school reading levels, making it a good read for college students or anyone interested in domestic and regional history.

With the Opium War (Anglo-Chinese War), the West, which at the time was

scanning the world to develop new colonies, began to manifest their appetite for East Asia in earnest. The United Kingdom of Britain, following its triumph over the Qing Dynasty, forced China to sign the heavily biased Treaty of Nanking in 1848, under which China was forced to concede Hong Kong and open up five of its ports, including Guangzhou and Shanghai. The treaty effectively closed the curtain on China’s Sinocentric world view.

Meanwhile, the Treaty of Peace and Amity forged between Japan and the United States in 1853 was significantly more favorable to Japan compared to other bilateral treaties of the times, such as the Treaty of Nanking or the Treaty of Tianjin that the Qing Dynasty signed with the Western countries.

This was partially because Japan, unlike China which signed under duress after its defeat in war, was allowed to negotiate terms. From a broader perspective, it was also because the West revised its oppressive foreign policies after populist revolts such as the Taiping Rebellion in China and the Sepoy Rebellion in India. The blood that was shed by its neighbors ultimately helped Japan take its first step smoothly in opening up to the rest of the world.

The perception of the West was that compared to its own civilized and progressive nature, Asia was savage and barbaric. Japan quickly accepted and identified with this perspective. In hand with its fast modernization, Japan began to apply the same expansionist “gunboat� diplomacy to the Joseon Dynasty.

Up until then, Japan had treated Joseon as its equal. But following its rapid progress into modern society, Japan began to view Korea as its less-developed neighbor and eventually twisted its arm to sign treaties that were far more unscrupulous and one-sided than those between other Asian countries and their Western counterparts. Japan began to gain even more ground with its victory

in wars against the Qing Dynasty and Russia. The West accepted Japan’s regional hegemony after Japan stated it had no intention of expanding its influence beyond East Asia.

Wherever authority reigns, rebellion follows as a due course of human nature.

For those who were resisting the imperialistic rule and authority, nationalism and socialism were their most powerful ideological weapons. The grassroots of Asia reinforced their rebellious spirit by sharing the influence of these two ideologies.

In Russia, the Soviet Union emerged in 1917 following the socialist revolution. Japan, fearing that the proliferation of socialism would deny its imperial rule, participated in the war in Siberia, alongside other meddling Western nations. Japan’s intentions and subsequent participation in the war offers a broader perspective on the fate of Korean independence fighters, whose scope has been narrowly interpreted.

What happened was that Japan failed to withdraw its troops from Siberia even after the regional conflict ended. Japan then merged its forces in Siberia with those in Joseon to eliminate the Korean independence fighters, whom it perceived as an obstacle in ruling Joseon.

During their plight, the nationalists of Joseon eventually took a page from Soviet revolutionist Vladimir Lenin and U.S. President Woodrow Wilson, both of whom proclaimed the right to “national self-determination.” Deciding that this ideal was the new global political trend, the Korean freedom fighters planned and executed the famous March First movement. Chinese students and intellects, stimulated by Korea’s campaign, soon after ignited the May Fourth movement. In a nutshell, 1919 became the year East Asia shared antiimperialistic ideas and campaigns. The modern and contemporary political

situations of the three East Asian countries were thus closely interwoven.

How and for what purpose was Western culture transplanted into the three nations also yielded different consequences. For instance, the railroads that were first built in the United Kingdom in 1825 were introduced in East Asia half a century later. The original purpose was to abet the Western nations in exploiting Asian markets. Both China and Japan initially refused to build the tracks on the grounds that they would destroy their traditional customs. Japan, however, overturned its decision after considering the political ramifications in the aftermath of the Meiji Restoration, believing better transport would help establish a centralized government.

Japan first built its railways by bringing in technicians and materials from the United Kingdom. Soon, it began to work and build independently. Japan also quickly worked to lay tracks in Joseon, its gateway to the Asian continent, to more swiftly transport goods and people. Previously, it took over a month to travel from Japan to Manchuria via Joseon. When the trains started to run, the time was cut to three days and a half. During colonial days, the “up-trains” were those heading in the direction of Japan. Hence, the trains from Gyeongseong (former name for Seoul) southbound to Busan, the seaport a short distance from Japan, were called the up-trains.

The central theme of this book can be found in the second volume, in Chapter 8 titled “War and People: Their Experiences and Memories.” This chapter encompasses a very refined and deliberate level of discourse written in an easy-to-understand manner.

