Korea Monthly Report: Controversial quarter in Korea

Allegations of corruption involving the chairmen of Hyundai and Samsung, protests organized via the collaborative web, growing inflation and the fall of the most conservative political party in the country, have dominated South Korean headlines during the past few months.

 
Economy: turbulent and chronically in the red

Korean economic development is going through a slow period, seriously affected by inflation and the rising price of fuel. This has resulted in a drop in exports and weak consumer spending. Additionally, the gross domestic product (GDP) grew by only 0.7% during the first quarter of 2008. This was a drop of 1.6% as compared to the last quarter of 2007. Of course, it was bad news for President Lee Myung-Bak, who had promised 7% growth for 2008 (or 2% over that achieved in 2007). The goal is increasingly infeasible due to high inflation, which rose 3.9% between January and March this year.

The news that shook the Korean financial sector was the indictment of the president of Samsung for tax evasion and violation of trust in early April. The announcement came after three months of investigations at the conglomerate, which resulted in the discovery of the use of a multimillion-dollar fund to bribe prosecutors and judges. The defendant, Lee Kun-hee, denied the charges and is free for now. The prosecution decided not to arrest him until the end of the trial in order to lessen losses at one of the Korea’s largest companies; and thus, any collateral impact on the country's economy.

Continuing along these lines, president of Hyundai, Chung Mong-koo, was also indicted for embezzlement. The case, involving $110 million, was reopened in April after the Supreme Court nullified a suspended 2007 three-year sentence. The prosecution is trying to prove that the funds were paid to politicians and government officials. They also cite that the money was used to facilitate Chung's son taking over the automotive group.

In other news, Korean health officials culled the entire poultry stock in Seoul on May 12 in order to stop the spread of Avian Flu. The virus was detected in the south of the country, where almost seven million birds were culled.

On June 18, Bolivia and South Korea signed a joint venture to exploit the Corocoro copper mine, which is located south of La Paz. The agreement was signed between the Mining Corporation of Bolivia (COMIBOL) and state-run Korea Resources. The mine has an estimated 15 million ton reserve. The project also includes the construction of a refinery that will process the raw ore.

Politics: the collapse of a giant

Undoubtedly the most significant political news of the quarter was the collapse of the Grand National Party (GNP). The GNP is the most conservative party in Korean politics and won the presidential election in December 2007. After an overwhelming victory against the former ruling party, the GNP’s president-elect, Lee Myung-bak, overcame the first challenge to his mandate with a solid showing at the legislative elections in April 2008.

As such, the GNP strengthened its position as the ruling party on April 9 when it won 153 of the National Assembly’s 299 seats. One of the first repercussions of this victory came out of North Korea. The new administration took a much tougher stance on the north, reducing food aid and putting new conditions on several other issues. North Korea’s state-run newspaper declared, "The Lee regime will be held fully accountable for the irrevocable catastrophic consequences to be entailed by the freezing of inter-Korean relations and the disturbance of peace and stability on the Korean Peninsula due to its sycophancy towards the US and its moves for confrontation with the North."

South Korea ignored with this direct warning, making no comments on same. However, the Lee administration was also indifferent towards its own population and not only its neighbors to the North. According to The Economist, the administration has been characterized by not responding to citizens’ demands. It felt that this attitude of indifference is precisely what reduced the party’s formerly strong approval ratings.

 
GNP problems began April 18, when the government announced it would lift a ban on United States beef imports. The measure, which dates to 2003, was imposed due to Bovine Spongiform Encephalopathy (BSE), also known as "Mad Cow Disease." The decision to lift the ban came on the tails of a US demand to lift the ban as a condition to signing the FTA between South Korea and the US. This created a new aspect to the bilateral relationship, in which Korea figures as the third largest buyer of US beef.

This decision led to mass protests in early May. Thousands gathered in the Seoul’s main plazas to protest the US-Korea FTA and fundamentally against the lifting of the prohibition of exports, which Koreans felt the health of the nation was in serious risk. People of all ages, professions and social classes protested, but, in spite of the large crowds, President Lee ignored their requests. On May 29, United States beef began to re-enter the Korean market. This led to a widespread dissatisfaction in Korean society and the new administration’s popularity dropped accordingly. After just 100 days in office, it fell by more than 30 points.

