01.01.2017 Author: Konstantin Asmolov

What will the new South Korean President be faced with?

200934052On New Year’s Eve, the author will allow himself to get distracted from the routine affairs by pondering what the Republic of Korea is expecting after Park Geun-hye. Whoever comes to power and under whatever scenario, either Ban Ki-moon or Moon Jae-in or Ahn Cheol-soo, the new president will be faced with a set of tough challenges, the response to which will be very complex, as some of these problems are inevitable and unavoidable.

The major problem is demographic in nature. While the fertility rate is decreasing, the South Korean population is getting older. According to a forecast by the National Statistical Agency of the Republic of Korea published on December 12, 2016, last year, the country’s population amounted to about 51 million 10 thousand people, with 36.2 persons out of 100 persons of working age accounting for people of incapacitated age (children) and the elderly. In the traditional families, senior children supported their parents. Now, however, this function is borne by the state. According to the opinion polls, only 10% of people over 60 live on their children’s incomes, while 49.7% continue working, as the South Korean pension system is far from perfect and only “feeds” civil servants.

It will be very difficult to turn the ageing process around, as it has a universal nature in the civilized countries. Thus, there is a whole series of challenges ahead.

The first challenge lies in the necessity to provide pension benefits for everyone who retires. It also deals in the living standards peculiar for Europe, not Southeast Asia.

Increased social expenditure is a very expensive item. In addition, when the authorities start building a social welfare state, they cannot “stop”. The reduction of pension benefits or the cancellation of privileges immediately cause very strong social unrest, as the senior citizens are a rather active social stratum. A blow to their interests may quickly lead to manifestations of mass discontent.

The second challenge relates to unemployment caused primarily by an excess of people with higher education, which is a traditional sign of prestige (especially education in the humanities). Meanwhile, the number of people with higher education exceeds the number of the upper secondary school graduates and amounts to 38%. The higher education cult leads to a surplus of experts with such education, and the owner of a university diploma will not work as a turner at a plant. This will be considered as a flagrant drop in the social status. Moreover, like their elders, unemployed and educated young people are the traditional “fuel” for the social protests.

This means that something should be done with the education system, which earlier had been aimed at a greater number of students. Theoretically, the number of universities and specialist fields with low competitiveness must be reduced. However, most of the higher educational institutions in the Republic of Korea are private, constituting part of the old tradition of self-administration and the reputation of the “opposition citadel”. Therefore, whatever the reasons of the reductions in this field, they will be perceived, not as an administrative, but as an extremely politically biased measure of the authority trying to eliminate the liberal intellectuals.

The “previous government” tried to solve this problem by a certain reorganization of the education system, but the reduction of the humanities experts and attempts to teach “turners with the diploma” in the universities were one of the biggest reasons why both teachers and ordinary students ended up directing their anger at Park Geun-hye’s government.

The reverse side of the same coin is the lack of a labour force, especially when it comes to dirty, dangerous or low-skilled work. In fact, they try to fill these niches of the market with migrants, primarily from the Southeast Asia and partially from South Asia. As the number of problems grows, the share of migrants will also increase.

However, this, in turn, may lead to a situation when South Korea will stop being a monocultural country (and this process has started already), and new problems of multicultural communication may appear. As a result, the new political agenda may emerge. Meanwhile, the topic of the Islamic threat and migrants’ attacks on cultural values is being elaborated by representatives of the marginalized Protestant Liberal Party. However, if the share of migrants increases, the state will face increasing problems associated with controlling them, and the reaction to this situation will also gather momentum.

The third challenge relates to the fact that the demographic problems can be considered in the context of the “theory of generations” as the nation’s mobilization potential. In a conversation with the author, some Korean experts have already posed a question on “the only child generation” that grew up in the atmosphere of excessive attention and care and out of touch with the traditional Confucian/collectivist culture, whether it can reach the same level of self-abnegation if the country faces a crisis similar to that of 1997.

It is important to note that the generation of politicians has also changed. Perhaps, it was one of the main mistakes of Park Geun-hye, who supposed that the bureaucratic apparatus was still living in accordance with the laws of her father’s administration. However, the modern politician cannot simply neglect public opinion, and by personal charisma or administrative measures push his vision of the situation, as Park Chung-hee did in his time. In fact, he had to change the Constitution, declare martial law, and make a revolution. The current President in the context of the Sixth Republic political system has neither the powers nor the opportunities to do it. If the current political leader conceives the idea of martial law or the strengthening of the President’s power in the Constitution, he/she will face such a level of mass protests from all occupations that the mass rallies of the thousands in Seoul in the autumn 2016 will seem to be childish festivals.