Many people in Korea and China lost their lives and suffered bitterly during World War II. Not only that, but even if the damage was intangible, the impact of war, which had turned everyone into fighting machines or advocates of

militarism, lingered for quite a long while. The biggest wounds were to the memories of people. More civilians were sacrificed than soldiers; whether voluntarily or involuntarily, huge immigrant populations remained in the three countries; and Japan rendered a binary identity as both a nuclear bombing victim and war aggressor. Collectively, this meant people were left with very different memories.

The furor ignited over Japan’s reverence for its Yasukuni Shrine and Hiroshima Peace Memorial Park is a perfect example of these clashing memories. Yasukuni Shrine venerates soldiers killed in wartime as gods. The shrine exhibits panels chronologically depicting the history of Japan’s participation in wars in and outside of the country. Nowhere in the shrine, however, is there a word about the pain and suffering the wars inflicted on Korea and China.

Hiroshima Peace Memorial Park, built in Hiroshima, the world’s first city to be victimized by a nuclear bomb, plays an active part in global pro-peace movements such as abolishing nuclear weapons. However, by linking its ideas for peace with a sense of victimization, the park serves to deepen Japan’s conviction that it is a victim of war.

“Yasukuni Shrine attempts to romanticize war by eliminating the factors of invasion in its history of war, while Hiroshima Peace Memorial Park aims to romanticize peace, but with no historical context and only a sense of victimization,” according to Shin Ju-baek, HK (Humanities Korea) research professor at the Institute for Korean Studies, Yonsei University, who is the Korean representative to the compilation committee. “Japan commemorates both aggressors and victims based on its idea that everyone is equal in death, but Koreans cannot agree to this practice,” he said.

Despite these stark differences, the historians were able to pull their weight to write a history that could be trilaterally appreciated. They held 19 international meetings and 60 domestic conferences, not to mention exchanging innumerable phone calls and emails.

Due to the sensitivity of the issues involved, some of the pages took up to two or three years to revise. There were also disagreements about specific vocabulary. For instance, the historians argued over whether they would define the traditional diplomatic relations between China and Joseon as a relationship of “tribute-for-investiture” or one of “investiture and tribute.” The former puts too much weight on the tributary nature of the relationship and gives the impression that Joseon was subordinate to China, while the latter seemed to more accurately describe the mutually beneficial relations of the two nations, albeit based on a Sinocentric order. In the end, “investiture and tribute” prevailed. The name of the seven-year war between Korea and Japan that began with the latter’s invasion in 1592 was written as Imjin War, instead of Imjin Waeran, meaning “Japanese Invasion of the Imjin Year,” which is more familiar to Koreans.

The book is scheduled to be published soon in China and Japan, too. In the long run, the trilateral compilation committee is hoping to write an unabridged edition on the entire history of East Asia. Professor Shin said that “the recurring differences in academic opinion may be a small price to pay to complete a noble journey towards a loftier future.” He expressed hope that the book would help cultivate a correct and common view of history.

[June 2, 2012]

www.koreafocus.or.kr

Foreign Affairs Correspondent Explores Truth in U.S.-ROK Relations

Lee Hee-yong Staff Reporter Yonhap News

“America Trauma”

By Choi Hyung-doo, Wisdomhouse, 296 pages, 15,000 won “Reliance on the United States is a worse problem than reliance on North Korea.” This was the stinging remark by Lee Seok-ki, a lawmaker of the United Progressive Party, who evidently touched a nerve as he repudiated the ruling conservative party and certain media outlets that were wagging their fingers at the pro-North Korean tendency of leftwing politicians, many of whom were student advocates of the juche ideology that governs North Korea.

As witnessed in the ongoing feud between South Koreans supporting closer

ties with North Korea and less dependence on the United States, and those advocating the direct opposite, an individual’s view of the United States seems to serve as a litmus test of the person’s ideological and political tendency in South Korea.

There are those who perceive the United States as a blood ally, who in the past fought to defend a free Korea and is now a partner in economic prosperity. On the other side of the political spectrum are people who believe the United States is nothing more than an imperialistic power that has Korea in its grasp and is seeking to maximize its national interests by perpetuating the peninsular division.

As contradictory as these two perspectives appear to be, they share some common ground: The United States has been systematically and consistently “managing” South Korea one way or another, starting right from its liberation from Japan.

Choi Hyung-doo, the author of “America Trauma,” had a similar opinion. In 1984, as a senior sociology major at Seoul National University and chairman of his school’s democratic campaign committee, Choi was arrested for leading an anti-government demonstration at the headquarters of the ruling Democratic Justice Party. After watching Washington tolerate Chun Doo-hwan’s military regime in disbelief, he began to harbor suspicions that the United States had participated in the Korean War with careful calculations of self-interest.

