[EDITORIALS]What We Should Do in Case of WarWith concern that U.S. retaliation against the terrorists who perpetrated the recent attacks in New York and Washington is drawing near, Koreans are becoming edgy about the possible impact on the national economy. Since a war against the terrorists is apparently unavoidable, we have to come up with countermeasures. In that sense, it was appropriate that President Kim Dae-jung called a meeting of economic ministers and the leaders of eight business and labor organizations to discuss steps to cope with the situation at the Blue House on Friday, adopting a resolution.
The recent parliamentary review shows the government has a three-step contingency plan. The first step is for normal conditions. The second step is for countermeasures against a possible decline of the U.S. and global economies, defined as annual growth rate of less than 2 percent. The final step goes into effect for a world economy with less than a 1 percent growth rate. In the third step, which can be considered as an emergency, the government plans to loosen its purse strings and slash interest rates despite the possible losses to the national coffers to maintain a foundation of domestic consumption.
But, such a program was not devised on the premise of the outbreak of a war in the international community. Therefore, a new and thorough scheme is necessary in this time of expected strife. The government has long been ready for war in the Korean Peninsula to cope with a confrontation with the North, and has tested its program on a regular basis. However, Seoul should modify the program because it was never planned for international conflict.
The most urgent task of the government is stabilizing the market and maintaining the balance between supply and demand of strategic goods. If NATO joins Washington and the target of any attack is expanded to Pan-Islam regions in addition to Afghanistan, we have to come up with a scenario to prepare for the worst possible condition. In that case, we must secure reserves of major raw materials, such as crude oil. The price of Dubai crude oil jumped to $37 per barrel from $17 in two months after the crisis in the Gulf began in 1990. We should remember that the price returned to normal levels only after the war ended. The recent parliamentary review showed that the Korea National Oil Corporation, a state-run enterprise, wasted its budget for crude oil reserves for emergencies. The government should reinforce its audit and root out such deplorable practices.
Monetary and fiscal policies should also support stabilization of the financial market. The government should adopt necessary measures promptly and flexibly by closely monitoring fluctuations in market indices, such as interest rates, foreign exchange rates and stock prices. Seoul should adopt flexible currency management policy because direct financing will be eroded if stock and bond markets contract. To counter long-term stagnation of exports, the fiscal policy should be carried out to maintain stable domestic consumption. Even if the countermeasures are deemed effective action, winning the support of people is important. The government should actively promote its contingency plans among the public to prevent uncertainty and hoarding.