[EDITORIALS]A looming crisisThe instability of our financial market is unusual. Amidst worries over a recurrence of the “Sell Korea” phenomena in the stock market, share prices are plummeting and the exchange rate of the Korean won is rising sharply against the U.S. dollar. In international financial markets, the spread of Korea’s Foreign Exchange Stabilization Fund has risen 30 percent in some months, and Korean businesses are experiencing difficulties in borrowing money from foreign banks. Short-term loans from corporate borrowings have also shot up. While consumption and investment are shrinking, soaring consumer prices have exacerbated worries of a financial crisis. Everyone is being pulled into this economic crisis. High-ranking government officials have rushed to Washington and the economic minister has held urgent meetings.
What brought the Korean economy to this dismal state? The fundamental reason can be found in the war against Iraq and the subsequent instability of the world’s economy. But the rapid deterioration of the financial market in a short time derives from the North Korean nuclear crisis and the government’s failure to assure security on the Korean Peninsula to the international community. As the Roh Moo-hyun government is seen at odds with the Bush administration over the North Korean nuclear issue, the Korean Peninsula crisis theory has started to spread, causing investors to avoid South Korea and worsen the instability of the financial market.
In this sense, the North Korean nuclear issue is not only a national security issue but an issue that brings critical influence to the economy. The government should understand that the current economic instability cannot be addressed only by economic means. The shortcut to restoring the stability of the financial market lies in showing investors that there is no change in a staunch U.S.-South Korean alliance.
The government should contemplate whether the Korean economy can survive on its own. Without economic stability, we cannot secure national security or even reform.