Choi later joined the Munhwa Ilbo to become a journalist, studied at the Harvard Kennedy School of Government, and covered the Ministry of Foreign Affairs and Trade. And while working as a correspondent in Washington, D.C., he began searching for answers to his questions.

He sifted through piles of declassified security documents and interviewed numerous political pundits such as Bruce Cummings, Immanuel Wallerstein and Robert Scalapino, as well as decision-makers and security strategists such as David Straub, Robert Gallucci, Zbigniew Brzezinski and Brent Scowcroft.

The results were unexpected.

To his amazement, Choi discovered that America’s South Korea policies actually lacked any real consistency. In fact, most of the big issues and incidents that occurred between the United States and South Korea were the results of surprising coincidence and stopgap measures.

The book touches upon how unprepared the two allies were to commit to the blood alliance they struck almost inadvertently following the outbreak of the Korean War; how persistent former President Park Chung-hee was in wooing Washington to sign the ROK-U.S. Mutual Defense Treaty; how stunned the United States was when the Chun Doo-hwan government emerged; and, last but not least, how uncomfortable it felt in having to deal with a political time bomb otherwise known as North Korea.

In a nutshell, the author defines the alliance as a relationship in which “South Korea lives in constant fear of being abandoned, while the United States is loathe to get involved in the wrong way.” He hopes that by calmly and rationally searching for the truth, South Korea can once and for all relieve itself of the so-called “America trauma” and considerably resolve the societal conflict surrounding the issue.

[June 24, 2012]

www.koreafocus.or.kr

- Jeong Yeong-seon: “Our generation is not the last to live on this earth.�

Jeong Yeong-seon: “Our generation is not the last to live on this earth.”

Kim Yun-deok Staff Reporter The Chosun Ilbo

Jeong Yeong-seon’s suggestion that we meet in Osan came as a bit of a surprise. Many of her most famous works can be found in Seoul. The landscaping for Seonyudo Park by the Han River, the Seoul Arts Center, the National Museum of Korea, the Cheonggye Stream and Gwanghwamun Plaza are all of Jeong’s creations.

Her work can also be seen in the Seoul vicinity. Hee Won, the acclaimed traditional garden at the Ho-Am Art Museum in Yongin, is a masterpiece that took four years to complete. The garden featured in the TV drama “Secret Garden,” where Hyun Bin’s character had his home, is the staff training center for the company Maiim, in Icheon, and this too is the work of Jeong’s hands.

But after seeing the 70,000 pyeong garden (approximately 231,000 square meters) at the Amore Pacific factory in Osan, the reason for meeting here became clear.

“Have you ever seen a garden this beautiful in a stark factory environment?” she asks. “Like the Yves Rocher Botanical Garden in France, this is a theme garden containing all the medicinal plants that can be used in cosmetics. It’s more than a garden for seeing and enjoying: It’s a playground and classroom for children, and a source of raw ingredients for the technicians at this company. I can say for certain that in 10 years’ time it will be recognized as one of the finest gardens in the world.”

Lapsing into her native Gyeongsang dialect every now and then, the voice of the grand dame of Korean landscaping rang out loud and clear, though her frame seemed rather small for managing tough landscaping projects. Burned by the sun, she says that on site no one can tell her apart from the laborers.

“But I’m so famous I don’t carry a business card,” she jokes.

Flood at Mt. Umyeon and Paris Park Q. People call you the grand dame of Korean landscaping.

A. Who says that? (laughs) It’s probably because I was the first landscaping major to graduate from Seoul National University, the first woman to pass the technical certificate exam, and because I’ve been involved in some way or other in every big national project. But I’ve never tried to present myself that way. (laughs) Whether a big garden or a small garden, or even a trifling consultation, I have always given my all to anything that would increase recognition of landscape gardening. I always did more than I was asked to do, so I suppose I can be called the grand dame. (laughs) Q. You’ve said, “If an artist has a canvas, the landscape gardener has the land.” What is your definition of landscape gardening?

A. It’s not simply about planting trees and flowers. Landscape gardening is about handling the earth under our feet, the land that we live on. The architect sees the land as a solid base on which to put up a building, but to the landscape gardener the land is a living entity that enables plants to grow. But it is not enough just to know all about nature. You have to think about the relationship between the land, sunlight, water, and the plants, and also how to treat spaces for the people who will live on the land.

