Despite unrest, S. Korea economy remains robust
The wealthy South Korean businessman, from one of the country's largest conglomerates, was worried. As he lunched at a luxury hotel in the center of the city, outside riot police and demonstrators readied for battle later that day. ``If this goes on,'' he said, gesturing out the windows, ``the economy will be hurt.''
The political unrest in South Korea has not yet shown much impact on its booming economy. Korean-made cars, televisions, VCRs, and clothing continue to roll off the assembly lines by day, even while rioting takes place at night. The economy is marching ahead at a robust pace, with the gross national product (GNP) expected to match last year's 12.5 percent rise.
The driving force behind Korea's success is foreign trade, with exports increasing last year at a 26 percent clip. Trade contributes half of South Korea's GNP growth, a United States Embassy economic report says. Korea has benefited from the weakness of its currency, especially relative to Japan whose currency has risen against the dollar. Korean exports to the US are thus far cheaper.
The dependence on trade is what worries Korea's businessmen and economic managers the most these days. The images of tear gas on Seoul streets flickering across television screens are causing foreign businessmen to have second thoughts.
The latest trade statistics are beginning to show the first signs of foreign buyers canceling their trips. Figures on arrivals of letters of credit, the financial instruments for trade, show a growth rate for June of 29.4 percent, a drop from a 44.1 percent average from January to May. Economists attribute the drop to the unrest and to the rising value of the Korean won.
The healthy economy is one reason the business community has been the most silent sector during the recent political crisis. The big business conglomerates, like Hyundai, Daewoo, or Samsung, are part of the power structure with the ruling Democratic Justice Party (DJP), the Army, and the technocrats of the bureaucracy. Many of them, businessmen say, are afraid of an opposition victory, of a change in the system that has benefited them - and most Koreans.
More practically, businessmen say, they are dependent on the government. Government-business relations in South Korea are very close. The government has essential control over the flow of credit, including foreign loans, to industry, often channeling such capital at preferential rates to favored industries or even companies. Open criticism of the government is not good business.
``During the Philippines crisis,'' the wealthy businessman recalled, ``my Filipino business friends used to ... tell me how they were issuing signed manifestos against the Marcos government. We can't do that.'' However, he says, in private, ``9 of out 10'' of his fellow capitalists are opposed to the government's handling of the political crisis. The April 13 decision to suspend constitutional reform talks with the opposition, followed by the June 10 nomination of Roh Tae Woo as President Chun Doo Hwan's successor, is seen as a disastrous decision.
The weakening of support for the government among those who have benefited most from the Korean economic miracle is what has made the current turmoil unique. From businessmen to urban white-collar workers of the middle class, the disaffection has been manifest, even on the streets.
The government has been trying to win back the middle class in recent days. In the aftermath of Friday's nationwide protests, officials have emphasized their desire for dialogue, portraying the opposition as intransigent and unreasonable. Street violence, they suggested, is the result of that attitude, not of police repression.
A random survey by this reporter of middle-class shoppers in front of Seoul's most fashionable department store revealed some support for the government's view, but far greater backing for the opposition's stance.
A middle-aged butcher-shop owner praised the government for ``going in the right direction. ... I think the opposition as well should be more conciliatory, like the government. All I want is stability through negotiations between the two parties.''
``I'm not satisfied at all with the government's concessions,'' said a bank clerk. ``It's just a trick to gain time.''
The ruling party, despite claiming a victory on Friday, clearly knows it has not won middle-class hearts and minds. Over the weekend, the party floated ideas for a new proposal containing more far-reaching concessions. The proposals may include dropping plans for presidential elections in February under the present system of indirect selection. According to press reports the plan may be presented today. The opposition Reunificaiton Democratic Party has said it will consider the plan, leaving the door open to resumed talks.