Faced with these facts, Lee had no other option but to reverse the lifting of the ban. He offered a voluntary agreement between US beef producers and South Korea that stopped imports of beef produced from cattle less than 30 months old. This stock is most susceptible to BSE. However, these measures were not sufficient for Korean voters, who began to demand Lee’s resignation.

On June 5, the crisis limited the GNP’s election results to 10 out of the 52 rural parliamentary seats being contested. Later, on June 9, the Prime Minister and his entire Cabinet resigned in order to calm the crowds. Special envoys were sent to Washington in order to discuss other options for resolving the two nations’ pending issues.

The measure did not prevent protests occurring June 10, a day usually set aside to commemorate the 1987 protests which led to Korea adopting democratic government. An estimated 1 million Koreans from across the country took to the streets in order to protest US beef imports. Consequently, President Lee Myung-bak declared a complete reorganization of his administration on June 16, including changing his chief of staff and the prime minister. On that occasion, the president promised to reflect "entirely the people’s will in the restructuring," responding thusly to the many criticisms, such as a complete lack of empathy, he has received in his brief time in office.

Specialists agree that, in essence, the attitude of the Korean people corresponds to several issues, and not just the cattle industry. For example, the defensive stance that South Korea has taken since the end of the war and the issue of South Korean sovereignty in the face of US interests.

A third point of contention is the protesters’ claim that Lee has failed to reply to their concerns. This is in addition to the criticism of his closest collaborators faced when he announced their respective appointments. Several privatization efforts and an urban plan, which does not have the support of most Koreans but which Lee has lobbied heavily for, are more evidence of his ignoring the public discontent. Many experts assert that Koreans feel that their president has been very arrogant, citing a number of attitudes. Lee refers to himself as the CEO of Korea. "Does that mean we are your employees?” asked one Korean media outlet.

An article in The Economist concludes that Lee’s persistent attempts for closer ties with the United States and his lack of interest in citizens’ complaints initiated the conflict. Two other issues were the beef controversy and a national transport strike, in reaction to a hike in oil prices. The strike paralyzed the country after June 13. The protest lasted six days and cost the administration $5.9 billion. There were also demonstrations against the proposed privatization and pension reform. These were led by construction workers and over 600,000 members of the Korean Confederation of Trade Unions.

On June 19, in a further attempt to calm the national mood, Lee appeared on national TV apologizing for having ignored public opinion. He also stated, “I and the government are deeply sorry" for failing to heed public concerns that were proposed during the first years of the administration. The situation, however, remained tense. So much so that on June 30 the greatest confrontation in modern memory occurred when more than 15,000 citizens took to the streets. As they were marching toward the presidential palace, protesters were blocked by police. According to protest organizers, this resulted in 300 to 400 being hurt. Official figures stated that the injured did not exceed 100.

Culture, science and technology: Astronauts and conflicts 2.0

Korea is having better days in its scientific sector, though. Astronaut Yi So Yeon was launched into space, becoming the first citizen of South Korea to do so. Korea is the ninth country in Asia to achieve the feat. The 29-year-old bioengineer spent 10 days on Soyuz, after being launched April 10 from Kazakhstan. The mission cost Korea $20 million.

Another headline was the Beijing Olympics. The torch arrived in Seoul on April 27. The event included thousands of Koreans opposed to the situation in Tibet and Chinese repatriation of escaped North Koreans. The scene was even more upset when demonstrators were confronted by masses of Chinese students who were more numerous than the Koreans. The day was marked by unrest and violence, which required a contingent of 8,000 police officers.

Finally, it is noteworthy that the beef controversy gained momentum via the Internet. Political activism in the country has become more powerful in recent times thanks to digital technology. Korea also has the most bandwidth in the world. The latest demonstrations illustrate how Koreans use digital networks to make their opinions known. The phenomenon is known as "digital populism" or "Web 2.0 protest". In fact, many believe that digital media, mostly blogs and activist sites, made the largest street demonstration in the history of Korea possible.