In general, a politician who can outright come out and say that during his/her reign, the people will face only sweat and shed tears for a better future is unlikely to occur in the South Korean political horizon.

The reduced number of the youth and the ageing of the population affects the military and political agenda as well. The society is becoming more sensitive to the human toll in general, and the death of children or young people is perceived as unacceptable. The Sewol Ferry Tragedy was a good alarm, but one may pay attention to the theoretical readiness of the South Korean army to combat, consisting of only sons who are in the high information transparency environment (“Hello, Mother, I am sending you my selfie from the burning tank”). A military conflict with a large number of casualties will be a very painful blow to the society, and will cause not so much a protest as preventive actions to ensure that such a conflict cannot happen again.

Naturally, the development of an efficient demographic policy can surely give results only after some time. In addition, this problem requires considerate expenses in the state budget if it is to be solved by means of the maternity fund or mortgage.

Then comes a set of economic problems that have started to shake South Korea’s economy. The crisis in the shipbuilding industry, which was the consequence of the bankruptcy of the Hanjin Company, recurrent scandals related to mass defects and recalls of entire series of equipment, either automobiles or blowing smartphones. Even South Korean mass media has to admit that “in 2016, the Republic of Korea faced a series of internal and external negative factors, including a change of the government and an increase of the refinancing rate in the United States, a slowdown with the Chinese economy, reduced exports and a slowdown with consumer activity, an increase in household debt and even the President’s impeachment”. In this context, on December 13, 2016, the Asian Development Bank downgraded the growth forecast for the South Korean economy. Moody’s rating agency has noted that the current political situation in the country will have a negative impact on its credit rating.

Generally speaking, a separate article can be dedicated to the economic problems that the new President of the Republic of Korea will face. Therefore, I will only briefly enumerate the most important ones that are not directly related to the demographic challenges we have discussed already.

First, the economy needs a serious structural reorganization. Although the lifetime employment system is formally liquidated, the de-chaebolization required by the IMF has not yet happened after the crisis of 1997. Meanwhile, the lifetime employment system leads to a situation when the unemployed youth are unable to take the positions of the elderly employees who honestly “filled the job places”.

Park Geun-hye tried to solve this problem by introducing temporary contracts for the employees as well as KPI. Nevertheless, she was bitterly opposed by both the bureaucrats, who could not just push a button in the office, and the labour unions because an employee on a temporary contract has a lower salary, has no benefits, and the undeveloped efficiency standards allow dismissing unwanted employees under this pretext.

At the same time, the ability of the state to directly influence big business is likely to be reduced, even if the Korean Association of Manufacturers, which the opposition wants to eliminate as a “symbol of the unholy alliance of power and capital”, will remain.

Second, the reduced demand for goods produced by the Republic of Korea is evident. There are several reasons, one of which is that China is using a similar model for achieving economic growth, and is snapping at South Korea’s heels due to its lower prices of goods related to lower labour costs.

South Korea is trying to solve this problem by extending its sales markets, but China is doing the same, while the countries to which South Korea and China supply similar goods are often the same. Moreover, the situation is affected by the trade war between China and South Korea that was initiated by Beijing in response to THAAD.

Third, let us take a look at the financing sources. Opportunities for the development of the Korean economy and its intensification are quite limited, because the economic initiatives of recent years (“Dynamic Korea”, “Creative Korea”, “Low-carbon Economy for Green Growth”) have turned into worthless grandiose projects, except for a set of common words and the embezzlement of public funds by the top public officials, as in time of Lee Myung-bak. They do not want to resort to the international financial and credit institutions because they remember the “era of the IMF” events when such loans were given under extremely harsh terms requiring major changes in the political agenda. Increased taxes will face even more serious hardships. Taxes on legal entities are quite high, and attempts to raise taxes on individuals are fraught with mass protests.

The third set of problems relates to foreign policy. Here, the author points out three partially related questions. First is the development of the North Korean missile and nuclear program, to which South Korea must respond, in order to keep up with the expectation of public opinion. At the same time, amidst the society polarization on the North Korean issue, either the return to dialogue or rocking the boat and increasing confrontation will not be adequately perceived by some part of the South Korean society. The “sunshine policy” of Kim Dae Jung – Roh Moo-hyun, the changed regime adopted by Lee Myung-bak, and the last years of Park Geun-hye leadership have shown a lack of success and public discontentment.

South Korea has currently announced a number of ambitious projects as part of the regional arms race. However, the DPRK’s asymmetrical response has been less expensive, and an opportunity of its neutralization remains non-absolute.