Q. So, it’s impossible not to think about the ecology and the environment.

A. Remember the flood at Mt. Umyeon. The landslide happened because people only thought about their own comfort on the mountain, making more hiking trails, creating a park, and installing exercise equipment. It’s frustrating to see development take place as if our generation were to be the last to live on

this earth. How on earth are our descendants supposed to live?

Q. You have undertaken a slew of big projects, from turning a water purification plant into Seonyudo Park to landscaping the grounds at Incheon International Airport. Which project are you most satisfied with?

A. I am never satisfied. (laughs) Seonyudo bowls people over but one of my first loves is the Seoul Arts Center project. I truly put in a lot of effort into landscaping the grounds, but every time a new director was appointed changes were made. So, when I go there now, I can’t find my way around. I feel that it’s not quite right, especially when the original designer is still living. It’s not just the Seoul Arts Center. In the case of public gardens, every time a new head of the organization concerned is appointed the whole garden is changed.

With no thought for the ecological characteristics of the land, they simply go ahead and plant the flowers and trees that they personally prefer. It’s very upsetting.

Q. Perhaps the mistake is yours sometimes.

A. Of course. There are trends and sometimes there may be issues I did not think of. When it comes to plants, people have very distinct likes and dislikes.

But it is true that there is too much bureaucratic interference. In the case of Seonyudo, which has won world famous design awards, people keep putting in their two cents. A city councilor will come and say such and such a tree must be planted, or a famous writer will come and say such and such a facility needs to be installed in the park. In this way, Paris Park in the Mok-dong apartment complex has been spoiled.

Q. Did you do the landscaping for Paris Park?

A. Sure. The architect and landscape designer for that beautiful park are still alive, but the local council has gone and ruined it. Do you know why the pond was turned into a swimming pool and then back into a pond? One council member said the sight of children in the water was unbecoming, so the pool became a pond again. Such inferior methods are no good.

The Statue of King Sejong at Gwanghwamun Square Q. Last year the Chosun Ilbo ran a survey on the best and worst architectural projects in the city. It just so happened that the projects that came first in both categories were projects that you worked on.

A. Seonyudo Park was a success because at the design stage, the then vicemayor of Seoul Dr. Kang Hong-bin insisted in front of all executive members that the “work must proceed exactly according to the original plan.� Dr. Kang is an urban planning specialist. As for Gwanghwamun Square, we did win the design competition, but not a single thing was done according to the original plan. I wanted to leave the whole plaza empty to convey the weight of history, to make it a symbolic space. But they put a statue of King Sejong there, as well as some silly flower beds and even a lawn. It’s preposterous to insist that since the street is called Sejong-ro, it has to have a statue of King Sejong.

Does that mean we need a statue of Yulgok on Yulgok-ro? I protested, said the statue must not be installed, but they went ahead and did it anyway. We came very close to a lawsuit. I raised a huge fuss, and in the end the department head in charge of the project came and begged me to stop. No wonder the plaza was chosen as the worst in the survey.

Q. What about Cheonggyecheon stream?

A. As with the statue of King Sejong at Gwanghwamun, the Daseulgi

sculpture at Cheonggye Stream shows the problem with unsophisticated interpretation of cultural space. Installations in public places must be given a great deal of thought. You can’t put in a statue of King Sejong just because a certain percentage of people think it’s a good idea. An agreement by a panel of experts is just as important. The Daseulgi sculpture (originally named “Spring”) is the work of the famous artist Claes Oldenburg, but the question is, does it suit the space? Cheonggyecheon is a stream, that’s why we have Daseulgi (which means “marsh snail”)? We may as well have put it in the water. (laughs) Q. How do you solve differences of opinion with the client?

A. Perhaps it’s because everyone knows I’m finicky, but I’ve had few clashes.

When there’s a difference of opinion, I persuade and appease. Even now, it’s gratifying to think that I persuaded public officials to turn a creek area in Yeouido, originally destined to be a parking lot, into a walking trail. I said I would do the design work for free if they agreed to leave it as a natural space. I even read them a poem by Kim Su-yeong. (laughs) When they were finally convinced, I brought together an ecologist, fish specialist and bird specialist, and designed an ecological park. My greatest worry was the silver grass. I was afraid of the field becoming a crime-prone area. Also, I was worried residents would start complaining about mosquitoes because of the waterway, so I secretly put some loach in the water. (laughs) Then I waited for the people’s reaction. But contrary to my fears, they were grateful and thanked me for creating such a beautiful walk for them. They said their apartments had gone up by 10 million won. Ha! (laughs) Q. Did you become famous too, thanks to the hit TV drama “Secret Garden”?

