March 2004
Roh No More?

In December 2002, South Korean president Roh Mu Hyun was narrowly elected on the Millennium Democratic Party (MDP)-the newly unified then-opposition party-ticket during a wave of progressive, nationalistic sentiment. Since taking office, however, he has been dogged by economic hardship, security concerns, and corruption scandals. The MDP formally split in September 2003, leaving the president's new party with only forty-seven of the 273 seats in the legislature. On March 12, the South Korean National Assembly voted to impeach President Roh, citing his violation of election laws. Under the South Korean constitution, this means that President Roh is no longer permitted to perform the tasks of state, which leaves Prime Minister Goh Kun, an established politician who has held important posts in six successive administrations, in charge. How will the president's impeachment affect the National Assembly elections scheduled for April 15? What are the legal, political, and security implications of this development? How will it affect business and investment in South Korea? These questions were explored by experts in South Korea at a March 26 AEI conference.

Lee Sook Jong
Brookings Institution 

In 2002, Roh Mu Hyun became president of South Korea as a member of the ruling Millennium Democratic Party (MDP).  Last fall he broke from the party, and though he has not yet aligned himself with another party, he is expected to join the Uri Party soon.  This is a small party comprised largely of former MDP members, and with Roh likely to join, it has essentially become the ruling party.  The political infighting that this has caused led everyone to believe that the impeachment proceedings were nothing more than a show for political purposes, in an attempt to influence the general election on April 15.  The impeachment of President Roh came as a surprise to everyone.

Before the impeachment, polls showed that Roh's approval rate stood at only 30 percent, in part due to poor economic conditions.  Yet polls show that 70 percent of Koreans are opposed to the impeachment, and many are pressing the two major opposition parties to reverse their decision.  As a result, the Uri Party has enjoyed a tremendous boost and is gaining popularity throughout South Korea.

We must await the ruling of the Constitutional Court before Roh's fate is determined.  They will face tremendous pressure because public opinion is with the president.  However, they will get very legalistic in determining whether the president has violated election law and how seriously the court must interpret the neutrality of the president in the general election.  Many legal scholars believe that the charge provides insufficient grounds for impeachment, and the nine-member court will certainly review the legal issues with care. 

So far, the impeachment has had little visible impact on the economy or the six-party talks with North Korea.  The stock market declined for several days but quickly returned to normal, and there has been no disruption of foreign investment or any other major economic indicator.  As for the six-party talks, North Korea did protest against the impeachment of President Roh and said they would not return to the table.  Yet it seems to me that if they are not coming back to the talks, it is for reasons other than the impeachment.

One worry I do have is the post-election impact of the impeachment.  Right now, the Grand National Party holds 51 percent of parliament, the Millennium Democratic Party makes up 25 percent, and the Uri Party has 17 percent.  Because the impeachment has backfired, garnering more support for the Uri Party, it looks as if the Uri Party is likely to take the majority in parliament.  That will have an enormous impact on Korean politics. 

The Uri Party's newfound support may alter Korea's willingness to deploy troops in Iraq.  Parliament recently passed a bill approving the deployment of thirty thousand Korean troops in Iraq by the end of April.  If the Uri Party were to gain the majority in parliament, there is a strong chance that they would reconsider the decision to send troops.

National security is another issue that would likely be affected by a Uri Party victory.  A law intended to stop communist infiltration from North Korea has been attacked by many progressives who say that it is not proper in a free society.   This law may be dismantled is the progressive Uri Party gains control in parliament. 

South Korean society has been bitterly divided, with a progressive president pitted against a conservative majority in parliament.  If the Uri Party is able to claim the majority in parliament, it will likely push through an actively progressive agenda.  Political fighting between conservatives and progressives will grow even stronger, and if President Roh survives, he will have enormous difficulty in demonstrating the leadership needed to reconcile the different social forces in Korea society. 

Extreme, divisive politics have displaced more important priorities in South Korea.  If we are to achieve a more pluralistic, solid democracy, we must be more modest, learn to consider and respect the minority, and restrain some things that are disturbing.  Today in Korean politics, character assassination and political labeling risk damaging democracy.  This is a country where GNP per capita is only $10,000.  We should focus on doubling per capita GNP, so that in the future Korea is a proper member of the OECD club.  Instead, we focus on extreme politics.  Perhaps we can achieve a democracy if we can come to terms with different ideas, but I am skeptical.  We will have to wait and see.  

Marcus Noland
Institute for International Economics

The events in South Korea and the presentation you just heard from Professor Lee, I think, justify the notion that President Roh's opponents have made a serious miscalculation.  As in the October self-referendum episode, President Roh has rallied support by framing the issue not as his absolute level of competence or incompetence, but rather as a relative choice:  do you want me or do you want him?

It now seems likely that the Uri Party will emerge with a plurality-if not an outright majority-in the National Assembly.  If the supreme court, as expected, does not ratify the impeachment, then, at the end of the day, President Roh emerges strengthened-he is in office; he has, if not a majority, at least the possibility of a stable governing coalition in the National Assembly.