The second problem is the growing US-China confrontation, where South Korea is between a rock and a hard place. On the one side is its traditional ally – the USA, on the other – China, its leading trade partner that has serious levers of influence that might create additional problems for Seoul in the case of the continued inclination to the USA. If the trend of confrontation continues (to be exact, it is actually growing) South Korea would have to choose sides. At the same time, the Republic of Korea cannot remain neutral, not only due to the mutual-defence treaty of 1954, but due to the fact that the elements of the US THAAD missile defence system located on South Korean territory make these facilities the legitimate target in case of a conflict.

The third problem is the probability of the isolationism in US policy. This does not mean that confrontation with China will ease, but that the Republic of Korea will have to get itself out from alone. There are two options of development, both of which are unpleasant.

The first option is if Trump’s intention to make Seoul pay for the deployment of US troops comes true, an additional hole will be drilled in South Korea’s budget, which will aggravate the above-mentioned economic problems.

The second option is if Seoul does not spend the extra money, US infrastructure on the Korean peninsula will be minimized as much as possible, and in the long term, this means the long-awaited transfer of command in time of war from the US generals to the South Korean.

This might seem to be a good sign, because until now, the situation where the South Korean army (even in case of war) was commanded by US generals has been perceived as an anachronism or a sign of neo-colonialism. However, the present generation of South Korean military leaders is significantly inferior to the US generals in competence, but surpasses them in political commitment. By that time, young majors who argued that “if the politicians had not hindered us, we would have destroyed North Korea in ninety hours” in the time of Lee Myung-bak, would have grown into colonels and generals. This increases the likelihood of a military conflict on the Korean peninsula initiated by the Southerners in the hope that finally South Korea will be possible to destroy the North “at the edge of collapse” with a powerful kick; and if something goes wrong, they can always ask the US for help. We can only regret about the possible consequences of such a decision, both on the Korean peninsula as a whole, as well as regionally.

Finally, Korea has a set of problems with its domestic policy where we can point out three elements. The first one relates to the demand for the reduction of presidential powers until serious changes have been made to the current Constitution, under which the Sixth Republic will be changed to the Seventh, where the role of Head of State may be occupied by the Prime Minister or the President, elected by the Parliament. Such a model, on the one hand, is more democratic, and on the other, requires more time to approve and secure political consensuses, which means that serious and ground-breaking decisions will likely be hindered.

The second element relates to the fact that such a Korean national sport as the faction struggle will remain. This also means the need for “personnel clearing” with an inevitable choice between smart and loyal, and a high probability of the sabotage of the initiatives by both the political opposition and the rivals within their own party.

In addition, the faction struggle logic will require the new President not behave like Park Geun-hye. In particular, this means not using the methods that either she personally used in her government, or the ones associated with mass consciousness during her father’s reign.

In fact, Park Geun-hye’s destiny can be a separate, the third, factor that is independent of the decision of the Constitutional Court. A successful removal of the President from power in the course of constitutional procedures is not only a demonstration of the presence of the South Korean democratic mechanisms and the civil society, but also a precedent that the opposition can use to threaten the authorities in the presence of a suitable occasion. The scandal with Park Geun-hye has demonstrated that dissatisfaction with the first person may find serious reasons sooner or later, and a scandal is easily inflated.

To sum it up. The new President will face a crisis situation. He or she will have to solve a series of important problems affecting the interests of the society differently for each sector. At the same time, the South Korean society will react rather painfully to some unpopular measures after going through Park Geun-hye impeachment.

It should also be noted that some of these problems were clear under the former administration. Park Geun-hye tried to solve them, but her methods were not well thought out, and some of them faced the politically motivated criticism both from the right wing and from the left wing. Therefore, they were not implemented as planned. In addition, these measures have contributed to the lack of respect to the President on the part of the people, who took to the streets and called for her impeachment.

All these facts mean that the future Head of State will have an unpleasant choice to make: saving the day using extremely unpopular measures, which, when the former President tried to implement them, deprived her of her position, or choosing a populist way by deepening the crisis and shifting its consequences to his/her successor. Taking into consideration the peculiarities of the factional struggle and the personality traits of the most likely candidates, the second option might be more preferable. Nevertheless, the question is whether the crisis will hit earlier, and whether the Republic of Korea will be the “East Asian Greece”? Events in the modern world often develop faster than politicians and analysts expect.

Konstantin Asmolov, PhD in History, Senior Research Fellow at the Centre for Korean Studies at the Institute for Far Eastern Studies, exclusively for the online magazine “New Eastern Outlook”.