Focus on restructuring

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Focus on restructuring

“The late-1997 scene was horrid. The market crashed in furious pace. The country was like a boat swept up in a hurricane,” Lee Hun-jai, former prime minister, described in his memoir about the onset of a brewing Asian currency crisis that spilled over and pushed the country to seek a shameful international bailout.

He served as the point man in a government-led corporate and financial restructuring under stringent International Monetary Fund command. Politics tip over easily when the economy crumbles. Massive layoffs lead to political upset. The April 13 general election delivered a crushing defeat for the ruling party, not only because of the disgraceful factional fracas over candidate nominations between loyalists to President Park Geun-hye and the minor faction, but also due to simmering public disgruntlement from a lengthy economic and business slump.

We cannot know if the president is aware, but the mood at the southern coastal stretch from Busan in the Gyeongsang region to Yeongam County in South Jeolla, home to the country’s shipyards and affiliates, is building up to be a flash point. Reporters saw fury in the eyes of workers at Daewoo Shipbuilding & Marine Engineering. They are threatening a labor uprising if 20,000 people lose their jobs.

Similar commotions were threatened in 1997. In a memo delivered to Kim Dae-jung, the president-elect at the time, Lee Hun-jai warned of a popular uprising in April 1998 due to massive layoffs and advised Kim to draw out a plan to solve labor problems before he assumes the presidency. The dissident-turned-president respected the advice from a veteran bureaucrat and appointed Lee as the head of an emergency economic committee and of the Financial Supervisory Commission to preclude major social unrest in the process of restructuring.

Kim made live TV appearances to persuade the people that the Korean economy must be retooled by streamlining the chaebol-led enterprises and financial institutions. Park Tae-joon, the founder of steel giant Posco who headed the conservative Liberal Democratic Party that formed a coalition government with Kim, met with Lee before his weekly meeting with the president. The president’s plea to the people, the Cabinet and president’s unity, and the force of a financial chief with mighty vested power all worked to stabilize the market and combat an unprecedented economic challenge.

Politicians helped on the sidelines by doing nothing. Lee Hun-jai recalled that it was a relief that political powers like the president, Prime Minister Kim Jong-pil and Park Tae-joon did not lobby hard against certain political groups. The main opposition had been the conservative Grand National Party then. Although it formed a majority, it did not interrupt the restructuring drive, as it shared the responsibility of bringing about the financial crisis at the end of its ruling power. Leadership, public aspirations and political conditions had all been ripe for restructuring.

Compared with the national crisis 20 years ago, the troubles of the shipping and shipbuilding sector are minor in their potential repercussions. But a serious illness cannot be left unattended as it could become life-threatening. If a malignant tumor is not removed, it could spread to all other industrial organs and ruin the national economy. An operation has been long delayed by politicians who fear losing votes from the working class during elections. But the sickness has become too serious to be put off any further. President Park Geun-hye said restructuring is now a must and not a choice. If an operation is delayed out of fear, the patient could die.

Park’s economic agenda had been murky and inconsistent, shifting focus from economic democratization to creative economy, deregulation and labor reform. Her words are regarded as less convincing to the market. She must now concentrate her focus on restructuring. She could learn from Kim Dae-jung’s experience. She must personally plead for understanding from politicians and the public, and come up with measures on massive layoffs.

The political climate has changed after the election. Politicians and parties cannot act entirely out of consideration for votes. The opposition’s election triumph could actually help the restructuring drive. Opposition members have gotten their hopes up for stealing the governing power in the next presidential election following their surprising feat in the parliamentary election. They will want the incumbent government to finish off the unpopular work of restructuring.

The president’s leadership in emergency times will be tested over the next month before the 20th National Assembly begins, when the ruling party no longer holds a majority, and over the next eight months until the next presidential election. She must forget the ill feelings she had during the campaign and election, and take on the new challenge in full force. Depending on her will, the work could be her greatest achievement.

JoongAng Ilbo, April 29, Page 30


*The author is an editorial writer for the JoongAng Ilbo.

by Chun Young-gi
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