[Viewpoint] Political gambling gets too dangerousIn the precampaign contest, the kings - or queens, to be exact - of the ruling and main opposition parties are showing masterly skills in the political game of chess. Han Myeong-sook, head of the opposition Democratic United Party, made the first offensive move. She sent a letter to U.S. President Barack Obama, warning that her party, if it won control of the government, would scrap the bilateral free trade agreement that has been ratified by both countries.
She listed ten contentious provisions that she wanted rewritten. It is hard to understand on what grounds the articles were chosen. Of the ten, just one had been added during the renegotiations under the incumbent administration. It was the auto-specific safeguard that the local auto industry wholeheartedly encouraged in order to help ratify the trade deal. The other clauses had all been agreed under the Roh Moo-hyun administration when Han was the prime minister.
Han, as prime minister, warned that the government would take criminal and civil action against any illegal protests about the Korea-U.S. trade deal. But what she said and stood for five years ago are gone and forgotten. We don’t want to question her memory, but her sincerity. If she means well, we wonder if she thought through the consequences of her actions on the country’s future.
Park Geun-hye, who heads the ruling party, has used an equally risky counterattack. She chose a strange tool - a special law reimbursing customers of insolvent mutual savings banks. The law, which won bipartisan approval from the National Assembly’s National Policy Committee, would compensate customers of savings banks that were suspended due to mismanagement and corruption with public funds.
Though we understand the good intentions, the law clashes with existing statutes on financial consumer protection and raises question of fairness. The law makes savings banks an exception by reimbursing their customers above the legal cap of 50 million won, and applies an unprecedented retroactive rule to offer the same generous benefits to customers of banks that have become insolvent in the past. It also wants to compensate for losses in high-risk subordinated bonds of savings banks.
The law is tailored-made for voters in Busan, the conservatives’ home ground and the epicenter of saving bank failures after Busan Mutual Savings Bank was suspended. It is a wonder that the ever-bickering ruling and opposition camps reached a unanimous agreement to pass the bill. Park suggested that the bill should be discussed at the next stage - the Legislation and Judiciary Committee of the Assembly. Her aides said she was neither approving nor disapproving of the bill. But she should have stopped the bill before it reached the review committee.
Park and Han are playing a dangerous game. If the FTA is killed, the United States will likely shun Korea as unreliable. Korea will become a joke in the international community. The country’s sovereign credibility could also bear the brunt, bringing about volatility in the stock and foreign exchange markets.
Han should know better. She served as a cabinet member and prime minister. The government she served was famous for playing tough against the United States during the early stages of the FTA. But it backed down when faced with the realities. Before President Roh visited Washington in May 2003, he agreed to send troops to Iraq and then later pursued the construction of a naval base in Jeju and the Korea-U.S. free trade pact out of practical concerns for our national interests.
Han must have an ingenious plan for putting the country’s reputation on the line by taking on the United States with the entire world watching.
There are also high stakes involved in Park’s move with the savings bank law. The law, once passed, could raise a storm. Subordinated bonds of savings banks are considered speculative junk banks in the financial market. They promise returns doubling the underlying deposits because they are that risky. If losses in such high-risk debt are paid off, so should the losses in stock investments as well as bets on horse races and at gambling tables.
How can all these be explained to consumers who kept their savings in low-interest bank accounts with faith in market order and principles? The labor union of the financial industry criticized the law for making fools of all bank customers.
During the election season, politics often is put above the economy. But politicians have gone too far with their dangerous game, gambling with the order and credibility of the country. We may have to wait and see what outcome falls upon the country if the law does pass and the opposition scraps the FTA. I wonder who will be laughing then.
by Yi Jung-jae
* The author is the business news editor of the JoongAng Ilbo.