[FORUM]Academic freedom and the system

What are the biggest risk factors when a company makes an overseas investment or an international financial firm lends money to a country? The uncertainty of market prospects, political instability, corruption of the government, a faulty financial system, overly strict regulations and insufficient foreign currency reserves are among the first things that come to mind. In fact, the international rating agencies consider these elements when determining sovereign ratings.
There are more fundamental risk factors, namely the possibility of a war and danger of regime change. A war, without doubt, is a catastrophe for a country. After the Korean War, Korea constantly faced the threat of a potential invasion from the North, and the risk has always brought down the country’s score for its sovereign rating. When Pyongyang’s nuclear development heightens the tension on the Korean Peninsula, the score gets even lower. The price is translated into higher interest rates, the departure of foreign direct investments or cancellation of promised investments. Such disadvantages are the price the Korean economy has been paying, knowingly and unknowingly, because of the risk of a war on the Korean Peninsula for the last half century.
The risk of a regime change is not an immediate threat, but when it materializes, it brings serious consequences. A regime is a fundamental frame of a nation encompassing the governing principles and economic system. If there is a possibility that a democratic government will turn into an autocratic system, or that a government will choose a socialist planned economic system over the market economy, the risk potential of a country is bound to elevate.
Imagine that a political upheaval changes the administration, and the group that seized power decides to nationalize the private sector and seizes the assets of foreigners. It is the worst possible disaster for investors. It is equally catastrophic if a new administration refuses to acknowledge the foreign debts of the previous government. The result would mean an end to foreign relations and the beginning of international isolation. Such precedents can be found in the Middle Eastern oil producers, which nationalized the oil fields after World War II, and the communist states that seized private assets and property. Due to such potential risks, signing a bilateral investment protection agreement is one of the first things countries do when starting diplomatic relations. Seoul made sure of the cautionary measure when it formed formal ties with China and the former Soviet Union. Countries attempt to reduce the risk potential through the internationally recognized form of a bilateral agreement.
The danger of a regime change does not apply solely to international relationships. When a system changes, all the political and economic activities that had been set to meet the existing system will collapse. Every right and contract based on the right to private property and constitutionalism are denied altogether. We cannot even start to measure the size of the peril. A change of system affects not only the mode of daily life but also the survival of the national economy. When the risk of a regime change heightens, people no longer have the luxury of considering investment or saving. Even without a revolutionary political upheaval, the possibility of a regime change can increase. Frequent infringement of the right to private property and overt damage to the constitutionalism are ominous signs of a system change.
A university professor created a controversy by denying the system of the Republic of Korea. His remarks contain too much risk of regime change to be considered in terms of academic freedom. While the prosecutors’ investigation and the decision of the court will determine whether he will be punished by the law, there is one thing we must reckon with. Regardless of his punishment, we need to clarify the basic system of the Republic of Korea.
As we all know, the Republic of Korea is built upon liberal democracy and a market economy. However, no government official or party insider has mentioned such facts. The defenders of the professor could be mistaken for having a different kind of system in mind if they continue to speak of academic freedom and human rights without clarifying what kind of system of government they pursue. Naturally, the uncertainty over the system will amplify. It is more urgent and important to reduce the anxiety about a possible system change than to safeguard the human rights of a certain individual.

* The writer is an editorial writer of the JoongAng Ilbo.

by Kim Jong-soo