A. I told you, I was already famous! (laughs) I didn’t even see the drama.

When I went to the United States recently I heard a lot of people saying that the garden in the drama was beautiful. The architect, Helen Park, studied architecture after studying landscape architecture, so we were on the same wavelength. That’s why the architecture and the garden go so well together.

Q. A lot of people still think of landscape architecture as a sub-category of architecture.

A. If one side keeps insisting it’s more important than the other you can’t produce great work. If someone asks me to plant some trees to cover up for an ugly exterior, then I absolutely refuse. The relationship between architecture and landscape architecture is not master and servant but partners.

Roh Moo-hyun’s Home and Gravesite in Bongha Q. You have collaborated many times with the architect Cho Sung-ryong, such as the Asian Games Athletes’ Village, Seonyudo Park, and Hee Won. A. He is an old friend. Generally, architects like to work on big projects only, but I like Cho because he puts everything he has into even the smallest project.

I’ve also worked a lot with Seung Hyo-sang. He’s an architect who trusts me to look after everything in terms of the landscaping. Even if it turns out differently to what he imagined, he understands and accepts it.

Q. You worked with the late Chung Gi-yong on the former President Roh Moo-hyun’s house in Bongha Village, and then with Seung Hyo-sang on the late president’s gravesite.

A. I received the commission for the house when my husband was sick in

hospital, so I had a lot on my hands. There’s nothing very grand about the landscaping there, just some trees to tie the house, the garden, the walls, and the hills behind together in a way suited to a country house. I went down one weekend and spent a lot of time talking to the president. At home in Bongha Village he was the very picture of a country farmer. Perhaps it’s because I saw him like that with my own eyes, wearing a straw hat as he went about his work, raising ducks, looking after the rice paddies, cleaning up around the village — that whenever I think of him my heart aches.

Q. People say that whether you liked Roh Moo-hyun or not, you should go and see his gravesite.

A. It’s not your average gravesite. The architect and I, we both wanted to do something completely new in this field. On a triangular piece of land and a single rock for a tombstone, we concentrated on enlarging the surrounding plaza. Some praise the work highly while some say it’s strange, but it’s true that when you go inside the area your feelings are heightened.

Q. What made you dream of becoming a landscape architect in the 60s and 70s, when the environment was so barren?

A. I was born in my grandfather’s orchard in Gyeongsan, North Gyeongsang Province. The hills were covered in apple blossoms, and even now the scene of marigolds and lilies in full bloom beneath seven rocks is my ideal landscape.

My father was a teacher, and he also filled the school grounds and garden of the teacher’s residence with trees and flowers. As the eldest daughter it was always my job to haul the pail on my back and water the plants. That’s probably why I never grew any taller than this. (laughs) I remember the big shock I got when I saw a Swiss calendar that my father brought home from school. After the war all our mountains had been stripped bare, and I marveled

at the beauty of the Swiss mountains, wondering how we could change ours to look like that too. That’s why I went to the school of agriculture at Seoul National University.

Q. I assume there was no such thing as a department of landscape architecture?

A. We always studied nothing but rice farming and bean farming. I was working at another job after graduation when I heard that a landscape architecture major would be offered in the graduate school of environmental studies, and took up studies again rather late in life. I was older than some of the teachers, who ended up calling me “eonni” (big sister). (laughs) Q. A lot of people want to buy a house with a garden that they can do up.

A. It doesn’t have to be an enormous task, and you shouldn’t try to do it all at once. Also, don’t be impatient to plant big trees. I once made a small garden at a house in Seoul, and the young son, a primary school child, having watched me as I worked, made his own little kitchen garden. He filled it with all kinds of herbs and vegetables. It was wonderful. He even kept a gardening diary. If you look after your garden every day, it will be a success.

Q. How do you select the trees and flowers?

A. It’s not necessary to use expensive trees and rare flowers. I’ve rarely used pine trees in the gardens that I’ve designed. A garden where the flowers bloom and die and mark the passing of the seasons is more beautiful. And sometimes planting cucumbers, red peppers, and lettuces can result in a more beautiful garden.

Q. You’re over seventy years old now!

A. I’m still not satisfied. When I didn’t win the competition for Seoul Forest and Yongsan Family Park, I lay down in despair for a month. Ha, ha!

[June 16, 2012]

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COPYRIGHT Korea Focus is a monthly webzine (www.koreafocus.or.kr), featuring commentaries and essays on Korean politics, economy, society and culture, as well as relevant international issues. The articles are selected from leading Korean newspapers, magazines, journals and academic papers from prestigious forums.

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