In the short run, the impeachment has few economic implications.  External demand accounts for most of South Korean growth, so if China and the United States continue to consume South Korean exports, the economy can effectively grow on autopilot.  Indeed, some government officials think that handing power to Prime Minister Goh Kun may actually depoliticize the policymaking process, removing bureaucratic obstacles and improving economic policy implementation, at least in the short term.  Ratings agencies have announced that they will not downgrade South Korean sovereign debt, and as Professor Lee mentioned, the financial markets have not felt the impact of the impeachment.

That said, the possibility for capital flight exists in South Korea in a way that it did not exist ten years ago because of changes in regulation and in the financial markets.  Likewise, the use of off-balance-sheet derivatives has expanded tremendously in the last two or three years.  Therefore, if this is not resolved relatively quickly, it is a potentially highly combustible mix.

So in the medium run, this could start to bite.  South Korean domestic demand remains weak.  Household or private consumption is actually shrinking, largely because of balance-sheet problems.  Corporate investment remains tepid.  At the same time, demand in China and the United States, which are the basic engines of the economy, are expected to moderate sometime in the future, so relying on external demand is not a recipe for growth in the medium run.

In the long run, if the political crisis is left unresolved and South Korea develops a reputation for political instability or xenophobia, then the costs could be considerable.  The country is essentially caught between China on the one hand and more developed countries of the OECD such as Japan and the United States on the other, and it constantly needs to restructure to maintain its competitiveness.  Since the Asian financial crisis, South Korea has made more structural changes than any country in Asia, including Japan.  But if progress in making financial and economic reforms were to slow down, the country's competitiveness would decline.

The government faces a number of troublesome issues, many of which involve the role of foreign firms in the economy.  One such issue is the problem of the explosive growth of credit card debt.  Much of the debt is no good, and large companies like LG Credit Card are stuck with non-performing debt.  In the past, South Korea would basically dragoon financial institutions to bail out the credit card companies.  Today, such heavy-handed tactics will not work.  Citibank has entered the market and is not the kind of company that can be dragooned.  Thus the government is less capable of manufacturing solutions to problems in the financial sector, in part because of globalization.  If a nationalist, anti-foreign party gains power, it could become an impediment to the successful process of globalization, which has been an enormous boon to the Korean economy.

That said, I do expect that the situation will be resolved relatively quickly and that the scenario I have just outlined will not be borne out.  To simply reiterate, there is here a potentially highly combustible mixture, but it has thus far not ignited. 

Scott Snyder
The Asia Foundation and Pacific Forum CSIS

The Constitutional Court, normally a quiet, sleepy place, is now at the center of a political crisis.  The court has not played a significant role in the political scene in Korea and was not even present at Roh Mu Hyun's inauguration.  President Roh actually performed his own swearing-in ceremony, making an oath to the people.  The court's absence from center stage is a critical issue because although the democratic procedures have been followed, it is unclear whether the people will accept the court's judgment.

It is no accident that the National Assembly took this action just when the public referendum on its own future is up.  I think that adds to the politicization of this particular decision and really puts the spotlight on the potential for changes or reforms that can accompany crisis.  This political crisis in Korean politics is analogous in some respects to the economic crisis in 1998, in that elections in Korea have been, over the course of the past few years, a catalyst for reforms.

The introduction of the primary system in 2002 and other changes in the electoral process represent a final attempt by the old elites to exert their power and influence.  In many respects, the impeachment is illustrative of the failure of that old point of view.  Opposition party elites decided to impeach Roh, but they failed to consider the desires of the general public.  The backlash against the impeachment proves that such inner-circle dealings will no longer be viable in Korean politics.

I believe that a more representative system will emerge from the impeachment debacle where the National Assembly members are not nearly as beholden to the party leadership as has been the case in the past.  The National Assembly promises to be much more interesting in the future. 

We are also seeing the beginning of mobilization politics in Korea.  Candlelight vigils ostensibly held to protest the impeachment call to mind U.S. university politics of the 1970s and 1980s expanded to a national scale.  One of the effects of this style of politics is to give the impression of a majority sentiment.  In this way, it tends to silence the minority, and can be an effective way to mobilize support for a cause.

There are some contradictions in the logic of the ruling party in this particular case.  As the minority party in the National Assembly, they complained that the speaker was overlooking their rights.  Meanwhile, they have suggested that the impeachment itself is not legal because it ignored the will of the majority of the public.  Striking the right balance between the protecting minority rights and honoring the will of the majority is one of the underlying issues here, and it deserves greater scrutiny within Korea.

As the panelists have suggested, the Uri Party has come out with a great bump in the polls and now appears to be likely to be a mainstream party.  Before the impeachment, people questioned whether the Uri Party would get a plurality, but now it appears that they may actually achieve a majority.  This is a key issue if Roh returns to power, because getting a plurality would require him to build coalitions to ever gain majority support for initiatives in the National Assembly, and Roh is not known for his coalition-building skills. 

As Marcus suggested, there may be some conservative opposition.  Another possibility that is interesting to consider is whether or not Roh himself, as a representative of a mainstream party, could face opposition from the Left.  Would he face someone more reformist than himself?  Also, if the Uri Party were to become a mainstream party, would they survive without an opposition to unite them, or would hidden fissures within the party emerge in the aftermath of the election? 

AEI research assistant Courtney Richard prepared this summary.